Thursday 21 June 2018

INM to challenge application to appoint inspectors by watchdog

Former INM chairman Leslie Buckley. Photo: Steve Humphreys
Former INM chairman Leslie Buckley. Photo: Steve Humphreys
Shane Phelan

Shane Phelan

Independent News & Media (INM) is expected to challenge an application by the corporate watchdog to appoint High Court inspectors to the company.

The wide-ranging application is scheduled to come before High Court President Peter Kelly today.

It is understood the media group would not be happy for certain aspects of the application to be approved and is concerned about the financial impact the process would place on the company.

The Office of the Director of Corporate Enforcement (ODCE) wants inspectors to examine several corporate governance issues at Ireland’s largest media company.

These include concerns over whether “inside information” was unlawfully disclosed to third parties outside INM and allegations by former INM chief executive Robert Pitt in relation to the aborted deal for INM to buy Newstalk.

There are also concerns over a proposal, later withdrawn, that a success fee be paid to a company owned by businessman Denis O’Brien in connection with the sale of INM’s shares in an Australian media group.

However, the most high-profile issue has been a major a major suspected data breach, with the Press Ombudsman and the National Union expressing concerns the confidentiality of sources may have been undermined.

There are fears the email communications of several people, including high profile journalists like ‘Sunday Independent’ deputy editor and television presenter Brendan O’Connor, may have been accessed when INM’s IT back-up tapes were given to an external company in October 2014.

INM, which publishes the Irish Independent, has said the data was provided to a third party service provider on the instructions of then INM chairman Leslie Buckley.

Invoices associated with the so-called “data interrogation” were discharged by a company owned by INM’s largest shareholder, Denis O’Brien, a close business associate of Mr Buckley.

INM’s board spent much of the past week locked in discussions with its solicitors McCann Fitzgerald and legal counsel.

Leading barristers Paul Gallagher SC and Shane Murphy SC have been retained.

It is expected INM’s legal team will challenge what is being sought by ODCE director Ian Drennan.

The company has declined to comment on its legal strategy, but sources have consistently indicated over the past fortnight that it will seek to narrow the scope of the inquiry.

It now looks likely the entire application will be opposed.

Work was ongoing last week on a response to a 224-page affidavit lodged by ODCE director Ian Drennan on March 23.

An INM affidavit could be lodged today before the matter comes before the court or its lawyers may seek more time to file one given the range and complexity of issues involved.

Two further affidavits were filed by the ODCE last Friday, but the details of what they contain have yet to be disclosed.

INM fears the inspection process could place a heavy financial burden on the company and there is speculation the process could ultimately cost millions of euro.

But the company has assured its 815 staff that their jobs are safe. INM has a cash pile of around €90m and is profitable.

INM chief executive Michael Doorly indicated to staff last week that the company plans to pursue other parties for its legal costs should wrongdoing be proven.

INM editor-in-chief Stephen Rae also informed staff of a number of initiatives to safeguard against unauthorised access to the data of journalists.

These include the appointment of external experts to examine governance of editorial data.

A “triple lock” mechanism will also be introduced where approval will be needed from three senior executives – a department head, a function head and the chief executive - if any editorial employee’s data is to be accessed by the company.

There are extremely rare situations where this may be necessary, such as in the defence of litigation or complying with court orders.

According to an ODCE affidavit, Mr Buckley said the “data interrogation” was part of a “cost reduction exercise” where he was seeking to find more detail on a contract INM had with a service provider. He said he had hoped to renegotiate the contract.

Mr Buckley has said he plans to robustly defend his position. Mr O’Brien has yet to comment.

Irish Independent

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