The director of corporate enforcement will ask the High Court to consider making disqualification orders arising from the Supreme Court decision that DCC chief executive Jim Flavin engaged in unlawful insider dealing when he sold the DCC stake in Fyffes in early 2000.
He would be concerned "if any persons who actively participated in insider dealing transactions should be able to continue to discharge leading roles in Irish corporate affairs", the director, Paul Appleby, said in an affidavit to the Supreme Court yesterday.
Among issues which, he said, may need to be addressed were the support that other senior people in DCC gave to the execution of the insider dealing transactions and Fyffes' own conduct, including the grant of share options to some people in January 2000 when it had information found by the Supreme Court to be price sensitive.
As well as possible disqualification proceedings, DCC is also facing an estimated €25 million legal bill, including its own legal costs, plus payment of multimillion compensation to Fyffes and other institutional investors, after the Supreme Court yesterday ordered it to pay all the costs of the action, the first major insider dealing case here.
The court rejected DCC's application that each side pay their own costs, advanced by Michael Cush SC on grounds including that Fyffes would get a "windfall" from the compensation hearing and because of Fyffes' conduct at the time of the share sales, including its failure to issue a profit warning until weeks after it had bad trading information.
DCC argued Fyffes knew of the first share sale, encouraged the second and third sales and noted the Supreme Court had remarked the purchase of champagne by the then Fyffes chairman for Mr Flavin on the date of the first sale "sat ill" with the allegation of illegality. Fyffes had also, in late January 2000, granted options over 900,000 shares to its senior management.
Seeking the full costs, Paul Sreenan SC, for Fyffes, said there was "an element of denial" by DCC of the court's finding of insider dealing. Insider dealing was "a serious matter", not "inadvertent", "unwilling" or "technical", the words used by DCC to "diminish its seriousness".
There was a "flagrant breach" of the law on insider dealing, he said. DCC had also run the case over 88 days in the High Court on the basis that Fyffes behaved "perfectly properly" and it should not be allowed change position now.
The Supreme Court made final orders in the case yesterday, including a declaration that the share sales of early 2000 breached the insider dealing provisions of the Companies Act and an order that the High Court decide DCC's liability to Fyffes in light of the insider dealing finding.
Fyffes has argued it is entitled to about €85 million from DCC over the share sales while DCC insisted that its aggregate liability, inclusive of €25 million in legal costs, is closer to €50 million.
About 20 per cent of institutional investors have also sued DCC over the share sales in proceedings brought in the wake of Fyffes' action.
After the Supreme Court made the orders, Brian O'Moore SC, for director of corporate enforcement Mr Appleby, asked the court to consider joining his client to the proceedings to bring to the attention of both the High and Supreme Courts their power to make, if they considered appropriate, disqualification orders under Section 160 of the Companies Act 1990.
Brian Murray SC, for Fyffes, and Ian Finlay SC, for DCC, did not accept the director was entitled to interfere in private inter-parties litigation.
In an affidavit, Michael Buckley, the senior non-executive director of DCC, said there were "serious factual inaccuracies" and "mis-characterisations of conclusions" of the High and Supreme Courts in the director's affidavit which were "unfairly damaging" to DCC.
Ms Justice Susan Denham, presiding at the five-judge court, said the Supreme Court had not itself raised the motion and any such motion was for the High Court. The Supreme Court would in those circumstances dismiss the director's motion.
