Turmoil engulfs Independent House as watchdog shows its teeth
Business Week: also in the news were struggling banks; job losses; and new flights
Then INM chief executive Robert Pitt (left) walking past then INM chairman Leslie Buckley at the company’s AGM last year. Photograph: Dara Mac Dónaill/ The Irish Times
These are troubling times at Independent News & Media (INM) after the State’s corporate watchdog sought far-reaching powers from the High Court for the first time in a decade in order to investigate matters at the company.
The affair dates back to early 2016 when then INM chairman Leslie Buckley and then INM chief executive Robert Pitt fell out over a proposal for the company to buy radio station Newstalk. Buckley wanted to go with a higher valuation than Pitt.
The station is owned by Buckley’s close associate, Denis O’Brien, who is also INM’s biggest shareholder with almost 30 per cent. Pitt refused to meet the asking price sought by O’Brien and made a whistleblower complaint about Buckley to the ODCE.
During the course of its investigation, the ODCE became aware of a “potential personal data breach” related to the IT systems at the media group, something which could have significant ramifications for a company in which the guarding of information is key.
The High Court has heard Buckley facilitated outside corporate security and IT experts in gaining access to the group’s internal systems. Who paid for this and why has yet to be revealed. Both O’Brien and Buckley have refused to comment either way when asked.
Now the ODCE has pushed the nuclear button and applied for the appointment of a High Court inspector to investigate. An inspector is a powerful figure with powers to access documents and demand interviews with executives and directors.
INM is taking legal advice on the matter. It has warned shareholders that the appointment could mean incurring “material costs”. Stockbroker Davy moved its stock rating of INM to “under review” from “outperform” following the disclosure.
Days later, the company brought 70 senior staff from across the group to Croke Park to outline a new strategy to “future proof” the company and ensure its long-term existence.
It’s a small world but it’s about to get even smaller
Following on from the first non-stop scheduled flight from Australia to the UK – which landed in London this week after a 17-hour and five-minute journey across 9,300 miles from Perth – Aeroflot is to launch a direct flight from Moscow to Dublin.
The Russian state-controlled airline is undeterred by the recent isolation of the Kremlin in the international community, though it has yet to decide when the new route will begin and how often it will fly.
The route could boost trade and tourism between the two states. The value of Irish exports to Russia was estimated at €500 million last year, an increase of almost 40 per cent.
Meanwhile, an internal submission from department officials to Minister for Transport Shane Ross has indicated that Waterford Airport is in crisis.
The note, sent in December, called for a full evaluation of a range of issues that need to be considered before the Government can decide on a future policy for the facility, which last carried commercial passengers in June 2016.
In Dublin, hotel group Dalata is looking to take advantage of rising tourism numbers after it acquired 38 Charlemont Street, a small site adjacent to its Clayton Hotel currently under development, for about €500,000.
Meanwhile, back with the ratings agency
Ratings agency Standard & Poor’s mused this week that Irish banks, while in recovery, are still not back to “business as usual” after the economic crisis, and said there was plenty of evidence to support that.
The main issue it highlighted was the large stock of non-performing loans (NPLS) on balance sheets.
Permanent TSB, for one, is likely to sell €3.7 billion of NPLs it currently has on the market for half their par value, triggering a €325 million loss, Davy said.
The bank is also to defer a decision on whether it can pull the sale of €900 million of split mortgages until it receives formal guidance from the European Central Bank (ECB) on how the loans could be reclassified as performing assets.
AIB meanwhile was accused of concocting a notional tracker mortgage rate of 7.9 per cent for some 4,000 customers caught up in the tracker scandal.
It claimed the “prevailing” tracker rate that customers would have been entitled to was 7.9 per cent due to high funding costs, but this tracker rate never existed and is significantly higher than the prevailing variable rate at the time.
Over at Bank of Ireland, chief executive Francesca McDonagh is working on plans to cut 15 per cent of the group’s managers and executives as she seeks to get a grip on costs. That could mean the loss of 200 jobs across Ireland and Britain.
Research by The Irish Times showed employee numbers in the Republic’s retail banking sector have fallen by almost 50 per cent in the years since the crash. Since 2008, more than 26,000 jobs have been lost across the sector.
In yet more bad news, it emerged that about $3 million (€2.44 million) from one of the most high-profile Russian corruption cases of the past decade may have passed through bank accounts at AIB and Bank of Ireland.