Wednesday 19 December 2018

INM rejects suggestion of a 'culture of deference' towards O’Brien

Independent House, Talbot Street, Dublin
Independent House, Talbot Street, Dublin
Shane Phelan

Shane Phelan

Independent News & Media (INM) has rejected a suggestion by the corporate watchdog that a “culture of deference” existed within the company towards its largest shareholder Denis O’Brien.

The company has also rejected a suggestion by the Office of the Director of Corporate Enforcement (ODCE) that former chairman Leslie Buckley, who was Mr O’Brien’s nominee to the INM board, had “untrammelled authority” within the media group.

Paul Gallagher SC, for INM, told the High Court there was not any basis for the assertions.

He said the two criticisms were of considerable concern and it was difficult to envisage a more damaging set of remarks for the board of a public limited company.

The barrister said INM had a board of very experienced directors who were people of “unimpeachable integrity”.

Mr Gallagher was speaking during the hearing of an application by the ODCE for inspectors to be appointed to the country’s largest media group to investigate a range of corporate governance concerns.

These include a major suspected data breach in 2014 and claims senior INM executives came under pressure from Mr Buckley to pay an inflated price for Newstalk, a radio station owned by Mr O’Brien.

INM is opposing the application, which it says is unwarranted and will have a damaging impact on the company.

The application is being heard by the President of the High Court, Mr Justice Peter Kelly.

The ODCE, which has been investigating matters at the company for well over a year, says it had reached a point where inquiries cannot be advanced further without the appointment of inspectors.

The court heard the data breach issue is already being investigated by the Data Protection Commissioner (DPC) and that the Central Bank was considering investigating another matter raised by the ODCE, concerns that “inside information” was shared with Mr O’Brien by Mr Buckley.

Neil Steen SC, for the ODCE, said INM had asked that if inspectors are appointed, their remit should be “tightly drawn” and should at a minimum not overlap with the DPC or the Central Bank.

But he said the nature of an investigation was to look into things that were not fully known.

“Therefore the proposition that the investigation be tightly drawn cannot be justified,” he said.

Mr Steen said the terms of reference must be suitably tailored, but could not be a straitjacket and pointed to broad terms of reference allowed in previous inquiries into matters at Ansbacher (Cayman) Ltd and National Irish Bank.

However, Mr Gallagher said the ODCE had made two allegations that were not substantiated by evidence.

He said the allegations were all the more difficult to accept when one considered how the ODCE conducted its investigation.

Mr Gallagher said a central criticism made by the ODCE related to the length of time it took INM’s board to meet to consider a protected disclosure made by former chief executive Robert Pitt.

He said that if the ODCE was so concerned about a delay and so concerned with INM’s response at a later stage to the “data infringement”, it had kept the evidence it was relying on from the company.

This was a reference to a spreadsheet discovered by the ODCE, which suggests the names of 19 people, including journalists, barristers and former INM executives and directors, was used to search data taken from the company’s premises for analysis by an outside firm.

The data interrogation was authorised by Mr Buckley and invoices related to it were discharged by a company owned by Mr O’Brien.

Mr Buckley, who stepped down last March, maintains he was searching for information about a legal services contract he wished to renegotiate.

Mr Gallagher said the ODCE came into possession of the spreadsheet in October of last year, but did not inform the company until the proceedings seeking the appointment of inspectors were issued last March.

He said that if the ODCE was concerned about a supposed culture of deference and untrammelled authority, it allowed this to continue for a period of six months after discovering the document.

The barrister said INM was also criticised by the ODCE over its initial report of the data incident to the DPC.

This report, he said, was copied to the ODCE and it did not raise any issue or make any criticism of it at the time.

He also said the ODCE had claimed inspectors were required as it had brought matters as far as it could under its existing powers.

Mr Gallagher said what was remarkable about this claim was that there were many matters not pursued by the director of the ODCE under his existing powers.

“A vast number of people and a vast quantity of information was not pursued,” he said.

Read more here:

INM arguments against appointment of inspectors challenged

Watchdog believes more searches were carried out on INM data files

ODCE believes searches of INM data went wider than list of 19 people  

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