An action by a former director and minority shareholder in the Web Summit tech conference firm claims he has been the victim of oppressive conduct and attempted blackmail in proceedings admitted to the Commercial Court.
The action alleging shareholder oppression is being brought by David Kelly, a director of Graiguearidda Ltd, who claims there has been a complete breakdown in relations with the Web Summit CEO Paddy Cosgrave.
The case is against Manders Terrace Ltd, the Web Summit holding company, a company called Proto Terrace Terrace with 81 per cent of the shares, and Mr Cosgrave who is the sole shareholder in Proto Roto.
Co-founders
Graigueridda, which has a holding of just under 12 percent, and Lazvisax Ltd, has seven per cent of which Daire Hickey is the beneficial owner. Mr Cosgrave, Mr Hickey and Mr Kelly are co-founders of the Web Summit.
Frank Kennedy BL, for Graiguearidda, told the court on Monday there were compelling reasons in Mr Kelly’s affidavit seeking entry of the case to the commercial list.
Bernard Dunleavy SC, for the respondents said he wished to make it clear that the decision not to object to the entry application was in any way a reflection of his clients' acceptance of the plaintiff’s case which will be vigorously defended.
Mr JusticeDenis McDonald gave directions for the case to proceed. It comes back before the court in March.
Alleged coercive conduct
In an affidavit, Mr Kelly makes several allegations against Mr Cosgrave including that he (Cosgrave) had engaged in toxic, oppressive, coercive conduct towards him, including attempted blackmail.
He claimed there was a complete absence of any meaningful corporate governance in the Web Summit company "despite my repeated requests for same".
He said there has been oppression of the members and disregard for their interests "arising from the intense personal animus of Mr Cosgrave towards Mr Hickey".
He also said Web Summit resources, including cash resources and employees, were used for the furtherance of Mr Cosgrave's non-Web Summit endeavours, which were frequently but not invariably, political.
Mr Cosgrave and Mr Kelly have known each other since they were in secondary school together.
Business relationship
In recent years, Mr Kelly said, the business relationship had become seriously damaged as a result of Mr Cosgrave's conduct.
This included a groundless allegation that he (Kelly) had in 2019 made a sexual pass at a mutual friend at a wedding. Mr Kelly said he clarified with the woman involved that he did not behave inappropriately and in a text to him, the woman said: "1 million percent you did absolutely nothing wrong".
She said in another text: "You did absolutely nothing wrong. Not even a word wrong. Promise".
Alleged falsehoods
This was of great concern, Mr Kelly said, because "it was now apparent Mr Cosgrave was making up complete falsehoods about me in order to damage my character".
There followed, in 2021, exchanges between the two men during a period of work to establish a second fund to the Amararanthine Fund "which was set up to leverage the substantial resources, knowledge, and connections from hosting the highly successful international Web Summit conferences.
In February 2021, he said there was an "astonishing stream of text messages" from Mr Cosgrave in which he alleged he had seen "kompromat" (compromising material) on Mr Kelly related to some photos which had allegedly been taken during Mr Kelly's stag weekend.
He said his reference to such photos was a fabrication and Mr Cosgrave was not on that weekend.
Political activities
When Mr Kelly resigned as a director of the company, but continued to act as managing director of the Amaranthine Fund I, Mr Cosgrave phoned him and told him he was going to destroy him, and it would end badly for him.
He said there was an offer on behalf of Mr Cosgrave to buy his shareholding at an undervalue of €1.25 million.
Mr Kelly said Mr Cosgrave used Web Summit funds to promote personal and frequently political tweets. This included making a €10,000 payment to charity for the settlement of a defamation action taken by Dublin-based GP Dr Matiú Ó Tuathail. Dr Ó Tuthail is a friend of Tanaiste Leo Varadkar.
Mr Kelly became concerned in November 2020 that Mr Cosgrave was using the reputation and platform of the Web Summit to further the profiles of individuals with whom he engaged in political activities, and specifically with a view to, damaging the reputation of Dr O'Tuathail and Mr Varadakar.
Mr Kelly also claimed Mr Cosgrave used Web Summit resources to assist in the carrying out of administrative tasks for the benefit of his private household.
There was also a €1 million donation to charity by Mr Cosgrave in March 2020 which was done without reference to the members of the company, other directors senior executives, he said.
