Executive accused of €100m insider trade deal

One of the State's top businessmen "masterminded" an insider trading share deal worth €106 million, it was alleged in the High Court yesterday.

The claim was made by counsel for the Dublin-based international fresh fruit distributor, Fyffes plc, on the opening day of a case that could last for up to 10 weeks.

Mr Paul Gallagher SC said a significant part of the case would be a tape of a conversation between businessman Mr Jim Flavin and Mr Ronan Godfrey of Davy stockbrokers concerning the sale of Fyffes shares.

He said Mr Flavin could be heard laughing when, "having concluded the deal" with Mr Godfrey, Mr Flavin said that he had no authority to do so. Stockbroking firms have a practice of recording telephone conversations with clients.

Mr Flavin is founder and chief executive of DCC plc, an industrial holding company quoted on the Dublin and London stock exchanges. It has an annual turnover of more than €2 billion.

The extent to which Mr Flavin was involved in the sale of the Fyffes shares will form a central part of the case.

He is a former non-executive director and adviser to Fyffes. At the time of the shares sale he was in possession of confidential information concerning trading difficulties which Fyffes was having.

The fresh fruit distributor is suing DCC, Mr Flavin and two DCC subsidiaries, alleging insider dealing in the sale of Fyffes shares in February 2000.

The clash between two major Irish plcs is set to cost in excess of €1.5 million in legal fees.

Evidence is to be heard from Irish, UK and US experts for both sides over whether information Mr Flavin had in February 2000 was price sensitive.

Experts called by Fyffes will say they have "no doubt" but that the information Mr Flavin had was price sensitive, while experts for DCC will say the contrary, Mr Gallagher told the court.

The experts will give evidence on whether the price of the Fyffes shares in the early months of 2000 was being driven by its fruit business or by a related internet project it was promoting.

If DCC loses the case, it could forfeit its entire €85 million profit from the Fyffes shares, which it bought in 1981. The institutions that bought the shares could also seek compensation.

The shares were sold between February 3rd and February 14th 2000. On March 20th, 2000, Fyffes issued a trading statement that led to a sharp fall in its share price.

Mr Gallagher said Fyffes was alleging that the information on trading difficulties released in March was known to Mr Flavin in February 2000 and was "price sensitive". Mr Flavin and DCC are saying they had no role in the share sale which they say was conducted by a DCC subsidiary called Lotus Green Ltd. Lotus Green is an Irish registered but Dutch resident company.

However, Fyffes is alleging that Mr Flavin and DCC were "shadow directors" of Lotus Green.

Mr Gallagher said Mr Flavin negotiated key issues such as price, the class of shares to be sold, and the commission to be paid to Davy, before arranging for Davy to be contacted by a director of Lotus Green.

He said the defendants would claim that all Mr Flavin did was pass on an unsolicited bid to Lotus Green and that he did not convey any price-sensitive information to Lotus Green.

They will also say the information Mr Flavin had concerning Fyffes's trading difficulties was not price sensitive.

However, evidence would establish that Mr Flavin played "a crucial and decisive role in the dealings that took place on those days in February 2000", Mr Gallagher said.

The case is being heard by Ms Justice Laffoy.