Paddy, Kelly, Leo, the Leak, and More to come, next March, Stay Tuned? The Summit Saga??

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Paddy Cosgrave ‘used Web Summit resources for benefit of his private household’, ex-director claims in lawsuit

  7 hrs ago

Paddy Cosgrave used Web Summit resources “for the benefit of his private household” and engaged in bullying and harassment, a former director has alleged in High Court proceedings.

In an affidavit, David Kelly quoted from company emails alleging the Web Summit organised a locksmith for Cosgraves’ childminder and the potential supply of a new modem in a granny flat.

He also alleged that in 2019 the Web Summit website began to sell clothing on behalf of Mr Cosgrave’s wife, model Faye Dinsmore. These included an €850 hand-knit sweater and a children’s hoodie for €240.

The claims are made in a lawsuit by Mr Kelly’s company, Graiguearidda Ltd, against Manders Terrace Ltd, the firm behind Web Summit, Mr Cosgrave and his company Proto Roto Limited, over the alleged oppression of Mr Kelly as a minority shareholder.

The case was accepted onto the list of the High Court’s fast-track commercial wing today.

Mr Justice Denis McDonald said there were “significant commercial matters” involved.

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In an affidavit in support of the application to enter the matter on the list, Mr Kelly alleged Mr Cosgrave’s behaviour had “for many years” been “manipulative” and “threatening”.

“I have been subject to bullying, harassment, abuse, coercion and intimidation. The relationship between us has now completely broken down and can best be described as irremediably toxic,” Mr Kelly said.

His firm has a 12pc stake in the Web Summit, but Mr Kelly claimed that because of the manner in which Mr Cosgrave ran the company, his minority shareholding had been “effectively meaningless”.

Mr Kelly alleged Mr Cosgrave “appeared to treat” the company “as an extension of his person” and did not meaningfully consult him as a shareholder or fellow director. He resigned as a director last March.

Bernard Dunleavy SC, for Manders Terrace Ltd, said his side neither consented nor objected to the entry of the lawsuit onto the court’s list.

“I just want to make it clear. The decision not to object to entry is not in any way a reflection of the defendant’s view of the merits of the case,” said Mr Dunleavy.

“We don’t believe the complaints that are set out at some length, taken at their height, amount to oppression. We intend to vigorously defend the proceedings.”

The lawsuit comes just weeks after Manders Terrace issued proceedings against Mr Kelly for alleged breach of fiduciary duty, claiming it had lost $10m (€8.6m) as a result of him allegedly secretly setting up an investment fund to profit from the Web Summit’s success. Mr Kelly has denied those claims.

Both cases now look set to travel together and will be back before the court next March.

In his affidavit, Mr Kelly said he had known Mr Cosgrave for 25 years. They had gone to secondary school together and he, Mr Cosgrave and Daire Hickey co-founded the Web Summit.

He said that in recent years, their business relationship became “seriously damaged as a direct result of the conduct of Mr Cosgrave in the manner in which he has conducted the affairs of the company”.

Among the claims made in the affidavit is that Mr Cosgrave used company resources to run “toxic” campaigns and vendettas against Leo Varadkar, the Tánaiste’s friend Maitiú Ó Tuathail and the IDA.

He alleged a defamation action taken by Dr Ó Tuathail over a defamatory tweet was “a prelude” to a “concerted campaign” to damage Dr Ó Tuathail.

The action was settled and Mr Cosgrave’s tweeted an apology in August last year.

But Mr Kelly claimed that by this time Mr Cosgrave had begun working with a former associate of Dr Ó Tuathail as well as a Web Summit employee, with a view to discrediting him.

The legal filing outlined Mr Cosgrave’s alleged involvement in breaking the story that Mr Varadkar leaked a draft GP contract to Dr Ó Tuathail in April 2019 when it was still under negotiation. The leak is now under investigation by gardaí.

Village Magazine has said Mr Cosgrave made no contribution to the piece it published revealing the leak. It says it published the piece in accordance with ordinary journalistic ethics and on the basis of what it independently thought relevant, fair and true.

In the affidavit, Mr Kelly alleged a senior IDA executive was “humiliated” at a Web Summit event in New Orleans in 2018 where the IDA sponsored a drinks reception for chief executives of around 200 companies.

He alleged that after a senior IDA executive gave a welcome speech, Mr Cosgrave stood beside her “slow clapping” and later told the audience it would be the last time the IDA would be allowed to sponsor a Web Summit event.

Mr Kelly claimed the “intermingling” of Mr Cosgrave’s affairs and those of Web Summit was not limited to financial or political matters.

“There are documented instances in which Mr Cosgrave has used Web Summit resources to assist with the carrying out of administrative tasks for the benefit of his private household,” he claimed.

Mr Kelly referred to company emails outlining how a locksmith had been procured for the Cosgraves’ childminder and discussing the potential supply of a new modem in a granny flat.

He alleged that in 2019 the Web Summit website began to sell clothing for his wife, Faye Dinsmore, including an €850 hand-knit sweater and a children’s hoodie for €240.

“The sale of such clothing attracted adverse publicity for Web Summit,” he said.

Mr Kelly raised the issue of a €1m donation towards Ireland’s Covid-19 response.

He said that on March 16, 2020 Mr Cosgrave tweeted that an aspect of the State’s response to the pandemic was “a catastrophic failure to plan”.

In response, HSE chief executive Paul Reid responded on Twitter, saying: “Throwing rocks from the sideline does not help anyone.”

A day later, Mr Cosgrave announced the €1m donation, which Mr Kelly said was done without reference to other directors or senior executives at Web Summit.

“Mr Cosgrave has run the company in a manner akin to that of a personal fiefdom, as if he owned it outright himself,” Mr Kelly claimed.

Mr Kelly alleged he had faced a concerted campaign by Mr Cosgrave to damage his “professional and commercial activities”.

He accused Mr Cosgrave of making up falsehoods about him in order to damage his character.

This, he alleged, included Mr Cosgrave telling him he heard he had made a pass at a mutual friend at a wedding.

Text messages from the mutual friend, outlined in the affidavit, confirmed nothing untoward happened.

He said that during one text exchange Mr Cosgrave referred to having seen “kompromat” on Mr Kelly, a term used to describe compromising material.

He said it became apparent this was a reference to photographs allegedly taken during his stag weekend.

“Mr Cosgrave was not on this weekend and his reference to such photos is fabrication,” Mr Kelly said.

The case returns to court on March 14 next.

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