Solicitors Arthur Cox acted on both sides of the Siteserv deal even though “instinctive” reservations were raised by its internal committee on conflicts of interest and by certain partners in the law firm, a draft report shows.
Arthur Cox had been adviser to Siteserv since it joined the stock market in 2006, but it accepted Denis O’Brien’s invitation to act also for his team during his successful 2012 bid for the troubled building services company. Siteserv received a €119 million debt write-off from the State-owned Irish Bank Resolution Corporation (IBRC) in the deal.
After a seven-year inquiry, Mr Justice Brian Cregan has set out in a confidential draft report how Arthur Cox’s dual role prompted internal concern about the potential for “adverse” shareholder and media comment because Siteserv was a public company. Five of the six committee members who discussed the question – including then chairman Michael Meghen – felt after initial discussions that it would better to decline Mr O’Brien’s instruction.
Mr Meghen later wrote that the reluctance to accept a role for Mr O’Brien in the sale “was borne out of a PR concern rather than of a view that we had some legal conflict that could not be managed”. He would not object if IBRC had no objection, which it had not.
Siteserv itself signalled it had no issues. But when the law firm said its “Chinese Walls” rules on conflicts meant it would not act for either side in any dispute between them, Siteserv’s corporate finance adviser KPMG warned of “unwarranted and significant risk” being taken.
Siteserv ultimately insisted on keeping its right to engage Arthur Cox in any dispute and required the firm’s lawyers to withdraw from representing Mr O’Brien’s Island Capital in that event – a departure from usual Arthur Cox rules.
Arthur Cox declined to comment on the draft report.