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INM prepares for life under the eyes of the inspectors

The media group is determined to focus on day-to-day business despite ODCE investigation, writes Fearghal O'Connor


Michael Doorly, chief executive of Independent News and Media, leaving the Four Courts last week

Michael Doorly, chief executive of Independent News and Media, leaving the Four Courts last week

Michael Doorly, chief executive of Independent News and Media, leaving the Four Courts last week

Photographers sitting around the entrance lobby of a newspaper group's office is not an unusual sight. But when those photographers have orders to get the first shot of High Court inspectors walking into the office it is a sure sign that the company has found itself at the wrong end of the news cycle.

In the High Court, Justice Peter Kelly had just decided to grant the Office of the Director of Corporate Enforcement (ODCE) - the State's corporate watchdog - application to appoint inspectors to investigate the conduct of the affairs of Independent News & Media (INM), which publishes the Sunday Independent among other newspapers.

As the photographers waited downstairs, INM staff journalists debated what it would all mean, worrying about the potential implications.

Chief executive Michael Doorly had sent a memo to reassure them on any concerns around journalistic privilege and the protection of sources: "Whilst it is the Company's policy that we should cooperate with the inspectors, that co-operation is not without limit.

"We will take every action to preserve privilege and protect sources. That includes all steps up to and including seeking court orders," he wrote.

Justice Kelly's 76-page ruling laid out his reasoning for the appointment of inspectors in clear and stark detail. "The appointment of inspectors is a serious matter and such a sledge hammer should not be used to crack a nut," wrote Justice Kelly. "What has been disclosed in the evidence before me is no nut."

There may, he continued, be "a complete explanation" for all the concerns raised by the ODCE about what had transpired in recent years in INM but if there is not then "what is alleged is very serious indeed".

INM had strongly opposed the application but, after taking time to consider Justice Kelly's judgment, had decided against any appeal. That had cleared the way for the two appointed inspectors - barrister Sean Gillane SC, who specialises in criminal law, and Richard Fleck, a UK-based solicitor and corporate governance expert - to come knocking any time they saw fit.

Central to the ODCE's successful application was the removal and subsequent interrogation of computer data from INM's Talbot Street premises in 2014, an operation that had, stated Justice Kelly, been directed by former INM chairman Leslie Buckley. He has consistently denied any wrongdoing.

Buckley's name - as well as that of the company's largest shareholder Denis O'Brien - featured prominently in Justice Kelly's judgment.

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"During the course of the interrogation, tapes and associated data appear to have been accessible to and accessed by a range of individuals who are external to the company. These individuals have business links with Mr Buckley, with each other and appear also to have links with Mr O'Brien," wrote Justice Kelly.

He outlined how data appeared to have been searched against the names of no fewer than 19 individuals, including that of two Senior Counsel who had previously acted for the tribunal that had investigated allegations relating to the awarding of the second GSM licence to O'Brien's company Esat.

Justice Kelly detailed how the bills for the data interrogation exercise were presented to an entity controlled by O'Brien called Island Capital and paid by an Isle of Man company called Blaydon Ltd, of which O'Brien is the beneficial owner.

"Many questions remain concerning this whole affair," wrote Justice Kelly. It was, he said, "certainly suggestive of the company's affairs being conducted for a purpose that is unlawful." At the same time as the data interrogation was taking place, Island Capital was seeking payment from INM of €1m for work "allegedly done" in respect of the disposal of INM's stake in Australian company APN.

The following day, the ODCE had alleged that Buckley and O'Brien exchanged text messages referring to a "cosi [sic] deal" and in which Buckley wrote "we in INM need to handle it very carefully".

Justice Kelly outlined how the ODCE believed that inside information and confidential information was furnished by Buckley to O'Brien.

For his part, Buckley released a statement to say he welcomed "the opportunity to vindicate my good name through the inspection process".

The former chairman said he would "robustly defend myself against each and every allegation".

O'Brien has not commented in public but, in April, he wrote to ODCE director Ian Drennan to tell him that he would be held "fully and personally responsible" for the leaking of allegations surrounding INM. He had been subjected to "extraordinary" and still intensifying levels of media coverage which suggested "wrongdoing", he wrote.

The company had argued alleged wrongdoing had been that of Buckley and not of the current board or management of INM and that the company would face serious reputational damage should inspectors be appointed.

But, wrote Justice Kelly, the allegedly wrongful activity engaged upon by Buckley was done in his capacity as INM chairman and that "I am satisfied on the basis of the evidence which has been put before me that a number of the incidents relied upon by the [ODCE] Director are suggestive of the conduct of the affairs of the company for an unlawful purpose".

Neither was Justice Kelly swayed by fears of reputational damage to INM: "It seems to me that a good deal of that has already occurred as a result of what has been disclosed to date."

It was difficult, he wrote, to see "how the appointment of inspectors is likely to cause very much more reputational damage to the company".

As the week went on and the inspectors did not appear at Independent House, the photographers left the lobby and thoughts returned to the day job. For management, that means implementing a new corporate strategy they believe will diversify revenue and steer the company through a difficult period for newspapers to a brighter new diversified future.

Goodbody analyst Rachel Fox told the Sunday Independent that the print advertising market has been in "consistent decline" for a number of years, describing the industry as a "challenging place" at the moment. According to Fox, INM's significant market share in print in Ireland "means it is probably in a somewhat better position than some of its competitors".

"But it is still facing declines on its print verticals and management have kept the market well flagged that it is a very tough environment to operate in," she said, not least because of the competitive threat in digital advertising from the likes of Facebook and Google.

Nevertheless, CEO Michael Doorly remained sanguine about the challenges ahead.

Late last week as INM settled into the reality of life under inspection, he insisted that for the inspectors to get to the real story of what happened in the past they would have to look outside the company.

He will know, however, that when it comes to creating the brighter future the company has promised, that the answers will very much need to come from within.

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