Denis O’Brien accuses corporate watchdog of leaking against him

Businessman Denis O'Brien has accused the Director of Corporate Enforcement Ian Drennan of leaking damaging details about him from court papers seeking to appoint inspectors to Independent News & Media.

Mr O’Brien explained in a letter to Mr Drennan that he had been subjected to “extraordinary” and still intensifying levels of media coverage which suggested “wrongdoing”. He concluded that Mr Drennan or his office facilitated media access to his affidavit “in full knowledge of the frenzy that would occur”.

The letter, which was sent on April 6th, was read out in court.

Mr O’Brien referred in his letter to the collapse of the trial of former Anglo Irish Bank chairman Seán FitzPatrick, who was acquitted after it emerged that the ODCE’s lead investigator Kevin O’Connell shredded documents in the case and the office led a “biased” investigation.

The businessman said that Mr Drennan should understand the importance of keeping documents confidential.

“I intend to hold you fully and personally responsible for all the alleged leaking,” Mr O’Brien wrote.

Neil Steen SC, for Mr Drennan, read out a replying letter sent by the ODCE on April 13th denying that the ODCE had leaked any information about him.

He said that the office had conducted a year-long investigation and nothing had been leaked until the documents had been served on INM.

Mr Steen said that the director had been obliged to provide the affidavit to INM and it was not responsible if it was released by third parties.

INM is seeking a judicial review on the ODCE's application to appoint High Court inspectors and wants a full hearing to take place.

The president of the High Court, Mr Justice Peter Kelly, listed INM’s application for leave to seek a judicial review of the corporate watchdog’s bid to appoint inspectors for May 9th.

The judge said the court would hear the media company’s application for leave to seek a judicial review and, if successful, then the application for judicial review before considering the appointment of inspectors.

Mr Justice Kelly said that if INM’s judicial review was successful, it would mean that the director’s application would “never even get to the starting blocks”.

The judge listed the applications in this order on the basis that the media company’s judicial review “seeks to strike a knock-out blow” to the director’s substantive application.

He rejected the view from both INM and Mr Drennan that the same judge should hear both the judicial review application and the director’s application at the same time as he was not convinced that there would be any saving in doing this.

Mr Justice Kelly noted that these legal proceedings had already received an “extraordinary amount of publicity” and that the publicity had gone on”unremittingly” over the last week or 10 days.

At a High Court hearing that began this afternoon counsel for INM Shane Murphy SC said the ODCE had effectively failed to notify INM, had failed to give INM reasonable opportunity to address the concerns, had failed to provide opportunity to make submissions and had failed to give INM an opportunity to argue what effect it would have on the company.

Mr Justice Kelly told the court he had read an affidavit from the State’s corporate watchdog concerning the affairs of INM and had also read two supplemental affidavits filed on Friday.

Mr Justice Kelly described INM’s application as “very unusual” as he was being asked to hear the substance of the application and to make a finding on it being ill-founded. “I can’t think of an application like it,” he said.

Mr Drennan is seeking the appointment of inspectors to investigate a suspected data breach from the company’s IT systems in October 2014 and other corporate governance issues raised in protected whistleblower disclosures by former INM chief executive Robert Pitt in 2016 and 2017.

Mr Steen SC, for the director, said Mr Drennan had sworn a very extensive affidavit running to 731 paragraphs and more than 200 pages following a lengthy and detailed investigation lasting more than a year.

He said the director had concerns INM’s affairs had been conducted for an unlawful purpose or in an unlawful manner and that actions had taken place that had been unfairly prejudicial to some shareholders and that some INM shareholders may not be getting the full information they might reasonably expect.

‘Commercially advantageous’

Mr Steen argued the purpose of the investigation by the inspectors was to establish the full facts around the issues of concern to the corporate watchdog and that there was a “compelling public interest” in these matters being investigated.

He told the court the investigation was based on two major disclosures by Mr Pitt, in November 2016 and in August 2017.

He said the latter disclosure revealed that in 2014 there appears to have been the removal of a large amount of data from back-up tapes that ended up in the hands of third parties and that the data had been “interrogated” over a number of months. The INM board was unaware of this until August 2017, said Mr Steen.

“There remains significant concerns about the purposes of the data interrogation,” he said.

The earlier disclosure related to the proposed takeover by INM in 2016 of Newstalk, a radio station owned by Communicorp Group, which is owned by INM's biggest shareholder, businessman Denis O'Brien.

Mr Steen said the director was concerned that the transaction proposed by INM’s then chairman Leslie Buckley may have been “commercially disadvantageous to INM but commercially advantageous to Mr O’Brien.”

Mr Buckley is a long-time associate of Mr O’Brien’s.

Mr Drennan was also concerned about the possible sharing of information with third parties, the court was told.

Mr Murphy raised concerns about the risk of the impact on INM, its management, employees and shareholders and its share price from Mr Drennan’s application being made. He warned about the “potential damage” to the company and its interests “by the very fact of bringing the application.”

On the issue of Mr Drennan’s affidavit being made available to third parties, Mr Murphy told the court that the Director of Corporate Enforcement had included some information in the exhibits to the affidavit that was privileged material that had been given to Mr Drennan’s office.

He suggested that some mechanism, similar to one used in past commercial litigation between companies Fyffes and DCC, could be used to address the issue of privileged information.

Several other parties made submissions to the court during the hearing.

‘Breach’

Red Flag Consulting, the PR company founded by former INM executive Karl Brophy and chaired by former INM chief executive Gavin O’Reilly, made an application to the court to receive the legal papers filed by Mr Drennan in the case.

Maurice Collins SC, representing the company, Mr Brophy, Mr O’Reilly and Mandy Scott, who was personal assistant to both men in INM, said they were concerned at reports that their data was at the centre of the alleged breach in 2014.

Mr Collins told Mr Justice Kelly that INM’s biggest shareholder Denis O’Brien is suing his clients in High Court proceedings and they were concerned that there had been a significant breach of the Data Protection Act.

Mr Pitt sought through his barrister, Tom Mallon SC, a copy of Mr Drennan’s grounding application that is based largely on Mr Pitt’s protected whistleblower disclosure to the ODCE.

Mr Justice Kelly said that Mr Pitt appears throughout the affidavit, in almost every paragraph.

“In the circumstances, I believe that my client should be entitled to it,” said Mr Mallon.

Counsel for Ryan Preston, chief financial officer at INM, said that he had been provided with the grounding affidavit but that he would be seeking INM’s replying affidavit filed on Monday.

Solicitor Simon McAleese, for former INM journalist Sam Smyth, told the court his client had been directly affected by the alleged data breach and was also seeking a copy of Mr Drennan’s affidavit.

The Office of the Data Protection Commissioner also sought details from the affidavit of the alleged data breach through a legal representative.