The chief executive of the IE Domain Registry has settled his legal action against the company. Mr Michael Fagan has agreed that IE Domain Registry - which administers Irish website addresses - can use a report prepared by KPMG in disciplinary proceedings against him. The report makes 18 allegations against Mr Fagan, including overpayment of salary and incorrect treatment of expenses.

Mr Fagan had sought an injunction preventing the company considering the report on the basis that doing so was in breach of the rules of natural justice.

The settlement of the High Court injunction proceedings will enable the board of the IE Domain Registry to consider a report prepared by KPMG in the context of a purported disciplinary inquiry/ investigation into its chief executive, Mr Michael Fagan. It will also provide for the payment of monies owed to Mr Fagan by the firm, following his suspension on full pay in early October 2002.

The IE Domain Registry and Mr Fagan both confirmed the settlement yesterday, which follows internal disputes at the registry over Mr Fagan's management, and the influence of people associated with UCD, Eircom and KPMG on the company's board.

On November 12th Mr Fagan, who was appointed chief executive of IE Domain Registry Ltd in September 2001, secured an interim order preventing the company from purporting to act on or otherwise rely on a report prepared by KPMG, and given to him on November 6th, in the context of a purported disciplinary inquiry/ investigation into him.

This followed scenes at the IE Domain Registry in Dún Laoghaire on October 2nd 2002 when Mr Fagan departed the company's premises in the presence of gardaí and KPMG personnel.

KPMG later prepared a report on management of the IE Domain Registry which included findings that were adverse to Mr Fagan.

An affidavit prepared by the chairman of the IE Domain Registry - who is a former chairman of Telecom Éireann - Mr Seán Scanlon, alleges 18 separate matters of serious concern including: substantial overpayment to Mr Fagan having regard to irregular tax treatment of his salary; improper accounting for personal expenses on the company Visa card; a failure to disclose to the board losses incurred by the company; and entering contractual arrangements with parties connected to Mr Fagan without prior board clearance.

The affidavit alleges Mr Fagan removed a substantial amount of company documentation when he visited the company's premises on October 2nd, and that KPMG officials were initially refused entrance to the offices, before they were accompanied by gardaí.

It also alleges that there is evidence that management accounts prepared by the financial controller were altered to present a more positive position on the instruction of Mr Fagan. It is alleged this included the reversal of expenses, incorrectly recognising revenue, window dressing of cash and altering budgets to reduce variances in results.

Mr Fagan's affidavit to the High Court acknowledges that a letter from the IE Domain Registry sent to him in October outlined several alleged irregularities that were purported to have been carried out by him. This affidavit rejects what it describes as "bogus allegations."

It says Mr Fagan feels his exclusion from his post derived from the fact that he had forcefully expressed his opposition to the domination of the IE Domain Registry by an elite from UCD, Telecom Éireann and KPMG. It also alleges that the new IE Domain Registry is attempting to write off substantial debts owed to it in order to create a liquidity crisis that would prompt a "rescue" by UCD. In court this week Mr Fagan claimed the investigation by KPMG is bogus and contrived and in breach of fair procedures and natural and constitutional justice. The IE Domain Registry Ltd denies these claims.

The court had earlier directed the report be withheld until its release was authorised by order of the court. It also directed the firm to continue paying Mr Fagan's salary. However, under the settlement yesterday, it is understood that Mr Fagan has agreed that the KPMG report can be used by an internal company tribunal. This tribunal may or may not lead to disciplinary action against Mr Fagan.

Mr Fagan said yesterday the agreement was a major step forward for natural justice.

A spokesman for the IE Domain Registry refused to comment on the settlement.

However, the Department of Communications may intervene in the dispute in the new year. Under Section 31 of the E-commerce Act the Government retains the right to take over the running of the registry. A spokesman said yesterday: "Our concern is that .IE represents Ireland... We are currently looking at the options going forward on the IE domain registry. But no decisions have been made yet."