Flavin's moodiness was 'painful to deal with'

The chairman of Fyffes, Mr Carl McCann, has told the court that the decision to take an action against DCC alleging insider trading was not based on difficult relations with DCC chief executive Mr Jim Flavin. It was based on legal advice.

That relations were very difficult is now very clear and yesterday some time was spent on the issue, with Mr McCann giving his views on Mr Flavin while Mr Flavin sat at the back of the court listening. The DCC chief has rarely missed a day since the case began.

In January 2000, there was a bust up between Mr McCann and Mr Flavin over the issue of an incentive scheme for executive directors arising from Fyffes' worldoffruit.com project. Mr Flavin was chairman of Fyffes' remuneration committee and was against the scheme proposed to the committee by Carl and David McCann and their father, Mr Neil McCann.

"I believe undue pressure was brought to bear on the committee by your father, David, and yourself to change our view," Mr Flavin wrote in January to Mr Carl McCann, copying the letter to the other two McCanns and to Fyffes directors Mr Denis Bergin and Mr Gerry Scanlan.

Two drafts of a response were written up by Mr Carl McCann, but were not sent. Mr McCann felt Mr Flavin's allegation of "undue pressure" was unfair and "quite ridiculous". He said the suggestion of impropriety was totally out of order. "My integrity is not questioned and I am very upset at any such suggestion...

"I don't believe that anyone who knows you could believe for an instant that you would be pressurised into anything. Your obstinate (sic) and compulsion to dominate everyone and every meeting is well known.

"There is no excuse for bad manners, a bullying approach, and a lack of courtesy, appreciation and respect for your elders... I do not know if your moodiness is random or related to other business hassles, but is is painful to deal with."

When Mr Michael Cush SC, for DCC and Mr Flavin, said the bust-up must have represented a low ebb in Mr McCann's relationship with Mr Flavin, Mr McCann said this was not so. These sort of bust-ups apparently occurred on a number of occasions during Mr Flavin's 19-year stint on the Fyffes board.

Mr McCann made it clear the McCanns had concerns over Mr Flavin and DCC getting "creeping control" over Fyffes. By way of increased shareholding and increased weight on a company's board, DCC could take over a company at a lower cost than would be the case if it bought it in a straightforward way, he said.

Mr Flavin had managed to do this with other companies, Mr McCann said, and cited Printex, Flogas and Wardell Roberts.

In December 1999, Mr Flavin hung up on Mr McCann during a telephone conversation concerning the worldoffruit.com incentive proposal.

On Thursday, Mr McCann mentioned an event in the early 1990s when, he said, Mr Flavin sought to increase DCC control over Fyffes. Fyffes was raising funds, and on Mr Flavin's advice, the McCann family bought some of the preference shares being issued. The family borrowed the money for the £6 million (€7.62 million) purchase and then interest rates shot up. The family was in "a slightly uncomfortable financial position" as a result.

Over the previous 12-18 months, shares the family had asked Mr Flavin to sell to put them on a more sound footing, had not been sold for reasons Mr Flavin had told them were to "do with deals or potential deals".

In the end, the shares were sold to a number of placees through Davy, with DCC being the largest placee.

"We got a poor price... but if we did, Jim also said that he wanted to be appointed chairman [ of Fyffes] and that he would like a couple of other DCC people appointed to the board of Fyffes.

"He endeavoured to use our distress - temporary distress fortunately - to procure a much greater degree of control by DCC and that would be a fairly familiar theme."

Mr McCann said Mr Flavin was used to dominating matters at DCC and found it difficult that he could not do so at Fyffes and often reacted strongly.

When Fyffes was working on its worldoffruit project in late 1999, Goodbody Stockbrokers approached the company suggesting it could raise finance for the project. They were engaged by Fyffes. Fyffes' broker, Davy, was "not pleased" with this and it was "a point of sensitivity with them", Mr McCann said.

When it came to the controversial DCC sale of Fyffes shares in February 2000, Mr McCann formed the impression from Mr Kyran McLaughlin of Davy, that this sensitivity "probably influenced their willingness to take sides... and do the placing and not talk to us ahead of time".

During his evidence yesterday, Mr McCann said it was common practice for Dublin analysts to send commentaries on Fyffes to Fyffes for their views prior to publishing them.

He said this was not the case with London-based analysts.