Fyffes' case to shine light on financial circle

The inner workings of Dublin's close-knit financial community will be on display next week when a high-profile insider-dealing case finally comes to court after a wait of almost four years.

Fyffes, the international fruit business run by the McCann family, is suing investment group DCC and its chief executive Mr Jim Flavin for insider dealing in its shares. The allegation relates to the sale by DCC of its stake in Fyffes in 2000, just weeks ahead of a profits warning that sent the shares tumbling.

At the centre of the case is the allegation that because Mr Flavin was a non-executive director of Fyffes, he had access to information about the difficult trading conditions the company was facing. DCC has countered that the Fyffes board had no adverse price-sensitive information ahead of DCC's decision to sell out.

They also maintain the Fyffes shares were held through a ring-fenced Dutch subsidiary called Lotus Green. The management and control of the Fyffes shareholding rested with the four directors of Lotus Green: the finance director of DCC Mr Fergal O'Dwyer and three Dutch non-executives.

In a statement to the stock exchange in January 2002, DCC said: "The board of Lotus Green made a wholly independent judgement in its decision to accept offers made to it in February 2000 for 87 per cent of its shareholding in Fyffes and no other person or company caused or procured Lotus Green to effect such disposals."

The action is set to run for eight weeks and a taste of what is in store was afforded by a preliminary action this week. It centred on the authenticity of taped conversations between Mr Flavin and Mr Ronan Godfrey, the head of the equity desk at Davy who handled the sale.

Fyffes' solicitor told the High Court in an affadavit on Wednesday that the tapes showed Mr Flavin actively negotiating the terms of the sale of the first tranche of Fyffes shares on February 3rd, 2000.

Solicitors for DCC and Mr Flavin said that their clients could not confirm the accuracy of the transcripts given the passage of time and that Mr Flavin would give evidence about the telephone call next week.

Transcripts of several phone calls were exhibited to the court. A number of them involve Mr Godfrey and Mr Flavin discussing the structure of the sale and the involvement of another firms of stockbrokers, Goodbody. After several conversations Mr Godfrey rang back with a firm bid. The following is the transcript of that call:

Ronan Godfrey: Jim, hi, I will bid you for 17,895,697 ordinary shares at 3.20.

Jim Flavin: OK I'll come back to you, as soon as I can.

Ronan Godfrey: OK.

JF: Eh go through, OK, it may, Ronan it may be that you get a call not from me but from a guy from ING Bank in Holland - Tom Depenhurst (sic), and if it's not him, you can take it that they have the authority to give an instruction.

RG: Fine, that's no problem.

JF: I have no authority on the matter.

RG: OK, so you'll have to come back and say you're happy to deal though or will you or...?

JF: Yeah, I know, if you get a call from ING Bank, they'll know all about it, you can take instruction from them instead of me.

RG: OK.

JF: The shares are in Holland and...

RG: Absolutely, OK and, as I said, we'll just take the late delivery.

JF: In fact you know (inaudible) doing it won't be with us at all. It will be entirely between here and Holland, I wouldn't want any trail of paper between here and...

RG: We'll just take the settlement details off them, but we'll be taking it.

JF: Exactly, exactly, and we'd want everything sent to them, nothing to DCC.

RG: OK.

JF: He'll fill you in, he's a director of a subsidiary there of ING Bank, he'll explain it

RG: Just Again Jim, we'll be taking delayed delivery on 4.6 million odd shares as well.

JF: Yeah, I know, I understand, we will stand over what I'll ring (inaudible) over that but just we really want the trail of instruction entirely from Holland to you in correspondence to you there and back.

RG: That's fine

JF: Yeah - I will come back.

RG: Thanks Jim.

The transcripts of the tapes also contained the following extract of a call between Mr Godfrey and Mr Diephenhurst.

V: Mr Godfrey,

RG: Speaking

V: This is Tom Diephenhurst speaking.

RG: Tom, Hi Jim.

V: Eh, eh.

RG: I was expecting your call.

V: Ah, ah, that's good. How can we proceed. I can confirm the transaction.

RG: Yes indeed.

V: Em,we sell to you, we being Lotus Green in Amsterdam,

RG: You only need to give me the full, you actually, you know what the best thing to do is, either to email me or fax me the exact details of how we are to book the deal.

V: So it would be first come, yes, my telephone, you take the call.

RG: Oh, absolutely, yeah.

There then follows a call between Mr Godfrey and Mr Flavin in which Mr Godfrey confirms that Mr Deitermarsh (sic) has rung and that the deal is going through. Mr Flavin adds that he has rung Mr Roy Barrett of Goodbody Stockbrokers, the other broker involved, to brief him.

The transcript also sets out a conversation in which Mr Flavin says he is going to ring the Fyffes chairman, Mr Neil McCann, to tell him to whom DCC are selling their Fyffes shares. Mr Godfrey then says he wants to ring Mr Carl McCann, who was vice-chairman of Fyffes.

RG: Jim, I'm going to ring Carl as well to say that we're going to try and do something.

JF: Ah, no, please.

RG: Mmmm...

JF: Please, please, no, I've to deal with the... You've no instruction from us at all to talk to Carl or the company whatsoever. This is a private transaction between Davy's and DCC. I'm astounded at what you are saying.

RG: That what? That I shouldn't talk to Fyffes who are also our clients.

JF: Absolutely. Absolutely, you've no authority to talk to them in relation to any transaction that DCC is contemplating, none whatsoever, I'm astounded.

RG: OK.

JF: Good heavens. Oh no, no, no, no, no, I mean really it's ... that communication is a matter between DCC and Fyffes. This is entirely...

RG: They are well aware of what's going on though Jim.

JF: Yeah, I know.

RG: They've been ringing us constantly, hearing that we're trying to do something in the market and what's going on and all of this...

JF: No, no. I've talked to Neil, I'm about to talk to him again...

RG: Anyway, give him a ring...

JF: It isn't at all appropriate for you at all to ... Ah ... I mean at some stage... I make a call to you about something but... this is, you know, it's eh... eh...

RG: Would you give him a ring and give me a ring back, would you?

JF: Thank you.

RG: Thanks a lot, Jim.

Both DCC and Fyffes declined to comment yesterday.