Claims that "manufactured difficulties" led to the "engineered collapse" of the Master Meat Packers Group of companies in the 1980s are being made by its former chairman and chief executive, Mr Pascal Phelan, the High Court was told yesterday.
Mr Justice Roderick Murphy also heard that Mr Phelan was claiming he was betrayed and "sold out" by his former partner, Middle East businessman Zakaria Taher.
The allegations were made at the opening of a hearing expected to last at least 15 months in which claim and counterclaim are pleaded by Mr Phelan, Mr Larry Goodman and Mr Taher. Mr Phelan, who founded Master Meats, claims he and Mr Taher were equal shareholders in 10 companies in the MMPG group. He alleges there was a conspiracy between Mr Taher, Mr Goodman and others in April 1987 to remove MMPG from the meat trade by putting the group into receivership or securing ownership and control.
For the purpose of the proceedings, Mr Goodman accepts that he owned and controlled MMPG since 1987.
Both Mr Goodman and Mr Taher deny allegations of wrongdoing. In his defence Mr Taher alleges that Mr Goodman acted fraudlently to defraud and damage Mr Phelan either to eliminate him (Mr Phelan) and MMPG as competitors to Goodman International or to establish a monopoly in the Irish beef industry.
Mr James Salafia SC, for Mr Phelan (50), said at the time of the matters complained of his client was a partner with Zakaria Taher in the Master Meat group. The unfortunate events that occurred would show that trust was abused in a most profound and heinous manner and that Mr Taher betrayed his partner, Mr Phelan, by secretly selling him out to his main competitor, Mr Goodman. That was a betrayal carried out in the lowest and most loathsome manner.
Counsel said the proceedings had been initiated in 1988/89. There was a long period during which they had made their way through the courts. The events complained of related primarily to April 1987 and September 1988. Only in September 2000 did Mr Goodman "come clean" about his involvement in the case and even then only in a qualified manner.
Mr Salafia said that Mr Goodman, knowing the truth of the allegations of inducing breach of contract, used the courts and other establishments of state to continue to deny his wrongdoing. Mr Phelan's case was that only in a most qualified manner had Mr Goodman admitted his participation in the conspiracy against Mr Phelan.
Mr Salafia said Mr Phelan was born into a family of 17 in Co Laois. He had been an altar boy and after leaving school at 18 spent a year studying to be a Franciscan. About 1970, he got a job in Dublin paying £10 (€12.7) a week. He then worked in Australia before joining the Irish Livestock and Meat Board (CBF) in 1973. He opened CBF's Milan office which served Italy and the Middle East. He later ran CBF's Brussels office.
Around 1979, he was asked by the CBF chairman to deliver a keynote speech to a symposium and outlined where he saw the beef trade going and that vacuum-packed beef primarily for supermarkets was "the way to go". He was approached by Mr Goodman who indicated he had a number of idle deboning plants and was interested in Mr Phelan joining him. Following further meetings, Mr Phelan joined the Goodman organisation.
Mr Phelan spent six months training at the Bagenalstown plant and then went on to be manager of it. Mr Nobby Quinn also worked in the factory. Subsequently, Mr Phelan was in charge of the boneless beef operation in Bagenalstown and Cahir. The business developed well. In early 1983, Mr Phelan came under a lot of pressure in the boneless division. Mr Goodman got Mr Quinn involved in the deboning division for exports outside the EU.
Shortly afterwards Mr Phelan found himself in competition with Mr Quinn, who was showing an enormous leap in profits. Mr Phelan decided to find out what was happening. He went to the Cahir factory and was satisfied there were serious irregularities there. Fiddles and frauds were being carried out in an outrageous manner. In March 1983 he wrote to Mr Goodman saying there were things going on in Cahir which he should be aware of. Mr Phelan met Mr Goodman in a hotel and outlined his concerns.
Mr Goodman's response was "Pascal, are you telling me that you want to leave?" Mr Phelan understood that if he did not fall into line with the way business was being generated, he was not going to have a future in the organisation. As he walked from the hotel he realised his career with Goodman had come to and.
On another occasion, he and Mr Goodman were to have a meeting in Cahir. Mr Goodman's helicopter was late. Mr Phelan's wife was expecting her first child. Mr Phelan was late getting to the hospital and his wife had lost consciousness and he was required to sign a document for her to have a Caesarean section. After that incident, Mr Phelan resigned on the spot.
In August, 1983 he started out on his own. Initially, he had a contract for Saudi Arabia which brought him into immediate conflict with Mr Goodman. Mr Phelan reached the point where he was able to trade on a smallish scale. He negotiated with the Industrial Development Board in the North and in 40 days had a package to build a factory in Ballymena. He opened factories in Omagh, Bandon and Ballymahon. Mr Phelan in the course of business travelled to the Middle East where he met the Tahers to see if they would buy beef from Ireland. The Clover Meat group of companies had collapsed and Mr Phelan and Mr Zakaria Taher entered into a joint venture following the purchase by them in 1985 of the Clover plant in Clonmel for £750,000.
Mr Phelan would complain he was forced out of Master Meats in mid September, 1988. Leading up that period there would normally have been large scale banking facilities available, but Mr Phelan would say there were then "manufactured" difficulties between himself and Mr Taher. It became apparent the banking facilties were not available and would not be forthcoming until what was perceived to be a deadlock between the parties was resolved.
In August-September, 1984 the Clonmel factory opened and Mr Phelan claimed it was very profitable. In 1985 he built a £3 million factory in Ballymahon for which he got an IDA grant. In 1986 he spent £3.6 million on the Bandon plant for which he also got an IDA grant. a
His companies were growing very well and were perceived to be real competition for the Goodman Group. Working for the Master Meat Group were four or five members of his family.
Mr Salafia said that following "the engineered collapse" of the Master Meats Group, anyone with the Phelan name was sacked. They (the Phelans) had been real competitors to Goodman, had the confidence of farmers and were able to get supplies. This was a dynamic young company of the 1980s raising its head.
Before the action began yesterday, Mr Dermot Gleeson SC for Goodman Group was granted an interim injunction by Mr Justice Kevin O'Higgins in relation to an application by the Goodman Group seeking documents from the Tahers. An application for an interlocut ory injunction will be heard today. The Judge said that he was not making an order but was requesting that the media not report yesterday's hearing until both sides had the opportunity of presenting their arguments.
The hearing before Mr Justice Murphy continues today.
