Legal saga brought arcane world of insider dealing into the media mainstream
DCC/Fyffes coverage 2000-2005
Jim Flavin: at a DCC annual general meeting
No less than 10 years passed between the unlawful transactions at the heart of the DCC insider dealing affair in February 2000 and the conclusion of the saga in January 2010. Criminal charges never arose, although DCC founder Jim Flavin lost the job he cherished and suffered reputational damage.
At issue was his sale in early 2000 of a major stake in the fruit importer Fyffes by DCC, a holding group with energy and healthcare interests. The sale, for €106 million, yielded an €85 million profit.
Flavin was then a non-executive director of Fyffes and held inside information about deteriorating trade that was not freely available to the market when selling DCC’s stake. Fyffes issued a profit warning the next month, after which its shares lost a quarter of their value.
Fyffes sued DCC in the High Court. After 87 days of evidence, Ms Justice Laffoy ruled in 2005 that trading information Flavin held was not price sensitive. Fyffes appealed. In 2007, five Supreme Court judges ruled unanimously that the information was indeed price sensitive.
The DCC board resolutely stood by Flavin, deciding the day the Supreme Court ruled that it would not serve justice or fairness to sack him.
At first, there was no public protest from the business community. Several months later, the Irish Association of Investment Managers declared it was not appropriate for Flavin to continue in his role.
This was shortly before the State’s corporate enforcer, Paul Appleby, went to the High Court to seek the appointment of an inspector to look into the affair. It was Appleby’s move which prompted Flavin’s departure.
In early 2010 the inspector, Bill Shipsey SC, reported that Flavin “genuinely believed he was not in possession of price-sensitive information” when selling the shares and made a “costly error”.
Appleby said on the basis of this report that his own inquiries were “at the end of the road”. Flavin was spared any further action.
The story in the media
The affair was a sensation, pitting pillars of the business establishment against each other in open court for all to see. This was a civil case, but insider dealing can lead to criminal prosecution.
The stakes were high for Flavin and for DCC, the company he established in 1976.
The case was no less important for the McCann family behind Fyffes, in which DCC had held a major shareholding for almost 20 years.
This was a tussle over money primarily. But the deep connections between the parties, forged over decades, and their public prominence brought drama and intrigue to the proceedings. The self-contained world of the Irish Stock Exchange had never seen the like.