Question of whether package included pay for role as director could be key

AT 2.50PM YESTERDAY, businessman Paul Connolly took the stand in court 16 for cross examination in his claim against Independent News and Media to have the €1.87 million compensation paid to its former chief executive Gavin O’Reilly declared unlawful.

The INM director’s case is that O’Reilly’s April 19th pay-off, which amounted to 23 months of remuneration, was excessive, paid in haste, and should have been put to a vote of shareholders.

A key element is whether the compensation included a payment to O’Reilly for his role as a director of INM, as distinct from his employment as chief executive.

Michael Cush, SC for Connolly, argued that it did and so should have been put to a vote of shareholders to comply with company law. Mr Connolly was confident taking questions from Cush. It was tame stuff.

His day got distinctly more uncomfortable under questioning from Paul Gallagher, SC for INM.

O’Reilly’s fate with INM was sealed at a board meeting on April 19th. A pack of information relating to the meeting was circulated to directors on April 17th.

Gallagher asked if Connolly, having studied and read this information, which included legal advice from law firm McCann FitzGerald on the “compromise agreement” with Mr O’Reilly, sought his own legal advice in advance of the meeting.

This is indicated in his witness statement, dated May 10th.

Mr Connolly said he had, and the advice was that the agreement should be put to a vote of shareholders.

Mr Gallagher then probed on whether the advice that Connolly received had been shared with his fellow board members on April 19th. Connolly said it hadn’t.

This appears to contradict a line in Connolly’s affidavit of April 30th, which states that he informed the board meeting that it was his “intention” to obtain legal advice on this issue.

“I don’t recollect,” was Connolly’s reply.

“Then why did you state this on affidavit?” Gallagher asked.

Connolly’s recollection of the affidavit appeared hazy.

He was pressed again as to why he hadn’t shared this advice with the other board members. “I just didn’t do it,” he replied.

Mr O’Reilly received his payment on April 19th. Connolly has questioned the haste at which it was made.

Mr Gallagher asked if it was not clear from the information given to the board on April 17th that the payment would be made on the termination date (April 19th).

“I had an idea the payment had been made,” Mr Connolly conceded.

There was more sparring around the details of what Mr Connolly did or did not know, with Mr Gallagher picking more holes in his case.

Before closing, Mr Gallagher enquired if, as chairman of Unicef Ireland, Mr Connolly had agreed a compensation package last year of two years remuneration for its former executive director Melanie Verwoerd.

Mr Connolly sheepishly agreed that he had. The grilling was over.

The body language of Mr Cush and junior counsel Rossa Fanning suggested his time in the witness box hadn’t exactly gone to plan.