BUSINESS OPINION:Rebel shareholders have put some awkward questions to the management, writes JOHN McMANUS

ON WEDNESDAY, the “rebel” shareholders in sliced-pan-to-metal trading conglomerate One51 are due to get some answers to a number of rather awkward questions.

They principally want to know what happened to a €4.96 million royalty payment in respect of a patent for a paint-tin lid developed by one of the group’s businesses.

They claim to have followed the money through a litany of internal and external companies and into the tax-free pockets of some unidentified executives. The questions they have put to the company are intended to shed light on all this, including who got the money.

One51 has not responded to any specific issues other than saying all the companies mentioned are within the group and that nothing untoward has taken place.

Presumably shareholders will be in a position to make up their own minds come Wednesday and if they are not happy with what they have heard then they can take action. The option currently open to them is to elect three directors nominated by the rebels, who promise to improve corporate governance at the company.

But, as ever, it will not be that simple. The transaction highlighted by the dissident shareholders is extremely complicated, involving eight separate companies.

One suspects that any more detail that might be provided by One51 may serve to only complicate things further.

And even at that stage it may not be possible to say if anything “wrong” happened or if any laws were broken.

Indeed the so-called “campaign for change” has stopped well short of making any allegations of this nature.

Confused shareholders are thus likely to be even more confused. They will also be aware of the background to the affair and may choose to see the rebels’ interest in corporate governance as simply expedient as they attempt to wrestle control of the business from Philip Lynch. The two leading lights of the “campaign for change”, Gerry Killen and John Hegarty both sold their businesses to One51 and took up executive roles before falling out with Lynch – a very successful businessman but one not noted for a touchy-feely approach.

It has also emerged Killen considered abandoning his campaign when offered a job by Lynch, although it came to nothing.

Investors will probably weigh up Lynch’s record in any final analysis. He is much admired for building up the IAWS agri-food business in the 1990s, but One51 – which he then moved on to – has disappointed in recent years, with the shares down at €1.75 from a peak of around €5. Lynch’s controversial tilt at Irish Continental Group cost the company millions and, as the dissidents point out, the company seems to have lost focus. Lynch has responded by releasing early the group’s interim results, showing a rise in earnings.

It will be a tight enough affair on Wednesday and Lynch has a fight on his hands.

One thing is clear already and that is that this is not really about corporate governance at One51. But, that said, any shareholder who is really that interested in corporate governance at One51 has heard enough already to be concerned.

It would appear to be undisputed that the €4.96 million in patent payments went on a long journey through a labyrinth of companies before ending up in a company whose beneficial ownership is at best unclear. Some of the money was then disbursed to unnamed executives tax free and not disclosed to shareholders.

The dual role of main board directors – namely members of the remuneration committee – as directors of some of the intermediaries pulls them into the centre of the affair.

Even if it turns out next Wednesday that everything was above board, a lot of damage has already been done.

The fundamental question remains as to whether or not it is appropriate for One51 to engage in this sort of opaque corporate activity and make undisclosed tax-free payments to executives.

Some shareholders may not be too concerned. Indeed they may have considered it incredibly naive to even express surprise, never mind concern, that a large, sophisticated company operates in such a fashion. They presumably do not see a link between corporate governance at the Irish banks and the €25 billion bill that the taxpayer has been left to pick up.

But anyone who thinks there is a direct correlation between investment performance and such things may already have heard enough to vote with their feet, regardless of who wins the day on Wednesday.