Part of the rationale put forward by Ian Drennan, the State’s corporate regulator, for seeking High Court inspectors for Independent News & Media (INM) is to examine whether any outsiders received unlawful “inside information” on the company, which is publicly listed on the stock exchange.
In July 2016, just as the relationship between former chief executive Robert Pitt and then-chairman Leslie Buckley was disintegrating, new so-called market abuse regulations came into force.
The rules are designed to prevent market manipulation, by limiting the disclosure to any in-the-know outsiders of internal information that might affect a company’s share price, unless shared with the whole market.
The Office of the Director of Corporate Enforcement (ODCE) alleges in court papers that Buckley “shared information that may well fall within the definition of inside information” under the rules.
He highlights a series of communications between Buckley and Denis O’Brien, who owns almost 30 per cent of INM, that he says raises “significant concern”.
Drennan lists nine emails or texts from Buckley to O’Brien, which the regulator alleges illustrate the sharing of information that was not available to INM’s other shareholders.
There is no evidence or suggestion that any share trading was conducted on the back of this information, or that O’Brien intended to profit from tip-offs.
The first message is an email from Buckley to O’Brien just as the market closed on March 3rd, 2016. Next morning, INM released better-than-expected financial results, sending its share price up 4 per cent.
O’Brien knew INM’s revenues were up more than 13 hours before other shareholders. However, Mr O’Brien owns 29.95 per cent of INM and under stock market rules could not have bought more share in the companies without crossing a threshold that would have obliged him to bid for the company.
‘Undervalued’
Drennan also draws attention to an email from Buckley to O’Brien one evening in August 2016, to which is attached a preview of a note by INM’s stockbrokers, Davy, that the chief financial officer circulated to board members.
Other shareholders would not have seen the positive note – which suggested the stock was “undervalued” and contained INM’s interim results – until the next day.
Buckley speculated to O’Brien whether INM’s share price could rise on the back of the note, although, as it turned out, it stayed flat. Drennan suggests this shows Buckley knew the note may be price sensitive.
By this time, unbeknown to outsiders, Pitt and Buckley were already at each other’s throat over an aborted bid by INM for O’Brien’s Newstalk radio station.
Later the next day, Pitt would tell a results briefing he would never overpay for acquisitions. In hindsight, this looks like an oblique warning to Buckley over the Newstalk row, telegraphed through the media.
Through various messages in this period, Buckley kept O’Brien regularly updated on issues including a bid to buy the Celtic Media groups, and INM’s decision to overhaul a costly pension scheme.
On one occasion, O’Brien is given sight of a stock market announcement due to go out the next morning, concerning a shareholders meeting over the pension restructuring.
“I did want you to know in advance,” Buckley tells O’Brien.
The most interesting missive among those about which Drennan is concerned is in November 2016 relaying the news to O’Brien that Denis Naughten, Minister for Communications, was going to delay the proposed Celtic Media deal.
Drennan then highlights several messages from Buckley to O’Brien over the following six weeks concerning the burgeoning row with Pitt over Newstalk, Pitt’s decision to make a whistleblower complaint, and messages sharing media inquiries from this newspaper over the row.
Buckley, Drennan highlights, was specifically aware that one message on November 28th, 2016, the day The Irish Times broke the Newstalk story, contained "price sensitive" information.
It appears that O’Brien even helped to craft one INM statement over the pension restructuring in December 2016, which had become a controversial public issue, especially set against the backdrop of the then-breaking Newstalk row.
Mr Drennan claims in his affidavit that an email Buckley sent O’Brien on December 12th, 2016, relating to the pensions issue shows that “not only was the major shareholder provided with a copy of the draft statement before it was issued, but it suggests that he actually participated in the drafting of that statement”.
The messages highlighted by Drennan illustrate that O’Brien, as recipient of such a steady stream of accurate information, really was the main INM shareholder in every sense.
