THE LONG-RUNNING saga concerning insider dealing by businessman Jim Flavin and DCC came to an end yesterday when the Director of Corporate Enforcement, Paul Appleby, said that his inquiries were “at the end of the road”.
Mr Appleby’s comments came after the publication of the report of High Court inspector Bill Shipsey SC, which concluded that Mr Flavin had “genuinely believed he was not in possession of price-sensitive information” when he dealt in Fyffes shares worth €106 million in early February 2000.
The Fyffes share price fell by 25 per cent when Fyffes issued a trading statement to the stock exchange the following month.
Mr Flavin, the founder and former executive chairman of the industrial holding group, welcomed the report, which he said “speaks for itself”. Mr Flavin resigned from his position in 2008, after Mr Appleby sought the appointment of an inspector.
Senior DCC director Michael Buckley said that he was “delighted” with the report, which had found there was “no dishonesty” involved in the dealing.
In 2007, five judges of the Supreme Court overturned an earlier High Court ruling and found that Mr Flavin had been in possession of price-sensitive information when he dealt in the shares on behalf of DCC, in February, 2000.
The ruling came in a civil case taken by Fyffes and led to DCC having to pay out €41 million to Fyffes and other parties. At the time of the dealing, Mr Flavin was a non-executive director of Fyffes and in possession of information on poor trading by that company.
The Supreme Court ruling did not involve any finding as to whether Mr Flavin knew the trading information he had at the time was price-sensitive.
Mr Shipsey, who was appointed by the High Court at the application of Mr Appleby, found that “contrary to the director’s understandable apprehension . . . his concerns were largely unfounded”. Mr Flavin had made a “costly error”.
“No finding of mine can repair the reputational damage to both DCC and Jim Flavin. At least, however, the suggestion that the dealing was intentionally wrongful, or that it was evidence of dishonesty on the part of Jim Flavin and of a culture of disrespect for the companies code in DCC, can be dispelled.”
Mr Shipsey wrote that at a time when “Ireland Inc is taking a beating internationally from a perception of low standards in high corporate places, the message of this report is that the actions and behaviour of DCC . . . in connection with the transactions under investigation measured up to the standards required by law notwithstanding Mr Flavin’s error of judgment.”
As well as the share dealings in 2000, Mr Shipsey also investigated DCC’s transfer of its shareholding in Fyffes to a Dutch-resident DCC subsidiary, Lotus Green, in 1995. The shareholding equalled 10 per cent of Fyffes’ issued share capital.
He found that the failure to notify Fyffes in relation to this was a breach of the Companies Act, but that DCC had acted with the benefit of legal advice, which Mr Shipsey believed was incorrect but was given in good faith. The advice was given by William Fry solicitors.
It was “not unreasonable” for the directors to follow the advice they received, Mr Shipsey found.
He found that DCC and its employees, from the chief executive down, “placed a high value on legal and regulatory compliance . . . The officers and executive directors of the companies were qualified, competent and careful individuals.”
Mr Appleby told The Irish Times: "Sometimes with investigations, the suspicions that may have triggered them are found not to be a cause for action and that is what happened in this instance."