The Fyffes/DCC insider dealing case yesterday returned to the issue of the unusually close relationship that existed between the two companies for so long.
The nexus, of course, was Mr Jim Flavin, founder and chief executive of DCC, and a non-executive director of Fyffes who also provided corporate advice.
Mr Carl McCann entered the witness box yesterday and is being led through his evidence by counsel for Fyffes, Mr Paul Gallagher SC. He had some harsh things to say about Mr Flavin.
Mr McCann made it clear that for a long time there was a concern within his family that Mr Flavin was more focused on DCC than he was on Fyffes. DCC, he said, was where Mr Flavin's key financial interest lay.
He said the relationship between the two sides become "more complex" in 1994 when DCC, formerly a venture capital and corporate advice company, became a plc. DCC "went from being a shareholder (in Fyffes) to a competitor, in the very broadest sense," he said.
In 1998 the two sides discussed whether DCC was obliged to seek permission from Fyffes before trading in its shares. Mr McCann said Fyffes was concerned that DCC would sell its substantial shareholding to a competitor, or that DCC would be able to acquire Fyffes in the way it had acquired other plcs, "by way of creeping control".
In the early 1990s the two sides had agreed to a "standstill agreement", meaning an agreement that neither company would increase its shareholding in the other.
DCC's shareholding in Fyffes was approximately equal in size to that of the McCann family, which is closely associated with the plc.
Fyffes was built up by Mr Neil McCann and floated on the Dublin and London exchanges in 1981.
In 1995 Mr Neil McCann's sons moved into key positions. Mr David McCann was appointed chief executive and Mr Carl McCann, chairman designate. Mr Flavin sought the position of vice-chairman, stating DCC might sell its shares in Fyffes if the position was not agreed. Neither event occured.
DCC bought into Fyffes in 1981 and Mr Flavin was appointed to the board. DCC sponsored Fyffes being listed on the Dublin and London exchanges, and for many years earned fees giving advice to Fyffes on significant transactions.
"When the opportunity arose, (Mr Flavin) sought greater involvement by DCC in the affairs of Fyffes", Mr McCann said.
He said there "were instances when it was clear that Jim Flavin put the interests of DCC before those of Fyffes."
In December 1999 Fyffe considered new rules concerning corporate governance and deemed Mr Flavin not to be an independent director. At the time Mr Flavin was chairman of the Fyffes compensation committee and a member of its audit committee.
The way Mr Flavin operated as a director of Fyffes did not change after DCC transfered its Fyffes shareholding to an offshore company (Lotus Green) in 1995, Mr McCann said.
The transfer was part of a tax scheme and was mentioned to Mr McCann by Mr Flavin during a lunch in May 1995. Mr Flavin gave some details concerning the structure that was being put in place to Mr McCann, and suggested it might be of interest to the McCann family.
Mr McCann said he sought advice and was told, by Mr Padraig Bennett of KPMG, that it was not an attractive structure for the family.
The two sides differed over whether the rules required DCC to inform the Fyffes chairman, Mr Neil McCann, formally of the change in control of the shareholding, with Mr Flavin saying they did not. The matter was not resolved and Fyffes' permission was not formally sought.
In 1995 the relationship between the two companies was so interlinked that Mr Flavin was giving up-to-date trading figures for Fyffes to the DCC directors. Mr Flavin thought this was reasonable but Fyffes thought otherwise. The practice ended.
It is not immediately clear what all this has to do with the charge that Mr Flavin was in possession of price sensitive information when the DCC shareholding was sold for €106 million in February 2000.
However it does illustrate the close relationships that can exist in the Irish plc sector, a feature that overhangs this case.
