The State's corporate watchdog has told the High Court that a suspicion the affairs of Independent News and Media were interfered with for the benefit of its largest shareholder, Denis O'Brien, was of the greatest public importance.

Lawyers for the Office of the Director of Corporate Enforcement made the submission as they began what they described as an "unusually strong" application to the court to have inspectors appointed to INM.

Senior Counsel Brian Murray said that if the allegations the ODCE was making were true, then there was a sequence of critical failures in the management of a public company performing important public functions in the State.

If the events it was outlining had occurred, they could only have happened because of a "fundamental malaise" in the company and a culture of deference to the major shareholder, Denis O'Brien, and his nominee, Leslie Buckley, the then chairman of INM's board.

Mr Murray said a suspicion that INM's affairs had been interfered with for the benefit of Mr O'Brien, who also controlled other media organisations, was of the greatest public importance.

He alleged that INM had hosted a pattern of very serious wrongdoing and attempted wrongdoing at the expense of shareholders and a range of other people who had entrusted INM with their information.

Mr Murray said everyone agreed that in October and November 2014, back up tapes containing a great deal of INM data were removed from the jurisdiction, reconstituted and searched for information in relation to a number of people including former INM directors, employees, journalists and barristers.

He told the court these were described as people who may "in some way be regarded as having acted adversely to the major shareholder, Denis O'Brien".

He said the exercise was set in motion by Mr Buckley, and undertaken and managed by people who have connections with him and Mr O'Brien.

He said bills were presented to a company called Island Capital, controlled by Mr O'Brien and paid by another company called Blaydon, which is also controlled by Mr O'Brien and acts as a paying agent for him and associated companies.

Mr Murray said these two entities did not appear to know what services they were paying for, nor did the board or relevant employees of INM. It was alleged by INM's solicitors in a letter to Mr Buckley that the searching may have been conducted for and on behalf of Denis O'Brien or for his personal benefit. But he said Mr Buckley had declined to answer questions asked by INM's solicitors about this exercise.

Mr Murray also said that, in October 2016, Mr Buckley sought to pressurise the then chief executive of INM, Robert Pitt, to agree to INM paying a grossly inflated sum to acquire the radio station, Newstalk, which was owned by interests controlled by Mr O'Brien.

The court was told that Mr Pitt also claimed Island Capital had sought payment of around €1 million in relation to the disposal of shares in an Australian company, APN. Mr Pitt claimed Island Capital had provided no services for that sum.

Mr Murray told High Court President Mr Justice Peter Kelly that the board of INM had believed Mr Buckley's explanation that the data interrogation related to a "cost reduction exercise" concerning a contract with INM's then solicitors. But he said the board was now saying that if what the Director of Corporate Enforcement is alleging is true, then the board was misled by Mr Buckley about the circumstances and purpose of the interrogation.

Mr Murray said the board of a public company was now declaring that it was "hoodwinked" or lied to by its chairman in relation to matters of critical importance to its business. He asked how that could stand without some form of investigation. And if the board had been hoodwinked about this issue, the question of what else it had been hoodwinked about, became critical.

Mr Murray said it was concerning that INM was claiming the issues were a small number of historic events which were individual and isolated. He said they were bound together by common features - Mr Buckley, Mr O'Brien and an actual or proposed act intended to confer an advantage on Mr O'Brien at the expense of the company as a whole.

He said the court did not have to decide if the facts were true but only if they were of sufficient weight to support the ODCE's application to have inspectors appointed. He said the ODCE believed there was a sequence of critical failures in the management of a public company performing important public functions in the state.

Mr Murray told the court there were questions to be answered which were not just of importance to INM but went to the heart of how business was conducted in this State.

He asked did some or all of the alleged events occur, and who or what was involved. If they did occur, he asked how could the chairman of a public limited company be put in a position of such untrammelled influence in a company, and how did the board not know what he was doing. He said there was also a question about how INM's board reacted when advised of the data breach.

Mr Murray said the company alleged it would suffer immense damage if inspectors were appointed. But he said this concern did not displace the gravity of what had prompted the application, or the pressing and substantial public interests in play.