DCC plc chief executive Jim Flavin has denied that the decision to sell a stake in Fyffes for €106 million in February 2000 was "substantially made" and "effectively controlled" by him and DCC.
Not only was it "possible and correct" for a public company to delegate to a subsidiary company certain matters, that was what had actually happened in relation to the sale of the DCC stake, Mr Flavin said. The decision about whether to deal in the shares was exclusively for Lotus Green, the Dutch-based subsidiary of DCC and that decision was exclusively made by Lotus Green, he said. There was "no shred" of evidence to show the decision was other than a Lotus Green decision.
The reason why Lotus Green had executed the DCC strategy to exit Fyffes was to mitigate payment of a double layer of Capital Gains Tax, Mr Flavin added. If the sale of the stake were to happen today, Lotus Green would not have had to be set up because no CGT would have to be paid, he said.
Mr Flavin also said he "utterly rejects" a suggestion by Mr Paul Gallagher SC, for Fyffes, that he knew that information in his possession at the time of the sale was price sensitive. It was clear that Fyffes' own executive directors did not consider this was a "price-sensitive" time, he said.
While he agreed it was his own firm view around the time of the sale that offers for the DCC stake should be accepted by Lotus Green, Mr Flavin said he was very careful to give no indication "good, bad or indifferent" to Mr Fergal O'Dwyer, a director of Lotus Green and chief financial officer of DCC, of that view.
Mr Flavin said Mr O'Dwyer would have been aware that DCC had, for years, a strategy to exit Fyffes at the appropriate time and Mr O'Dwyer would also have known that, in February 2000, the circumstances were unprecedented.
Mr Gallagher yesterday concluded his lengthy cross-examination of Mr Flavin on the 49th day of proceedings brought by Fyffes alleging "insider dealing" in connection with the sale of the DCC stake in Fyffes over three days in February 2000.
The action is before Ms Justice Laffoy and is against DCC plc, Mr Flavin and two DCC subsidiaries - S and L Investments Limited and Lotus Green Limited. The defendants deny the claims and plead the share sales were properly organised by Lotus Green.
The re-examination of Mr Flavin by Mr Kevin Feeney SC began late yesterday and continues today, after which Mr Fergal O'Dwyer is expected to begin his evidence. The action is expected to run for several more weeks.
Yesterday, Mr Gallagher asked Mr Flavin about a memo prepared by solicitor Alvin Price following a phone conversation between Mr Flavin and Mr Price on January 31st, 2000, three days before the first of the share sales.
In the memo, Mr Price noted Mr Flavin had phoned him to discuss the possible sale by DCC plc of a shareholding in another public company. He noted Mr Flavin was on the board of that other company and was concerned to be advised in relation to DCC's freedom to sell shares at this time. He also noted Mr Flavin had "said he had examined his conscience with regard to any price-sensitive information and felt he didn't have any".
Later in the memo, Mr Price noted Mr Flavin had mentioned that the company's year had ended on October 31st (1999) and, to Mr Flavin's knowledge, the first two months trading (for fiscal year 2000, beginning November 1999) "had not been all that wonderful". It noted he had also indicated the company's track record was to have an uneven pattern of results and two relatively poor months would not have been unusual in the past.
The note stated: "Having discussed the matter, we confirmed that we shared his view that there did not appear to be any legal obstacle to their proceeding with a full disposal of the shareholding".
Mr Flavin told Mr Gallagher the principal point of his call to Mr Price was to deal with absolute reassurance that nothing had changed in terms of any need for the DCC group company to have permission from the company (Fyffes) to deal in shares.
