The president of the High Court has reserved judgment on the State's corporate watchdog's bid to have inspectors appointed to investigate concerns over the conduct of the affairs of Independent News & Media.

Mr Justice Peter Kelly also said he would accept written submissions from the sides as to the exact terms of reference for inspectors, should they be appointed.

He heard closing arguments on Thursday in the three-day application by the Director of Corporate Enforcement (ODCE), Ian Drennan, who was in court, as were several solicitors holding watching briefs for various parties, including former INM chief executive Robert Pitt.

The application follows a year-long investigation by the ODCE into matters in protected disclosures made by Mr Pitt and INM chief financial officer Ryan Preston in 2016 and 2017.

Arising from that investigation, the ODCE has concerns about issues including an alleged data breach at INM in 2014 during which data was exported from the jurisdiction and interrogated by third parties in what former INM chairman Leslie Buckley, who stepped down last March, has said was a cost-cutting exercise.

Other issues include a proposed acquisition by INM of radio station Newstalk from a company of INM's major shareholder, Denis O'Brien, at an allegedly substantial overvalue and proposed payment of a €1 million "success fee" to Island Capital, another O'Brien company, following the sale of INM's shares in the Australian media group APN.

Neither the Newstalk purchase nor fee payment proceeded, but the ODCE has concerns about them and about a number of corporate governance matters.

INM strongly opposes inspectors. It argues that the Data Protection Commission (DPC) investigation into the alleged data breach is adequate and that the Central Bank is the appropriate body to investigate any market abuse concerns.

It also maintains that several issues raised by the ODCE are isolated and historic matters already appropriately addressed by INM.

It has denied any “culture of deference” towards Mr O’Brien, says it maintains high standards of corporate governance and denies any breach of the Market Abuse Regulations or Protected Disclosures Act.

Watchdog’s concerns

In closing arguments for the ODCE, Brian Murray SC said the watchdog’s concerns are about circumstances that appeared to be “part of a single continuum presenting a pattern”. If that means what it appears to mean, it has the “most profound significance” for how INM was run and operated in the relevant period, he said.

It was of “profound significance” for all public companies if a person can acquire a major shareholding and, through a “strategically positioned” officer, achieve the things alleged.

INM had complained of being taken by surprise by what he had said in court about the ODCE’s concerns of a “culture of deference” towards Mr O’Brien, counsel said.

There “could never have been any doubt” about the case being advanced by the ODCE in affidavits referring to matters suggesting possible interference by the major shareholder in the day-to-day affairs of INM, he said.

The ODCE’s case was that, if what appeared to have occurred in INM had occurred, that could only have happened because of a “culture of deference towards the major shareholder and his nominee, Mr Buckley”.

Contrary to what INM argued, any wrongful acts by Mr Buckley also involved wrongful acts of the company, counsel argued.

He said Mr Buckley had said several individuals in INM were aware of the work Mr Buckley was doing as part of Operation Quantum, a cost-cutting exercise.

If INM took the alleged data breach as seriously as it said, it was hard to see why it was opposing inspectors, as only the ODCE, and not the DPC, would have the necessary powers to fully examine that, counsel said. Only inspectors could compel attendance of witnesses, production of documents, cross-examine persons and publish findings.

INM submissions

Earlier, in submissions for INM, Paul Gallagher SC argued that the legal criteria had not been met for appointment of inspectors and the court should exercise its discretion in refusing to appoint them.

This case involved a situation where INM had emphasised the substance of the problem was “that a particular director has not complied with his duties”.

Counsel said that if Mr Buckley, while chairman of INM, had done various things alleged, he “has certainly done them in breach of his duty”. Mr Buckley was not in control of INM at the time of the alleged acts, and any loss to the company was prevented by its existing corporate governance procedures and built in safeguards, he argued.

Mr Gallagher stressed it was “absolutely vital” for INM that the ODCE had acknowledged there was no issue about editorial independence. That meant the only public interest issue was ensuring companies complied with the Companies Act and there was no broader issue about the freedom of the press.

Counsel said he was instructed to say INM would consent to publication, subject to the required redactions, of the DPC report.

The legal criteria had not been met for appointment of inspectors, he said. Any such appointment would be disproportionate, would have significant adverse consequences for INM, its employees, shareholders and pensioners, and the court should refuse to appoint. The application was also premature and the ODCE should let the DPC and Central Bank do their work, Mr Gallagher argued.

INM was concerned that the ODCE was seeking a wide-ranging investigation that could go on “without limit” and wanted its scope to be narrow and precisely defined, he added.