The High Court today has heard claims that Dairygold continued to control key rates of payment and bonuses of its then chief executive even after he had moved to a subsidiary company.

Businessman Jerry Henchy (48) from Kilmallock, Co Limerick, is suing the co-operative society for approximately €8m in damages arising from the termination of his contract in 2009. He also claims the company is behind allegedly defamatory material that subsequently appeared in the press. Dairygold contest all counts.

Today Henchy told Justice Daniel Herbert from 2006 he had been chief executive of both Reox Holdings plc, a company set up to administer certain non-core business interests of the co-operative, and Dairygold itself.

He told the court he had signed a letter to the effect that he would now be working for Reox Holdings but his work was divided between the two companies. Dairygold paid half his €500k salary as well as PRSI and bonuses for the work he did for them under a contract for services with Reox, it is claimed.

“As far as I was concerned I wasn’t doing anything new. This was just moving around.”

It is Dairygold’s case that Henchy was contracted to Reox Holdings in his past few years working as the co-0operative’s chief executive. Henchy claims Dairygold also had an employer’s duty of care to him under the terms of the agreement.

Henchy told the court during the de-merger of Reox from Dairygold, members of the co-operative’s board, who also served on the Reox board were unhappy with the way bonuses were to be calculated for senior Reox staff. Board members Vincent Buckley and Flor Riordan were unhappy with the valuation of the company’s property portfolio. Henchy said there were concerns that the property had been undervalued, which would result in targets being easier to reach when final valuations were made.

Asked by his counsel Patrick Hanratty SC if his integrity had been questioned at the time Henchy agreed that it had. “All of our integrity was questioned at different stages of the process,” he claimed. Henchy commented that as things had worked out the property valuations were in fact far too high.

It is Henchy’s case that he was dismissed for spurious reasons related to alleged financial irregularities with his farming account. He claims instead that his dismissal came as a result of a concerted campaign by various board members including Buckley and others.

He told the court there was always a lot of discussion when it came to deciding how bonuses were calculated as it was important they were a benefit to the company as well as the recipient. Using milk prices as an example he claimed: “You couldn’t have managers coming in and arranging for a price when their bonus at the end of the year was dependent on how blasé they were about that or how flaithiúlacht they were about spending that money.”

The case continues tomorrow. Dairygold is expected to put its case after the summer recess. It contests all allegations.

By Abigail Rieley