U2 bassist Adam Clayton is launching a High Court legal war which could rip the world's leading rock band apart, the Irish Mail on Sunday can reveal.
Clayton is suing the band’s financial mastermind Gaby Smyth for alleged negligence in a case that could see U2's labyrinthine finances exposed before the world.
Dublin-based Smyth is often described as 'financial controller' of all U2 group companies and knows every detail of the band's earnings.
He is also thought to have masterminded the highly controversial decision to avoid Irish taxes by moving the U2 publishing operation to Holland, which has a far lower rate of tax on royalties.
That decision, revealed by this newspaper three years ago, has led to furious and sustained criticism of the band -- especially given the anti-poverty campaign of their currently injured frontman Bono.
The prospect of Clayton lining up in court against the band's financial mastermind will alarm those who already fear that musical tensions, coupled with Bono's crippling back injuries, threaten to tear the group apart after more than 30 years together.
It will be 50-year-old Clayton's second High Court action in the space of six months.
In January, the High Court agreed to freeze the assets of Clayton's former housekeeper, Carol Hawkins, after the court heard claims that she had defrauded him of up to €1.8million.
Now Clayton has lodged papers at the High Court signalling his intention to bring a negligence claim against Smyth and two other accountants -- Jill Percival and Pat Cleary -- in Smyth’s company.
The papers, lodged by Clayton on June 4, confirm the plenary summons relates to alleged 'negligence.' However, the detail of the claim is not yet known, as Clayton has until July 4 to issue formal summons to Smyth and his co-defendants.
It's thought the case has its roots in issues brought to Clayton's attention in his case against Carol Hawkins.
The ease with which his former housekeeper was allegedly able to take €1.8million from his accounts, taking €600 a day from his debit and credit cards for up to three years, alarmed Clayton.
The housekeeper allegedly used the money to go on a spending spree, which included the 2007 purchase of a $465,000 New York apartment, cars and jewellery, as well as living a rock star lifestyle far beyond her means.
At one stage, she was spending €900 a month maintaining racehorses.
A source close to Clayton said: 'It would be unwise to assume that this case relates to the case against his housekeeper, but that's not to say it has nothing to do with her.'
In preparation for the case against Mrs Hawkins, Clayton instructed two accountants, including Kieran Wallace of KPMG, to review his financial arrangements and all his personal accounts.
While it is not clear if his negligence claim against U2's accountant relates to matters which arose in this review, the claim does concern investments made on the musician’s behalf, and professional advice offered by Gaby Smyth & Co. A fourth defendant in the case is Bank of Ireland Private Finance.
This branch of Bank of Ireland handles investments on behalf of high net worth individuals, offering 9 per cent annual returns on minimum investments of €250,000 or more.
Clayton has retained Gleeson McGrath Baldwin to act on his behalf against Smyth and the bank.
The managing partner at Gleeson McGrath Baldwin is Frank Murphy, an expert in commercial law, who specialises in media and entertainment contracts.
He was called as an 'independent expert' when celebrity chef Conrad Gallagher was sued by the Fitzwilliam Hotel over the alleged theft of paintings.
Mr Murphy's evidence proved crucial in the case, casting doubt over whether the hotel actually owned the paintings at the centre of the case.
It was that evidence which ultimately helped secure an acquittal for Gallagher.
Murphy is overseeing Clayton's case against U2's accountant and Bank of Ireland, together with Geraldine Clarke, head of the firm's litigation department and a former president of the Law Society.
In addition to Gaby Smyth and Bank of Ireland Private Banking, there are two other listed defendants.
Jill Percival and Pat Cleary are both accountants who work for Smyth, with the latter noted for his expertise in advising television and film industry executives about tax efficiency.
Smyth & Co. acts for Screen Producers Ireland as a tax adviser to producers and artists engaged in the visual arts.
© Associated Newspapers Ltd., 2010.
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