Bitter row sparked scandal at Greencore
The Greencore sale, 1991
Journalist Sam Smyth, who broke the story. Photograph Paddy Whelan
The government’s conversion to privatisation in the early 1990s came in for lots of criticism, but not even the policy’s most trenchant critics predicted the scandal that enveloped Greencore in September 1991, just five months after it was floated on the Irish Stock Exchange.
Greencore had been Irish Sugar, one of the first “semi-States” to be sold, largely because it had been turned from a loss-maker in the mid-1980s to a profitable business with a dominant position in its home market.
The scandal broke when it emerged that its managing director, Chris Comerford, claimed to own part of a company that was paid almost £9 million when Irish Sugar bought out the 49 per cent stake in a subsidiary, Sugar Distributors Holdings Ltd (SDHL), that it did not already own, in February 1990.
A company called Gladebrook owned the 49 per cent stake in SDHL. Its shareholders were Greencore executive, Charles Garavan, former executive, Charles Lyons, company secretary and head of finance, Michael Tully, Thomas Keleghan, Cork solicitor, John Murphy and a Jersey-based firm, Talmino, which held 24.25 per cent. All Gladebrook shareholders received loan notes from Irish Sugar pledging to pay them specific sums in return for their stakes in SDHL. Garavan, Keleghan and Lyons each got £1.87 million, Tully received £974,000 and Talmino £2.1 million.
A row between Comerford and Cork law firm, MJ Horgan, over Talmino’s ownership sparked the scandal. The Greencore chief executive claimed the solicitors had established the company on his behalf, while they argued it was set up for Garavan, Lyons and Keleghan. Comerford began legal action, a move that resulted in the whole affair coming to light.
It then transpired that Gladebrook’s stake in Sugar Distributors had been bought with the help of a £1 million loan from a company called ISM, which was itself a subsidiary of Sugar Distributors. Lyons, Tully and Keleghan were directors of ISM. Gladebrook’s shareholders had made a near £7 million profit from the Irish Sugar deal.
The story in the media
Sam Smyth broke the story in the Sunday Independent on September 1st, 1991 and the dailies, including The Irish Times, picked up on it quickly. The first mention of the scandal in this paper was a short article on the Monday confirming the fact that Comerford was suing MJ Horgan, but as the week moved on, its coverage gained momentum and the paper began to make much of the running.
Courtesy of reporter Jackie Gallagher, The Irish Times broke the news that Greencore executives had used the IMS loan to buy the Gladebrook stake in the first place. The story was front and centre for more than a week, with contributions from the likes of markets editor, Brendan McGrath and political staff such as Maol Muire Tynan. In classic paper of record style, every detail and reaction was covered exhaustively.
RTÉ also covered the story comprehensively on its news and current affairs programmes, treating the viewing public to shots of reporters door-stepping the 10-hour board meeting at which Comerford resigned, and filming him dismissing their questions with a “no comment” as he left.
Comerford resigned two days after the story broke and Tully followed him within a week.
The Greencore board appointed audit specialists Arthur Andersen to review the Sugar Distributors/ Gladebrook deals. Minister for industry and commerce Dessie O’Malley appointed solicitor Maurice Curran to inquire into the beneficial ownership of Talmino and Delante, another Jersey-based company that had been paid consultancy fees in relation to the deal.
He also asked the High Court to appoint senior counsel Ciarán Foley and accountant Aidan Barry as inspectors to Irish Sugar under section 8 of the Companies Act, 1990, the first time that this power was used.
The following December, Curran stated in his report that Comerford was Talmino’s beneficial owner. The High Court inspectors found the opposite when they published their findings in March 1992. Arthur Andersen concluded that Irish Sugar did not over pay for Gladebrook’s SDHL stake.
In November 1991, Greencore took legal action against Comerford, Tully, Keleghan, Lyons and Murphy, alleging breach of duty, breach of trust, breach of contract, misrepresentation and negligence.
The government referred the matter to the Director of Public Prosecutions for consideration, and that office passed it on the Garda fraud squad. Nobody was ever prosecuted.
By the end of 1991, the affair was mired in litigation. In late 1995, Greencore settled with Comerford, Tully and the other executives. The Irish sugar business is no more and Greencore these days is a convenience food specialist with most of its operations in Britain.