WEB SUMMIT CO-FOUNDER and majority shareholder Paddy Cosgrave engaged in a “vendetta” against former director Daire Hickey in an attempt to “blackmail” him into giving up his shares in the company, lawyers have alleged before the High Court.

The court also heard today that the holding company for Web Summit “appears to accept” that Mr Cosgrave is using company money to defend himself in actions brought by Mr Hickey and another former director, where legal costs may reach up to €7 million.

The Commercial Court is hearing a “bitter” multi-million euro legal row between Mr Cosgrave and minority shareholders and former directors Mr Hickey and David Kelly.

Mr Cosgrave is suing Mr Kelly for allegedly breaching his duties while acting as a director. Mr Kelly and Mr Hickey are in turn suing Mr Cosgrave for alleged minority shareholder oppression and breach of a profit-sharing agreement. 

Bernard Dunleavy SC, for Mr Cosgrave, has told the court that his client alleges Mr Kelly had been “disloyal” to the company when acting as a director through the creation of a tech investment fund to rival those of Web Summit which “co-opted” financial opportunities.

At the court today, Eoin McCullough SC, for Mr Hickey, said the board of the holding company for Web Summit “appears to accept that Mr Cosgrave is spending company money to defend himself in both of these sets of proceedings and that figures from [auditors] Grant Thornton suggests a legal expenditure as much as €7 million”.

Mr McCullough said this was in light of Mr Cosgrave receiving a “sign-on bonus” of €1 million in April last year when he returned to Web Summit after he resigned in October 2023 over social media posts concerning Hamas and Israel.

Counsel said it is alleged that Mr Cosgrave was a “very difficult person to work with”, who was “highly unpredictable”.

Mr McCullough said that Mr Cosgrave’s “demands went unsupervised” and that the court will see that “when questioned he [Mr Cosgrave] reacts with extraordinary vitriol”.

Mr McCullough said Mr Cosgrave had pursued “vendettas” and had refused company information, strategy and finances to Mr Hickey, who had complained about corporate governance between 2019 and 2021.

Mr McCullough said Mr Cosgrave ran a “campaign to destroy Mr Hickey” over an alleged incident in 2016 in New Orleans where an employee of Web Summit complained about remarks made over drinks by Mr Hickey about another person. Counsel said his client accepts the remarks were “unacceptable” and “not appropriate” though made in jest.

Counsel said his client was told that the matter had been resolved and was not given a chance to respond to the employee’s letter of complaint and would have done so at the time to give his version of events if he knew of the letter.

Mr McCullough said Mr Cosgrave had appeared to suggest he did not know of the complaint at the time but it was submitted he later ordered an investigation into the matter to “attack” Mr Hickey.

In messages seen by the court, Mr Cosgrave allegedly says that Mr Hickey was to “get nothing, absolutely nothing” for his shares before Mr Cosgrave allegedly released a series of social media posts about the complaint against Mr Hickey, without naming him, in what was submitted was an attempt at “blackmail”.

Counsel said Mr Cosgrave claimed online that he was writing a book called “Sex, drugs and the appointment of a sexual predator to a State board”. The court heard Mr Hickey was an RTÉ board member at the time and it was argued that Mr Cosgrave was making “wild allegations as part of a campaign to damage him”.

Mr McCullough told the court that Mr Cosgrave was also “annoyed” by a 2021 profile of him that appeared in the Irish Independent and concluded that Mr Hickey was a source for the article.

Counsel said that Mr Cosgrave then compiled a “detailed dossier” of the 2016 incident “to blackmail, destroy and intimidate” his client into “giving up his shareholding” and attempted to disseminate it to journalists.

Counsel said that Mr Kelly was told by Mr Cosgrave to ring Mr Hickey and say the matter would not be made public if Mr Hickey returned his shares to the company and cut all ties with Web Summit.

Counsel said Mr Cosgrave “used the company” to conduct “campaigns and vendettas of various types but not just in business” to the financial detriment of the company and the interests of Mr Hickey, who owns 7 percent of Web Summit, and Mr Kelly, who owns 12 percent.

Mr Hickey’s share in the company is valued between €19.6-25.2 million.

Counsel said Mr Cosgrave’s remuneration “dramatically” increased at the time Mr Hickey was being denied “basic” financial information when still a director.

Mr McCullough said when Mr Cosgrave returned to the company his basic salary was €950K with the sign-on bonus of €1 million but in 2022 and 2023 he received a bonus of €2.5 million for each year.

Counsel said that Mr Cosgrave also benefited from several loans from the company at a low rate of interest.

The case continues before Mr Justice Michael Twomey and is scheduled to last nine weeks.