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 technology events company to work on political activism that damaged the business.
David Kelly will also argue in a High Court action, in which he claims he was oppressed as a minority shareholder of Web Summit, that Mr Cosgrave shut down a potential €200 million deal to sell the business in 2017 without telling Mr Kelly who was on holiday at the time.
He is also alleging that Mr Cosgrave refused an investment last year during the height of the Covid-19 pandemic that valued the business at up to €136 million when the company was under significant financial strain.
He will also claim that Mr Cosgrave used Web Summit social media accounts and finances to fund personal projects, including a fictional organisation called Irish Tax Agency that promoted Mr Cosgrave's personal agendas and drew significant adverse publicity to Web Summit.
Mr Kelly co-founded Web Summit with Mr Cosgrave and owns 12 per cent of the business through a company called Graiguearidda Ltd.
He is claiming that Mr Cosgrave treated Web Summit as his personal business and acted unilaterally without any regard for the repercussions of his actions on the financial wellbeing of the company or for the other shareholders in the business.
Mr Kelly is taking the action through Graiguearidda against Mr Cosgrave, his company Proto Roto Ltd and Web Summit holding company Manders Terrace.
His shareholder oppression complaint is the second legal action involving the tech events company.
Last month Manders Terrace alleged in separate legal proceedings, taken in Ireland and the US, that Mr Kelly breached his duty to the company by attempting to secretly use Web Summit's resources to set up an investment fund for his own personal gain.
A spokesman for Mr Kelly has described Mr Cosgrave’s actions as “meritless”.
When Mr Kelly’s claims were put to Web Summit, a spokeswoman responded: “David Kelly is rehashing old claims and piling up new ones in an attempt to deflect from the legal case Web Summit has taken against him in Ireland for breach of fiduciary duty.
“We look forward to future hearings when matters of fact will be given due consideration,” she added.
Mr Kelly will allege in his shareholder oppression action in the Irish High Court that Mr Cosgrave hired journalists and lawyers as Web Summit employees – outside its standard recruitment process and without the knowledge of senior management – to work on political activism unrelated to Web Summit at Mr Cosgrave's direction.
He will claim that this did not just waste company resources but the work by the journalists and lawyers had the potential to cause unquantifiable damage to the business in light of the political nature of the work and Web Summit’s reliance on its reputation as an events company.
Clothing sales
Among the personal projects promoted by Mr Cosgrave was the clothing company run by his wife Faye Dinsmore, according to Mr Kelly's legal action against his former partner.
He claims that Mr Cosgrave authorised the sale of handmade Aran-style sweaters made by his wife’s company costing €850 each at the Web Summit event in November 2019 – a decision that attracted significant adverse publicity, overshadowing the event itself.
Mr Kelly also argues that Mr Cosgrave used his personal Twitter account, in which he refers to himself as “CEO Web Summit” in a manner which has damaged the Web Summit brand.
He claims that his tweets have resulted in High Court actions for defamation against Mr Cosgrave personally and that a €10,000 charitable donation as part of a settlement of one action was paid directly by Web Summit in order to avoid Mr Cosgrave incurring a tax liability.
Mr Kelly also claims there have been multiple bullying complaints against Mr Cosgrave by Web Summit staff and the company has lost talent as a result and spent substantial resources, both financial and management time, in resolving issues arising from these actions.
