‘Patsy’ company director spared conviction over Clerys redundancies

By Tom Tuite

An insolvency expert, who was a “patsy” in a scheme to avoid paying almost €3m in redundancies to Clerys workers and make the State foot the bill, has been spared a criminal conviction.

OCS Operations Ltd petitioned the High Court for liquidation on June 12, 2015 after its parent group was sold by owners Gordon Brothers.

This was followed by the collective redundancies in which 464 people lost jobs at the iconic store on Dublin’s O'Connell Street; 134 of them were directly employed by Clerys which was later bought out.

James Brydie, a UK based insolvency expert was appointed as a director of OCS Operations on the day the High Court was petitioned to wind up the company after its funding was withdrawn.

Brydie, with an address at Kingsmere Road, London, pleaded guilty at Dublin District Court on Wednesday to employment law offences: failing to give notice of collective redundancies and failing to keep records to ascertain whether or not there had been compliance with the Protection of Employment Act.

He was given the Probation Act by Judge John Brennan who accepted he had come in at a late stage of a pre-packed insolvency arrangement and had been a “patsy” with limited information.

Workplace Relations Commission inspector James Kelly agreed with prosecuting counsel Breffni Gordon (instructed by solicitor Niamh Tuite) that Brydie had been appointed director and sole shareholder as part of a “pre-packed insolvency”.

Mr Kelly said OCS Operations Ltd petitioned the High Court for insolvency and to be wound up on June 12, 2015.

The inspector told Judge John Brennan he examined the information provided to the High Court. The sale of the company began in January 2015.

Its owners, the Boston private equity firm Gordon Brothers, which owned the Clerys group structure accepted a fixed bid from businesswoman Deirdre Foley’s firm D2 Private which was backed by Cheyne Capital, in the UK.

D2 Private had hoped Gordon Brothers would still run the department store after the buyout. However, after a meeting in London, Gordon Brothers said they were no longer interested in assisting, Mr Kelly told the court.

D2 Private and Cheyne Capital then reduced their bid by €2.8m which was calculated to be the cost of redundancies and related expenses, the court heard. The bid was accepted.

The inspector said D2 Private decided to use a “pre-packed situation” to appoint independent directors to remove OCS Operations from the group.

Judge Brennan heard the group consisted of OCS Properties which ran the building, OCS Operations Ltd which was responsible for the department store and OCS Holdings.

After the bid had been accepted it proceeded to liquidate OCS Operations to save the bidder the €2.8m costs and the State would be liable to pay the redundancies, the court heard.

Brydie and Brendan Cooney with an address at Weirview Drive, Stillorgan, Co. Dublin were appointed as independent directors.

The papers lodged in the High Court for the liquidation petition had been prepared before the two men were appointed as directors. They concealed the €2.8m write, the cost of making staff redundant, from the court, Mr Kelly said.

He agreed with prosecution counsel that other people were involved in preparing the petition.

The court heard D2 Private took over the holding company and withdrew funding from OCS Operations.

Brydie was asked his opinion and determined OCS Operations was insolvent.

Staff were made redundant the same day.

Mr Kelly agreed Brydie was not the “prime mover” and said “the main work to bring about the downfall of the company was by other parties”.

The inspector said Brydie has given the investigation assistance and was co-operative. Mr Kelly accepted it was a “pre-packed state of affairs before it landed on his lap” and it had already been “pieced together”.

The inspector said his role was relatively minor compared to other parties.

He agreed with defence solicitor Michael Cosgrave that Brydie was not going to benefit from it, “the thing that tied his hands was that funds were withdrawn by other parties”.

The offences can result in a maximum fine of €2,500 for each charge.

Mr Cosgrave asked the judge to note his client was an insolvency expert who carried out work for KPMG and IBRC. The solicitor said when funding had been withdrawn resulting in the High Court petition, his client had not had all the information.

He has been of material assistance to the investigation and was of impeccable character, the solicitor said pleading for leniency.

The court heard the accused was a director of several banks and a conviction would be damaging.

Mr Cosgrave asked the judge to note the other director, Brendan Cooney, had been given the Probation Act in January for connected charges.

Judge Brennan said the abrupt termination of employment at Clerys was reprehensible and there were nefarious activities to avoid lawful obligations. However, he noted Brydie came in at a late stage, the pre-package was already in place and he had very limited information. He accepted the businessman had been a “patsy” and “not the main player”.

He noted his guilty plea and applied the Probation Act, sparing him a criminal record.

Natrium Ltd, the company that took over OCS Operations Ltd in 2015 and which was co-owned by property developer Deirdre Foley along with Cheyne Capital, is no longer facing any charges in connection with the redundancies.

Proceedings against other defendants on related charges were struck out in March following legal argument over an alleged failure by the prosecution to comply with an order for disclosure of computer data evidence to the defence.

Those defendants were: businesswoman Deirdre Foley, Mark Redmond, of Belfry Dale, Citywest Road, Saggart, Co. Dublin – an employee of D2 Private Ltd – a firm owned by Deirdre Foley, and OCS Operations Ltd.