Henchy made ‘unavoidable enemies’ at Dairygold, High Court hears

Former Dairygold chief executive Jerry Henchy was fired after a long campaign against him by key company board members, it was claimed at the High Court today.

Mr Henchy denies that he was ousted because of unpaid debts and claims that the problem started long before he left his position in January 2009.

Speaking on the first day on proceedings in Dublin today (Tuesday), counsel for the plaintiff, Patrick Hanratty SC, claimed that Mr Henchy had made unavoidable enemies during his time as chief executive and it was this rather than the balance of his outstanding farming account that was behind moves for his dismissal.

Mr Hanratty told Mr Justice Daniel Herbert that Vincent Buckley, the chairman of Dairygold at the time of Mr Henchy’s dismissal, had been against Mr Henchy since the board elections in 2006. Some time prior to this meeting Mr Buckley had refused to sign the new board charter, which placed an emphasis on confidentiality regarding board dealings and stated that there should be a relationship of “absolute trust” between the chairman and chief executive, it was claimed.

At the elections Mr Buckley announced his intention to run for chairman. In a private conversation with the then vice-chairman Mr Patrick Kelleher Mr Henchy expressed his reservations about someone who had not signed the charter becoming chairman of the board, the court heard. Mr Buckley was defeated for the roles of both chairman and vice-chairman. In January of the following year Mr Buckley presented a statement to the board describing his outrage at the interference of management in the voting, the court heard.

Mr Buckley subsequently became chairman of the company in 2008.

Mr Hanratty told the court that there had also been a long running issue with milk testing. After it was discovered that results of protein tests were systematically being decided to the disadvantage of the farmers Mr Henchy took the executive decision to bring in independent testing. The Irish Co-Operative Organisation Society wanted to take over that testing, the court heard.

The court heard at the subsequent Dairygold board meeting in 2007 Mr Henchy vigorously opposed the idea. He told the board that the ICOS did not have the expertise to do the tests to a standard that would satisfy the farming community. After the meeting Mr Buckley called Mr Henchy telling him that fellow board member, and chairman of the ICOS, Bertie O’Leary was “extremely displeased” at his conduct at the meeting and asked him to call him. Mr Henchy did so and Mr O’Leary told him exactly how he felt, it was claimed.

Mr Hanratty told the court that the matter of milk testing rumbled on for years. In 2009, after Mr Henchy had left the company, the ICOS did move to open a testing facility but it never got off the ground.

Mr Hanratty claimed that the matter of Mr Henchy’s outstanding farming account balance did not become an issue until late 2008. He told the court that it was not unusual for farmers to have an outstanding balance until it was paid off after a harvest and traditionally Dairygold would have accepted this. Mr Henchy’s account had a balance of €159,000 but this would still have been a fraction of his own income of €560,000, the court heard.

The issue was raised at the 2008 AGM by an ordinary member of the society who asked the meeting whether it was proper for the chief executive of the company to have such a significant outstanding debt. Mr Hanratty asked the court how an ordinary member would have access to this kind of information and speculated that he must have been a plant.

Mr Hanratty told the court things began to move very quickly in January 2009.  Mr Buckley demanded €140,000 in four days. Mr Henchy said that he couldn’t get that type of money together so quickly. He offered a post dated cheque.

“All Mr Buckley’s ducks were in a row now,” Mr Hanratty told the court. Instead of taking the matter to the audit committee or making it clear to Mr Henchy that his job was on the line, Mr Buckley brought the matter before the board.

Mr Hanratty told the court that Mr Henchy met with Mr Buckley and the then vice-chairman Bertie O’Leary in the Park Hotel in Charleville on January 16th.  They told Mr Henchy that a meeting of the board had been called for the following Monday, the 19th. Mr Henchy would be given an opportunity to make a statement but should then leave the meeting. There would not be a discussion, the court heard.

On the 19th  Mr Henchy made a brief statement and left the meeting. Mr Hanratty told the court that Mr Henchy had no idea that a document had been prepared for the meeting detailing the situation with his account. He disputes various points of this document.

Mr Henchy again met with Mr Buckley and Mr O’Leary two days later in the Kingsley Hotel in Cork City. Mr Hanratty told the court it became clear that the decision had already been made to fire him bar an attempt to get him to resign. During this meeting Mr O’Leary said to him “You’re a big boy and you always said to us that if we wanted you out you would rather we came to you face to face rather than a slow death,” it was claimed in court today. Mr O’Leary went on that he had held a number of people back because of this but he wouldn’t be able to hold them any longer, the court heard.

In its defence, Dairygold denies Mr Henchy’s claims, including that he was subject to an orchestrated campaign to procure his dismissal. It claims his contract of employment was transferred in June 2006 to Reox. It is denied Mr Henchy was chief executive or an employee of Dairygold after June 1st, 2006, and it is pleaded he was employed by and acted as chief executive for Reox

The case continues tomorrow and is expected to last four to six weeks.      

By Abigail Rieley  at the High Court today 

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