The former MD of Cantillon could continue to work as a director in the demolition company even though he undertook not to be a company director for almost five years, a High Court judge has ruled.
Paul Cluskey, 49, signed a “business disqualification undertaking” with the Competition and Markets Authority (CMA) in February, admitting his role in three hedging incidents and agreeing not to sit on the board of administration of any company for four years. – half a year
But last Thursday (May 25), Judge Catherine Burton ruled that Cluskey could continue to work as a director at Cantillon subject to a series of caveats and conditions, including extensive compliance measures to ensure Cluskey and Cantillon cannot participate in more anti-competitive acts. However, he will not be able to act as a director in any other company during the period of disqualification.
In a ruling handed down at the Rolls Building in central London, the judge said it would be very difficult for Cluskey to work at Cantillon at assistant manager level, adding that it was in the interests of the company’s employees if he stayed, due to the risk of failure of the company if it did not.
The ruling came after Cluskey, Cantillon’s managing director from 2014 until he resigned last month, request permission to continue as a director of the company. The legal action was supported by Cantillon and its majority shareholder, Morrisroe.
The CMA had opposed the application. He argued that Cluskey could continue to work as a manager at Cantillon without being a statutory director. The regulator also said the disqualification should remain in its original form to deter anti-competitive behavior by other companies.
However, Burton agreed that Cluskey’s role at Cantillon is “so pivotal that it would be impossible for him to be just a manager”, as “people internally and externally are most likely to consider that”. [Cluskey] as the controlling mind of the company”.
He pointed to evidence that Cluskey had been solely responsible for the operational and financial management of Cantillon for several years, as well as being the company’s key contact for customers and suppliers, succeeding former CEO Michael Cantillon.
He therefore said there would be a risk – if Cluskey were to remain at the company, but not as a statutory director – that he would cross the “very blurred line” between being an adviser and a “de facto director”.
In his own evidence, Cluskey had said he would be forced to leave Cantillon if he could not be a statutory councilor, at the risk of crossing that line, which would leave him open to prosecution under the original terms of his voluntary disqualification undertaking. .
Burton said that, based on evidence provided by other Cantillon directors, the “continuing existence of the company would be jeopardized” by Cluskey’s departure, adding that this would be detrimental to its shareholders, 56 employees and the 300 people employed by its subcontractors.
He accepted that no other Cantillon director had the experience to run the company and that replacing Cluskey with a successor would take at least eight months to a year. He added that the best role for Cluskey would be as a statutory director “with a clearly defined role where he is accountable for his actions”.
Cluskey’s permission to continue as a director at Cantillon is linked to a series of measures the company had offered to take and is now legally required to take. It has already implemented many, if not all, of the measures.
Measures include:
- Cluskey does not serve as an advisor to any other company;
- Cluskey retired as CEO;
- Cantillon does not act as a director of any company;
- Lawyer Adrian Luto is appointed as a non-executive director to provide scrutiny and compliance oversight;
- Paul Moody and Jim O’Sullivan are appointed as additional directors at Cantillon, in charge of operations and pre-construction activities respectively;
- Moody, O’Sullivan and Luto reporting to Cantillon’s council, instead of Cluskey;
- Moody, O’Sullivan and Luto are only replaced by other individuals with the approval of the court;
- Cluskey and other key staff attending competition law training;
- Luto conducts a periodic search of employee records and call logs for high-risk terms related to competition violations;
- Luto leads a quarterly board session on competition law and compliance.
Burton said she was satisfied the measures meant there was “no real prospect” of a repeat of anti-competitive behaviour.
The judge also imposed an additional requirement: that Cantillon’s annual report contain, for the period of four and a half years of Cluskey’s director’s disqualification, details of the company, its reasons and an overview of the his judgment
During the oral judgment hearing, Judge Burton criticized Cantillon for not including details in his most recent annual report about the CMA’s tender investigation, the possible fine Cantillon would face or the possible disqualification of Cluskey.
“Mr Cluskey’s decision in July 2022 to sign a director’s report on future uncertainties and post-balance sheet events [without mentioning these] it is not okay with this court,” he said.
Burton also addressed concerns that giving Cluskey permission to continue as a director of Cantillon could be seen as a lessening of regulatory action that undermines its role in deterring other companies from anti-competitive behaviour.
He said the CMA should be satisfied that its actions had resulted in Cantillon having to undertake “cumbersome and time-consuming” compliance measures that were potentially “industry leading”, adding: “No party that thought to engage in anti-competitive behavior I would consider Cluskey had an easy ride.”
Cluskey declined to immediately comment when approached CN after the sentencing hearing.
Cluskey is one of four construction managers who have signed a voluntary undertaking for their part in a high-profile scandal that saw 10 asbestos and demolition services contractors. fined £59.3m for hedge bidding in relation to 19 contracts between 2013 and 2018.
Cover bidding is the practice of submitting artificially high bids for a contract where the bidder has no intention of winning, which can have the effect of distorting competition by inflating prices. The CMA says hedging offers is a form of bid rigging; however, this is denied by Cantillon and Cluskey.
