Public airing of fall-out between Web Summit directors takes another turn

Public airing of fall-out between Web Summit directors takes another turn

On Thursday last, Paddy Cosgrave accepted an invite to become a European Innovation Council Ambassador, further cementing his status as one of Ireland’s most noteworthy tech ambassadors.

On Monday however, in the Commercial Court in Dublin, proceedings will officially open in the latest legal wrangle involving the chief executive of Web Summit.

Again, the disputing party is a former close colleague of Paddy Cosgrave — his co-founder of the tech conference and fellow shareholder, Corkman Daire Hickey.

The Commercial Court hearing will see an affidavit by 35-year-old Mr Hickey read into the official record, in his case against Mr Cosgrave, taken in the name of his company Lazvisax.

Many details of the document are already in the public domain however. It follows a similar narrative to that seen in another affidavit in a separate case taken against Mr Cosgrave, by the third co-founder of Web Summit, David Kelly, earlier in November.

It describes a relationship soured beyond repair. What is perhaps more surprising is that appears to have been the case as far back as 2013, as the tech conference began to make an impression on the global stage.

The case is the latest twist in a matter which first came to public attention in September, when Mr Cosgrave initiated legal proceedings against Mr Kelly in both the US and Ireland regarding an alleged attempt on Mr Kelly’s part to set up an investment fund, Semble Fund II, separate to Web Summit, but which Mr Cosgrave alleged could only succeed as a successor to the Web Summit-endorsed Amaranthine Fund, which was established in 2012 to take advantage of the power of Web Summit’s contacts book.

In his Irish suit, Mr Cosgrave alleged breach of fiduciary duty to Web Summit as a director on the part of Mr Kelly.

Mr Kelly’s official response was to lodge a suit of his own, via his company Graigueridda, in early November, against Mr Cosgrave alleging oppression of shareholder rights (Mr Cosgrave owns 81% in shares of Web Summit, Mr Kelly just under 12%, and Mr Hickey the remaining 7%).

In his sworn affidavit in that case, Mr Kelly alleged that Mr Cosgrave’s conduct in managing Web Summit was often motivated by his negative feelings towards Mr Hickey, whom he first met when both were students in Trinity College.

Given the extent to which Mr Hickey’s name was mentioned in Mr Kelly’s affidavit, in which the alleged circumstances surrounding the breakdown of Mr Cosgrave and Mr Hickey’s relationship are outlined in detail, it’s perhaps less surprising that Mr Hickey has now launched a court action of his own.

Daire Hickey, a co-founder of Web Summit, resigned as director in 2017.

In his own affidavit, Mr Hickey —  a former journalist who, since leaving Web Summit in 2017, has founded a successful US-based tech public relations and consulting firm named 150 Bond —  alleges shareholder oppression both towards himself and Mr Kelly by Mr Cosgrave, via an alleged failure to observe corporate governance norms, alleged disreputable conduct with regard to Web Summit’s brand, and an alleged concerted strategy to force Mr Hickey out of the company.

Mr Cosgrave has yet to formally respond to Mr Hickey’s affidavit. A spokesperson for Web Summit described the new case as an “opportunistic legal action… without merit”.

“The claims that he and David Kelly are making seek only to distract and deflect from the legal case Web Summit has taken against David Kelly in Ireland for breach of fiduciary duty,” they said.

“We look forward to future court hearings when matters of fact, not wild allegations, will be given due consideration.” 

Counsel for Mr Cosgrave, meanwhile, vowed to “vigorously defend” the allegations by Mr Kelly heard in the Commercial Court earlier this month.

Web Summit said at that time that Mr Kelly is “rehashing old claims and piling up new ones” in an attempt to deflect from the legal case Web Summit had taken against him in Ireland. Mr Kelly’s case is next due for mention in March of next year.

Where the various strands of this most spectacular of fallings-out go next, no one can say.

Mr Hickey’s affidavit mentions Mr Kelly liberally with regard to the evolution of their respective relationships with Mr Cosgrave.

While Mr Cosgrave alleges actions of an underhand corporate nature on the part of Mr Kelly with regard to the establishment of Mr Kelly’s new investment fund in Mr Cosgrave’s own case (something Mr Kelly swore in court to “vociferously” defend), the legals of Mr Hickey are more in line in tone with that of Mr Kelly — focusing on Mr Cosgrave’s alleged behaviour towards his fellow

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