Tuesday 17 July 2018

Watchdog's bid to appoint inspectors to INM gets underway in High Court

Independent House in Dublin
Independent House in Dublin
Shane Phelan

Shane Phelan

An application by the corporate watchdog seeking the appointment of inspectors to Independent News & Media has gotten underway in the High Court.

The Office of the Director of Corporate Enforcement (ODCE) is seeking to appoint barrister Sean Gillane SC and British company law solicitor Robert Fleck to investigate a number of corporate governance issues at the country’s largest media group.

These include a major suspected data breach in 2014, potential violations of "insider information" regulations, and concerns arising from a proposed deal for INM to buy Newstalk and a proposed fee linked to the sale of INM’s shares in Australian media group APN.

The ODCE is concerned INM’s affairs may have been conducted in “an unlawful manner” and “for an unlawful purpose”.

If the application is approved, the two inspectors would have far reaching powers to investigate the matters of concern.

The move to seek inspectors follows a year-long inquiry by the ODCE, sparked by a protected disclosure from former INM chief executive Robert Pitt.

INM is opposing the application, which it believes is unwarranted.

The matter got underway at 11am and is scheduled to be heard over three days by the President of the High Court, Mr Justice Peter Kelly.

Both sides have heavyweight legal teams.

The ODCE is being represented by Brian Murray SC and Neil Steen SC, instructed by ODCE solicitor Dermot Morahan.

INM’s legal team includes former attorney general Paul Gallagher SC and Shane Murphy SC, instructed by McCann Fitzgerald solicitors.

Last month the media group failed in judicial review proceedings aimed at halting the application.

ODCE director Ian Drennan wants inspectors to investigate a range of issues, including a major suspected data breach, where IT back-up tapes were provided to a third party service provider on the instructions of then INM chairman Leslie Buckley.

He also wants them to examine concerns voiced in Mr Pitt’s protected disclosures to INM and the ODCE and in a protected disclosure to INM by its chief finance officer Ryan Preston.

These concerns related to alleged pressure Mr Buckley brought to bear for INM to pay a higher price than INM’s advisors recommended for Newstalk, a radio station owned by INM’s major shareholder Denis O’Brien.

Mr Pitt also had concerns over a proposed success fee for a company owned by Mr O’Brien in connection with the sale of INM shares in APN.

Mr Drennan also wants the inspectors to examine the consideration of the payment of a fee to then INM director Paul Connolly in connection with the APN transaction.

He also wants the inspectors to look into whether Mr Buckley unlawfully disclosed “inside information” to third parties, including but not limited to Mr O’Brien and his spokesman James Morrissey, within the meaning of EU market abuse regulations between March 2016 and January 2017.

INM has objected to the appointment of inspectors, given the impact it would have on the company.

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