Hell yes.
and hell yes again
Most of the places where I've worked have had a "Conduct Unbecoming" clause in their employee agreements.
The few times I've seen it used were for employees who couldn't keep their pants zipped, usually with regard to other employees.
However, to me at least, this is a textbook definition of the clause. Glad that the guy got what was coming to him....were I his manager I'd have done the same.