High Court appoints inspectors to investigate corporate governance concerns at INM
The High Court has this afternoon approved the appointment of inspectors to investigate corporate governance concerns at Independent News & Media.
The decision follows an application by the Office of the Director of Corporate Enforcement (ODCE), which has conducted a lengthy investigation into corporate governance concerns at the country’s largest media group.
Among the issues to be probed by the inspectors is a major suspected data breach in 2014, where it is feared the data of journalists, INM directors and other individuals were improperly accessed and “interrogated”.
The inspectors appointed are top criminal barrister Sean Gillane SC and British company law solicitor Robert Fleck.
In a 76-page ruling today, Mr Justice Peter Kelly: "The evidence merits the appointment of inspectors".
He said the public interest was one of the matters the court must take into account in exercising its discretion to appoint inspectors.
The judge said it was important to ensure that the affairs of a public company are conducted “above board”.
He also said a free press was a cornerstone of a functioning democracy.
Allegations of the accessing of journalists’ data were particularly concerning and there was an obvious public interest in investigating matters further.
Mr Justice Kelly said INM had a dominant position in the market and there was an “obvious public interest in its proper governance”.
He said despite investigations already conducted by the ODCE, “considerable mystery” still surrounds some of the issues.
The judge said that if he was of the opinion no facts would be gleaned from the appointment of inspectors, he would not have agreed to their appointment.
Mr Justice Kelly said the fact that other inquiries were in train or contemplated - a reference to an investigation by the Data Protection Commissioner and a potential inquiry by the Central Bank - did not mean inspectors could not also be appointed.
The fact that wrongful activity has ceased is not a basis for not appointing the inspectors, he found.
As well as the data breach matter, the inspectors will also investigate 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 shared in Australian media group APN.
In its application, the ODCE said there were circumstances suggesting the affairs of INM were conducted in an unlawful manner and for an unlawful purpose, that some of the company’s members have been unfairly prejudiced, and that some people connected to the management of INM’s affairs have been guilty of misfeasance or other misconduct.
The most high-profile issue which will be investigated is 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.
The inspectors will also examine concerns voiced in protected disclosures by former INM chief executive Robert Pitt and the company’s 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.
INM objected to the appointment of inspectors, saying the measure was disproportionate and would have a seriously damaging impact on the company, its shareholders and employees.
The company’s results for the first half of 2018 showed €1.9m of exceptional legal costs primarily linked to the group’s response to the ODCE’s application.