On February 24, 2021, Web Summit co-founder David Kelly was increasingly uncomfortable with the activities of Paddy Cosgrave, his fellow co-founder and partner of the tech and business events company. , and what he posted on social networks.
âI just don’t like everything,â Kelly said in a text to Cosgrave.
Cosgrave replied, âAh jaysus. What is the concern. How does it even affect you. Maybe it’s just that a deal falls through the cracks.
Kelly cites the text exchange as an example of what he claims to be that Cosgrave is “recklessly indifferent” to him, the company, and its minority shareholders and the potential impact losing a deal could have on. their interests in the business of which they are co-owners. .
The exchange is just one of many examples Kelly cited in a 74-page affidavit he submitted in a High Court lawsuit he brought against Cosgrave.
He claims to have been oppressed as a minority shareholder of Web Summit.
The affidavit is replete with allegations made by Kelly which he says show how Cosgrave treated Web Summit as his “personal stronghold, as if he owned it himself,” when Kelly owned 12 percent of the the company.
This is the second legal skirmish between the parties: Cosgrave has initiated separate legal proceedings, in Ireland and the United States, claiming that Kelly failed in his duty to the company by secretly attempting to use the resources of Web Summit to establish an investment fund for personal benefit. .
Kelly dismissed this action as “baseless”, while Cosgrave’s Web Summit dismissed Kelly’s new case as “rehashing old claims and piling up new ones in an effort to distract from the Web case that Web Summit brought charges against him in Ireland for breach of fiduciary duty law.
A spokesperson for the Web Summit told the Irish Times it looked forward to “future hearings when questions of fact are given due consideration”.
Both sides appear poised for a gruesome confrontation in court given the nature of the claims. This is a summary of Kelly’s claims against his longtime former business partner and former classmate – a relationship that he says has now “completely broken down” and is “irreparably toxic.”
Cosgrave’s Use of Web Summit Resources for Political Purposes
At the heart of Kelly’s lawsuit is her claim that Cosgrave used Web Summit’s social media accounts and resources to fund and pursue personal interests that have damaged the company’s brand and sparked public abuse. negative publicity, without consulting his fellow shareholders.
Among Cosgrave’s targets was TÃ¡naiste Leo Varadkar, “on whom Mr. Cosgrave has sought to inflict serious political damage at least for the past 12 months,” says Kelly.
Among the incidents to which Kelly refers in his case is the publication by Village magazine of an article in October 2020 on the leak by Mr. Varadkar of a confidential copy of a new contract proposed for general practitioners at his friend Dr MaitiÃº Ã Tuathail the previous year. The contract contained details of the agreement the government had provisionally made with the Irish Medical Organization. Dr Ã Tuathail was president of the National Association of General Practitioners, a now defunct rival organization of the IMO.
Cosgrave had introduced healthcare entrepreneur Chay Bowes, the original source of the village’s story on the leak, to the magazine. Kelly claims Cosgrave worked on the story with Bowes and two Web Summit employees, Eoghan McNeill and Dargan Crowley-Long.
Kelly texted Patrick Kirwan, the company’s chief financial officer, expressing concerns about the involvement of Web Summit staff in Cosgrave’s business: “There is a risk that Leo will sue him.”
Kirwan responded, noting the importance of separating the interests of Web Summit and the interests of Cosgrave. It was necessary to “keep the church and state completely separate”, he wrote to Kelly, but it was “difficult sometimes when the CP is directly linked to the people”.
In November 2020, it was announced on Web Summit’s Twitter account that Bowes, Village Magazine Editor-in-Chief Michael Smith and founder of a whistleblower legal support organization would be speaking at the flagship conference. of the company.
Web Summit’s director of marketing and technology Mike Sexton later called Kelly to express concern that Cosgrave was using the company “to promote his personal blood feuds.”
When Kelly confronted Cosgrave about it, he got a “tirade” in which Cosgrave said that Web Summit was “his business and he could choose who he wanted to talk to at Web Summit.”
IDA’s “toxic treatment”
In her affidavit, Kelly challenges Cosgrave’s treatment of the government trading agency IDA, one of Web Summit’s early partners. He claims to have behaved “in an unnecessarily aggressive and damaging manner” towards IDA and another state agency, Enterprise Ireland.
In April 2018, at a Web Summit, Collision event in New Orleans, Kelly said that when a senior IDA executive addressed an assembly in a welcoming speech, Cosgrave stood at his sides and “began to clap slowly as she continued to speak”. When she finished, Cosgrave told the audience that this would be the last time IDA would be allowed to sponsor a Web Summit event.
Cosgrave then told Kelly via email that he would ask someone to write to Enterprise Ireland to tell him that Web Summit would no longer work with them. Kelly said he resisted “Mr. Cosgrave’s attempts to destroy Web Summit’s relationship with IDA and Enterprise Ireland,” which was “fortuitous” because the company received â¬ 500,000 in grants from Enterprise Ireland in 2020.
Kelly says Mr. Cosgrave’s engagement with IDA was “in total disregard of the interests of minority shareholders in the company.”
The “fictitious” Irish tax agency
Kelly claims that Cosgrave spent the Web Summit money promoting the Facebook page of a fictitious entity called The Irish Tax Agency, which strongly criticized Irish corporate tax policy and that Cosgrave’s “animosity” towards the IDA and Enterprise Ireland was his motivation.
The charitable donation of one million euros
Kelly claims Cosgrave donated $ 1 million of company money to charity in March 2020 without consulting other directors or senior management at Web Summit in what was an “extraordinarily precarious time. For the company during the Covid-19 pandemic.
The donation was made after HSE chief executive Paul Reid criticized a tweet from Cosgrave in which he claimed the state’s response to the Covid-19 pandemic was a ‘catastrophic failure to plan’. Reid’s tweet condemning Cosgrave for “throwing stones from the sidelines” received over 9,000 likes. Kelly says the Web Summit board minutes were fabricated to retrospectively approve a donation that was “grossly oppressive” to minority shareholders.
Kelly also alleges that Cosgrave potentially abused Web Summit resources in February 2021 when the company formed Health Reform Ireland, an entity whose stated purpose was to criticize the healthcare system. Cosgrave told Kelly he would produce podcasts and documentaries made by former RTE producers and broadcasters.
He refers to Cosgrave who set up a website called On The Ditch with Bowes and two Web Summit employees who posted political content, including an article alleging that the Taoiseach MicheÃ¡l Martin violated public health guidelines during ‘an event held in honor of his late father in Cork.
Kelly claims that this was a “scandalous and abusive misuse of Web Summit resources.”
850 â¬ Aran-style sweaters
Kelly claims that in November 2019, the Web Summit website started selling clothes on behalf of Cosgrave’s wife, Faye Dinsmore, which included a hand-knitted sweater for â¬ 850, a sweater for â¬ 780 and a hoodie for children for 240 â¬. The sale of these items attracted negative publicity, he says.
Kelly refers to Cosgrave using the Web Summit Twitter account to promote his own personal political tweets to users. This included a series of tweets in which he accused the Irish Times of political bias. Kelly says it was “a waste of valuable company resources on activities unrelated to Web Summit’s business,” could expose Web Summit to libel and result in suspension of the Web Summit. Web Summit Twitter and Facebook accounts. He argues that the effect this would have on Web Summit would be “catastrophic”.
One of Cosgrave’s tweets, posted amid frequent public comments on Twitter during the pandemic, resulted in a charitable payment of â¬ 10,000 in settlement of a libel action brought by Dr MaitiÃº Ã Tuathail. Kelly claims it was paid for by Web Summit because it was more tax efficient for Cosgrave, even though he was sued “in a personal capacity for a personal tweet.” Kelly believes Cosgrave is paid around $ 275,000 per year as the Managing Director of Web Summit.
Breaking up relationships, attempted blackmail and “toxic behavior”
Kelly’s claims are his objections to the way Cosgrave treated his colleagues and shareholders, the way he ran the company, and his reluctance to set up an independent board of directors as that “would have created levels of oversight that he was not ready to tolerate “.
He claimed Cosgrave “harbored a strong animosity” towards Daire Hickey, former director of Web Summit and a 7% shareholder, and was pursuing a vendetta against him to remove him from the company. Kelly claims Cosgrave “made several attempts to enlist me in an attempt to coerce Mr. Hickey into relinquishing his beneficial interest in the company.”
Kelly claimed at one point that Cosgrave maintained that there was “kompromat” – damaging material – on Kelly. It later emerged from texts with Cosgrave that this involved photographs allegedly taken by Hickey during Kelly’s Stag Weekend, according to the affidavit, but Kelly claims this was a “fabrication” . In his affidavit, Kelly states that Cosgrave behaved in an “oppressive, aggressive, coercive manner. [including attempted blackmail] and toxic behavior towards me.