Wednesday 17 January 2018

Something has to give at INM's AGM after a period of uncertainty

INM chief executive Robert Pitt and chairman Leslie Buckley are set for an eventful AGM after the ODCE was called into the boardroom. Photo: Gareth Chaney Collins
INM chief executive Robert Pitt and chairman Leslie Buckley are set for an eventful AGM after the ODCE was called into the boardroom. Photo: Gareth Chaney Collins
Dearbhail McDonald

Dearbhail McDonald

Plcs don't sell tickets to their AGMs. But if they did, Independent News & Media's annual corporate brouhaha would be a sell out.

On Wednesday, Ireland's largest media company, which hosts titles such as The Sunday Independent, the Irish Independent and online portal independent.ie in its portfolio, holds what promises to be yet another eventful meeting in the dying days of the AGM season.

It is one that has been preceded by a series of unprecedented and unfortunate events including a controversy over the wind down of its two defined benefit pension schemes which saw Taoiseach Leo Varadkar - then a mere minister for social affairs - threaten to intervene.

Varadkar floated the idea of State intervention unless INM, with €85m in the bank and on course to generate €30m in profits this year - despite a recent profit warning - honoured promises made to its pensioners.

That row was recently successfully resolved when the company, whose largest single shareholder (at 29.88pc) is Denis O'Brien, agreed to pump an additional €50m into a pension pot for employees. But what will it take to resolve the stasis that has engulfed INM ever since its chief executive Robert Pitt called the company watchdog into INM's boardroom?

Pitt stunned Ireland Inc earlier this year when it emerged that he was the most senior figure in business or public office to trigger the provisions of the Protected Disclosures Act 2014.

This is the new whistleblowing regime that is causing so much chaos in the public sector that the Government has already initiated a review of its operation.

Late last year Pitt made a protected disclosure to the Office of the Director of Corporate Enforcement, the corporate law enforcer which has drawn strong criticism in the wake of the acquittal of former Anglo chairman Sean Fitzpatrick.

Pitt made his disclosure to the ODCE, reportedly over a disagreement relating to the price to be paid if radio station Newstalk - part of O'Brien's Communicorp stable - was acquired by INM whose chairman Leslie Buckley is a long-term business associate of O'Brien.

Like all those who make such disclosures, Pitt enjoys the full protection of the act as the ODCE carries out its inquiry.

We can assume from the recent indication that Pitt could vote against certain resolutions (primarily Buckley's re-election) at Wednesday's AGM that the confidence both men enjoy in each other is uncertain.

For a ceo to either abstain or vote against the chair's re-election is virtually unprecedented.

As well as the ODCE inquiry, INM commissioned its own independent review into the Newstalk affair conducted by Senior Counsel David Barniville.

The outcome of both the ODCE and the Barniville reviews will be critical for INM's board, which saw two of its former independent directors recently reclassified as non-independent.

There was also confirmation that senior independent director Jerome Kennedy is not seeking re-election.

But have investors already made up their minds? In recent weeks, two leading international advisory firms, ISS and Glass Lewis, have given a flashing orange if not a green light to Buckley to keep calm and carry on.

For its part, ISS said that INM's overall governance practices are "in line with recommended best practice" whilst keeping schtum on the motion to re-elect directors to the board even as it expressed concern that INM doesn't comply with its recommendation that it have a senior non-executive independent director on its board.

Glass Lewis recommended shareholders vote in favour of all resolutions at the agm, including Buckley's re-election.

INM, whose shares closed unchanged at 11c in Dublin last Friday, is enjoying a period of calm before the storm.

The group's newspapers - as figures last week revealed - perform very strongly, dominating their individual markets. Its online sites continue to grow and new products such as FarmIreland and its events business are showing disruptive potential. However, INM has failed to acquire a third leg.

The corporate uncertainty, which of its nature must have curtailed aspects of INM's business including its M&A strategy, is unsettling and hardly helps share value.

Something has got to give.

Boom-to-bust Quinn's punt on bookie is ironic after past bets

THE irony of boom-to-bust businessman Sean Quinn Snr getting back into the betting game won't have been lost on those of us who have been covering him and his family's travails for aeons.

Quinn, you may have heard, is backing a new online betting business, QuinnBet, with his son Sean Jnr and other family members.

The online bookie is regulated in Ireland under the Betting (Amendment) Act of 2015 and licensed by the UK's Gambling Commission.

Ireland's former richest man famously pedalled the myth that he never spent more than €5 at his weekly card games with friends before taking a secret, €2.5bn punt on building up a 25pc stake in the former Anglo Irish Bank using contracts for difference, the investors' equivalent of crystal meth.

I'll never understand how Quinn Snr escaped with a proverbial slap on the wrist - a €200,000 personal fine - when it emerged that Quinn Insurance Limited (which he chaired) made a loan of almost €300m to help fund his costly conversion of CFDs into a 15pc direct shareholding in Anglo.

But having being dealt with by way of administrative sanction, no other inquiry could proceed.

The Anglo punt was a personal bet. But Quinn Snr used QIL's reserves to pay for it.

Quinn Snr, his son Sean Quinn Jnr and nephew Peter Darragh Quinn also placed another spectacular bet when they were jailed (Sean Quinn Jnr purged his contempt but Peter Darragh has yet to serve his time) for breaking court orders not to place the assets of the Quinn's International Property Group (IPG) beyond reach after the Quinn group had been placed into receivership.

The scheme to place the assets beyond reach was an outrageous punt that has paid off for whomever is enjoying the fruits of the €500m worth of bricks and mortar, with their €35m rent roll, that curiously went missing a la le Carre.

For their part, the Quinns claimed they were double-crossed in the Ukraine.

The State, through the aegis of the Special Liquidators of the IBRC, is still chasing the IPG's overseas assets with limited success, whilst successive governments have flirted from time to time with doing a deal with the Quinns.

The final story of Quinn's CFD bet has yet to be told, but there's plenty of time to roll the dice one last time.

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