On past form, this DCC saga will run and run

ANALYSIS:There is every possibility that DCC will try to block yet more scrutiny of the insider dealing, writes Arthur Beesley, Senior Business Correspondent.

THE DCC board is likely to meet today to assess whether it should go to the Supreme Court to appeal the appointment of a High Court inspector to investigate its illegal sale of Fyffes shares in 2000.

Having fought its corner every step of the way to the ruling yesterday from Mr Justice Peter Kelly, there is every possibility that DCC will try to block yet more scrutiny of the insider dealing that returned a profit of €85 million for the company. We should know tomorrow afternoon if an appeal is in the offing. On past form, that must seem likely at this point.

If Mr Justice Kelly's ruling serves to prolong DCC's pain, it was far from an outright victory for the Director of Corporate Enforcement, Paul Appleby. Indeed, the judge restricted the scope of the inquiry Appleby sought. He said it was "undesirable" for the enforcer to issue a press release on the case and took issue with a press briefing he gave. "It was certainly unwise in the present case, since what he had to say in the briefing has now, quite properly, been turned against him," the judge said.

Although DCC founder Jim Flavin reluctantly left the stage in May, there is no end in sight to this affair. Any DCC appeal would not be heard for months to come. Even if that does not happen, Appleby has said an inspector would be doing well to complete his work within 12 months.

There are many who say DCC's directors have only themselves to blame. They appear to have taken no disciplinary action against Flavin when the Supreme Court ruled against the firm last summer. It was his personal decision to waive a bonus last year, not any board sanction. Likewise, his resignation in May was a personal decision. He was not pushed.

The board was steadfast in the face of the Supreme Court ruling that Flavin held insider information on Fyffes when selling DCC's interest in the fruit importer. Soon afterwards, a profit warning from Fyffes led to a sharp drop in its share price.

DCC still seems to hold the view that there's nothing wrong with that. Ventilated in copious detail before the High Court and the Supreme Court, these matters will be investigated anew by senior counsel Bill Shipsey if the inspection goes ahead.

If appropriate, his findings can be used by Appleby as the basis for an application to the courts to make disqualification orders.

Shipsey will examine and define the transactions related to the acquisition, maintenance, transfer and disposal of the beneficial and legal interest in Fyffes held by DCC and its subsidiaries, S&L Investments and Lotus Green.

He will also examine whether the law on the disclosure of interests in shares and insider dealing was breached by their officers, including shadow directors. If so, he must identify the circumstances and breach in question. Still, the judge declined Appleby's application to empower the inspector to examine "any related matters with the prior approval of the court" on consideration of an interim report.

What is more, he found that the enforcer engaged in a good deal of public relations "spin" in his press statement. "On two occasions it refers to the director having applied to the High Court to appoint inspectors. No such application had been made. All that had happened was that the papers in the case had been lodged in the central office of this court. The statement seems to wish to create an appearance of more activity than had actually taken place."

In addition, the judge said it could be concluded from the press statement that Appleby's sole motivation was to attract a "specific evidential cloak" under the Companies Act for facts already known. "However, I have to have regard to the sworn evidence put before me by the director in which he avers to a much broader basis for seeking the appointment . . . He was not cross-examined on this affidavit and so I must accept at face value what he says."

There was no comment on any aspect of the ruling from Appleby's office. DCC said in a statement that the High Court order did not relate to its ongoing business. "The board of directors of each of the three companies will now consider the terms of the judgment and a further announcement will be made at an early date." A stay was placed on Shipsey's appointment until 2pm tomorrow pending any appeal.