Fyffes has alleged a key presentation to investors by its broker, Davy, in January 2000, was in fact held for the benefit of DCC, writes Colm Keena

The Fyffes/Jim Flavin clash returned to the High Court with a bang yesterday following the Christmas break.

The case, which has obvious potential to damage the reputations of both Fyffes and the DCC chief executive Mr Flavin, had by lunchtime dragged leading Dublin stockbroking firm, Davy, into the frame.

By the time the hearing resumed after lunch, two public relations executives acting for Davy were sitting in the back of the courtroom.

Davy acted as broker for both Fyffes and DCC in early 2000. When Mr Flavin/DCC sold a substantial stake in Fyffes for €106 million, Davy acted for DCC, garnering substantial commission payments.

The sale occurred in three tranches with the first tranche sold on February 3rd, 2000.

On Monday, January 31st, 2000, Fyffes held a presentation for approximately 20 potential investors, organised by Davy and held in the broker's offices.

Yesterday, Fyffes chief executive Mr David McCann said it was his belief that his company was misled by Davy in relation to this presentation.

He said he was told at the time that the presentation was organised by Davy because of the great interest that existed in Fyffes shares because of the company's worldoffruit.com project.

He said he now believed that, in fact, Davy, acting with Mr Flavin, set up the meeting because it wanted to promote the sale of DCC's shareholding in Fyffes for the highest price possible in pursuit of commission payments.

As he put it to DCC's counsel, Mr Kevin Feeney SC, Davy's client at the time was DCC, not Fyffes, though this was not known to Fyffes at the time. He said Davy was asked by DCC not to tell Fyffes what was happening.

He said he believed Mr Kyran McLaughlin of Davy was the senior person involved in setting up the meeting. He had met him many times since but had never raised the issue with him.

Mr Feeney put it to Mr McCann that there was a more innocent interpretation for what happened. There was unprecedented interest in Fyffes shares because of the worldoffruit.com project, a level of interest that was boosted by a series of presentations made by Fyffes in Dublin, London and Edinburgh in late January.

When increased demand created a shortage in shares available for trading, the brokers naturally looked to DCC and its shareholding in Fyffes as possible material for a deal or deals.

However, Mr McCann said he had formed his belief based on two factors. Firstly, he had a conversation with Mr Flavin near the end of January which, he said, indicated to him that Mr Flavin knew of investor presentations Mr McCann was scheduled to make in London on February 1st. He believed the information came to Mr Flavin from Davy.

Secondly, on the morning of February 3rd, he received a call from Goodbody asking if he was aware of substantial dealings in Fyffes shares. He said he was not so aware and telephoned Mr Ronan Godfrey of Davy to ask if "anything was cooking". Mr Godfrey told him no. Mr McCann said he believed Mr Godfrey was told by DCC not to tell Fyffes about the DCC sale then being arranged.

Davy has acted as broker in Dublin for Fyffes since the company went public in 1980 and Mr McCann was asked if he did not have trust in, and high regard for, Davy. Mr McCann said that he had but his view generally was that stockbrokers would always look for an opportunity to create trade in shares.

Despite the seriousness of the alleged deceit Mr McCann believes occurred in late January 2000, Davy still acts as broker for Fyffes.

Following consideration of the matter, Mr McCann said, the company decided to retain the broker's services.

Internal Fyffes documentation drafted in the months after the DCC sale recorded a belief that Fyffes' good name had been damaged by a belief in the market that Fyffes was "in some way complicit" in the DCC sale of Fyffes shares in February 2000.

This referred to a (mistaken) belief in the marketplace that the presentations in late January had occurred when Fyffes had known DCC intended to sell. Fund managers felt that Fyffes had been actively selling shares on behalf of DCC. (The share price fell dramatically when a profit warning was issued by Fyffes on March 20th, 2000.)

Fyffes's case is that at the time DCC sold its Fyffes shares, Mr Flavin was in possession of trading information which, had it been known to the market, would have led to a drop in the Fyffes share price.

Yet Fyffes and Mr McCann were involved in presentations to potential investors at the time. Was he not concerned that the presentations could backfire if it transpired he was "selling a dog"? Mr Feeney asked.

Mr McCann said investor presentations were not appropriate places to release market-sensitive information.