DCC executive admits letter he requested gave 'wrong impression' on board meeting

DCC's chief financial officer (CFO) has agreed that a letter which he had requested a Dutch director of a DCC Dutch-registered subsidiary to write gave an incorrect impression about who had suggested calling a board meeting of the Dutch subsidiary in early February 2000.

The meeting was called to discuss the possible sale of DCC's stake in Fyffes.

DCC CFO Mr Fergal O'Dwyer was the sole Irish director of Lotus Green, the DCC Dutch-registered subsidiary. He told the High Court yesterday that he believed tax "was in his mind" when he had asked Mr Henri Roskam, a Dutch director of Lotus Green, to write a letter to Mr O'Dwyer on January 31st, 2000, recording the content of a phone conversation held some 40 minutes earlier that day between Mr O'Dwyer and Mr Roskam.

Mr O'Dwyer agreed that when he initially called Mr Roskam that day, it was he who had suggested to Mr Roskam that a Lotus Green board meeting be called to discuss approaches from brokers about the Fyffes shareholding and the sharp rise in the Fyffes share price.

He also agreed he had telephoned Mr Roskam later requesting Mr Roskam to write a letter recording what they had discussed in their first phone call. Asked why he did this, Mr O'Dwyer said he was obsessive about paper work and could only assume that tax was on his mind.

He said he did not say that to Mr Roskam but had said that, maybe for the "sake of good order", that Mr Roskam "should drop me a note to record our discussion, which he did".

He said Mr Roskam had faxed him a letter later that day in which Mr Roskam wrote that he, Mr Roskam, had recently noted an increase in the Fyffes share price and that "it occurs to me (Mr Roskam) that we perhaps should consider a board meeting".

Mr O'Dwyer said he had not dictated the terms of the letter to Mr Roskam.

Mr Paul Sreenan SC, for Fyffes, suggested the letter gave a misleading impression about what had actually happened in the phone call between Mr O'Dwyer and Mr Roskam. Counsel suggested that the reality was quite different, as the initiative for the board meeting came from Mr O'Dwyer, not Mr Roskam.

"Isn't that correct?" counsel asked. Mr O'Dwyer agreed that was correct.

Mr O'Dwyer added that, "in the business world I live in", he could be at meetings with colleagues where he would have a feeling that somebody should have a letter sent to them. That did not suggest it was not part of reality, that was "just the way it happens".

He said he had received the letter from Mr Roskam as it was and did not think twice about it. He had not "parsed" it as counsel was doing now. He said it was for the minutes and "ultimately any scrutiny that would be made of it".

Asked what was the letter's purpose, Mr O'Dwyer said it was to show there was Dutch involvement, Lotus Green involvement, in the process. It was also written to show there was discussion at an early stage in the review process regarding the Fyffes shares.

He said the letter's existence was disclosed to Fyffes' solicitors in 2001. However, he agreed the letter was given to Fyffes' solicitors without any commentary indicating it did not reveal the full picture. He agreed that it was not until last November that Fyffes' solicitors were told Mr Roskam's letter was written at Mr O'Dwyer's suggestion.

He said it did not occur to him that the letter was likely to mislead Fyffes in considering the circumstances whereby Lotus Green came to sell its stake in DCC. He said the Lotus Green board minutes reflected the general import of what was discussed and the general import of those minutes was correct.

If the matter was not dealt with as correctly as it could have been in the letters to Fyffes' solicitors by DCC's solicitors - the latter of which were acting on instructions from DCC officers, including himself, that was a reflection of the resources DCC had at the time and also the time it had to respond.

Mr O'Dwyer was being cross-examined on the 52nd day of proceedings in which Fyffes alleges insider dealing in connection with the €106 million sale in February 2000 of the DCC stake in Fyffes, beneficial ownership of which was transferred to Lotus Green in 1995. The defendants - DCC plc, Mr Flavin and two DCC subsidiaries S and L Investments Limited and Lotus Green - deny the claims and plead the share sales were properly organised by Lotus Green.

Earlier yesterday, Mr O'Dwyer said he had been unable to find any resolution of the DCC board that formally delegated to Lotus Green the execution of the long-term DCC strategy to exit Fyffes when the price was right.

He said the DCC board had met in July 1995 to approve the transfer of the Fyffes shareholding to Lotus Green and the board was advised the exclusive management and control of the shareholding rested with Lotus Green. That was not recorded in minutes but that was the case, he said.

He also believed that in May 1998, the DCC board was advised that Lotus Green was reviewing its position regarding the Fyffes shareholding.

Mr O'Dwyer also said that when he was informed by Mr Flavin on January 31st, 2000, that Mr Flavin had received unsolicited approaches from brokers in relation to the Fyffes shareholding, he had not asked Mr Flavin about the price being offered.

Prior to January 31st, 2000, he had not spoken to Mr Roskam or the other Lotus Green directors about the rise in the Fyffes price. The court heard that price rose by some 50 per cent between January 7th and January 31st, 2000.

He rejected a suggestion by Mr Sreenan that the Lotus Green directors were "sitting in Amsterdam waiting for a signal from DCC" that now was the time to implement the strategy to sell the Fyffes stake.

Asked had he, as a director of Lotus Green, negotiated with brokers at all about the sale of the Fyffes stake, Mr O'Dwyer said that, using Mr Flavin as a "conduit", Lotus Green's requirements were relayed to the market and, to that extent, Lotus Green had interfaced with the market.

The case resumes on Tuesday before Ms Justice Laffoy.