McCann tells of 'undue pressure' from DCC

Fyffes chairman Mr Carl McCann drafted a note for DCC chief executive Mr Jim Flavin in January 2000 saying: "I don't know if your moodiness is random or related to other business hassles but it is painful to deal with, particularly for 15-20 years", the High Court heard yesterday.

He also complained in the draft of January 11th, 2000, that Mr Flavin's written complaint on January 5th, 2000 that Mr McCann, Fyffes chairman Mr Neil McCann and Fyffes chief executive Mr David McCann had put "undue pressure" on the Fyffes Compensation Committee, of which Mr Flavin was then chairman, regarding whether the committee should approve a scheme for directors' bonuses/shareholdings in Fyffes' then fledgling ecommerce business, Worldoffruit.com, was "most unfair".

Mr McCann noted that Mr Flavin had told Mr David McCann in a phone call that Mr Flavin was totally opposed and "unmovable" in regard to the possibility of directors' bonuses/shareholdings in respect of Worldoffruit and that Mr Flavin had later apologised for his remarks during that conversation.

In a second draft note of the same day on the same issue, Mr McCann wrote: "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."

Later in the same draft, he wrote: "So be it. Opinions may differ. There is nothing wrong with raising it and debating it but there is no excuse for poor manners, a bullying approach and a lack of courtesy, appreciation and respect for your elders.

"I would rather not have a pound to which I am entitled than have you suggest something improper."

The note concluded: "I must ask you to withdraw your remarks and apologise. It is not possible to carry on a normal business relationship until this takes place."

Neither of the two draft notes was ever sent because Mr Flavin withdrew the remark about "undue pressure", Mr McCann said. He added that Mr Flavin regarded Mr McCann as being "childish" about the matter but Mr McCann said he was particularly upset about the "grossly insensitive and inappropriate" suggestion because it was contained in a letter circulated to other directors.

Mr McCann disagreed with a suggestion from Mr Michael Cush SC, for DCC, that the exchanges showed the relationship between himself and Mr Flavin in January 2000, just weeks before the controversial disposal of DCC's stake in Fyffes for €106 million, was "at a very low ebb".

"I would not put it like that," Mr McCann said. He said Mr Flavin had withdrawn the remark. Much worse had happened between himself and Mr Flavin over the years and things had calmed down. If the share sales had not happened, he expected they would have got on with life.

In terms of the "moodiness" he had referred to, Mr McCann said Mr Flavin was a very able man who had built a very large and successful business and who had had a very good input into a number of things Fyffes did over the years.

However, especially in latter years, Mr Flavin had pursued the goals of DCC. "That is fine, that is just business," he said.

Mr McCann said Mr Flavin had, from time to time, hung up the phone during phone exchanges over the years. Mr Flavin was very able but also very forceful. If things were not exactly as he would wish, he would sometimes react in a very direct way.

He was the most dominant character in his own business and it disappointed him that he could not do the same in other businesses.

Asked if he had himself become angry with Mr Flavin down the years, Mr McCann said their personalities were not the same. "I've a much lower-key personality, there were times over the years when I was very unhappy about some things but I don't remember ever hanging up the phone on Jim Flavin." He added that Mr Flavin had his own commercial goals, the goals of DCC. "My only goal was to look after the interests of Fyffes."

As he had become older, Mr McCann said he had realised business is not just "about nice and fair" but is about people pursuing commercial goals. "I don't want to be too pious about it," he added. Mr Flavin, he said, was perfectly entitled to pursue his own interests but there was a slight difficulty if he was a director of both DCC and Fyffes.

Mr McCann was being cross-examined on the 22nd day of proceedings in which Fyffes alleges DCC and Mr Flavin organised the disposal of DCC's Fyffes stake in February 2000 in a manner which breached insider dealing provisions of the Companies Act. The claims are denied.

Yesterday, Mr Cush went through detailed documents concerning the development of Worldoffruit.com from mid-1999.

Those documents showed that Mr Flavin had concerns regarding the internet business and that he had, from September 1999, wanted the Fyffes board to address it in more detail. This had led to the exchange of some terse correspondence between Mr Flavin and Mr Carl and Mr Neil McCann.

The correspondence showed there were also differences of opinion between Mr Flavin and the McCanns in relation to whether there should be a scheme under which Fyffes' executive directors could purchase shareholdings in Worldoffruit. In the event there was no such scheme because a significant number of shareholders were opposed to it.

Mr McCann agreed with Mr Cush that the market regarded the Worldoffruit venture as very interesting and that there was a lot of interest displayed in it in early 2000. He had outlined both the upside and the downside of the project to investors in February 2000.

The internet business was being looked at in a very positive way at the time and there was a high degree of interest in it.

He agreed that hopes for worldoffruit did add significantly to Fyffes' share price after Christmas 1999. In the event, however, the project never got to the point where it could charge anyone for using it and it was closed down at the end of 2000 with losses of some €14 million.

In further cross-examination, he agreed a company should not issue share options if it has price sensitive information (PSI).

He had no recollection of discussing PSI when he and Mr Neil McCann discussed whether a Fyffes director, Mr John Ellis, should be permitted to sell shares in January 2000.

Mr Ellis was permitted to do so. Mr McCann said that should not have happened and was a mistake.

Mr Cush suggested Mr McCann would not have thought about the Ellis disposal were it not for this case and the Fyffes claim that Mr Flavin had PSI in January 2000. Mr McCann said he began to regret the Ellis sale a long time after the event.

He said the granting of share options in January 2000 was a matter for the Compensation Committee, headed by Mr Flavin. The committee had decided the options could be issued.

He agreed he was aware the company was about to issue the options and, on January 22nd, had approved a list to go to the Compensation Committee.

He said he himself was not buying or selling shares and the options had not been availed of as the share price continued to rise. He was not thinking in terms of PSI at that time.

The case continues on Tuesday before Ms Justice Laffoy.