Investigative phase of DCC insider-dealing inquiry ends

THE INSPECTOR appointed to investigate unlawful insider dealing by DCC and its former chief executive, Jim Flavin, relating to the €106 million sale of the DCC stake in Fyffes in February 2000 has concluded the investigative phase of his work, the High Court was told yesterday.

Inspector Bill Shipsey plans to give the companies and 18 relevant individuals whom he has interviewed copies next September of any adverse findings he proposes to make so they have an opportunity to respond before he finalises his report next December.

He has also indicated his intention to make general recommendations in his final report relating to the corporate responsibility obligations of companies and their directors, officers and advisers.

Mr Justice Peter Kelly yesterday received Mr Shipsey’s second interim report but refused an application by Jim Breslin, for the inspector, to extend time to January next for the final report to be presented. The judge directed the final report should be presented by December 21st.

Mr Breslin noted the parties involved had extended full co-operation to the inspector.

Mr Justice Kelly appointed Mr Shipsey in late July 2008 after finding circumstances suggesting unlawfulness in the conduct of DCC’s affairs relating to the 1995 transfer of the DCC plc stake in Fyffes plc and/or the sale of that Fyffes stake in early 2000. A “thorough investigation” was in the public interest, the judge said.

The appointment of an inspector to DCC and its two subsidiaries – SL Investments Ltd and Lotus Green Ltd – was sought by the Director of Corporate Enforcement Paul Appleby following the 2007 Supreme Court finding of unlawful insider dealing by DCC and Mr Flavin in the €106 million sale of the DCC stake in Fyffes in early 2000.

The application was opposed by DCC. An inspector’s report could provide the basis for disqualification proceedings against any persons involved in the 2000 share sales or in the 1995 transfer of DCC’s Fyffes stake to Lotus Green.

The inspector is empowered to examine whether there were breaches of the Companies Act by the officers and directors, including shadow directors, of DCC and its servants or agents.

When appointing the inspector, Mr Justice Kelly said he had to bear in mind the activities in question gave rise to court findings and resulted in DCC paying Fyffes more than €37 million in damages.

DCC had conceded there was evidence, in relation to the 1995 transfer of the Fyffes stake to Lotus Green, suggesting a breach of the statutory provisions on notification requirements but has denied any breach of the insider dealing provisions relating to either the events of 1995 or 2000.

The director had also pointed out that the High Court, during the Fyffes case, had not had the benefit of evidence from persons whom he regarded as important witnesses to the events related to the insider dealing transactions, including Kyran McLaughlin, chairman of Davy stockbrokers, the then chairman of DCC, another director of DCC, and two directors of Lotus Green.

In his interim report yesterday, Mr Shipsey said he had interviewed 18 people, including the directors, officers and advisors of the companies, plus key employees who assisted with, or facilitated the 2000 share sales. He also interviewed the principals of the two firms of stockbrokers (Davy and Goodbody) who purchased the stake on behalf of third-party institutional investors. He had finalised the investigative phase of his work and the firms had provided additional documents requested by him.

Mr Shipsey said he also met lawyers for the companies and the Director of Corporate Enforcement arising from his concern over part of the order requiring him to determine whether provisions of the Companies Act or related provisions were breached.

He reported a strong measure of agreement as to the course he proposed to follow in that regard.