The Employment Tribunal has heard brief closing submissions in the matter of O’Connor v Brooke & Lendy. The claimant Mr Kieran O’Connor, former CFO, faced an an avalanche of allegations about his credibility “Not only did [he] knowingly mislead the FCA and investors about the prospects of the Homer Row Claim, but the Claimant also lied to the Tribunal“.
Today the tribunal heard:
How it’s said Mr O’Connor lied to investors, the FCA and the tribunal
How seven-months-before Lendy entered Administration “Mr Brooke had apparently “estimated the value of his shares at between £150 million and £360 million”
That Mr O’Connor discovered he “posed the most significant threat to [Liam Brooke’s] interests that he had faced to date – which threatened to scupper the carefully cultivated process for extracting his investment in [Lendy]“
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Reporting by Daniel Cloake.
Barrister Mark Greaves, representing Lendy (in administration), explained in written submissions that:
“The central issue in this claim is causation, and the trigger for the loss in confidence of [Mr O’Connor] which led to [among other things] … service of notice of termination on 9 November 2018…“
It was said that “The trigger was the [Mr O’Connor’s] conduct at a meeting on 6 November 2018 to discuss the FCA’s proposed Voluntary Requirement”. See our coverage of day four for full details.
It was asserted that “the FCA had informed Mr Brooke and Mr Coles at a meeting on 30 October 2018 that [Mr O’Connor] was “unsuitable” and had insufficient knowledge and experience in relation to treating customers fairly and regulatory compliance.“
Mr O’Connor denied that this was even possible stating that the FCA’s “conduct
would be subject to judicial review and possibly to separate civil action…”. Instead:
“Where the FCA has concerns in relation to an individual, they do not seek to exercise their regulatory powers by interfering with the relationship between that individual and the individual’s employer. They do not lobby that person’s employer or that person’s subordinate with suggestions that the individual’s employment or responsibilities should be changed. They do not make veiled threats or informal allusions in the hope of convincing the employer to bring about that result“
Addressing the tribunal via remote video link Mr O’Connor said that rather than any valid concerns about his conduct there was a plan to prevent him from making a disclosure of information to the FCA:
“The penny dropped with Liam when someone, I’m suggesting it was me, saw this, understood it, and thought holy smoke we’re in the middle of a whole range of endeavours where this is going to blow a massive hole in a couple of things. One, the FCA’s willingness to believe we have any credible systems but closer to home for Liam is “you’re shot mate’”. If news of this gets out, and it will get out, if Mr Bellringer finds out about it, you won’t be able to withstand the pressure, staff will force you to make a disclosure.“
The disclosure, summed up by Mr O’Connor thus – “that the draft financial information about to be sent to the FCA …took no account of a credible QC’s opinion that entirely undermined the confidence anyone could have in the rosy capital and income projections [of Lendy]” would have had serious consequences for Liam Brooke, it was claimed.
Mr Brooke had apparently “estimated the value of his shares at between £150 million and £360 million based on the projected financial information which was being prepared to be sent to the FCA…The consequence of making the rider I’d suggested, was likely to be public awareness of significant doubt over the value of [Lendy’s] shares. It risked the consequence that this would come out “in the open”, and no one would pay anything at all, for [Liam Brooke’s] shares“.
Mr O’Connor claims he was dismissed because he “posed the most significant threat to his interests that he had face to date – which threatened to scupper the carefully cultivated process for extracting his investment in [Lendy] …The evidence demonstrates the abrupt change in [Liam Brooke’s] treatment of me, immediately after I had told him that I could not follow his instructions to withhold critical from the FCA – and after I’d told him that withholding that information was likely to badly mislead to FCA“.
Credibility
Mr Greaves submitted to the Tribunal that: “The evidence reveals that [Mr O’Connor] was responsible for knowingly misleading both the FCA and investors by describing the legal claim of Ms Szekeres, who had borrowed money in respect of properties on Homer Row and Mutton Row , as being “without merit”.“
It’s important to note that having merit is not a high bar for litigation. It was said by Mr Greaves that Mr O’Connor had had sight of advice from Lendy’s lawyers:
“[W]e and counsel have previously advised Lendy that the claim is arguable and therefore has merit. This was also the view of Mr Justice Zacaroli who had considered an earlier draft Particulars of Claim and stated publicly in open court that he considered there was a case to be tried… I attach for your information the previous detailed advice we have received from David Halpern QC concerning the merits of the claim as it had been articulated in April”
It’s said Mr O’Connor replied to this saying: “Unless we take a confident view of the outcome, should this be litigated, there is no point in continuing our business“.
As a result of the above Mr Greaves submitted that Mr O’Connor had “lied to the Tribunal about the legal advice received on the merits...The legal advice provided by Mr Dyke on 23 September 2018 was not originally included in the bundle as [Lendy] did not intend to waive privilege over it. However, it was included when the Claimant claimed that the statement that the Homer Row Claim was “without merit” was accurate and reflected the legal advice that had been received“
“In light of the manner in which [Mr O’Connor] sought to mislead the FCA, [Lendy’s] investors and the Tribunal about the legal advice received on the prospects of the Homer Row Claim, the Tribunal should have grave concerns about the Claimant’s credibility“.
Mr Connor denied that he was the driving force behind these kinds of discussions and described to the tribunal an “embarrassing” discussion with the FCA about the so-called Convent loans that had been on the Lendy platform:
“the FCA on their own account had understood line by line what was happening on these loans and they questioned James [Crascall], on the Convent loan where James had represented that ‘good news we’re about to recover 100% of the customers money because the borrower has found someone who will refinance him’
“The conversation went… the guy from the FCA said “ok, who’s refinancing him?” James said “err a gentleman in Norway”. The FCA guys says “well that wouldn’t be the borrowers brother in law” and James says “errr well yes yes it is”. And the FCA guys says “look that’s what you told investors two months ago and then in another update you told them that you had run that to ground and it isn’t a viable proposition”.
“The brother-in-law wasn’t going to pay up the loan, so bit by bit the FCA guy said to James that “you’re trying to pull the wool over my eyes”.
“When we came out of that meeting on the 10th October [2018] meeting I said to James “what on earth were you coming at, what were you trying to achieve?” He gave me a bit of a grin and said “Liam suggested we have a more bullish approach”. It was a lapse, lack of judgment. My point is Liam was driving these things. “
Employment Judge Mark Emery, sitting with panel members Ms Jennifer Cameron and Mr Steven Hearn indicated they would spend the remainder of the day privately discussing the case.
We were told the tribunal may be able to reach a decision by tomorrow afternoon, if not then the judgment would be handed down at a later date.
Coverage
22/11/2021: Lendy CFO reported ‘serious financial irregularities’ before sacking, Tribunal finds
02/08/2022: Former Lendy CFO’s £6.6m Employment Tribunal claim begins
04/08/2022: Lendy: “It was a dysfunctional company”, tribunal hears on 2nd day
05/08/2022: Lendy was in “regulatory financial cardiac arrest”, tribunal hears on 3rd day
08/08/2022: CEO: Lendy was “in chaos…I found it a bit overwhelming”, tribunal hears on 4th day
09/08/2022: O’Connor “was responsible for knowingly misleading both the FCA and investors” tribunal hears on 5th day
10/08/2022: Tribunal rejects £6.6m claim but finds Kieran O’Connor was “a convenient scapegoat”Case Details
Employment Tribunal Case No: 1400452/2019
London Central Employment Tribunal
Before Employment Judge Mark Emery
Sitting with Tribunal Members Jennifer Cameron and S Hearn
Claimant:
Mr K O’ConnorRespondent:
(1) Mr Liam John Brooke
(2) Lendy Limited
Mouse in the Court 
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