New chief executive John Osbourne said the investment strategy of the company secretary, John McStay, ahead of the lucrative resyndication of record breaking stallion Invincible Spirit highlighted shortcomings.
As part of the Invincible Spirit deal in 2007, Mr McStay, the INS chairman Chryss O’Reilly, and director Trevor Stewart shared in a one-off €2.9 million windfall arising from a stallion that was controlled by the INS.
A year before the investment, Mr McStay used his options as a shareholder to buy up additional rights in the horse.
This limited the INS’s ability to draw in significant outside investment and stave off a hostile takeover from an American agency.
Mr Osbourne said the INS benefited from Mr McStay’s unique experience but he accepted it was an area the INS needed to “tighten up on” in terms of its organisation.
“It is something we are going to have close look at,” he said.
And he said he respected the concerns raised by Fine Gael’s agriculture spokesman Michael Creed, who said Mr McStay’s actions were working against the business strategy of the INS.
Mr Creed asked why the board had not acted when its efforts to attract blue chip investors, believed to be the Queen of England’s stables, collapsed.
This was because the Queen’s offer to buy shares in Invincible Spirit was blocked in part by Mr McStay because, as a syndicate member with a growing shareholding, he had first refusal on buying rights.
Mr Osbourne said Mr McStay had made offers to buy shares within the syndicate previously but was knocked back in a ballot.
However, when Mr McStay was successful on a couple of subsequent occasions, this made his position stronger as he held more voting rights.
Mr Osbourne said the first refusal clause was in place to encourage people to get involved at an early stage, when the element of risk was greatest, and Mr McStay availed of this.
Mr Osbourne also confirmed to the Oireachtas Committee on Agriculture the INS had made a bid for the 2009 horse of the year, Sea the Stars, a year before it retired to stud, but was unsuccessful.
He said given the INS’s connections to the horse and its mother, Urban Sea, the board had invested in trying to court its owner, the Hong Kong-based Tsui Family.
He said the INS had great hopes of having the stallion spend its stud career there but it could not compete with the financial resources of the Aga Khan’s Giltown Stud.
He refused to comment on whether the loss of Sea the Stars had anything to do with the actions of his predecessor, John Clarke, who had been working as an agent for the owners of the stallion.
Senator Paul Bradford said had the INS been able to secure the services of Sea the Stars its current financial woes would have been greatly eased.