INM challenge to watchdog application to be heard in May

Director of Corporate Enforcement wants two inspectors to investigate INM’s affairs

Journalist Sam Smyth arriving at the Four Courts on Monday for a High Court action involving INM. Photograph: Collins Courts

Journalist Sam Smyth arriving at the Four Courts on Monday for a High Court action involving INM. Photograph: Collins Courts

 

An attempt by Independent News & Media (INM) to deliver a “knock-out blow” to an application by the State’s corporate watchdog for the appointment of inspectors to investigate the conduct of its affairs will be heard in May.

Ian Drennan, the Director of Corporate Enforcement (ODCE), wants two inspectors to investigate whether INM’s affairs have been conducted in an unlawful manner or one unfairly prejudicial to some of its shareholders.

He says he is concerned the range of “potentially unlawful conduct” that may have taken place within INM is “extensive” and contends there is a “compelling public interest” for inspectors to be appointed.

INM, which employs more than 870 people, is opposing the appointment of inspectors and is also seeking judicial review of the application by Mr Drennan, made following a year-long investigation by his office arising from protected disclosures made by INM’s former chief executive Robert Pitt, and INM’s chief financial officer, Ryan Preston.

Shane Murphy SC, for INM, said given the impact on INM of any appointment of inspectors, it should have been given notice of the ODCE’s intention to seek inspectors and an opportunity to make submissions before the application was brought.

He said INM maintained its rights to fair procedures and natural and constitutional justice were breached, and wanted a court order quashing the ODCE decision to seek the inspectors’ appointment.

Mr Murphy also said INM was co-operating with the Data Protection Commissioner (DPC) in her investigation into data protection matters.

He told the president of the High Court, Mr Justice Peter Kelly, both sides had agreed the ODCE application, and the judicial review matter, could be heard together in a telescoped hearing in May.

The judge said he was not convinced the two matters should be heard together or by the same judge. He had never heard of such an application, and believed the judicial review should be heard separately.

He directed a hearing of a telescoped judicial review application, involving the leave application and full judicial review being heard together, on May 9th. That must be heard before the ODCE application because it sought to inflict a “knock-out blow” on it proceeding at all, he said.

Access to documents

Earlier, the judge heard several parties are seeking access to the documents for the ODCE application.

The judge directed documents could be provided to other parties electronically but not before clarification of whether certain material in the ODCE’s affidavit is, as INM contends, legally privileged and should not have been included in the affidavit.

Among the parties seeking access to the documents are the DPC; Red Flag Consulting; Karl Brophy and Gavin O’Reilly, respectively former associate editor and chief executive of Independent Newspapers; Mr Pitt; Mr Preston and journalist Sam Smyth.

Mr Smyth, whose lawyer Simon McAleese said he was supporting the appointment of inspectors, is among 19 “persons of interest” who are concerned their data may have been subject to interrogation by third parties over a period from October 2014.

The ODCE did not object to various parties accessing documents but Mr Murphy expressed concerns about the potential impact of release of material on INM to parties other than the commissioner.

In his ruling giving directions for how the matter should proceed, the judge said he had read the ODCE affidavits and exhibits and had before him a copy of INM’s replying affidavit, filed just hours earlier.

He said the ODCE argued the necessary provisions for appointment of an inspector are met, the court has discretion whether to appoint an inspector and INM had filed a lengthy replying affidavit and intended to seek leave for judicial review of the decision to bring the proceedings.

The other parties were in court because of “extraordinary unremitting publicity” concerning the application which had involved extracts from affidavits being published. That was a “dangerous exercise” because it involved navigating between contempt and defamation but whether those responsible had succeeded would become apparent in due course.

‘Full facts’

Earlier, Neil Steen, counsel for the ODCE, said his client wanted two competent inspectors to investigate the affairs of INM as he considered that was necessary to establish the full facts.

He said the investigation was promoted by a protected disclosure by Mr Pitt in November 2016 but the ODCE believed the investigation could not proceed further without taking sworn evidence. The primary purpose of the application for inspectors was to establish the “full facts” for reasons including consideration of whether disqualification proceedings should be taken against directors of the company.

Counsel said that it appeared there was a removal in 2014 of a large quantity of data from INM’s premises and that the INM board was unaware of that until last August. He said significant concerns remain about the purpose of that and it seemed some of the data was accessed by parties with links to Mr Buckley and INM’s largest shareholder, Denis O’Brien. There was also evidence INM’s data may have been searched against the names of certain persons including journalists and two counsel to the Moriarty tribunal.

In seeking access to documents, Maurice Collins SC, for Red Flag Consulting, Karl Brophy, Gavin O’Reilly and Mandy Scott, who had been a personal assistant to both men at Independent Newspapers, said they had learned from media coverage Mr Brophy and Ms Scott were two names apparently the target of data interrogation.

Mr Collins said Mr O’Brien is suing Red Flag in pending proceedings and it is of concern information concerning his clients “has been provided for purposes not yet clear”. It seemed there was no dispute his clients’ personal data was grossly breached in a very significant way, he said.

Mr Murphy said INM is dealing with two investigations, by the ODCE and by the DPC, and is concerned not to engage in imprudent transmission of information. The question of a data breach is a matter that has yet to be determined and it had to be established exactly who was responsible, he stressed.