DCC chief executive Jim Flavin will say there is "no basis" for a suggestion that Davy Stockbrokers disclosed information to Mr Flavin regarding controversial dealings in Fyffes shares in February 2000, the High Court was told yesterday.
Mr Kevin Feeney SC, for DCC and Mr Flavin, was outlining what his clients' response would be to evidence from Fyffes' chief executive David McCann regarding the role of the stockbroking firm at the time of the €106 million sale of shares in Fyffes on three dates in February 2000.
Fyffes claims the share deals, which yielded a profit of €85 million, were organised by DCC and Mr Flavin in breach of "insider dealer" provisions of the Companies Acts. The defendants deny the claims and have pleaded that the share sales were properly conducted by Lotus Green, a wholly-owned subsidiary of DCC.
During his continued cross-examination of Fyffes chief executive, David McCann, on the 13th day of the case yesterday, Mr Feeney referred to Mr McCann's evidence that he believed that a presentation given by him to potential investors in January 2000 was arranged by Davy for reasons other than those given to Fyffes.
Mr McCann had said he now believed the presentation of January 31st, 2000 was arranged to facilitate the sale of DCC shares in Fyffes, that Mr Flavin was aware of this and had asked Davy not to tell Fyffes. The first of the share sales occurred three days later, on February 3rd, 2000.
Mr Feeney said that Mr Flavin will say that, before February 3rd, 2000, Mr Flavin had some contacts with Mr Kyran McLaughlin of Davy in relation to requests from Mr McLaughlin for DCC to sell shares in Fyffes, but that there was no mention whatsoever of any presentation meetings being held.
Mr McCann said he believed that was "most unlikely".
When Mr Feeney suggested there was no basis to suggest that Davy had disclosed to Mr Flavin any information regarding dealings in Fyffes shares, Mr McCann said he found that "hard to accept" in the context of the work involved in placing the amount of shares in February, 2000.
Mr McCann also said that he had a clear impression from a conversation he had had with Mr Flavin - which occurred prior to Mr McCann's presentation to investors on February 1st, 2000 - that Mr Flavin knew of that presentation.
Pressed by Mr Feeney, Mr McCann said that he had not suggested there was anything improper in what Davy did. It seemed that there was communication regarding the placing of the Fyffes shares, he said. He agreed he had not taken up the issue with Davy and that they remained Fyffes' brokers. He understood there was communications between other Fyffes executives and Davy.
Mr McCann said he had "high regard" for the work that Davy's do but, he added: "We were very annoyed about what happened." He added that he would prefer to rely on contemporaneous records regarding dialogue between Fyffes and Davy.
In further cross-examination, Mr Feeney repeatedly suggested that information available to Mr Flavin in his capacity as a non-executive director of Fyffes prior to the share sales was not price sensitive. Mr McCann said the poor trends for Fyffes from November 1999, which represented the beginning of Fyffes' 2000 financial year, were so obvious from the information available to Mr Flavin that it seemed unnecessary to explain them in any detail.
Mr Feeney suggested the trends were not obvious and were not outlined to the non-executive directors. He again noted that a Fyffes board statement of December 14th, 1999, predicted that 2000 would be a year of further growth.
Mr McCann said the December 14th statement did not disclose the underlying trading position and it was too early then to predict the position for the first quarter of 2000. He said that if management accounts for November 1999, which were prepared in late December 1999, had been available to the market, he believed they would have had a negative effect on Fyffes' share price.
Mr Feeney said if Fyffes believed that was the case, it would have had to state this in its December 14th statement. He suggested that there was nothing in the November accounts which was not entirely consistent with what was expressed in the December 14th statement.
Mr McCann disagreed and said Fyffes was in serious trouble in terms of meeting market expectations. He said it should have been very clear to Mr Flavin that Fyffes had almost no chance of meeting the figures expected of it for 2000.
He agreed there was no written document to suggest to non-executive directors that Fyffes would need good results from two court cases in early 2000 to meet its targets. However, he added, the directors were well aware of those cases. He added that currency fluctuations were also affecting Fyffes' performance in early 2000.
He said the trend was "terrible", the information was "terrible" and there could only be a conclusion that the company was in serious trouble. Mr Feeney said that to decide Fyffes was in serious trouble, the non-executive directors would have had to entirely discount Fyffes' board statement of December 14th, 1999, predicting 2000 would be a year of further growth.
Mr McCann said they would know the statement did not reflect the then position of the company. He said the board had exercised its judgment to give the market a positive statement. He said the market would know some information would not always be given for commercial reasons and the market did not get the information about the company's underlying concerns.
The case continues today before Ms Justice Laffoy.
