INM inquiry ‘justified and in public interest’
THE High Court has approved the appointment of inspectors to probe concerns over the conduct of the affairs of Independent News & Media.
Their inquiry into a major data breach and other serious matters at the country’s largest media group, which publishes the Irish Independent, could begin as early as tomorrow.
In a judgment yesterday, the President of the High Court said the appointment was justified and in the public interest.
Mr Justice Peter Kelly also said circumstances surrounding two proposed business transactions were “suggestive of an unlawful purpose” directed to the benefit of INM’s largest shareholder, Denis O’Brien.
An appeal is thought to be unlikely. INM said it intends to continue its business as normal in the aftermath of the decision to approve the appointment of inspectors to the company.
The company said its board would consider the 76-page ruling and the action the company might take in the interests of the business and its stakeholders.
THE appointment of High Court inspectors is the biggest development yet in the controversy which has engulfed Independent News & Media (INM).
The saga, which has been rumbling on since 2016, has its roots in an aborted deal for INM to buy Newstalk, the radio station owned by INM’s largest shareholder Denis O’Brien.
The deal never went ahead amid disagreement between then INM chief executive Robert Pitt and then INM chairman Leslie Buckley, who was Mr O’Brien’s nominee to the board, over the valuation of the station.
Mr Pitt, a former senior executive with Tesco, joined INM as chief executive in September 2014 and was invited on to its board in January 2016.
It is evident that throughout 2016 there were significant tensions between him and other members of the board.
According to an account given to the High Court by senior independent director Dr Len O’Hagan, the situation deteriorated to the point where the board decided that October it wanted to replace Mr Pitt.
But the chief executive dropped a bombshell before the board acted on this decision.
On November 11 that year he made a protected disclosure to INM in relation to the Newstalk deal. A week later he made a similar disclosure to the Office of the Director of Corporate Enforcement (ODCE).
This set in motion a lengthy investigation culminating in yesterday’s ruling.
Chief financial officer Ryan Preston also made a protected disclosure to INM on December 5, 2016, corroborating Mr Pitt’s account. Both claimed they were put under pressure by Mr Buckley to pay a value which was considerably higher than they thought the loss-making radio station was worth.
At one meeting it is alleged Mr Buckley told Mr Pitt and Mr Preston he would “do the deal regardless” and that a valuation of €14m was “insulting” to Mr O’Brien.
Mr Pitt alleged Mr Buckley said Mr O’Brien was “entitled to a reward for bailing out INM”.
At another meeting Mr Buckley is alleged to have said: “Do you not get it, lads?”
Mr Pitt was also concerned about a proposal that Island Capital, a company owned by Mr O’Brien, be paid a success fee in connection with the sale of INM’s shares in Australian media group APN in 2015. The proposal was emailed to him by Mr Buckley. Mr Pitt was concerned as he believed Island Capital added no value in relation to the share sale.
The proposal was pulled after Mr Pitt got advice it would have to be declared due to the related party nature of the transaction.
Two independent reviewers were hired to examine the claims. Due to “a stark conflict of evidence” they were unable to resolve the key allegations regarding the aborted Newstalk deal. However, they did conclude Island Capital had done significant work of value to INM.
A further protected disclosure would be made by Mr Pitt to the ODCE on August 10 last year, two months before he left INM with a €1.5m severance package.
The repercussions of this disclosure would be even more explosive than his first one.
It led the ODCE to investigate the reasons for the removal of data from INM in 2014 and its “interrogation” by an outside company at the direction of Mr Buckley. The then INM chairman claimed he was looking for information about a legal services contract he wished to renegotiate.
However, during the course of its inquiries the ODCE found evidence suggesting a list of 19 people was used in a search of the data. Those named included journalists, former INM staff and directors and two senior counsel who had worked for the Moriarty Tribunal. The High Court later heard INM’s solicitors described those named as “persons who may be regarded as having acted adversely to Mr O’Brien”.
Mr Buckley stepped down from INM’s board in March.
Last night Mr Buckley’s spokesman said he intended to robustly defend his position.