Ireland's new media kings fight for their reputations

By Henry Mance

Few people remember what was in the Sunday papers in 1998, but Irish billionaire Dermot Desmond certainly does.

The canny investor - who made hundreds of millions of pounds from turning round London's City Airport - is suing the Sunday Times for defamation over an article published 16 years ago, which claimed he had wrongly taken the credit for the idea of Dublin's financial centre.

Mr Desmond and his close friend, the telecoms entrepreneur Denis O'Brien, have emerged as rare winners from Ireland's financial crisis.

They are both among the country's five richest people, according to Forbes, with their billion-dollar fortunes largely unaffected by the property crash.

However, the actions and investments of Mr Desmond, known as 'the Kaiser' on account of his upturned moustache, and Mr O'Brien, a flamboyant jet-setter who pays part of the salary of Ireland's football manager, have come under intense media scrutiny in their home country.

In response, the two businessmen have fought to protect their reputations - aggressively.

Between them, the two men have launched more than 50 claims, related to news coverage, against journalists and newspapers over the past two decades, according to a Financial Times analysis of court records.

"They're peas in the same pod. They use their wealth to browbeat criticism," says one person who has been involved in more than one of the cases.

Mr O'Brien and Mr Desmond did not respond to a request for comment.

CONTROVERSIAL FIGURES

While billionaires tangling with their critics are not uncommon, the issue has become particularly sensitive in Ireland after the financial crisis exposed close relationships between politicians and businessmen.

Intense scrutiny of business and government is necessary "if we are to avoid sleepwalking into another crisis", says John Devitt, head of the non-government organisation Transparency International.

Mr Desmond and Mr O'Brien have long been controversial figures in Ireland. An official inquiry led by Mr Justice Moriarty found Mr Desmond had once paid for repairs to a former prime minister's yacht, while Mr O'Brien had made payments of about €500,000 to the communications minister, and supported a loan to him for a further €500,000, in the period after his consortium was awarded a lucrative mobile phone licence. Both men deny any wrongdoing.

Observers say that the worry is not just that they have sued critics - but also that they have invested in them.

In December, the pair were confirmed as the two largest shareholders in Independent News & Media, Ireland's biggest newspaper group and a company that O'Brien once accused of "trying to destroy my reputation".

The two men own about 45 per cent of the company following a fierce boardroom battle. O'Brien also owns Ireland's largest network of commercial radio stations through his company Communicorp.

"He is probably the most powerful media owner the country has ever known," said Mr Devitt.

STAUNCH CRITICS

The Irish Independent and Sunday Independent, Ireland's best-selling titles, which are owned by INM, have been among Mr O'Brien's strongest critics.

A dominating figure who demands absolute loyalty from his staff, the entrepreneur is said to read everything written about him.

"Those f...ers at the Indo are at it again," the entrepreneur would tell an adviser, while leafing through their reports, according to a biography by the journalist Siobhan Creaton.

Several journalists and academics told the FT that they are now concerned that Mr O'Brien's investment in INM could dilute critical coverage of his business affairs.

The newspaper group has recently proposed a code of conduct, under which "sustained or repeated adversarial editorial material concerning individuals or organisations" would require written approval from the managing editor. The code was proposed in February 2013, but has not been implemented.

In 2012 James Osborne, INM's chairman who was later voted out, said the entrepreneur had asked for an article about his debts to be removed from the next day's paper.

"Zero influence at all," was Mr O'Brien's response to suggestions of editorial influence. "I'm not even on the board so I don't have any influence. I'm an investor."

The media group said any suggestion of external influence would be "incorrect or defamatory".

Winning the 1996 mobile phone licence laid the basis for Mr O'Brien's telecoms empire, Digicel, which extends to the Caribbean, Central America and parts of Asia, and from which the entrepreneur this year expects to receive a dividend of US$650m.

Mr Desmond, who agreed to finance the mobile phone consortium, has called the Moriarty report "the most lengthy and expensive comic ever produced".

He has also had his own grievances against INM's publications, including one article about sectarianism in Scottish football. An investor in Celtic FC, he labelled the piece "disgusting . . . gutter press". He sued INM over an article published in a now-defunct newspaper.

"There is no point in meeting face to face unless you have a cheque," he wrote to Gavin O'Reilly, INM's then chief executive, during the dispute.

INVESTING IN INM

Mr O'Brien's financial involvement with INM began at the height of Ireland's boom, when he spent €500m for a 26 per cent stake in the company.

It turned out to be his worst investment: the shares fell as much as 99.8 per cent following the financial crisis.

"I bought into a business that I thought had very strong assets and was well managed. It was the opposite," Mr O'Brien told the FT. "It was the British Leyland of newspaper groups."

A restructuring deal struck by INM reduced Mr O'Brien's stake to about 20 per cent, a level he still held when the Moriarty tribunal's final report was published in March 2011.

But by May 2012, at a time when the newspaper group was continuing its hostile coverage, Mr O'Brien had increased his stake to 29.9 per cent. That was just shy of the level at which he would be forced to make a bid for the whole company, at a time when Ireland was considering a new law on media ownership.

Meanwhile, Mr Desmond disclosed in August 2011 that he had bought a 3 per cent stake in INM. Mr Desmond continued to build up that stake, to 16.85 per cent by December 2013.

The two billionaires enjoy a close personal relationship. They worked together on the appointment of Martin O'Neill as manager of Ireland's football national team.

They deny, however, that they acted in concert in building up their respective stakes in INM.

"I'm a friend of Dermot Desmond but he has separate investments to mine," Mr O'Brien told the FT.

BOARDROOM CHANGES

Mr O'Brien and Mr Desmond both urged the board to remove Mr O'Reilly as chief executive in 2012.

Several board members planned to refer the two billionaires' stake-building to Ireland's Takeover Panel for scrutiny, two people familiar with the matter said. But the proposal did not progress, with two board members failing to win re-election and four others resigning.

On Friday INM announced that its chief executive Vincent Crowley - one of the few directors to remain in place as Mr Desmond and Mr O'Brien built up their holdings - will depart within three months.

His departure is expected to give greater power to INM's chairman Leslie Buckley, who is also vice-chair of Mr O'Brien's telecoms company Digicel.

The story of INM illustrates potential shortcomings in Irish media ownership regulation, which would not consider Mr O'Brien's radio business when evaluating his power in Ireland's newspaper industry.

"We need new legislation," says Colum Kenny, a university professor in Dublin. "This is not about any individual, but there is reason to believe that our laws don't deal adequately with the financial and editorial realities."

A draft law on media plurality has been delayed.

Meanwhile, Mr O'Brien scored a big win last year against the Irish Daily Mail, which had alleged his charity work in Haiti was motivated by a desire to distract from the Moriarty tribunal.

A jury vindicated him and ordered the newspaper publisher to pay €150,000 in damages.

In December, the lower-profile Mr Desmond also chalked up his own victory. His lawyers won a ruling to proceed with the 16-year-old case against the Sunday Times, despite judges finding that there had been an inordinate and inexcusable delay in bringing it.

It is unlikely to be the last time his critics find themselves in court.

Mr Desmond did not respond to a request for comment on the matters referred to in this article.

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