DCC confident propriety observed in Fyffes' dealings

DCC, the quoted distribution and investment group, has said any investigation into suspected insider trading involving its sale last year of Fyffes shares worth €106.7 million (£84 million) will find no impropriety.

The company said neither it nor any of its officers were in possession of price-sensitive information on Fyffes at the time of the disposal of the shares in February 2000. At the time its chief executive, Mr Jim Flavin, was a non-executive director of Fyffes.

Inquiries into suspected serious insider trading are being conducted by the Garda Bureau of Fraud Investigation. A Garda spokesman refused to comment when asked if the share dealings were under investigation.

In a statement to the Stock Exchange, DCC said it had recently become aware of speculation that an investigation was taking place into alleged insider trading concerning its disposal of Fyffes shares.

A spokeswoman for DCC and Mr Flavin had declined to comment when contacted by The Irish Times on Thursday. A spokesman for Fyffes yesterday said it had not been contacted by the Garda in relation to the matter.

Mr Flavin was non-executive director of Fyffes until early last year. He left the company shortly after DCC completed the sale of a 10.2 per cent stake in the fresh fruit group that it had held for more than 20 years.

DCC sold the shares in several tranches between early and mid February 2000, and realised €106.7 million. The shares were placed with overseas institutions by Davy Stockbrokers and Goodbody Stockbrokers. In its statement yesterday, the company said the sale came following unsolicited bids from stockbrokers and that it had been company strategy "for several years" to realise its investment in Fyffes.

The timing of the sale was fortuitous and preceded a sharp decline in Fyffes shares on foot of a profits warning issued just more than a month later at Fyffes's annual general meeting.

Mr Flavin said at the time that when DCC made the decision to sell its Fyffes holding he had no prior knowledge of the profits warning which proved the trigger for a collapse in the share price from €3.96 to €1.10. The shares had reached record levels on the back of hype surrounding Fyffes internet-based fresh produce trading venture, worldoffruit.com, which proved misguided. The company was also experiencing difficult trading conditions, for a number of reasons, in its core fresh produce distribution business.

It is standard practice for the Irish Stock Exchange to look into any large or unusual transaction, particularly any that involve connected parties. In its statement yesterday, DCC said it had received one written inquiry from the stock exchange on September 1st, 2000, in relation to the sale of Fyffes shares. A reply was made on September 8th and since that date "neither DCC nor any of its officers has been contacted by any relevant authority in this matter".

If it uncovers what it believes are serious irregularities, the Stock Exchange notifies the DPP, who decides if any further course of action is needed. The Garda are asked to investigate if the DPP feels such a move may be warranted.

Mr Flavin stepped down as deputy chairman of Eircom last week and recently accepted The Irish Times/PA Consulting Group Management Award for 2001 after it was awarded to DCC.