A shareholder in Paddy Cosgrave’s Web Summit will claim in a case against him that the entrepreneur hired journalists and lawyers as employees of the tech events company to work on the political activism that has harmed the business.
David Kelly will also argue in a lawsuit in the High Court, in which he claims he was oppressed as a minority shareholder of Web Summit, that Mr Cosgrave has struck a potential € 200 million deal to sell the company in 2017 without informing Mr. Kelly who was on vacation at the time.
He also alleges Mr Cosgrave turned down an investment last year at the height of the Covid-19 pandemic which valued the company up to 136 million euros while the company was under significant financial pressure.
He will also claim that Mr. Cosgrave used Web Summit’s social media accounts and finances to fund personal projects, including a fictitious organization called the Irish Tax Agency which promoted Mr. Cosgrave’s personal agendas and carried an advertisement. major negative at Web Summit.
Mr. Kelly co-founded Web Summit with Mr. Cosgrave and owns 12% of the business through a company called Graiguearidda Ltd.
He claims that Mr. Cosgrave treated Web Summit as his personal business and acted unilaterally with no regard for the repercussions of his actions on the financial well-being of the business or on the company’s other shareholders.
Mr. Kelly brings an action through Graiguearidda against Mr. Cosgrave, his company Proto Roto Ltd and the holding company Web Summit Manders Terrace.
His shareholder oppression complaint is the second lawsuit involving the tech events company.
Manders Terrace last month alleged in separate legal proceedings in Ireland and the United States that Mr Kelly breached his obligations to the company by attempting to covertly use Web Summit resources to set up a fund. investment for personal benefit.
A spokesperson for Mr Kelly called Mr Cosgrave’s actions “without merit”.
When Mr. Kelly’s claims were submitted to Web Summit, a spokesperson replied, “David Kelly is rehashing old claims and piling up new ones in an attempt to distract from the Web matter that Web Summit brought against him in Ireland for breach of his fiduciary duty.
“We look forward to future hearings when questions of fact are duly taken into account,” she added.
Mr Kelly alleges in his oppressive shareholder action in the Irish High Court that Mr Cosgrave hired journalists and lawyers as employees of Web Summit – outside of his standard hiring process and without knowledge from senior management – to work on political activism unrelated to Web Summit at Mr. Cosgrave’s leadership.
He will claim that this not only wasted the company’s resources, but that the work of journalists and lawyers had the potential to cause unquantifiable damage to the company in light of the political nature of the work and Web Summit’s confidence in its reputation as an event business.
Among the personal projects Mr Cosgrave promoted was the clothing business run by his wife Faye Dinsmore, according to Mr Kelly’s lawsuit against his former partner.
He claims Mr Cosgrave authorized the sale of handmade Aran-style sweaters made by his wife’s business for € 850 each at the Web Summit event in November 2019 – a move that sparked a significant negative publicity, eclipsing the event itself.
Mr. Kelly also claims that Mr. Cosgrave used his personal Twitter account, in which he identifies himself as “CEO Web Summit” in a manner that has undermined the Web Summit brand.
He claims his tweets gave rise to libel actions in the High Court against Mr Cosgrave personally and that a charitable donation of € 10,000 as part of a settlement of an action was paid directly by Web Summit in order to prevent Mr. Cosgrave from having to pay taxes.
Mr Kelly also claims that there have been several complaints of intimidation against Mr Cosgrave by Web Summit staff and that the company has lost talent as a result and has spent substantial resources, both financial and managerial, to resolve problems arising from these actions.