Dunnes attack on Harney approach to group

The Minister for Enterprise, Trade and Employment, Ms Harney, referred to "substantial cause for concern as to the standards of corporate governance" operating in Dunnes Stores when giving reasons for appointing an authorised officer to two of its companies, the High Court heard yesterday.

Mr Adrian Hardiman SC, for Dunnes, complained that the Minister, when asked by Dunnes to clarify what "standards of corporate governance" and other matters detailed in the reasons meant, had refused.

He argued that, while the Minister had decided last year not to apply to the courts to appoint an inspector to investigate the affairs of the two Dunnes companies, she was effectively seeking to run an investigation similar to that undertaken by an inspector through the authorised officer she had appointed to the company.

Mr Hardiman said the company had secured last Monday documents from the Department of Enterprise, Trade and Employment which included a complaint from Mr Jack Tierney, a director of Kildare-based Faxhill Homes, that he had been told by a journalist that the journalist had been given confidential information by an authorised officer, Mr George Moloney, who had investigated Faxhill Homes.

Counsel also alleged that information in a Sunday Times article of January 10th last about investigations into Garuda Limited and Faxhill Homes regarding events in the 1980s, which included damaging and devastating references to Dunnes, must have been leaked from Ms Harney's Department.

Dunnes had received no satisfactory response to complaints about such leaks of information obtained under statutory powers, he said. Mr Hardiman, with Mr Richard Nesbitt SC, for Dunnes, was continuing his opening of the challenge by Dunnes Stores Ireland Company, Dunnes Stores Ilac Centre Limited and Mrs Margaret Heffernan, a director of Dunnes, to the appointment by Ms Harney of an authorised officer to the two Dunnes companies.

In his opening, Mr Hardiman read correspondence between Mrs Heffernan and Ms Harney prior to and after the appointment of the authorised officer on July 22nd, 1998. In a number of letters after the appointment, Mrs Heffernan strongly objected to the appointment and asked Ms Harney to outline the reasons for it.

She also trusted the appointment would remain confidential and spoke of the damage the appointment would do to Dunnes.

While this correspondence was continuing, Dunnes received a demand from the authorised officer to produce extensive documentation, a demand later described by the High Court as "excessive" and "a trawl", counsel said.

Among the documents demanded was the Price Waterhouse report, which was prepared in contemplation of litigation taken by Mr Bernard Dunne and which the Department knew was privileged, counsel said.

Mr Hardiman said when the Minister was finally obliged, following a High Court decision last November, to give reasons for the appointment, those reasons included no Section 21 material. Dunnes had sought clarification of the reasons but were refused.

The hearing continues today.