Sunday 22 April 2018

ODCE claims INM data taken off site and 'interrogated' but 'board did not know'

Data relating to former and current staff - including journalists - removed, High Court affidavit says

Independent House on Dublin's Talbot Street
Independent House on Dublin's Talbot Street

Data relating to a number of former and current staff - including journalists - as well as former directors at INM may have been removed from the company's premises, taken out of the jurisdiction and "interrogated", the State's corporate watchdog has claimed.

The head of the Office of the Director of Corporate Enforcement (ODCE), which is seeking the appointment of inspectors to investigate a range of corporate governance issues at Ireland's largest media company, made the claims in an affidavit filed with the High Court.

"During the course of the data interrogation, INM's data appears to have been interrogated and searched against the names of various individuals, including, amongst others, a number of INM journalists and two senior counsel," ODCE director Ian Drennan claims.

Mr Drennan has told the court that in October 2014 there was a removal of INM's IT system's back-up tapes from the company's premises to the premises of a company outside the jurisdiction.

This resulted in INM data being interrogated over what appears to have been the course of a number of months, according to the ODCE director. It is alleged the data was accessed by at least six companies external to the media group.

Last night, the group's editor-in-chief Stephen Rae said he was "clearly concerned by the possibility as set out in an affidavit that journalists' data may have been accessed.

"We have always invoked a strict protection or 'firewall approach' to both our journalists' research and sources to maintain the integrity of our journalism. We will look seriously at this new information to see what data, if any, may have been involved during this reported event in 2014.

"At the same time we will continue to provide journalism of the highest standard as we keep our newspaper readers and online audience fully updated," he said.

Mr Drennan claims that the data interrogation was directed by the then chairman of INM, Leslie Buckley, who stepped down last month.

He alleges that INM told the ODCE that its board only became aware of the data interrogation exercise on August 11, 2017, when it was informed of it by the ODCE.

In the affidavit he claims that two invoices, totalling approximately €60,000 associated with the data interrogation were not discharged by INM but by Blaydon Limited, an Isle of Man company beneficially owned by businessman Denis O'Brien, INM's largest single shareholder and long- time business associate of Mr Buckley.

INM told the ODCE it does not know why Blaydon discharged the costs associated with the data interrogation.

It is not clear if Mr O'Brien was aware of the data interrogation exercise or the payment by his company of invoices associated with it.

The ODCE began investigating the affairs of INM after receiving a protected disclosure from former INM chief executive Robert Pitt in relation to the potential but abandoned acquisition by INM of radio station Newstalk, owned by Mr O'Brien's Communicorp.

The ODCE director says the appointment of inspectors is required to establish why Mr Buckley authorised access to INM's systems, whether Mr O'Brien was aware of the data interrogation, and whether Mr O'Brien benefited from it.

According to Mr Drennan, Mr Buckley explained that the data interrogation was part of a "cost reduction exercise".

Mr Buckley told the ODCE he authorised the work so he could find out more detail about the awarding by INM of a professional services contract. He wanted to consider whether the high cost and duration of the contract could be renegotiated.

Mr Drennan claims that some of the output of this work "does not have any obvious connection to the cost reduction purpose asserted by the chairman".

He says that in the course of a year-long investigation, the ODCE uncovered emails containing a list of names which were to be searched for in the data interrogation.

The names include current and former journalists, former directors and executives, staff members as well as two senior counsel unconnected to the company.

"Persons of interest" were identified on the list and the document refers to "email hits" against eight of the names, including against journalists' names.

Mr Drennan says the ODCE has not been able to establish the precise purpose of the data interrogation, but says the apparent lack of knowledge on the part of INM's board is a "striking feature" and that he wants "to establish whether journalists' email, or other data, was accessed and, if so, by whom and for what purpose".

In his affidavit he says it is "clearly problematic" that the board of directors of a publicly- listed company does not know why an unrelated third party discharged invoices totalling approximately €60,000 in respect of services he claims were ostensibly provided to the company.

After INM's board learned of the data interrogation last August, it appointed Deloitte to conduct a review. It also notified the Data Protection Commissioner of a potential data security incident.

An INM spokesman confirmed it had received new information from the ODCE on March 23 last in relation to the potential data breach.

This accompanied the ODCE's notice of its intention to apply to the High Court for the appointment of inspectors to the company on April 16.

The spokesman last night confirmed it had written to the Data Protection Commissioner, informing her office of the new information it had received. A response is expected in due course.

According to Mr Drennan, INM does not know why Mr O'Brien's company Blaydon discharged the costs associated with the data interrogation.

In his affidavit, Mr Drennan said the ODCE does not dispute that Mr O'Brien as the major shareholder has a right to nominate one or more directors to the board of the company.

He said the ODCE does not dispute that Mr Buckley, as a nominee of the major shareholder, may have regard to the interests of a particular member of the company.

A spokesman for Mr O'Brien was not contactable last night.

Mr Buckley's spokesman said: "It is not appropriate to comment as a review process is ongoing."

The ODCE said it does not comment on individual cases.

It is seeking to appoint Sean Gillane, a senior counsel and leading criminal law expert, and Robert Fleck, a British solicitor previously appointed by the Bank of England to conduct several investigations and statutory inspections under UK company law, to inspect the affairs of INM.

Lawyers for the ODCE will tell the High Court that an application to appoint inspectors is a very significant step, all the more so in the case of a publicly listed company.

Sunday Independent

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