The chief executive of travel software firm Datalex threatened the company’s own chairman with legal proceedings as its share price collapsed at the start of this year, The Irish Times has learned.
It is understood that lawyers acting for Datalex chief executive Aidan Brogan contacted chairman Paschal Taggart, asking him firstly to restrict his contact with clients and in the second instance with staff at the company.
Mr Taggart complied with the request.
The disagreement between the two most senior figures at the firm occurred after the Dermot Desmond-backed company issued a profit warning early this year. The warning came after Datalex disclosed that it may have misstated revenues in relation to a major customer – thought to be German airline Lufthansa – in the first half of last year.
Mr Taggart had no comment when contacted. A spokesman for the company said that it had no comment.
Highlighted risks
Datalex had been expected to post a profit of almost $16 million (€14.1 million), but instead now expects to report an earnings loss of between $1 million (€885,000) and $4 million (€3.5million). When news of the profit warning broke, the company’s share price slumped by 59 per cent in a day.
At the time, the company said that its earnings and profits “may have been misstated principally due to the accelerated recognition of revenue associated with the significant customer deployment”.
The news came after years of consistent growth at Datalex, which was regularly among the top performers on the Irish Stock Exchange. Mr Desmond’s IIU investment firm has a 26.4 per cent shareholding at the company, which produces travel software and has contracts with some of the most significant players in the airline industry.
Auditors of the firm’s accounts had previously highlighted risks about how it accounts for revenue and product development costs. In 2017, EY warned that “there was a heightened degree of subjectivity applied by management” in calculating levels of revenue.
PwC, the company’s previous auditors, wrote that Datalex had to “exercise significant judgment” in assessing the stage projects were at when booking service revenues.
Industry sources speculated that Mr Taggart may not stand for re-election at the Datalex agm this summer. Actavo chairman Sean Corkery was added as a vice-chairman by the company on Friday, it said in a stock market statement. In a statement released on Friday, Mr Taggart said “board renewal remains a core focus as we develop and we will be making further announcements in due course”.
Datalex embarked on a cost cutting programme to save up to $10 million (€8.8 million) a year in the wake of the crisis at the company, prompting another share price decline. Donal Rooney, who held the position of chief financial officer at the company, departed in February, having taken up his role in December.
