Judge asks Henchy if he should have had thicker skin

The former chief executive of Dairygold was asked in court whether he should have had a thicker skin when dealing with the board of the co-operative.

Businessman Jerry Henchy (48), a father of three from Kilmallock, Co Limerick is suing his former employers for around €8m in damages arising from his dismissal for “spurious reasons” to do with alleged financial irregularities with his farm account, it is claimed. He is also suing the co-operative for alleged defamation over articles that appeared in the national and international press subsequently. Dairygold contest all counts.

Mr Justice Daniel Herbert asked Henchy if “hurtful” allegations regarding asset stripping were not “the kind of fairytales that are going to appear”. He told Henchy: “It goes with the job. You couldn’t have a thin skin.”

Judge Herbert drew laughter from the court when he pointed out that farmers tended to be blunt and were “long looking people” who wanted to know all sides of a situation.

Henchy was describing events during the proposed sale of Dairygold’s consumer food business Breeo to rival Kerry Group. Henchy told the court that the matter of the sale had arisen in 2007. Breeo had been one of the businesses moved to Reox Holdings Plc, a subsidiary company of the co-operative set up to maximise the profits from non-core businesses.

Henchy explained that Reox had been exploring a merger between Breeo and Glanbia. He said it given the uncertain climate for branded foods it made sense for the two companies to join their consumer manufacturing to lower production costs, he claimed. Glanbia pulled out but Reox was approached with an unsolicited offer from Ion Equity to buy Breeo, the court heard.

Henchy said he brought the offer before the board of Reox but three of the four Dairygold board members who were also on the board of Reox were dead against the plan, he alleged. He claimed there were concerns that the management of Reox were intent on selling off the company’s assets to boost its own bonuses and that the change in direction would lose the goodwill of the Dairygold shareholders.

Henchy claims he and the Reox managers were upset at the suggestion they were suggesting the move for their own gains. He said he thought the suggestion was “unfounded”, “nasty” and only introduced so that “certain individuals” could have the excuse to stall the sale. He himself found it “hurtful”.

He told the court  the Dairygold board members were concerned about a third party operating the Dairygold name, which at that stage was licensed by Breeo to Dairygold itself. Ion Equity withdrew and Kerry Group made an offer, the court heard.

Henchy told the court it was agreed that Kerry Group would pay a virtually non-refundable deposit of €20m to prove its intent but the Dairygold board members of Reox were still concerned. The matter dragged on for several months, he claimed.

There were still concerns about the use of the Dairygold name by a third party and some board members were concerned that they would need to rebrand the co-operative, the court heard. Henchy told the court Kerry Group had agreed to pay for any rebranding costs but the Dairygold board members were not interested. They wanted €5m from Reox upfront before agreeing for the sale to go ahead, he claimed.

“I said I thought this was completely wrong and many of the other Reox board members thought this was wrong but Reox would pay the €5m subject to the business being sold.”

Henchy told the court this move was a “scam” from Dairygold to “put their hands in Reox’s pockets”. He claimed in his opinion the move would do nothing to benefit those shareholders who were no longer farming.

Henchy told the court that he had subsequently asked Mr Flor Riordan why the Dairygold board had insisted on the €5m payment. He claimed Mr Riordan had replied: “It was extracted because we could extract it.”

Breeo was subsequently sold to Kerry Group for €140m.

Henchy also described tensions that had arisen over an ongoing dispute about milk protein testing. The court heard the Irish Farmers Association (IFA) had organised two independent tests of milk supplies in 2005 and 2007. Both found differing results from Dairygold tests, to the detriment of the farmers, it was claimed in court.

Henchy told the court that after the second IFA test he undertook his own investigation into the testing and found that the IFA case was solid, he claimed. In November 2007 he announced at several farmers’ meetings that Dairygold would introduce independent milk testing within the next year.

He alleged the Dairygold board were very unhappy with his announcement. It did not consider he had the right to make such a large policy announcement, he said. It was decided the board would consider various options and would travel to view testing facilities in the UK and The Netherlands.

Henchy told the court that Dairygold board member Bertie O’Leary, who was also a member of the Irish Co-operative Organisation Society (ICOS), a body representing the dairy production sector, had suggested that the ICOS should handle testing.

Henchy told the court that, in principal, the ICOS plan was one that would benefit the dairy industry as a whole but would never work, he claimed. He claimed he considered it a waste of time discussing it. He told the court that the ICOS had no experience in milk testing, it had no laboratories. “It didn’t even have a scientist,” he alleged.

He claimed he had not attended an ICOS presentation on the subject but had sent the member of the Dairygold management who was an expert in the area. Henchy told the court after the meeting he received a call from Dairygold chairman Vincent Buckley, who told him that there had been complaints about him not attending the meeting and that Bertie O’Leary had wanted to phone him but was too angry.

He told the court he had rung O’Leary and he claimed O’Leary had been furious. “He said I was being too negative and the fact that I hadn’t turned up to the meeting was wrong. He said he didn’t feel it necessarily had to happen but he felt I wasn’t taking it seriously,” he claimed.

Asked by his counsel Mr Patrick Hanratty SC whether this row had any legacy Henchy said: “It was another bone of contention between myself and Mr O’Leary.” Henchy agreed that the milk testing discussions continued until after he had left the company. They are still unresolved today, he claimed.

The case has adjourned until after the courts summer recess and will resume in October. Dairygold is expected to put its case after the summer recess. It contests all allegations and claims.

By Abigail Rieley 

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