Datalex not currently planning legal action against ex-bosses

Datalex not currently planning legal action against ex-bosses

Datalex has said taking legal action against its former chief executive and chief financial officer, over the accounting scandal which has rocked the travel software firm, is not a priority at present.

"There are no legal proceedings in train. It's an option that we have and we haven't decided what we're going to do. It's not straightforward, either from the complexities of the legality of it or the affordment of time and prioritisation within the management team. I, personally, wouldn't see it as a priority in terms of what I'm doing," Datalex's acting chairman and interim CEO Sean Corkery said after the company's agm in Dublin.

"My focus is on going forward. I don't want to spend a lot of time on that [the past scandal]. If shareholders felt it was worth their while...but I think it's a long process. I thnk the legalities of it are probably marginal in terms of cases so I think there's a long way to go, but it's an option. I want to remain focused on keeping the business and making it better," he said.

Datalex holds the option to bring legal action against former CEO Aidan Brogan and former chief financial officer David Kennedy who left the company in the wake of an accounting scandal which saw customer project revenues overstated.

The fallout from that involved the potential loss of a major client in the form of Lufthansa, trading in the company's shares being suspended, a $50m (€45.3m) 2018 annual loss being unveiled in long-delayed accounts and the State's corporate watchdog - the ODCE - becoming involved to investigate PwC's independent review, which earlier this year found "significant accounting irregularities" at the company.

"I believe somebody broke the law. A wrong was done and we, representing our shareholders, need to decide what we're going to do about it. We haven't made that decision, but there are obviously angles we could take," Mr Corkery said.

He described judgement calls by former management as being "at best rogue accountancy; at worst something a lot more sinister."

When asked why the issue had not been taken to the Gardaí, Mr Corkery said that could happen during the ODCE investigation, in which the Gardaí is involved.

"Our job is to lay out the facts. It's for others to decide where to take that," Datalex's current chief financial officer Niall O'Sullivan said.

Datalex's main backer Dermot Desmond is providing additional funding of $5.5m to cover the company's capital needs for the remainder of 2019. Mr Desmond will also support a planned equity fundraising which will go towards repaying outstanding loans and funding Datalex's working capital needs for the next couple of years.

Mr O'Sullivan said the company hopes to have its shares trading again before Christmas, with the equity raise due to follow.

Mr Corkery said that while Datalex is not in a good place, it is the new management team's "strong belief" that it can recover.

The company said that it expects to break-even this year and build sustainable profit growth from next year onwards.

Datalex is targeting new auditors within weeks, and is hopeful of salvaging some remnants of the Lufthansa deal and finalising at least one new customer from a number of airlines it is negotiating with in Asia and South America before the end of the year.

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