Monday 16 September 2019

Watchdog rejects INM's claim it should have been consulted about court application

The Director of Corporate Enforcement Ian Drennan. Photo: Steve Humphreys
The Director of Corporate Enforcement Ian Drennan. Photo: Steve Humphreys
Shane Phelan

Shane Phelan

THE corporate watchdog has rejected arguments made by Independent News & Media (INM) that there should have been consultation with the company before an application was filed seeking the appointment of inspectors.

Brian Murray SC, for the Office of the Director of Corporate Enforcement (ODCE), claimed the case made by lawyers for INM was "unstateable" and that there was no legal obligation on the watchdog to consult the company.

INM has taken judicial review proceedings aimed at quashing a decision by ODCE director Ian Drennan to apply to the High Court for the appointment of inspectors to investigate a range of corporate governance issues at the country’s largest media group.

If INM is successful in the judicial review, being heard by Mr Justice Seamus Noonan, Mr Drennan will not be able to proceed with his application for the appointment of inspectors, who would have far-reaching powers of inquiry.

On Wednesday, Paul Gallagher SC, for INM, told the court that the move to appoint inspectors came as “a bolt out of the blue”, was “inherently unfair”, and caused “significant damage” to the company’s share price.

Mr Gallagher said the company only learned of a number of matters on March 23 last, the day the watchdog indicated it would be seeking the appointment of inspectors.

These included critical information about a major suspected data breach in 2014.

This was despite the fact information suggesting the names of 19 individuals may have been searched for in INM data was known to the ODCE since October 2017.

As a result INM was unable to alert sooner the Data Protection Commissioner or people feared to have been affected.

Mr Gallagher also argued that although Mr Drennan had a duty to afford INM the right to make representations, the ODCE director had not done so.

However, this argument was rejected today by Mr Murray.

Mr Murray said the Oireachtas has vested powers in the ODCE to bring such applications to the courts and had not imposed a requirement for consultation before doing so.

He said INM had an untrammelled right to put whatever information it wanted before the court in opposition to the ODCE’s application.

The barrister said there was no distinction between INM and any other company who says it has suffered damage as a result of the court process.

If INM’s case proved founded, he said, it would raise fundamental issues for the courts and the administration of justice in public.

He also said INM had not been able to identify any legal authority in Ireland or elsewhere to justify its position.

Mr Murray said it was striking that INM was suggesting that a special case should be made that public limited companies be allowed to make such representations, when such companies were among the largest and best resourced in the State.

He said that what INM envisaged was that the ODCE had to write to the company and say it was proposing to appoint an inspector.

Then the company’s lawyers would look for reasons and the ODCE would have to respond with a summary of those.

Mr Murray said nobody could seriously believe this was acceptable.

If INM’s arguments were founded, it would give rise to an endless, self-replicating procedure.

The barrister also said that the courts have clearly stated the fact proceedings may cause embarrassment, inconvenience or reputational damage, was not a reason to impose an obligation on the ODCE to consult in advance of bringing an application to court.

Mr Murray also took issue with the statement that certain information about the suspected data breach came as a bolt from the blue.

He said INM’s position was that it did not have any information that would have caused the board to question an explanation given to it by then chairman Leslie Buckley or to believe it was inaccurate or misleading.

The barrister said this position “was at least questionable”.

Mr Murray pointed to letters sent to INM in August 2017 by Donal Spring, solicitor for INM’s former chief executive Robert Pitt.

This included information supplied to the ODCE by Mr Pitt in a protected disclosure.

The barrister said that in correspondence INM was made aware of Mr Pitt’s concerns that Mr Buckley had instructed INM’s IT director to facilitate third party contractors with access to INM’s data back-up tapes.

The correspondence outlined that Mr Pitt had very serious concerns that large indiscriminate pieces of data, potentially including emails related to employees and others, had been accessed.

It said Mr Pitt exhorted the board to investigate the matter fully and to contact the Data Protection Commissioner.

The case continues.

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