INM's bid to block inspectors is thoroughly dismissed
High Court could hardly have been more damning in its judgment
In the High Court, INM’s lawyers pleaded for more time to assess the judgment before it comes into force and inspectors are appointed.
A striking aspect of the judgment delivered on Tuesday by Mr Justice Peter Kelly is not simply that Independent News and Media (INM) lost its attempt to prevent the appointment of High Court inspectors. Rather, it is the scale of INM’s loss. In the end, it wasn’t even close.
The president of the High Court strode into courtroom number 10 just after 2pm to read his judgment on the application by the Office of the Director of Corporate Enforcement (ODCE). That was as good as it got for INM, whose chief executive, Michael Doorly, sat quietly in the body of the court.
The watchdog wanted inspectors to investigate allegations of “unlawful conduct”, including the secret granting of access to INM’s email servers to IT experts paid for by a company linked to Denis O’Brien, its main shareholder. INM objected, arguing that inspectors were unnecessary and damaging.
For almost an hour and a half, the president of the High Court reviewed all the evidence in measured tones.
As he reached his denouement towards 3.30pm, the judge’s verdict was unequivocal: the application, he said, was “well justified”. The full 76-page written judgment makes it clear he rejected every substantive argument INM made.
The laws that govern the ODCE’s powers detail 10 potential scenarios that might justify the appointment of inspectors to a company, such as a suspicion of fraud. Ian Drennan, the head of the State watchdog, had only to convince the High Court that at least one of them applied to INM. In the end, he argued that INM ticked six of the 10 boxes. Kelly agreed.
Full ODCE v Independent judgment
Among the issues of most concern to the ODCE is the alleged data breach. Drennan presented text messages that appeared to suggest Leslie Buckley, INM’s former chairman and a board nominee of O’Brien, oversaw an operation to parse staff emails for private information.
The list included at least 19 people – the so-called INM 19 – including journalists and lawyers who had previously crossed swords with O’Brien.
Buckley had argued it was done for a “cost-reduction exercise”. Kelly said he did not have to make findings of fact. He still chose, however, to cast doubt on Buckley’s explanation: “It is difficult to see what [the exercise in relation to some of the 19] had to do with a cost-reduction exercise.”
Kelly added that it appeared that “the rights and entitlements of some or all of these 19 people may have been transgressed in a most serious way”. He also cited press freedom and the importance of keeping journalists’ private emails secure as justifications for the appointment of inspectors in the public interest.
Kelly also assessed texts between Buckley and O’Brien, submitted by the ODCE, in which the watchdog alleges the two men discussed “inside information” on INM, potentially a breach of market abuse rules.
“That material, if correct, seems to demonstrate a pattern of wrongful disclosure of price-sensitive information by Mr Buckley to Mr O’Brien,” Kelly wrote, adding that this appeared to be “for an unlawful purpose”.
Then came some of his most pointed words. In assessing all of the allegations made by the ODCE, including that Buckley wanted INM to overpay for a radio station being sold by O’Brien, Kelly directly addressed the alleged conduct of O’Brien’s former board nominee and closest ally.
“I hold that Mr Buckley . . . on the evidence before me, the circumstances suggest that he has been guilty of misconduct and misfeasance,” wrote Kelly. It could hardly have been more damning.
As INM’s lawyers pleaded for more time to assess the judgment before it comes into force and inspectors are appointed, Kelly said he was due to go on holidays: “I’ve spent the best part of August on this!”
INM may yet appeal Kelly’s decision. He delayed the appointment until Thursday, at least. As the inspectors, with wide-ranging powers of inquiry, prepare to knock on INM’s door, you get the sense that there may be far more yet to come.