INM AGM:BUSINESSMAN DENIS O'Brien has set the tone for a likely confrontation with Independent News Media (INM) at its agm in London today by renewing his attack on its board and governance in a new report on the business.

INM dismissed as a "rehash" the report by US analyst Dr Stephen Davis, who was commissioned by Mr O'Brien to update a report he wrote last year, and said it was "deliberately misleading, malicious and wholly inaccurate assessment" of the company.

With Mr O'Brien's interest in the company now standing at 25.04 per cent, he is widely assumed to be preparing to bid for the business at some point in the future. His stake now nears that of INM chief executive Sir Anthony O'Reilly, who holds 27.88 per cent of the company.

Dr Davis said in his 34-page update that the board was too large and had too few independent directors and said the board's audit committee and its nomination and corporate governance committee were too closely affiliated with company management.

The update cited proxy advisers Institutional Shareholder Services (ISS), Glass Lewis, European Corporate Governance Service and Manifest. "Although the management of INM has made noises supporting its corporate governance, it is clear from professional comment, that governance and independence of the board remains a critical issue for the company," Dr Davis said in a statement.

His report said sustained investor anxiety about the dominance of insiders is grounded in fears of misalignment of interests between Sir Anthony's family and other shareholders.

"Despite improvements in governance, INM's board maintains essential features that attract charges that amount to 'cronysim' by market parties that act as the eyes and ears of many institutional shareholders," it said.

Such conclusions contrast with favourable findings published last week by the firm in a report it commissioned from Harvard professor Jay Lorsch, who said the board was "functioning effectively" and said management was delivering record revenues. In a statement yesterday, the company quoted Prof Lorsch saying Dr Davis had repeated "the same content using the same sloppy methodology" as in his first report.

"It fails to consider the reality of how the INM board functions, the individual contributions of each of the directors and their ability to execute their own independent judgment for the benefit of all stakeholders," Prof Lorsch said.

But Mr O'Brien said none of five "independent" proxy reports published to date found INM's board to be independent. "This should be a matter of grave concern to all shareholders. It is imperative the corporate governance issues are addressed without any further delay," he said.

"It is in the interests of all shareholders that our Board carries out its duties and responsibilities in a totally objective and impartial manner."

Dr Davis said governance weakness can impair the firm's ability to grow through acquisition and said substandard practices in board independence "unnecessarily undermine investor confidence, contributing to a likely rise in the cost of capital through a discounted stock price".

INM rejected that: "If the cost of capital is the measure of governance then INM's governance must be in rude good health as its cost of capital is the lowest of the full peer set outlined by Davis".

Mr O'Brien's spokesman said only that the businessman was "currently travelling" when asked late yesterday whether he would attend the agm.

INM shares closed down 1.24 per cent at €2.23 last night in a rising Dublin market.