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'A fundamental malaise at the company' - Three months later, application to investigate INM finally begins at High Court

The ODCE is seeking to appoint High Court inspectors to investigate issues concerning corporate governance at Ireland’s largest media company.

THE STATE’S CORPORATE watchdog, the Director of Corporate Enforcement, is to seek inspectors to investigate Independent News & Media plc, the publisher of the Irish Independent, Sunday Independent, Herald and other newspapers. The Office of the Direct Source: Sam Boal

THE HIGH COURT has heard that the issues of corporate governance facing Independent News and Media could only have emerged if there was a ‘fundamental malaise’ at management level in the company.

President of the court Peter Kelly has been hearing the case of the Office of the Director of Corporate Enforcement’s application to appoint High Court inspectors to INM.

The application stems from a number of corporate governance issues unearthed by the ODCE while examining, amongst other things, a suspected massive data breach at the company in 2014.

Also under scrutiny is the alleged actions of former INM chairman Leslie Buckley regarding the prospective bid for radio station Newstalk (owned by INM majority shareholder Denis O’Brien) by the media company in late 2016. That bid, broadly deemed to have valued Newstalk at a far greater level than its true value, eventually led to a protected disclosure by former INM CEO Robert Pitt to the ODCE, which in itself led to a year-long investigation into goings on at the company.

Counsel for the ODCE Brian Murray SC will be making his client’s case for the duration of today, and for some time tomorrow morning.

Response

He said, in applying for High Court inspectors, the ODCE would be asking the court to look at “INM’s response to this as it happened”. This, he explained, is relevant regarding Section 748 of the Companies Act 2014, which deals with the appointment of High Court inspectors, with investigatory powers significantly in excess of the ODCE itself.

He said that INM “has now known about these issues for four months”, and does not “dispute any of the events outlined, nor contradict any of them”.

Murray suggested that where the ODCE and INM first begin to differ is that INM is of the opinion that an investigation by the Data Protection Commissioner into the alleged data breach, announced in April of this year, should be sufficient.

He argued that both the DPC’s powers and scope of jurisdiction are “insufficient” to get to the bottom of the matter.

File Photo INM confirms Buckley role in alleged data breach. End. Former INM chairman Leslie Buckley Source: Sam Boal

Regarding the aborted bid for Newstalk, Murray said it was “an attempt to convey advantage” to Denis O’Brien, who owns 29% of the shares in INM, “at the expense of the company as a whole”.

‘Malaise’

He suggested that the move to action such a deal had been made by Buckley, and “could only have happened because of a fundamental malaise at the company”.

“The suggestion that it would even be possible that a 29% shareholder might even try to achieve the objectives set out is of the greatest moment,” Murray said of O’Brien’s.

Regarding arguments that may be made as to why inspectors shouldn’t be appointed to the company, such as the ideas that inspectors wouldn’t uncover any new facts, Murray said: “how can that be believed when INM doesn’t know all the facts?”

Why did the board not know what it was doing? When the board was advised (of what was allegedly going on, by Pitt himself in late 2017) why did it not discover the true facts?

How, when evidence was provided by senior company officers that the chairman of the company, on a number of occasions, in a number of ways, had used information to the benefit of one shareholder how did the whole of the company react, and was it appropriate?

“These are allegations, not facts, but the court must decide if they have sufficient weight” to require the appointment of inspectors, Murray said.

The case continues, and is expected to last three days.

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