ANALYSIS:Jim Flavin told Bill Shipsey that he was not 'in denial' about the Fyffes/DCC case

THE FORMER executive chairman of DCC Jim Flavin told a High Court inspector he still believed the trading information at the heart of the Fyffes/DCC insider dealing case was not price- sensitive.

He told Bill Shipsey SC he was not "in denial" about the affair and stressed that the Supreme Court was the "final arbiter" in the matter. "A combination of circumstances had arisen which were pretty unique," he told the inspector.

He also said he still believed he had not dealt in the shares, a position he maintained in his evidence during the Fyffes/DCC High Court hearing. He told the hearing that a Dutch resident subsidiary of DCC, and not him, had dealt in the shares. Ms Justice Mary Laffoy described this evidence as an "absurdity".

Mr Shipsey's report, which dealt with the sale of Fyffes shares worth €108 million by Mr Flavin on behalf of DCC in February 2000, contains an edited transcript of his two "on oath" interviews with Mr Flavin.

Mr Flavin resigned as DCC's executive chairman in 2008 after the Director of Corporate Enforcement Paul Appleby sought Mr Shipsey's appointment.

Mr Appleby's application came in the wake of a 2007 judgment in the Supreme Court that information on Fyffes, which Mr Flavin had at the time of the dealing, was price-sensitive. The five-judge Supreme Court ruling overturned Ms Justice Laffoy's finding that the information was not price-sensitive.

"I recognise that as a legal fact, I have dealt and as a legal fact, the information was price-sensitive, but I sit here as somebody who honestly believes I didn't cause or procure dealing, bids or acceptance and I still believe the information wasn't price- sensitive," he told Mr Shipsey.

"I respect the fact that Judge Mary Laffoy came to a judgment that I did [ deal]. I have got to accept that, that is a legal thing. I can more readily accept that than I can" [ the Supreme Court finding that the information he had was price sensitive].

On the price-sensitivity issue, Ms Justice Laffoy's judgment involved the use of a notional person called a "reasonable investor" and did not give evidential value to the fact that a profit warning by Fyffes, given on March 20th, 2000, led to a 25 per cent fall in the Fyffes share price over the following two days.

The DCC trades began on February 3rd, 2000.

The Supreme Court said a common-sense analysis of the information was a better basis for a judgment and concluded that the events surrounding the profit warning were of evidential value.

Part of Mr Flavin and DCC's argument in the case was that the actions of Fyffes and its executives at the time, were consistent with their not thinking the information was price-sensitive.

"I don't think it is any disrespect that one has independence of mind," Mr Flavin told Mr Shipsey.

He said the Supreme Court judgment ignored the fact that Fyffes had acted as if it believed the information was not-price sensitive. The court had treated February 3rd, when DCC began dealing, and March 20th, when Fyffes issued a profit warning, as if they were equal in terms of market conditions.

He would "never understand" how the court could say the High Court judge was wrong in using the "reasonable investor" test.

"It is a nonsense. The reasonable investor is specifically provided for in the 2005 Act. I just don't agree with that, with full respect to the [ Supreme Court]".

The share sales occurred in a number of tranches during early February and involved a Dutch resident company called Lotus Green. After the first tranche was sold, Neil McCann, the then chairman of Fyffes, bought Mr Flavin a bottle of champagne and, on the following day, wrote to him saying it would be best if the rest of the DCC shares were sold to avoid an overhang in the market.

"I think Neil McCann, [ his sons] Carl McCann, David McCann, because they all knew that letter, they all supported that, I mean, they were more active in causing and procuring [ the dealing], it can be reasonably, plausibly argued, because of writing a letter encouraging further sales, which I never did to Lotus Green, on these shares with the same information.

"What is the result of all of this? I am sitting here, reputation in tatters, DCC money down, DCC executives distracted hugely, shareholders suffering as a result. Fyffes are sitting with cash in bank. I mean, I am sitting here thinking this is crazy."

Mr Flavin attended the Fyffes annual meeting on March 20th, 2000, where he sat beside Mary Finan, a public relations consultant to both Fyffes and DCC. She said to him: "Well, what do you think of the profit warning?" and he said: "What?"

"I was very surprised," he told Mr Shipsey, "but I was sort of shocked, and I think instantly the penny dropped with me, oh God."

Mr Shipsey, interrupting: "This is going to look awful?"

Mr Flavin: "Yes."