The minutes of a board meeting were changed in support of a scheme that saved a listed Irish company approximately €17 million in tax, the High Court heard yesterday. Colm Keena, Public Affairs Correspondent, reports
The meeting, in February 2000, opened the way for the sale of shares in another Irish group worth €106 million at a profit of €85 million. No Irish capital gains tax was paid on the profit.
In order for the tax scheme set up by DCC plc to work, a Dutch-resident Irish subsidiary company at the heart of the scheme - Lotus Green - had to be controlled exclusively from the Netherlands.
Changes to the minutes of a board meeting of Lotus Green Ltd, held in Amsterdam on February 3rd 2000, deleted the role played by its sole Irish director and inserted Dutch directors in his place.
The changes made to the minutes were outlined in the High Court yesterday in the ongoing Fyffes/DCC insider-dealing case.
Fergal O'Dwyer, financial controller at DCC and the sole Irish director of Lotus Green, suggested that the names of two Dutch directors replace his in relation to the presentation of a memo to the meeting and also that his role in preparing the memo be deleted.
In fact, he had prepared the memo in Dublin, receiving advice from Terry O'Driscoll, a tax partner with accountants PricewaterhouseCoopers (PwC).
Mr O'Dwyer also suggested that the minutes indicate the board meeting had been called by a Dutch director whereas it had been called by Mr O'Dwyer. The suggested changes to the minutes were made.
Jim Flavin, chief executive of DCC, told the court yesterday he had not directed nor suggested to Mr O'Dwyer that a board meeting of Lotus Green be held in order to facilitate the share deal. At the time, Mr Flavin had been contacted by Dublin stockbroking firms seeking to buy the shares.
Asked whether he believed it was appropriate that the "minutes should be altered in a way that does not reflect reality", Mr Flavin said he would leave that question to the directors of Lotus Green. They are scheduled to give evidence later.
Mr Flavin told senior counsel Paul Gallagher, for Fyffes, that, as a generalisation, "sometimes minutes might be adjusted to reflect and make sure that something is in accord with the underlying fundamentals in relation to a tax situation".
Mr Flavin and DCC are denying a claim by Fyffes that they were in possession of price-sensitive information at the time DCC sold its Fyffes shares. They also say Mr Flavin was not involved in the sale, which was executed by Lotus Green. Mr Flavin, who was not a director of Lotus Green, said he always kept a distance from its affairs. He said he was aware, however, that Mr O'Dwyer was always careful to take advice from PwC and that "the tax considerations were always paramount".