‘Denis v Goliath’: O’Brien’s battle against alleged reputational damage

There was a lot going on in the world of billionaire businessman Denis O’Brien in 2014 and 2015 and something of the pressure he may have felt himself under is revealed in an affidavit he swore, in Singapore, for the Irish High Court, on October 13th, 2015.

“In recent times, and particularly in the last 12 months, I have become conscious that there is a campaign to damage me personally and professionally and to damage my business interests,” he told the court.

He said this included attempts to undermine him, disseminate false statements about him, and leak confidential information relating to him.

The campaign had “many fronts”, he said, was directed at him personally and his business interests, and was taking place “nationally and internationally and through the media”.

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Because of his certainty that a campaign was being waged, “I engaged professional investigators for the purpose of investigating whether there was campaign against me and, if so, the source of the campaign”.

The wealthy businessman made it clear that there was an enormous amount of money at stake. The campaign, he said, was damaging him at a time when he was planning an initial public offering (IPO) of shares group on the New York Stock Exchange. It is no exaggeration to imagine that, to his mind, this purported campaign threatened the global business portfolio he has created over the past 20 years.

O’Brien is the owner of the Digicel telecoms group that operates in the Caribbean and the south Pacific and may be worth more than $4.5 billion. He has earned in excess of $1 billion from the business over the years but Digicel has massive debts (more than $6 billion) and in late 2014 he was looking at ways of dealing with this debt mountain.

In time this led to the IPO plan, which would have involved selling off 40 per cent of Digicel for $2 billion so as to pay off debt and buy new assets. But in October of 2015, the planned sale was abandoned, after a lacklustre interest in the shares. It was a major blow to O’Brien, who tried to put a brave face on things.

IPO idea

He remains interested in the IPO idea. Earlier this year, speaking to reporters in Davos, Switzerland, he said he might return to the project in a year to 18 months’ time. His reputation is as crucial to his business plans today as it was three years’ ago.

O’Brien’s business career involves an interesting pattern of taking on monopoly-type incumbents and beating them. Often this involves getting licences in liberalising markets. He got radio licences when that sector was being opened up in Ireland in the early 1990s, then moved on to the telecoms sector when it was being liberalised, first here and then later in the Caribbean. Along the way he has taken on RTÉ, Telecom Éireann, and, in the Caribbean, the old colonial monopoly, Cable & Wireless.

It can seem that the battle against these monoliths takes on, in O’Brien’s mind, a type of David versus Goliath contest, which may in turn fuel his considerable drive. That certainly was the case in the instance of his taking on Anthony O’Reilly, who was the richest Irish businessman of his generation, just as O’Brien has become the richest of his.

At the heart of his contest with O'Reilly was getting ownership of Telecom Éireann, or Eircom as it became following its privatisation. The older billionaire won that battle, and moves involving the then government, to O'Brien's mind, contributed to his losing out. During this battle, O'Brien feels he became the subject of a sustained attack from titles published by Independent News & Media (INM).

INM is a publicly-listed company. For a long time, O’Reilly was its largest single shareholder and people watched closely to see if any influence was brought to bear on stories carried by its titles.

Around the time that O'Reilly and O'Brien were battling over Eircom, the Moriarty Tribunal, which was investigating matters to do with the former taoiseach Charles Haughey and former Fine Gael communications minister Michael Lowry, began to investigate financial connections between O'Brien and Lowry.

This happened after a story appeared in the Sunday Tribune, which was at the time controlled by INM. The story was based on a leak, and, as far as O'Brien was concerned, once the tribunal dragged him into its maws, INM went to town on covering the controversy at a time when its largest shareholder was battling him for ownership of the State's premier telecoms asset. Whatever the truth of the matter, that was certainly O'Brien's view.

By the time the tribunal published its report, in 2011, in which it linked the awarding in 1996 of the State’s second mobile phone licence to O’Brien’s Esat Digifone, and financial transactions between O’Brien and Lowry, who was communications minister in 1996, O’Brien was on his way to building up a substantial shareholding in INM and ousting the O’Reilly family.

Undermined

Unfortunately for him, he was doing this at a time when the newspaper industry was having its business model undermined by the internet. Becoming INM’s largest shareholder would end up costing O’Brien €500 million. Even to a man as rich as O’Brien, that is a lot of money.

O’Brien has been the largest shareholder in INM since 2011, and is also the largest owner of privately-owed radio stations in the State.

He is also, undoubtedly, one of the most prolific initiators of defamation proceedings in the State, and at one stage, when he was its largest shareholder, initiated proceedings against then INM journalist Sam Smyth, over his coverage of the tribunal. The case never went ahead.

At one stage, O'Brien was the majority shareholder in INM but still the subject of sustained negative coverage in the pages of the State's biggest selling weekend title, the Sunday Independent. That changed when the contract of its then editor, Anne Harris, came to an end in December 2014.

In April 2012, Gavin O’Reilly stepped down as chief executive of INM, bringing to an end his family’s 39-year association with the newspaper group.

The group's then corporate affairs director, Karl Brophy, also left that year. Brophy was a close associate of Gavin O'Reilly's and is a former journalist. In 1998, he was the author of a report in the Irish Mirror that led to a libel award to O'Brien.

It’s a convoluted tale but after an award of €750,000 was decided on by a jury, the case was settled for about €150,000.

Brophy took up a role in INM working closely with Gavin O’Reilly at a time when O’Brien had his sights on the media group. Emails that were later disclosed in court during a dispute after Brophy’s departure included ones he sent to O’Reilly when about to take up his INM role.

“I do want to work with you,” one email from 2010 read. “I do want to see off DOB and I’m confident that I can help build INM up to be a success again.

“If DOB can’t prevent the chap who libelled him taking a senior role in the company, it will be absolutely clear who is in charge and it will buttress your authority,” Brophy wrote in an email to O’Reilly in September 2010.

After their departure O’Reilly and Brophy set up a public relations and lobbying group, Red Flag Consulting, of which Brophy is chief executive and O’Reilly is chairman.

The affidavit quoted at the opening of this article is a grounding document for O’Brien’s case against Red Flag, Brophy, O’Reilly, and others, where he is alleging that Red Flag is operating for a client and seeking to damage O’Brien.

In his affidavit, O’Brien said it was as a result of his appointing his professional investigator that he learned that Red Flag was disseminating information about him. He also said that he received an anonymous envelope at around the same time, containing a memory stick, which contained a “dossier” which was being disseminated by Red Flag and which, he said, contained material damaging to him.

He is asking the court to order Red Flag to identify the client, so that he can seek damages. Red Flag is objecting to the application. O'Brien has said he believes the client may be businessman and political campaigner Declan Ganley, who has been joined to the action even though he denies being the client.

Red Flag has said it compiled the dossier on behalf of a client. The dossier mainly contains press cuttings, most of which refer to the Moriarty Tribunal’s findings.

The case, aspects of which has been up to the Supreme Court and back, continues and the costs to date are believed to be in the region of €4 million.

Extraordinary events

All of this forms some of the background to the latest extraordinary events at INM. The Director of Corporate Enforcement, Ian Drennan, is seeking the appointment of High Court inspectors to investigate matters he is concerned about at INM, including an apparent massive data breach in October 2014.

After Gavin O'Reilly left INM in early 2012, he was replaced by Vincent Crowley, who in turn resigned in May 2014. O'Brien's close business associate, Leslie Buckley, had been appointed to the board by then as O'Brien's nominee, and was chairman. Robert Pitt was selected to take on the role of CEO of INM after Crowley's departure, but couldn't take up the post until late 2014.

In the meantime a sub-committee of the board, comprising Buckley and non-executive directors Triona Mullane, Alan Marshall and Terry Buckley, were in charge.

According to Drennan’s affidavit to the High Court, and affidavits filed in a related case by Buckley, Buckley accessed data from the INM server in October 2014 and gave it to a company in Wales called Trusted Data Solutions. Last year, when the ODCE was investigating this apparent breach, it had to go to Buckley rather than the company to find out what had happened.

Exactly how much data was involved is not entirely clear, but it may have been all the data held on the INM server, including journalists’ emails and those of O’Reilly and Brophy. It is easier to extract the entire content of a server, by way of its back-up tapes which are smaller than a video tape, than it is to extract partial information from a server, according to sources with knowledge of such matters.

According to Drennan’s affidavit, the Trusted Data Solutions bill was paid for by an Isle of Man company, Blaydon, which is linked to O’Brien. The invoice was sent to INM, raising questions.

The leaked data was then apparently "interrogated". As part of this interrogation it appears that people's names were put into the data to see what the searches would turn up. The names searched for included two barristers from the Moriarty Tribunal, journalists with the Sunday Independent, and a lawyer who acted for Cable & Wireless in a court case in the UK involving Digicel.

Concerns

It was only when INM received the affidavit from Drennan on March 23rd last, that it became aware of the extent of what has allegedly happened, according to sources.

The apparent data breach is now to be investigated by the Data Protection Commissioner, Helen Dixon. The head of the National Union of Journalists in Ireland, Séamus Dooley, has said the apparent breach raises very serious concerns about the protection of journalists' sources, and media ownership in the State.

Drennan’s affidavit also expresses concern about how the INM board, and Buckley in particular, dealt with a second focus of his affidavit, which has to do with a suggested sale of O’Brien’s radio station, Newstalk, to INM, for a price which was up to €20 million more than advisers to the then INM CEO, Pitt, though was reasonable.

O’Brien is the largest shareholder in INM but is not the controlling shareholder and there is a legal obligation on the board and its chairman to act independently and on behalf of all investors.

Anything that points to a failure in that regard, could have significant consequences for the plc and also for O’Brien’s role as shareholder.

The Drennan application, and the consequences of the apparent data breach, are likely to create a legal and public relations debacle that will be very costly and prolonged.

O’Brien has yet to comment on the whole saga and the same is true of Buckley. Bizarrely, much of the information about what is contained in Drennan’s affidavit is entering the public domain by way of reports in INM titles.

The Drennan application is due before the President of the High Court, Mr Justice Peter Kelly, on April 16th next, when the affidavit may become generally available.

It seems likely that the reputational damage that O’Brien was complaining about in 2015, and its effect on his capacity to do business, is not going to go away any time soon.