GoSafe: legal case threatens survival of firm linked to speed cameras

Redflex Holdings, one of the parties behind the State’s privatised speed camera system has warned shareholders legal actions, including a €330 million compensation case taken by the city of Chicago, could threaten its survival.

The move has implications for the GoSafe consortium here which is 16 per cent owned by the Australia-based multinational.

Last month, the Department of Justice told underbidders it had chosen GoSafe as the winner in a competition to run the privatised speed camera system for up to seven years. The contract has an estimated value of €115 million.

However, the department has declined to say if the proposed contract utilises clauses common in State contracts that provide for the termination of the contract where ownership or control of the awardee is changed.

Contracts

Sources said a minimum requirement in such contracts would be the State’s consent for the contract to continue.

The Irish Times understands clauses in GoSafe's current contract require the consent of the department in the case of any change in control of the consortium.

On Friday, the Department of Justice said the award of the contract was a joint process involving the department and the Garda. But it declined to comment on the contract as the tendering process is not yet complete.

The remaining GoSafe shareholders are Co Kerry businessman Xavier McAuliffe’s Spectra and a French company, Egis, which own 42 per cent each.

The GoSafe operating company Road Safety Operations, is based in the Isle of Man.

The company said that it was precluded by its contract from making any comments to the media.

Admission

Redflex’s difficulties stem from the admission of a former chief executive of its US subsidiary that she bribed a city of Chicago official to secure contracts for Redflex. Karen Finley subsequently admitted to similar charges in the state of Ohio and is awaiting sentencing on August 10th.

The scandals have already led to the resignation of the chairman of the Australian board, Max Findlay, and directors Ian Davis and Ms Finley.

Investigation

The Australian federal police have also announced a criminal investigation into the conduct of former employees of the company which is ongoing.

Redflex has strongly denied knowledge of any alleged wrongdoing, according to papers that have been seen by The Irish Times.

In notes attached to the company accounts for the half-year ending December 2015, it vowed to “ avail itself of all legal defences” to minimise its exposure to potential financial harm.

But it warned if the matters in Ohio or Chicago “resulted in negative judgments and damages at levels that could not be funded by the group based on the level of financial resources available to it at such time, there is significant uncertainty as to whether the consolidated entity could continue as a going concern”.