From top: Leslie Buckley and Denis O’Brien; Justice Mr Peter Kelly; His judgment yesterday.
Yesterday, The High Court agreed to appoint inspectors to Independent News and Media following an application by the Office Director of Corporate Enforcement.
High Court President Mr Justice Peter Kelly said the appointment was “well justified” and “not disproportionate.”
We asked Legal Coffee Drinker what this judgement (which can be read in full here) is all about and what happens now.
Btroadsheet: “Legal Coffee Drinker what is this judgement all about and what happens now?”
Legal Coffee Drinker: “It’s a judgment of Judge Peter Kelly, in which he states that he intends to make an order appointing inspectors to investigate and report on the affairs of INM.”
Broadsheet: “Under what law?”
LCD: “Section 748 of the Companies Act 2014 gives the High Court power, on the application of the Director of Corporate Enforcement, to appoint inspectors to investigate the affairs of a company where there are circumstances suggesting that the company has conducted its business unlawfully or in a manner unfairly prejudicial to shareholders or that persons connected with the management of the company have committed fraud, misfeasance or other misconduct towards the company or its shareholders. According to Kelly J, all of these circumstances were present, and it was in the public interest that an inspector be appointed.”
Broadsheet: “What were the particular matters which gave him concern?”
LCD: “They all related to former INM Chairman and Denis O’Brien board-appointee Leslie Buckley.In 2014 Mr Buckley sent back-up tapes of INM computer data for interrogation outside the jurisdiction by individuals external to the company linked to Denis O’Brien.”
Broadsheet: “And Mr Buckley’s reasons?”
LCD: “He says this was done for the purposes of obtaining information about the terms of a contract with Simon McAleese, solicitors for INM, which he felt was not beneficial to the company from a cost point of view.”
LCD: “The actual data searches carried out in the course of the interrogation were against a variety of individuals including the journalists Rory Godson, Maeve Sheehan, Brendan O’Connor and Sam Smyth; two members of the Inner Bar, Jeremiah Healy S.C. and Jacqueline O’Brien S.C.; former board and staff members of the company including Joe Webb (former Chief Executive of the company’s Irish division), Karl Brophy (former Director of Corporate Affairs of the company), Mandy Scott (former Personal Assistant to the Chief Executive), Vincent Crowley (former Chief Executive of the company), Donal Buggy (former Director and Chief Financial Officer of the company) and the late Mr. James Osborne (former chairman of the company). Also included were Messrs. Andrew Donohue, Mark Kenny, Jonathan Neilan, Harriet Mansergh, Jenny Kilroy, Nick Cooper and Ann Marie Healy.
Broadsheet: “Ah here.”
LCD: “Kelly J said that it was difficult to see what the interrogation of information concerning at least some of those persons had to do with a cost reduction exercise in respect of the legal services being provided by Mr. McAleese.
Broadsheet: “And well he might.”
LCD: “The two Senior Counsel referenced had previously acted for the Moriarty Tribunal investigating allegations relating to the awarding of the second GSM licence to an entity controlled by Denis O’Brien.”
Broadsheet: “Who paid for this interrogation?”
LCD: “The costs of the data interrogation exercise were not discharged by INM, but by another entity controlled by Mr. O’Brien called Island Capital and were paid by an Isle of Man company called Blaydon Ltd beneficially owned by Denis O’Brien. No explanation was given for this.”:
Broadsheet: “Island capital, eh?”
LCD: “Island Capital, incidentally, subsequently sought to be paid of the order of €1 million by the company in connection with work allegedly undertaken by in respect of the disposal of the company’s shares in an Australian company APN – for which it allegedly provided no services. This request for payment was withdrawn when it was pointed out that it would have to be disclosed publicly.”
LCD: “A further incident occurred in the autumn of 2016 concerning the possible purchase of Newstalk, a radio station owned by interests controlled by Denis O’Brien. Group Chief Executive Robert Pitt and Group Chief Financial Officer Ryan Preston were concerned about Mr Buckley’s insistence on this purchase, which they felt was for an excessive price and subject to onerous conditions. As a result of their complaints, the board of INM constituted a special committee which cleared Mr Buckley of any wrongdoing.”
Broadsheet: “The board cleared Buckley?”
LCD: “Yes but subsequently, under threat of litigation, the board decided to establish an independent review.”
Broadsheet: “Well at least that’s something.”
LCD: ” However, an initial difficulty arose when one of the candidates proposed to serve on that review, Mr. Brian O’Moore S.C. was objected to by Mr. Buckley at Mr O’Brien’s behest.
Broadsheet: “My brain hurts.”
LCD: “The review, when it finally went ahead, didn’t get very far, because it was denied power to resolve disputes of fact. Essentially it could not resolve a conflict of testimony between Mr. Pitt and Mr. Preston on the one hand and Mr. Buckley on the other because it had no power to decide as to who was telling the truth.”
Broadsheet: “No more concerns after that surely?
LCD: “A further concern was possible wrongful disclosure of price sensitive information by Mr. Buckley to Mr. O’Brien. Kelly J referred to extensive communications in this regard without giving details of the specific information disclosed.”
Broadsheet: “This all sounds extremely serious?”
LCD: “Well, Kelly J clearly thought so. He writes: ‘[The company occupies a dominant position in the media sector in this country and there is an obvious public interest in its proper governance. It is in the public interest to discover everything about, in particular, the data interrogation issue so as to find out if there were wrongdoings carried on by the company in the conduct of its business or by persons connected with its management‘.”
Broadsheet: “Who were the inspectors appointed?”
LCD: “Sean Gillane, an Irish barrister and Richard Fleck, an English solicitor.”
Broadsheet: “And their terms of reference?”
LCD: “They have quite a few things to investigate:-
– the accessing by third parties (including but not limited to Trusted Data Solutions U.K. Ltd., Trusted Data Solutions LLC, DMZ IT Ltd., Specialist Security Services Ltd., Reconnaissance Group Ltd., Resilient Defence Ltd., John Henry, Derek Mizak, Keith Duggan, Shane Henry, Robert Breen and Ron Cole) from October 2014 or thereabouts, of the company’s informational technology systems and the collection, extraction and/or processing of data held therein (referred to hereinafter as the “data interrogation”);
– the role played by Leslie Buckley in relation to the proposed Newstalk acquisition;
– the proposed payment of a fee to Island Capital in March 2015 or thereabouts (the success fee) in connection with the disposal of the company’s holding in APN News and Media Ltd (the APN transaction)
– the board’s response to the disclosure and /or attempted disclosures made by Messrs. Pitt and Preston
– whether Leslie Buckley, between June and November 2016 or at any other time, disclosed to third parties (including but not limited to Denis O’Brien, Dominic Shorthouse and Dermot Hayes) information that was or is confidential to the company (including but not limited to legal advice received by the company)
– the overall governance of the company, having regard to the foregoing issues and any other issues determined by the inspectors to be relevant thereto.
Broadsheet: ” Thank you Legal Coffee Drinker. A lot to consider for INM there.”
LCD: [drains Nespresso] “Kelly j also stated that a free press is a cornerstone of a functioning democracy. So a lot for everyone to consider.”
Broadsheet:: ” Indeed yes. Thank you, Legal Coffee Drinker. It won’t be just the coffee…”
Broadsheet: “…to keep us awake from now on.. Right. Wonderful. Thank you very much. Lovely.”
Yesterday: An Inspector Calls