DCC chief executive Jim Flavin has told the High Court it was "unfair" to suggest that DCC had contacted Goodbody Stockbrokers in September 2000 about DCC's response to an Irish Stock Exchange (ISE) inquiry into alleged insider dealing in Fyffes shares with a view to co-ordinating the DCC and Goodbody responses to the inquiry.
DCC did not co-ordinate any response from brokers to the ISE inquiry, he said.
Asked about a fax from Mr Flavin to Roy Barrett of Goodbody dated September 14th, 2000, and containing extracts from the DCC response to the ISE inquiry (of September 8th, 2000) which extracts referred to Goodbody's part in the sale of the Fyffes shares in February 2000, Mr Flavin said he could not recall that fax or discussing the ISE queries with Mr Barrett but clearly, he said, he had such discussions.
He did not think Mr Barrett had asked him what DCC was going to say to the ISE before DCC actually sent its response to the exchange, he said. He had a "complete blank" about that but he had obviously talked to Mr Barrett.
He said that, in any conversations with Mr Barrett then or later, Mr Barrett was "extremely careful in whatever he said to me". The conversation "tended to be pretty one-sided" and there was a reason for that, Mr Flavin said. "Mr Barrett was and is a director of the Irish Stock Exchange".
Paul Gallagher SC, for Fyffes, said the fax stated: "Further to our discussions, I attach extracts from our report to the stock exchange with references to Goodbody Stockbrokers highlighted and relevant faxes from Lotus Green." (Lotus Green Ltd is a Dutch-registered DCC subsidiary which, DCC claims, properly carried out the Fyffes share sales).
Mr Flavin agreed with Mr Gallagher that he wanted to ensure Mr Barrett didn't convey to the ISE the impression, which Mr Barrett might have had, that the share deals were done by Mr Flavin and DCC.
Mr Flavin said any discussions would have been in the context of the market perhaps not understanding DCC's internal processes and to ensure that the ISE had the "proper information" when carrying out its inquiry and was "unambiguously clear" about the DCC processes. He had a concern that stockbrokers and the market in February 2000 might not have understood the decision-making structures within DCC and Lotus Green. There could be a gap, or perhaps "a chasm", between what the market thought and the reality.
Asked was he seeking to co-ordinate DCC and Goodbody's responses, Mr Flavin said DCC took the exchange's inquiries very seriously. He and the DCC board wanted to ensure the ISE had the proper information to make a coherent judgment. He didn't believe anyone had told the ISE about co-operation between DCC and Goodbody.
Mr Flavin said he and the DCC board were "appalled" when they learned from a newspaper article a year later that the ISE had sent a file on the matter to the Director of Public Prosecutions. He said the ISE had come to an incorrect conclusion based on just one letter to DCC about the share deals and, he later learned, considerable contact with Fyffes.
He said DCC was a large public company with no history of doing anything incorrectly. This was grossly unfair treatment by the ISE of a public company in front of their investors and employees. When DCC contacted the ISE about the file having been sent, the exchange said its role was "spent" under law.
Mr Flavin said we now know that was wrong and the ISE had later agreed to tape expert reports on the matter from DCC. From then on, the exchange was very helpful to DCC's position, he added.
Mr Gallagher yesterday continued his cross-examination of Mr Flavin on the 45th day of proceedings by Fyffes alleging insider dealing in relation to the sale of the DCC stake in Fyffes in February 2000. DCC,
Mr Flavin and two DCC subsidiaries - S&L Investments Ltd and Lotus Green - deny the claims and plead the share sales were properly carried out by Lotus Green. The court has heard that, for tax reasons, the beneficial ownership of the DCC stake in Fyffes was transferred to Lotus Green in 1995.
Yesterday, Mr Gallagher referred to a phone call between Ronan Godfrey of Davy Stockbrokers and Bruce Ashmore of Goodbody on the afternoon on February 3rd, 2000, after the first share deal was completed.
During that call, the two brokers appear to be discussing the commission to be paid on the share sale. A transcript of the conversation includes the exchanges: Mr Ashmore: "What did ye charge Jim?" and Mr Godfrey replying: "5 per cent". It also features Mr Godfrey saying: "But you're only going to get a quarter because that's what you agreed with him" and later saying: "We did a different deal with him, apparently Roy had already caved in with him before we even talked to him."
The transcript also features Mr Godfrey saying: "No, Roy apparently caved in with Jim. A quarter per cent you let him away with... Jesus Bruce!"
Mr Gallagher said the 5 per cent which Mr Godfrey referred to should be 0.5 per cent.
In response to questions from Mr Gallagher, Mr Flavin said he had no recollection of any discussion with brokers on commission to be paid to them on the share sales. He believed Davy and Goodbody had agreed commission between themselves.
Mr Gallagher asked was Mr Flavin saying this entire deal, worth €106 million, the biggest share transaction in DCC's history, was not negotiated by either DCC or Lotus Green and was a deal where no one negotiated the commission rate.
Mr Flavin said Davy and Goodbody regularly deal with each other without discussing commission. He said that, in the telephone conversation between Mr Godfrey and Mr Ashmore, the two men were "playing games" with each other. He would take the call with "a complete pinch of salt". The whole conversation was "a jest", he said.
Earlier yesterday, Mr Flavin said the prices at which the DCC stake was sold on February 3rd, 8th and 14th, 2000, came from the stock market. In stock exchange trading, it was perfectly normal for offers to be made to potential sellers and, where the price was established by the market, for those offers to be immediately accepted. He drew an analogy between a person offering a price for a house which was about twice the value of the house. In such a situation, a houseowner would probably not negotiate in case the potential buyer changed their mind, he said.
In those circumstances, he would have been disappointed if offers for the balance of the stake were not made after February 3rd.
When Mr Barrett contacted him after February 3rd about the shares, he believed it was very likely that Mr Barrett would think the shares were for sale. He was very clear that he told Fergal O'Dwyer, a DCC executive who was on the board of Lotus Green, of any calls from brokers that would have indicated potential offers for the stock.
On February 8th, 2000, he was not absolutely certain whether Mr Barrett knew of the existence of Lotus Green. Asked by Mr Gallagher why Mr Barrett did not go to Tom Diepenhorst of Lotus Green about buying stock, Mr Flavin said he had asked Mr Barrett about a year ago why Mr Barrett had called Mr Flavin on February 14th, 2000, (the date of the third share sale) about buying the remaining stock and Mr Barrett had said he "just did".
Mr Gallagher also referred to telephone records of a number of calls between Mr Flavin and stockbrokers on dates in February 2000. Mr Flavin agreed he had made some calls to brokers and that their discussions would probably have included Fyffes shares. He said he also regularly called brokers about other matters.
The case continues on Tuesday.
