I disagree that his reaction to it is reasonable. Regardless of how or why, 'accident' or not, showing his dick to Olivia is far more likely to get him fired than simply admitting to his boss himself that he had sex with Rebecca, who's a maid and not 'one of the girl's'. The demand is worse than the thing he's being blackmailed with, and it's always better to get ahead of these things and set the narratieve, rather than let yourself be manipulated into doing things that will only worsen the blackmail.
Not to mention that he's a fucking bodyguard! Being blackmailed and not stepping to your boss about it is bad, doing it as a bodyguard for people whose lives might be in danger is so much worse.
No, no. It's absolutely ridiculous that he's going along with this for so many reasons, and it's fine if you and others don't mind that, but it bothers me to no end.
Either way though, you don't make it sound like it will be over any time quick, so I'll leave this game be for now.