The corporate story of 2018 was undoubtedly the relentless drama at Independent News & Media (INM). Annus horribilis wouldn’t even come close to describing the year experienced by the State’s biggest newspaper publisher. And 2019 holds out little prospect of being any better. It is now enmeshed in what has the potential to be among the biggest scandals in Irish corporate history.

The litany of allegations of misconduct at the company includes suspected data hacking, disclosure of insider information and the alleged pressuring of executives to waste shareholder funds by overpaying for assets being sold by INM’s biggest shareholder, Denis O’Brien.

INM is now the subject of three separate State investigations by the Office of the Director of Corporate Enforcement (ODCE), the Central Bank and the Data Protection Commission. Two High Court inspectors have also been appointed to make findings.

As 2017 drew to a close, the INM story had already been in the public domain for a year. The ODCE was investigating after complaints from its former chief executive, Robert Pitt, who had fallen out with its then chairman, Leslie Buckley, over allegations of poor corporate governance. This included an alleged attempt by Buckley to pressure Pitt to overpay for Newstalk, which O’Brien wanted to sell.

Email trawl

At the end of that year, the ODCE investigation began moving through the gears. It emerged at the High Court that Ian Drennan, the head of the ODCE, wanted Buckley to reveal who had paid the bill for a huge secret trawl of INM’s email accounts, which is now being investigated as a suspected data breach. Drennan believed Buckley, a board nominee of O’Brien, had organised the operation.

In January, Buckley announced he would step down as INM chairman in two months’ time, as the allegations began to swirl around INM. He duly resigned in March, when former UK-based Telegraph Group director Murdoch MacLennan stepped in to replace him.

The Scottish businessman MacLennan must have had no idea what he was letting himself in for. Just weeks after his appointment, Drennan went back to the High Court seeking the appointment of inspectors to investigate a long list of allegations of illegality at INM.

Drennan based his application on a 224-page affidavit that may yet end up being remembered as one of the most remarkable documents ever compiled for an Irish business court case. Based upon interviews with Pitt and other INM executives, as well as text messages unearthed from company phones, including Buckley’s, Drennan laid out his concerns.

He presented text messages between Buckley and O’Brien, which he alleged may have constituted the passing of insider information by the former chairman. He outlined Pitt’s concerns that Buckley had wanted him to overpay for Newstalk when O’Brien had considered selling it.

Most damning of all, Drennan outlined in detail his belief that Buckley had organised a secret operation to have cybersecurity experts trawl INM’s email systems for information on a range of prominent people, many of whom had in the past crossed swords with O’Brien. The initial list of those affected became known as the INM 19, although the data of many more was likely compromised.

Blaydon, an Isle of Man company controlled by O’Brien, paid the bill for the operation, said Drennan.

In April, INM sought a judicial review to halt the appointment of inspectors. But still, the thunderbolts kept coming from Drennan’s investigation. Towards the end of that month, the Government was rocked by the revelation that the then communications minister, Denis Naughten, had passed on information to a PR executive about the process of State approval for an INM bid for the Celtic Media group. That information was then passed on to Buckley, and on to O’Brien.

The optics were horrendous: a Government communications minister indirectly funnelling information to O’Brien about a State process affecting one of his investments. Only for the need to maintain stability ahead of the abortion referendum that was due to be held weeks later, the Government could well have fallen.

By May, the Central Bank had started probing the allegations that Buckley may have passed several pieces of price-sensitive inside information to O’Brien, a near 30 per cent shareholder. MacLennan hosted his first INM AGM, which attracted more photographers than a Justin Bieber gig.

Out of nowhere, the so-called beef baron, Louth businessman Larry Goodman, appeared on the INM share register, alongside O’Brien and Dermot Desmond. It was like an ensemble cast of some of the wealthiest people in the State.

Paul Connolly, another O’Brien board nominee, stepped down as a director just five days after he stood for re-election at the AGM. This has never been satisfactorily explained. On the same day, INM’s editor-in-chief Stephen Rae, previously seen as close to Buckley, also left the group.

INM began preparing a legal case against Buckley over the allegations made by the ODCE. Its lawyers mused in legal correspondence whether the alleged data breach had occurred “for the personal benefit of [O’Brien]”, its own 30 per cent shareholder. Meanwhile, Drennan considered in legal pleadings whether the alleged activities at INM were part of “the broader use of INM for the benefit of [O’Brien].”

By September, INM had run out of legal road in its attempts to block the appointment of inspectors. Peter Kelly, the president of the High Court, said it appeared there may have been “unlawful” conduct at INM. He also said he believed the former chairman had engaged in “misconduct and misfeasance”.

Buckley has consistently said he would robustly defend himself against “each and every allegation” against him. He has denied any wrongdoing. O’Brien, meanwhile, has said precisely nothing since the whole affair broke. He is likely to be interviewed under oath.

Documents leaked

Through October and November, several more senior executives left the media group. Then, in December, documents were leaked to the Sunday Business Post that suggested Pitt had in 2015, after consulting Buckley, authorised the secret parsing of certain editors’ computers, specifically in search of the source of the leak of a company email to Phoenix magazine. INM gathered its staff to express its dismay, and called for further investigation.

This incident, a targeted search for somebody who it was suspected had breached company policy, is not even close to being comparable with the industrial-scale, and potentially illegal, data breach at INM that Drennan is investigating. But it still served to further stoke fears around the safety of private data at the newspaper publisher.

INM also announced that Ryan Preston, INM’s chief financial officer who had previously made whistleblower complaints alongside Pitt, was leaving the company “by mutual consent”.

After such a blockbuster 2018, how could the coming year shape up for INM? The court inspectors are due to make their first report to the High Court around April. It is likely that they will initially address the alleged data breach involving the INM 19, as this is the incident identified by the judge as being of the utmost public importance.

The inspectors are likely to be in place for most, if not all, of 2019. Depending upon their findings, it could end up being just as interesting for INM as the 12 months just passed.