On the 11th of November 2016, Robert Pitt, the previous CEO of Independent News and Media, had a conversation with Jerome Kennedy, the senior non-executive director, at Conrad Hotel in Dublin. Formerly an executive at Lidl and Tesco, Pitt discussed his apprehensions about the conduct of Leslie Buckley, the non-executive chairman of the company.
This encounter sparked a sequence of events, eventually leading to the recent release of a report by a pair of High Court inspectors. The study scrutinises certain aspects of Buckley’s governance, his relationship with Denis O’Brien, the company’s largest shareholder, and his support for a proposed acquisition of Newstalk radio from O’Brien. It also delves into a proposition to remunerate O’Brien’s firm, Island Capital, for facilitating the sale of INM’s Australian business.
The inspectors, whilst disapproving of some of Buckley’s behaviour, found no proof that O’Brien’s interests were prioritised over those of other shareholders, which was a claim made by Pitt.
Pitt and Preston, the company’s previous CFO who had also raised concerns, had invoked legal protections for whistleblowing, presenting protected disclosures under the law. This ensures that individuals cannot face punitive actions for genuinely reporting misconduct.
However, following the release of the reports, Pitt and Preston have remained largely silent, with Pitt returning to his previous base in Hungary. O’Brien and Buckley, on the other hand, have been quite vocal.
The experiences of Pitt and Preston serve as a cautionary tale for others in positions of power considering reporting misconduct. The inspectors in their report highlighted that whistleblower laws counter the defensiveness organisations display, where they lean towards believing the accused parties whom they have known or worked with.
Pitt and Preston are predicted not to have a disagreement. Their interaction with INM’s board is outlined in the report, and it doesn’t paint a flattering picture.
A special committee was established to evaluate Pitt’s revelation to Kennedy. The committee consisted of Kennedy, a previous KPMG managing partner; Terry Buckley, an established businessman who has served in upper management positions in multiple Irish firms; Len O’Hagan, a businessman from Northern Ireland with seats on multiple state boards; and Allan Marshal, an erstwhile newspaper executive and advisor.
The committee convened twice. In their initial meeting, they examined a memo from McCann Fitzgerald concerning Pitt’s revelation, while in their second meeting, they met with Buckley and ruled that there was “no proof of malpractice or any issues or matter that presented a grave worry for the company”, thus no further action was deemed necessary.
Regrettably, the committee did not fulfil its mandate and lacked a valid and acceptable grounds for informing the board that there was no proof of misdoing by Buckley.
The full board, which included financier Paul Connolly representing O’Brien, David Harrison representing Dermot Desmond, another major shareholder, and businesswoman Triona Mullane with a history in tech, adopted this decision. The board also agreed with the subcommittee’s conclusion that Pitt’s disclosure was not safeguarded by the protected disclosure legislation.
The inspectors concluded that the subcommittee’s review of Pitt’s disclosure was “deeply flawed”. They did not provide “appropriate or proper weight” to Pitt’s concerns or “took the essential measures to evaluate and determine the implications of the matters raised”. The committee did not fulfil its task and did not have a solid and acceptable basis for informing the board that there was no evidence of misdoing by Buckley. According to the inspectors, “the actions of the associated directors fell short of what one would expect from directors of a public limited company”.
As a result, it’s not surprising that Pitt rejected the board’s conclusion and threatened to take legal action, which triggered the board to initiate an independent review. By this point, Preston had also made a protected disclosure.
The independent investigation was conducted by then senior counsel David Barniville, who is now president of the High Court, and British accountant Stephen Kingon. In July 2017 their findings reported an inability to settle allegations concerning the proposed acquisition of Newstalk. However, they did not find any unlawful behaviour in relation to the proposed deals with Island Capital. The investigation also concluded that Pitt’s rights to a fair procedure were violated.
In August 2017, the INM board approved the conclusions made in the independent investigation indicating that they deemed Pitt’s claims to be resolved fully.
Inspectors were assigned by the Office of the Director of Corporate Enforcement in March 2018, who have recently informed the High Court of their findings.
The saga was not over yet. Pitt had already made a protected disclosure to the Office of the Director of Corporate Enforcement (ODCE) following an earlier disclosure to the company. The ODCE continued their inquiries after Pitt had made a second disclosure to them in August 2017 about the external review of INM data, following Buckley’s order. Inspectors were again assigned in March 2018 by the ODCE, who have communicated their findings to the High Court this week.
The INM board and Buckley faced serious condemnation from the inspectors, however, it was concluded that the central complaint implying Buckley was prioritising O’Brien’s interests above other shareholders was unfounded. The inspectors also berated Pitt and Preston for providing misleading statements claiming they made their disclosures independently. Still, the inspectors agreed that these misleading statements did not distort the essence of their disclosures, as “‘while some of the facts, issues drawn upon, or their conclusions were not accurate, they were not made up, exaggerated, or fabricated. Hence, we are confident in the sincerity of Mr. Pitt and Mr Preston’s worries.” It deserves mention that Pitt underwent over 45 hours of interrogation over the course of 13 days spread across 19 weeks.
The inspectors’ remarks can offer some consolation to the two men. However, it cannot be confidently said that such comments would be sufficient to motivate others in similar situations to step forward. This should prompt concern amongst individuals concerned about ethical standards in Irish public and commercial sectors.