Flavin's view was that he should not resign

Jim Flavin told DCC he had thought "deeply" about his position, writes COLM KEENA

JIM FLAVIN told a meeting held by the DCC board in July 2007 - within hours of the Supreme Court finding that he had dealt in shares while in possession of price sensitive information - that he didn't believe he should resign.

An edited transcript of an interview with the current non-executive chairman of DCC, Michael Buckley, is contained in the report of High Court inspector Bill Shipsey SC, which was published this week.

Buckley said Flavin told the July 2007 meeting, which he initially chaired, that he had been thinking "deeply" about his own position if the Supreme Court held against him.

Buckley said that Flavin had said: "In the light of the fact that the judgment did not raise any new issues that hadn't been dealt with in the High Court that would bear upon issues like whether he had used that information in the context of the transactions, as to whether he had given misinformation to anybody, in the light of the fact that no such issues had been raised in the Supreme Court judgment, his personal view was that he shouldn't resign, but he said it was a matter for the board rather than a matter for himself, that he was going to withdraw from the meeting."

Buckley, as senior independent director, took over chairmanship of the meeting. He told Shipsey that, on his way out, Flavin said: "I will respect, irrespective of what my personal view is about whether I am required to resign or not . . . I will respect the view that the board comes to."

The remaining directors then discussed the issue. Those present were: executive directors Tommy Breen and Fergal O'Dwyer, and non-executive directors Bernard Somers, Roisin Brennan, Maurice Keane, Paddy Gallagher and Tony Barry.

Buckley said he asked each of the directors in turn whether they felt Flavin should resign. "Each of them very categorically said 'No'."

Flavin dealt in the Fyffes shares on behalf of DCC at a time when he possessed negative trading information on Fyffes by way of his being a non-executive director of that company. The Supreme Court held that the information was price sensitive, but did not address the issue of whether Flavin believed it was.

Shipsey, in his report, found that Flavin mistakenly had come to the view that the information was not price sensitive.

Buckley told Shipsey the board's discussion was largely "about the whole issue of integrity, did anything in the Supreme Court judgment go to the integrity of Jim Flavin as an executive of DCC, or cast a question or shadow over his integrity or honesty?"

Buckley said the board had quite an extensive discussion about the meaning of an introductory piece in one of the judgments. This is believed to be a reference to the judgment of Mr Justice Fennelly (see panel).

"Very clearly the High Court had said, and the Supreme Court hadn't said anything different, that there was no issue of [profiting from the price sensitive information], so there was quite a serious discussion about all of that, but it was very largely about integrity and honesty and whether there was a slur cast in a sense on Jim's character, such that it would be inappropriate for him to continue in an executive position of a public company."

He said the issue of any sort of personal relationship with Flavin wasn't a consideration for the directors. "It is understandable that people on the outside think people on boards are all cosy and all the rest of it, but that's not the way it was."

The plc is about 85 per cent owned by foreign investors, he said. Over the following three to four weeks it was established that all of these major investors were absolutely supportive, Buckley said. He said he had four meetings over three weeks with representatives of the Irish Association of Investment Managers and with the group's two largest Irish investors.

He said he felt that, at the end of that process, "a draw had been fought". The association was asked whether it wanted to write to DCC asking it formally to reopen the issue, but no such letter was sent. The following April the association told DCC it was going to issue a statement saying it believed it was inappropriate for Flavin to remain in his role.

Buckley told Shipsey he felt "disappointed and let down" by the development, and did not know what lay behind it. The board met immediately and discussed Flavin staying in office for a shorter period than had been envisaged. Within days, director of corporate enforcement Paul Appleby made his application for Shipsey's appointment. "Jim offered his resignation immediately."

THE JUDGE'S VIEW

At the outset of his ruling on the Fyffes/DCC case, Mr Justice Nial Fennelly said the following: "It used not to be considered any sort of sin to profit financially from the use of secret, private or privileged information. That was how fortunes were made. Now things are different. To trade on the use of inside information is recognised for what it is. It is a fraud on the market. The insider who exploits his access to the special knowledge he enjoys for the purposes of the company in his capacity as executive or director of a company commits a crime. He may be made, additionally, to answer for the profits he has made."