Court gets inside view of key Fyffes trades

Analysis: In a surprise move, Goodbody chief Mr Roy Barrett is now unlikely to be called to give evidence in the Fyffes case, writes Colm Keena, Public Affairs Correspondent

One of the small number of people involved in the negotiation of the €106 million share deal at the heart of the Fyffes/DCC insider dealing case, may now not be called to give evidence.

On Wednesday, Arthur Cox solicitors, for Fyffes, wrote a letter to William Fry solicitors, for Mr Jim Flavin and DCC, informing them that they would not be calling Mr Roy Barrett, managing director of Goodbody Stockbrokers. The communication came as a surprise to the DCC side.

Yesterday, Mr Bruce Ashmore, a former trader with Goodbody who is now in dispute with the stockbroking firm, gave evidence about his involvement in the three trades that made up the €106 million deal. His evidence was that he never negotiated with Mr Flavin or anyone from DCC, and that he was acting on the instructions of his boss, Mr Barrett, who, he said, was in contact with Mr Flavin.

The trades occurred on three dates in February 2000: the 3rd, 8th, and 14th. The first trade, involving 17.89 million shares, was done by Goodbody and Davy working together. The subsequent two deals, involving a further 13.27 million shares, were done by Goodbody.

Mr Ashmore gave evidence for two hours in the morning, having been called by Fyffes. Unlike most witnesses to date, he did not have a statement of intended evidence. The cross-examination in the afternoon was one of the shortest to date in the 33-day hearing.

It still remains open to the defendants, Mr Flavin and DCC, to call Mr Barrett. Others who have been connected with the deal are Mr Kyran McLaughlin, deputy chairman of Davy, and Mr Ronan Godfrey, also of Davy. Mr McLaughlin is set to be called by Mr Flavin and DCC. Mr Godfrey was not called by Fyffes to give evidence on Wednesday, when tapes of his conversations with Mr Flavin and Mr Ashmore on February 3rd, 2000 were played to the court. There has been no indication that he is to be called by the defendants.

The defendants say Mr Flavin was not in possession of price-sensitive information at the dates of the deals and, also, that he and DCC did not deal. The deal was done by a DCC subsidiary, Lotus Green, a company resident in Holland, they say. Mr Flavin was not on the board of the company.

Earlier this week, Mr John Donnelly, the well-known former liquidator, presented an expert report for Fyffes in which he considered the issue of Lotus Green.

The DCC stake in Fyffes was transferred to Lotus Green in 1995 as part of a tax scheme. For the scheme to work, the company had to be controlled from Holland. The bulk of its directors were Dutch but its Irish director, DCC finance officer Mr Fergal O'Dwyer, was its sole A director and no major decision could be made without his agreement.

Mr Donnelly noted that, in 1998, Mr Flavin developed a strategy for DCC to realise, within two years, €76 million from its investments in non-core activities. The stake in Fyffes was DCC's largest single asset.

At a board meeting later that year, it was decided by Lotus Green that all or part of the stake in Fyffes would be sold if the price reached £2 (€2.54).

At some date in early 2000, Mr O'Dwyer called a meeting of the Lotus Green board after being told by Mr Flavin of approaches from stockbrokers, according to Mr Donnelly's report. On February 2nd, 2000, a memo by two Dutch directors concerning strategic options for its investment in Fyffes was presented to the Lotus Green board.

At 9.44 a.m. a draft of this memo was sent to PricewaterhouseCoopers in Dublin, by DCC, "presumably for PwC's comments, as the final version was expanded from that sent at 9.44 a.m.".

In the memo, the directors expressed the view that the price Fyffes shares were trading at, at that time, was "unpredictable" given the volatility of internet valuations. At the time, the shares were trading at €3.20, on the back of strong interest in Fyffes' worldoffruit.com project.

At a board meeting in Amsterdam, at 7.45 a.m. European time, on February 3rd, 2000, the Lotus Green directors resolved to accept offers of €3 or higher, for the Fyffes shares.

The tapes of the conversations involving Mr Godfrey on February 3rd were made by Davy. The conversations begin in the afternoon, with Mr Ashmore and Mr Godfrey discussing the potential joint bid for Fyffes shares. "The question is, you know, what are we bidding him for", Mr Godfrey says at one stage, meaning how many shares.

He then gets on to Mr Flavin and discusses the number of shares that might be traded. Mr Godfrey says a bid was made for the entire block held by DCC the previous day. "Yeah, at a crazy price," Mr Flavin responds.

He asks Mr Godfrey to get on to Goodbody and to get back to him.

When Mr Godfrey and Mr Ashmore then speak, Mr Ashmore says he's just had a conversation with Mr Barrett, who had earlier been on the phone to Mr Flavin. Mr Godfrey explains that he has been discussing with Mr Flavin issues to do with preference and ordinary shares. The two men agree they are going to do a joint bid for 17 million shares. Mr Godfrey goes back to Mr Flavin.

He speaks with Mr Flavin, speaks with Mr Ashmore again, and then gets back to Mr Flavin. He makes the formal bid. Mr Flavin then tells Mr Godfrey that he, Mr Flavin, has no authority in the matter of the sale, and that he, Mr Godfrey, will be contacted by Mr Tom Diepenhorst, from Holland.

Mr Diepenhorst then calls Mr Godfrey and introduces himself. He asks how they can proceed, then says: "I confirm the transaction." Mr Godfrey then rings Mr Flavin to tell him the deal is being put through.

The February 3rd deal involved shares worth €57.123 million. The two stockbroking firms earned a commission of 0.25 per cent, or €71,582 each. The two subsequent deals were handled through Goodbody.

Mr Ashmore said that, prior to the February 3rd deal, Mr Barrett had been in contact with Mr Flavin and that Mr Barrett told Mr Ashmore to contact Mr Godfrey in relation to a joint deal.

Buyers for the shares had been lined up, on the instructions of Mr Barrett, he said. He said buyers wouldn't be lined up if a firm did not know there were shares to sell.

The February 8th deal involved Mr Ashmore being given Mr Diepenhorst's name and contact details by Mr Barrett, and calling him to bid him €3.60 for eight million shares. Mr Barrett said: "You need to call this fellow for tax reasons," Mr Ashmore said.

Mr Ashmore said he had concerns about the "know your client" money laundering rules, but Mr Barrett told him he would "sort out compliance".

He said he called Mr Diepenhorst and made the bid and Mr Diepenhorst accepted. He said the Dutchman had been expecting the call.

Mr Ashmore told Mr Brian Murray SC, for Fyffes, that he, Mr Ashmore, was present when Mr Barrett negotiated with Mr Flavin.

In relation to the final deal, he again called Mr Diepenhorst and made the bid and Mr Diepenhorst said OK. He was told what bid to make by Mr Barrett, Mr Ashmore said.

The case is being heard by Ms Justice Mary Laffoy and is expected to run for a number of months yet. Yesterday she said that in relation to the issue of the alleged price sensitivity of the information that was available to Mr Flavin in February 2000, there was a "small body of primary facts".

On the issue of who dealt in the shares, there was a "small body of primary facts, so far", she said.

She said she would decide on the inferences from these facts.