Entrepreneurs will be driven away from publicly quoted companies by the insider trading case taken against Mr Philip Byrne, the chairman of Dunloe Ewart, Mr Noel Smyth, said yesterday.
Mr Smyth said all public companies would now become dominated by non-entrepreneur managers because the risk of being charged with insider dealing was "unacceptable" for entrepreneur shareholders with executive positions. "Any time you now think about dealing in shares, you'll think about the Philip Byrne/ DPP case," Mr Smyth said. Speaking in the Four Courts, Mr Smyth said he owned almost 25 per cent of Dunloe Ewart "but I can't do anything with it, I can't sell one share without possibly landing myself here".
Mr Smyth was speaking after a jury found Mr Byrne, the former managing director of Dunloe, not guilty of insider dealing charges brought in relation to the sale of 260,000 Dunloe House (now Dunloe Ewart) shares in April and May 1997. The jury gave its decision after it had deliberated for seven hours and 47 minutes yesterday and on Monday. The trial, which lasted two weeks and two days, was the first in the State for insider dealing. The Garda Bureau of Fraud Investigation is currently investigating three other cases of suspected insider dealing.
Mr Byrne did not want to comment on the case after the verdict. Mr Smyth, who said he was delighted with the verdict, said one positive outcome of the case was that Judge Dominick Smyth had ruled that, to be guilty of insider dealing, a defendant had to have intended to benefit from any price sensitive information of which he or she was in possession. Nevertheless, Mr Smyth said he believed the case would drive entrepreneurs away from becoming involved with public companies.
"The entrepreneurs will stay in private companies, which is a loss because ultimately people make money by getting on the back of, on the shirt tails of, entrepreneurs who are willing to take chances - not only with shareholders' funds but with their own money."
The only way to "cure the problem" would be to publicise "every phone call, every deal". Even then there might be the issue of what your intentions were. "It's impossible." He said he now thought that public companies and entrepreneurs were "a bad mix".
He was in Dunloe Ewart for the long haul but, if he had a change in circumstances and wanted to sell his shares, he would probably have to resign his executive position and undergo "a complete transformation". "I couldn't do it quickly. That in my view has a negative effect on owning shares in a public company and working for it."
Dunloe Ewart, in a statement, said it was "delighted" that its former managing director had been found not guilty. "The company has always believed that Mr Byrne was innocent of the charges and remained firmly of this view throughout the lengthy period from when the initial investigation commenced in November 1997, to this day."
