A "Russian corporate coup d'etat" of a partly Irish-owned supermarket chain in Moscow had brought its Irish supplying company to its knees, the High Court has been told.
Mr Rory Brady SC, for two directors of Steamline Ltd, told Mr Justice Shanley it was not pilferage from the Moscow Garden Ring Supermarket chain in August 1995 which caused Steamline, its supplying company, to go into liquidation a year later. It was Russian mafia-related activities from April 1996 which caused Steamline to collapse, he argued.
These included the refusal by Russian signatories to sign cheques; the misappropriation of funds by one of the Russian partners; the intimidatory actions by people who seemed to be associated with the Russian mafia; and the lock-out of Irish staff at the supermarkets.
Yesterday was the second day of the hearing of an application by Musgraves Ltd, trading as Supervalu/Centra Distribution of Ballycurreen, Airport Road, Cork, to have three directors of Steamline Ltd restricted from operating as company directors in the future.
They are Mr Michael Coughlan of Inniscarra, Co Cork; Mr Brendan Flannery of Model Farm Road, Cork; and Mr Kieran Walshe of Fairyfield, Parteen, Limerick. Mr Brady, for Mr Coughlan and Mr Flannery, said a due diligence report revealing the pilferage problem in the Moscow supermarkets only became available to Steamline directors in mid-October 1995.
Efforts were made to talk to Musgraves on three occasions and both sides finally met on November 21st, 1995, with Steamline offering to pay outstanding debts on an instalment basis, an offer that was rejected by Musgraves, but later implemented by Steamline.
At the November meeting a letter threatening to wind up Steamline was produced but, significantly, this threat was never proceeded with by Musgraves.
Mr Brady said it was worth noting that the liquidator of Steamline had refused to join Musgraves in its application for a restriction order on the basis that he was satisfied the books of Steamline had been well kept.
He challenged the legal entitlement of Musgraves to bring the application and said the liquidator rather than a creditor was the proper person to seek such an order.
Mr Paul Sreenan SC, for Musgraves, said in this case his client, as a creditor with an interest, had the right to bring this matter to the attention of the court.
Mr Justice Shanley said he hoped to deliver judgment today.