Three Irish businessmen abused their positions as directors or employees of the Irish branch of a US-based office products company, the High Court was told yesterday.
The men were involved in fraud and conspiracy which ultimately led to the branch incurring losses of up to €2.5 million and going out of business, it was claimed in court.
Paul Gardiner SC, for Ko Rec Type Nertherlands BV and its parent company, the New York based Barouh Eaton Allen Corporation, applied yesterday to have the proceedings brought by his clients against seven defendants admitted to the list of the Commercial Court, the commercial division of the High Court.
The application was opposed by counsel for some of the defendants.
After hearing all sides, Ms Justice Mary Finlay Geoghegan said she wanted time to study the very complex claim and would rule on the application for admission to the list tomorrow.
Ko Rec is based in Amsterdam and its primary business is the sale of office products including Original Equipment Manufacturer (OEM) data storage products. Barouh Eaton owns Ko Rec, which has a branch in Ireland at Syngefield Road, Birr, Co Offaly.
Both companies proceedings are against: Paul W. Hudson, Brown Hills, Aghancon, Roscrea, Co Tipperary; his son Philip Hudson, of Syngefield Road, Birr; Patrick Seery, Kilfaughney, Glasson, Athlone, Co Westmeath; M & N Marno Enterprises Ltd, of Kilfaughney, Glasson, Athlone; Source Imaging Supplies Ltd, of Brown Hills, Aghancon, Roscrea; Pat Carroll, an accountant and auditor practising under the title Pat Carroll & Company, The Riverfront, Howley's Quay, Limerick; and Parkchester Investments Ltd, of The Riverfront, Howley's Quay.
Mr Gardiner said Paul Hudson was the managing director of the Ko Rec company's Irish branch since 1988 and had worked for Ko Rec here since 1977.
He said Mr Hudson was in control of the company, had operated a "fiefdom" and had concealed the collapse of the Ko Rec company until 2005. The plaintiffs had tried to save it but it ceased trading in 2006.
Counsel said Philip Hudson had worked for Ko Rec under a contract from July 1999 as production manager and Mr Seery had worked for Ko Rec as sales manager from 1986.
Counsel said M&N Marno Enterprises (MNE) was formed in 1999 by the wives of Mr Hudson and Mr Seery, using their maiden names and the Gaelic version of their maiden names - "a creative way" to name a company. Source Imaging Supplies (SIS) was incorporated in 2002 by Paul and Philip Hudson, he said.
Both companies were incorporated to defraud his clients, Mr Gardiner said. Among the claims were that MNE and SIS conspired to damage the interests of the plaintiffs, including by overcharging Ko Rec for stock.
The fundamental case was that the US parent, through its Dutch subsidiary Ko Rec, had a branch in Ireland run entirely by Patrick Seery and Paul Hudson. The US company had allowed the Irish employees run the Irish operation but, unknown to it, the company was run entirely for the benefit of the Irish employees form 2001 to 2005.
While Mr Carroll and Parkchester were never employees of the plaintiff, they had provided services to the plaintiffs, counsel said.
It is alleged, among other claims, that Mr Carroll had failed to discharge his engagement as auditor and tax adviser with reasonable skill and care and failed to notify the plaintiffs business was being carried on through MNE and SIS in circumstances where it gave rise to a risk of fraud.
It was also claimed Mr Carroll, through Parkchester, had caused the plaintiffs to make investments which were not in their interest and resulted in €170,000 losses.
His clients wanted the defendants to disgorge all sums they had received in secret profits, to repay all salaries and benefits received and to compensate for losses incurred by the plaintiffs as a result of their activities, counsel said.
In the years after 2001, when Ko Rec's Irish branch made profits of some €330,000, it began to lose considerable amounts of money quite quickly but the plaintiffs were unaware of that, Mr Gardiner said.
By the time accounts were produced in 2005, Ko Rec had lost €2.5 million, it was claimed.
His side would need to see certain documents before it could establish exactly what losses were incurred as a result of the defendants activities, he added.
Counsel for Paul Hudson said the court should have concerns about this case, including failure to particularise the alleged losses. Mr Hudson had left the company because of ill-health and there was a personal injuries claim and defamation action, it was stated.
The judge was also told that Philip Hudson was contending he had no written contract of employment and that this was a "stale" and "wholly unmeritorious" claim.
Cian Ferriter, for Mr Carroll, said it seemed to be claimed that, because there was a delay in signing off on accounts, Mr Carroll should be responsible for any losses inccurred by the plaintiffs.
That was a "very tenuous" claim, Mr Ferriter said.
