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Archive for October 23rd, 2012

At the end of August 2012, the Irish Examiner reported that the Broadcasting Authority of Ireland (BAI) had written to Denis O’Brien’s Communicorp radio operation asking for an update on Denis O’Brien’s control of Independent News and Media (INM), the largest private media group in Ireland which publishes the (Irish) Independent, the Sunday Independent, the Evening Herald, Sunday World as well as provincial titles and in Northern Ireland, it publishes the Belfast Telegraph and Sunday Life. In July 2012, the BAI had previously concluded that Denis O’Brien “does not control IN&M.  Rather he has a substantial interest in the Company, as that term is defined in the Policy.  In this regard, the Authority was not obliged to review Mr. O’Brien’s interests in the context of an undue amount of communications media”, and the latest intervention by the BAI at the end of August 2012 was aimed at testing if this was still the case after the intervening appointment of Denis’s associate Leslie Buckley to the role of chairman at INM .

 It seems that the 60 days expires about now, and the BAI ruminations will be closely studied, especially by those concerned or alarmed at Denis O’Brien’s growing control of Irish media, particularly in light of the adverse findings in the Moriarty Tribunal and a pattern of editorial interference by Denis or his associates, suggested by communication with Gavin O’Reilly and former chairman, James Osborne and attempted editorial interventions against Sam Smyth and to a much lesser extent, allegedly against Eamon Dunphy. The nation’s favourite curmudgeonly journalist Vincent Browne has also recently been on the receiving end of unpleasant correspondence from Denis.  Sam Smyth has seen his contract terminated at Communicorp’s Talk Radio and it seems that Sam’s last article in the Independent was on 25th May 2012 – Vincent Browne claims that Sam has been ostracised. All of this comes after Sam Smyth’s writings about the Moriarty Tribunal, the adverse findings from which are disputed by Denis.

Today in Court 3 at the High Court today, Ms Justice Laffoy presided over a disjointed hearing where it was obvious both sides were engaged in intermittent discussions outside the courtroom aimed at a settlement. It was the third day in the case taken by IN&M’s director of corporate affairs and content management since 2010, Karl Brophy against what is now his former employer after IN&M tried to terminate his contract in April 2012, immediately after Gavin O’Reilly stood down as CEO amid frictions between Denis O’Brien and the O’Reilly family. Karl had been recruited in 2010 by IN&M – way back in 1998 when Karl was a political journalist, he had penned an article in the Irish Daily Mirror which resulted in a defamation action by Denis O’Brien where Denis received €750,000 compensation.

 Today the current IN&M CEO, Vincent Crowley took to the witness stand and alas was only part-way through his evidence when a settlement was announced, so there was no cross-examination.  In his 90 minutes of evidence, he painted a distressed picture of IN&M with falling circulation and advertising in its main market, the Republic of Ireland.  Vincent was the former Chief Operating Officer (COO) of the company, and said today that he had two meetings with Denis O’Brien prior to his elevation to the main management role at the group on 19th April, 2012. He described his former role as “fluid” and it seems that his vacated role of COO is not being filled at the group.

The outlook at IN&M doesn’t look great. Vincent said that he originally planned to spend €40,000 on public relations in 2013, presumably most of it with Murray Consultants but he has since revised that up to €80-100,000 given the detailed discussions with the banks, continued cost cutting and dealing with pension issues.  Evidence presented to the court included deliberations by Vincent Crowley on assuming the CEO role in April on several terminations; three were indicated to the court – his own COO role, Karl’s and the role of group treasurer – but there was also a redacted name which apparently is an exec who was spared.  It also seems that the former CEO Gavin O’Reilly had considered making Vincent Crowley redundant. You’d have to wonder if anyone is safe at IN&M!  Vincent described the position of the company when he assumed the CEO role as “perilous”.  The stock price of INM is 10c today valuing the company at €52m, a shadow of its former billion euro plus valuation, and given the group is balance sheet insolvent to the tune of over €200m, you’d wonder if it is perhaps overvalued even at €50m.

As regards the Denis O’Brien angle in this present court case, it seems that a perceived attempt by Karl Brophy to unearth details of Denis O’Brien’s borrowings at Anglo and to bring those details into the public domain was a source of tension at INM, on account of Denis being a tax-exile who was being financially supported with loans by a bank 100%-owned by the taxpayer. Of course Denis’s spokesman has previously stressed that Denis pays tax in Ireland on income earned here, though we have not seen that tax quantified. There were also concerns at alleged leaks related to Sam Smyth and Eamon Dunphy, but it seems the main source of friction was Denis’s borrowings with Anglo, something which echoes claims made by former chairman James Osborne in a recent interview with the Sunday Independent’s editor Anne Harris. It’s not clear why this should be regarded as Krytonite by Denis, as it seems he has reduced his borrowings at Anglo and no-one has suggested his loans aren’t performing. INM argued in the case that Karl was terminated for cost savings reasons.

Karl was joined today in court by former CEO Gavin O’Reilly who sat beside him, and apparently the pair looked as if they had some fight left in them still. This evening, Karl has said on Twitter that he has no plans for the future “yet” and that he is no longer an employee of IN&M “as of today”. Gavin O’Reilly is understood to be busy with his hotel interests at present.

The settlement statement read to the court said that IN&M makes no allegation of wrongdoing against Karl Brophy and also that the decision to terminate Karl’s employment was the CEO’s, Vincent Crowley’s and that specifically, Denis O’Brien had “no hand” in the decision. Other details of the settlement are unlikely to make it into the press, but it seems that Karl’s contract provided for a 2-year severance which would amount to €600,000 in light of his reported €300,000-a-year salary.

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On this side of the Border, NAMA might only have sold less than 20 homes so far this year for social housing – a disappointing figure compared with the 2,000 home hoopla spouted by Minister Phil Hogan last December, but a disappoint which appears to be more a reflection of government inaction than any dilatoriness on NAMA’s part – but today we learn that NAMA is supporting a major new social housing scheme in Lisburn, just outside Belfast in county Antrim.

When you actually delve into the detail of the announcement – shown here on the Clanmil Housing Association website together with a fine photo of the NAMA chairman Frank Daly and NAMA Head of Asset Recovery, Ronnie Hanna – what NAMA is actually doing is agreeing an option agreement with the social housing organisation which MAY see the development of the 16 acre former site of the Hilden Mill complex developed by 2014. The number of planned new homes is not specified and the scheme is planned as mixed use residential, retail, office scheme. It is not clear if NAMA is providing funding for the development.

Hilden Mill was attacked by vandals in May 2011 and gutted by fire. The developer Galliard Homes is in NAMA.

Frank Daly is quoted as saying “I am delighted with this news today. This agreement with Clanmil is extremely important for NAMA.  It reflects NAMA’s determination to work in partnership with the social housing sector in Northern Ireland to provide affordable housing solutions through our portfolio.  It also reflects our commitment to work with the wider State and public sector  to develop and deliver, in tandem with our own commercial objectives, a range of  initiatives which will bring social and economic benefits to Northern Ireland.”

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It emerged at the Commercial Court division of the High Court yesterday that one of the developers being pursued through the Irish courts by NAMA was in fact declared bankrupt in London on 29th August 2012. Reginald Stuart Tuthill, aged 63, currently resident in an upmarket part of London but formerly resident in Clondalkin is described as a “self employed property consultant” on the bankruptcy record shown above. His current address is given as 147 CRANMER COURT, LONDON, SW3 3HF but according to the Irish Times, his former address was Tower Road, Clondalkin, Dublin.

Along with his business partner, Derek O’Leary – coincidentally also a former Dublin resident but currently resident a stones throw away from Reginald at an address on Gatliff Road in Westminster, London SW1 – and three of their companies, they were being sued by NAMA on foot of loans and guarantees involving AIB.

In the end, judgments of €24m apiece were granted against Messrs Tuthill and O’Leary and €91m against two of the companies – Sandyford Forum Developments Ltd and Blackthorn Securities plc – and a third judgment is in the offing against Maycombe Developments Limited once some bureaucratic issues are addressed. The judgment against Stuart Tuthill was adjourned “because [he] was adjudicated a bankrupt a day before proceedings were served on him”. It is not clear from the Irish Times piece why this would be an impediment. In fact NAMA made the application in the High Court on 28th August 2012, one day before the bankruptcy order was obtained in London.

Reginald’s bankruptcy brings to 18 the number of UK bankruptcies of NAMA developers recorded on here comprising Ray Grehan, Danny Grehan, Tom McFeely, John Fleming, Bernard Doyle, Patrick Fitzpatrick, Tony Fitzpatrick, Paddy Shovlin, Michael Doran, Martin Doran, Alastair Jackson, Fergal McAlinden, Peter McDaid, Mervyn McAlister, Peter Dolan, Sam Thompson, Sean McWilliams. It should be said that Tom McFeely’s bankruptcy was overturned in the UK and he was subsequently declared bankrupt in Ireland.

Details of the NAMA application were reported here.

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