Developer O'Flynn disagrees Cox worked outside group structure

Developer Michael O'Flynn has disagreed in the High Court that Patrick Cox functioned outside the O'Flynn group structure when Cox started working as a investment manager in 2010.

Mr O'Flynn said Nama, which had taken over the group's €1.8 billion in loans, had in 2010 rejected his 2,500 page business plan for paying off the debt.

That same year, a new, separate company called Victoria Hall Management Ltd (VHML) was set up to do business in England.

He said John Nesbitt, his long time business friend, director and minority shareholder in the group, became the sole shareholder in VHML after the Nama rejection.

He said there was nothing stopping Mr O'Flynn himself getting involved in a separate business from those in Nama.

However, he said it was left to Mr Nesbitt because there was a stigma in the UK for people who were in Nama and this complicated their ability to deal with investors.

As a result, Mr Nesbitt and him had an understanding that Mr Nesbitt would exit the Irish operation, and while initially VHML would be beneficially owned by Mr Nesbitt, in due course O'Flynn would take up a share in VHML.

He was being cross-examined in the continuing case by VHML and five other O'Flynn companies against former employees, Patrick Cox jun, a son of former MEP Pat Cox, Liam Foley, Eoghan Kearney and four companies.

It is claimed the defendants made more than €12.5 million in profit on a student accommodation project on Gardiner Street, Dublin, at O'Flynn group's expense including by using nearly 37,000 documents copied by Mr Cox before he left his employment.

The defendants deny the claims.

He disagreed with Paul Gardiner SC, for the defendants, that as Mr Cox was working for VHML in England, he was "specifically working outside the O'Flynn group structure".

Mr O'Flynn said while VHML was a separate structure, Mr Cox "would have been working for a company associated with other companies in the group."

He took exception to what he said were Mr Gardiner's repeated suggestion there was something wrong with setting up the separate VHML structure.

As someone with no personal debts, he was quite entitled to do what he did in relation to VHML and there "was absolutely nothing wrong with it."

He disagreed with counsel that this change of shareholding in VHML was all done after Nama "had torpedoed your business."

He said he would need to check dates given by counsel but said "I don't accept Nama torpedoed my business."

Earlier, he said when the loans of the O'Flynn group, whose parent company is Coldbridge, were transferred to Nama, Mr O'Flynn a central component of his business plan was development proposals.

However, Nama was only prepared to sanction funds for finishing off projects in Ireland but not to fund the "putting of a spade in the ground" for new construction, including in the UK.

Mr O'Flynn was upset when at a meeting with John Mulcahy of Nama in April 2010, his business plan was completely rejected.

It was the equivalent of "quasi-liquidation" to be told to dispose of an asset which could generate money, he said.

The Nama rejection to him meant the group had no hope of repaying its debts, he said.

In his witness statement he said he "could not allow the Nama decision destroy our business" and he said "I stand over that paragraph."

The case resumes next week before Mr Justice Michael Quinn.