INM rejects suggestion of ‘culture of deference’ to Denis O’Brien

‘No basis’ for view ex-chairman had ‘untramelled’ influence at company, High Court told

INM was very concerned about a “fundamental unfairness” in the ODCE’s approach to its application for inspectors, counsel for the media group told the High Court.

INM was very concerned about a “fundamental unfairness” in the ODCE’s approach to its application for inspectors, counsel for the media group told the High Court.

 

Independent News & Media (INM) has strongly rejected concerns of an apparent “culture of deference” within the media group towards its major shareholder Denis O’Brien.

There was also “no basis” for concerns that former INM chairman Leslie Buckley – a long-time business associate of Mr O’Brien – appeared to have had “untrammelled” influence in the company, Paul Gallagher SC told the president of the High Court.

In reply to Mr Justice Peter Kelly, Mr Gallagher agreed that Mr Buckley had, in correspondence from his solicitors to INM, alleged it was “scapegoating” him and was denying a series of claims against him.

Mr Gallagher said various actions taken by INM had been “far from a culture of deference” to the major shareholder.

An INM committee had instructed Mr Buckley to co-operate with an investigation by the Data Protection Commissioner; INM’s board had set up an independent review to inquire into various allegations made by former INM chief executive Robert Pitt against Mr Buckley; and INM had publicly announced it had issued proceedings against Mr Buckley, he outlined.

Even if the allegations against Mr Buckley were true, and he wanted to stress they remained allegations, that did not amount to unlawful conduct of the company’s affairs, Mr Gallagher argued.

‘Unimpeachable integrity’

This was because INM’s directors were experienced people of “unimpeachable integrity”, the board was responsible for the conduct of the company’s affairs and “the controls worked”. The board’s stewardship of INM had been endorsed at a recent general meeting, he added.

Appointment of inspectors would inflict immense damage on INM, was “unjustified” and should not be made on the basis of alleged actions of a person who has left the company, he said. Mr Gallagher was making submissions in the continuing hearing of the Office of the Director of Corporate Enforcement (ODCE) application for inspectors.

The ODCE says there are circumstances for concern over the conduct of INM’s affairs arising from his office’s year-long investigation into certain matters arising from protected disclosures made by Mr Pitt and former chief financial officer Ryan Preston in 2016 and 2017.

Those matters include an alleged data breach during which data was removed from INM over a period from October 2014 and interrogated by third parties outside the jurisdiction.

Other issues include a proposed acquisition by INM of radio station Newstalk from a company of INM’s major shareholder Denis O’Brien at an allegedly substantial overvalue and the proposed payment of a €1 million “success fee” to Island Capital, another company of Mr O’Brien’s, following the sale of INM’s shares in the Australian media group APN.

While neither the Newstalk sale nor fee payment proceeded, the ODCE has raised several concerns about them.

On Wednesday, Mr Gallagher said the INM board had no knowledge of the alleged data breach.

The claim in that regard is that Mr Buckley, as chairman, did something unlawful for his own benefit and that fell “far short” of meeting the requirement for inspectors, he said. If what was alleged was true, those were the acts of someone “who has broken their duty to the company”.

It was accepted, with hindsight, that the board would in its response have done things differently but the fact that it did not react in a particular way to the data issue did not amount to conducting the company’s affairs for an unlawful purpose.

A procedure had to be followed and the board set up a special committee. It also established an independent review and there was a “very thorough” investigation by people who were “self-evidently” independent and whose integrity was not questioned. The board was also entitled to ask why Mr Pitt had not raised various concerns sooner.

Throughout all of this, INM had taken legal advice and approached the matter based on that and in a very thorough manner.

This was “very different” from the picture the ODCE presented of its response.

‘Fundamental unfairness’

INM was very concerned about a “fundamental unfairness” in the ODCE’s approach to this application. It was said on behalf of the ODCE in court a “common theme” was that the major shareholder controlled everything, which was a “very serious” allegation against a plc and not something the other INM shareholders believed.

The ODCE’s “generalised criticisms” in court documents about corporate governance had transmogrified into a claim of shareholder control which was “unfair and unjustified”.

The ODCE had made “trenchant criticism” of INM, even if the blows were diluted by the use of phrases such as saying there were “circumstances suggesting” various serious issues, he said.

Mr Justice Kelly asked, arising from Mr Buckley’s claims that the October 2014 data matter arose in the context of a cost-reduction exercise concerning a €650,000 legal services contract for Simon McAleese solicitors, whether INM had contact at the time with Mr McAleese about his contract.

Mr Gallagher said Mr Buckley had achieved substantial overall cost savings at INM and he understood there were contacts at some stage between Michael Doorly and Michael Denieffe of INM with Mr McAleese but no agreement was reached.

The hearing continues on Thursday.