The High Court has heard claims that Web Summit founder and CEO Paddy Cosgrave engaged in a campaign of intimidation and blackmail to force minority shareholder Daire Hickey out of the company.
On the second day of a legal action involving Web Summit’s three founders, lawyers for Mr Hickey claimed Mr Cosgrave dragged up a 2016 complaint of harassment by an employee against Mr Hickey to further his public campaign against his co-founder, and threatened to “destroy him” by releasing a dossier to journalists and others.
The court was also told that Mr Cosgrave gave himself “dramatic” salary and bonus increases in recent years, including a €1 million signing on bonus when he rejoined the company in 2024 in addition to his salary of €950,000.
The case involves five separate legal actions to be heard over an estimated nine weeks.
Paddy Cosgrave is suing former Web Summit director David Kelly, who holds a 12% stake in the business for alleged breaches of duties as a director.
He is seeking damages related to losses he alleges related to Mr Kelly’s role in the establishment of a venture capital fund separate from Web Summit. Mr Kelly and former director Daire Hickey are also suing Mr Cosgrave.
Today’s claims were made as part of Mr Hickey’s action for damages against Mr Cosgrave for alleged shareholder oppression and breach of a profit share agreement.
Senior Counsel Eoin McCullough said Mr Cosgrave had publicly tweeted “wild allegations” about Mr Hickey as part of a campaign to intimidate and blackmail him into surrendering his shares in the company.
Mr Hickey has a 7% shareholding, which his lawyers say is valued at between €19 million and €25 million. They want the court to order Mr Cosgrave to buy out the shareholding as a remedy for alleged oppression and disregard of interests.
The court was told Mr Hickey was a co-founder of Web Summit and based himself in New York from 2013, mainly to avoid having to interact with Mr Cosgrave, who was “very difficult and highly unpredictable”. Mr McCullough said Mr Cosgrave demanded unsupervised control of the company and would not tolerate questions, reacting with extraordinary vitriol when challenged.
Mr Hickey eventually resigned as an employee but remained as a director, but there was an alleged “campaign” by Mr Cosgrave to force him out as a director.
Mr Hickey’s lawyers argue that as a co-founder of the company, he was in a quasi partnership, which, if the court finds is correct, they say will have significant bearing on the outcome of the case.
Mr McCullough outlined the court what he said was a long standing campaign of intimidation and harassment by Mr Cosgrave against Mr Hickey, including denying him the right to attend board meetings and withholding financial information, despite numerous requests.
Mr McCullough told the court that the 2016 incident occurred when Mr Hickey joined Web Summit employees in New Orleans for a drink after a successful event and jokingly suggested to a male employee that he should “get with” an event sponsor who had expressed an interest in him. He said Mr Hickey accepts it was inappropriate but was told the matter had been informally resolved.
However, he later learned through discovery in this case that a letter of complaint had been written by the employee.
Mr McCullough said years later Mr Cosgrave raised the issue again and spoke about “spilling beans” and destroying Daire Hickey by disseminating information about the 2016 complaint to journalists. He also spoke about putting a dossier together and told another co-founder, David Kelly, to ring Mr Hickey to tell him he would not make public the information if he returned his shares.
Mr McCullough said it was hard to see a clearer example of shareholder oppression than this.
He said Mr Cosgrave also went on to claim he was writing a book called “sex, drugs and the appointment of a sexual predator to a State board”. The court heard Mr Hickey was a member of the RTÉ board at the time and Mr Cosgrave was making “wild allegations as part of a campaign to damage him”.
It is also alleged that Mr Cosgrave used the company for personal causes, including his political views, which had damaged the company and disregarded the interests of other shareholders.
Mr McCullough also outlined what he described as dramatic increases in Mr Cosgrave’s salary in recent years, which he said would have the effect of reducing profits and affect the valuation of a company.
He said Mr Cosgrave’s salary in 2018 was €266,667, with a further €100,000 pension contribution and a bonus of €166,000.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
By 2024 when he returned to the company having been forced to resign over tweet about Israel, his salary was €950,000 along with a signing on bonus of €1 million and an eligibility for a performance bonus. The court was told that several other salary increases after 2018 were not disclosed to the minority shareholders and the most dramatic increases took place after David Kelly had left the company.
It is also alleged that Mr Cosgrave “misused” company resources to pursue personal interests, including his funding of the Ditch investigative news website and to pay his legal fees in these High Court actions, estimated to be €7 million.
The case continues.
