Analysis: The Fyffes/DCC insider dealing case has caused reputational damage to the two companies concerned, the Irish Stock Exchange, and the Irish market, writes Colm Keena.

Yesterday, the damage continued. The founder and chief executive of DCC, Jim Flavin, declined to answer when asked if he believed a DCC subsidiary's board minutes should have been "altered in a way that does not reflect reality?"

He said he would leave that question for the board of the company concerned, Lotus Green.

However, commenting generally, he said that sometimes minutes might be adjusted to make sure "something is in accord with the underlying fundamentals in relation to a tax situation".

Mr Flavin was giving evidence about changes to the record of a meeting held by a DCC subsidiary, Lotus Green, in Amsterdam, in February 2000. In order for a tax scheme set up by DCC, with advice from accountants Price Waterhouse Coopers (PWC) in Dublin and Amsterdam, to work, control over DCC's 10.5 per cent stake in Fyffes had to be exercised exclusively by Dutch-resident Lotus Green.

The tax scheme allowed DCC to avoid paying Irish capital gains tax on the €85 million profit it made when it sold the stake in Fyffes for €106 million in February 2000.

DCC is denying Fyffes' claim that Mr Flavin was in possession of insider information at the time of the deal, and that Mr Flavin was involved in the sale.

Mr Flavin was not a director of Lotus Green.

In the immediate run-up to the deal, Mr Flavin was involved in conversations with Kyran McLaughlin of Davy Stockbrokers, and Roy Barrett of Goodbody. The shares were sold in three tranches and Mr Flavin was involved in talks that preceded each sale.

He told the court that, after he received some initial inquiries from brokers, he mentioned the fact to Fergal O'Dwyer, chief financial officer of DCC and the only Irish director of Lotus Green.

However, he said that he did not suggest to Mr O'Dwyer that a meeting of Lotus Green's board be held.

Mr O'Dwyer organised a meeting of Lotus Green in Amsterdam and apparently asked a Dutch director to write a letter purporting to call the meeting, and send it to him, Mr O'Dwyer.

He prepared a memo for the meeting and took advice on its content from Terry O'Driscoll, a tax partner with PWC in Dublin.

Around the time of the Lotus Green meeting, there was contact between PWC in Dublin and Amsterdam, and Mairéad O'Malley, DCC's group taxation manager.

After the meeting, Mr O'Dwyer suggested changes to the draft minutes to the meeting, including removal of his role in the drafting of the memo, which was recorded as being the work of two of the Dutch directors.

He also suggested that the letter from a Dutch director purporting to show him calling the meeting, be attached to the minutes.

When the Irish Stock Exchange subsequently began inquiries into the DCC sale, DCC sent it copies of the Lotus Green minutes and the letter Mr Flavin accepts does not reflect reality.

Mr Flavin said he believed the inquiry from the stock exchange was one of many such inquiries that are made by the exchange and that he did not expect it would go anywhere. He said that the documents DCC has had access to as part of the preparations for the case indicate that the matter was let lie by the exchange for nine months.

When Fyffes began contemplating taking an action against DCC, "the stock exchange seemed to have gone back into action", Mr Flavin said.

Mr Flavin said contacts he made with Neil McCann, the then chairman of Fyffes, at around the time the stock exchange inquiry was initiated, were done "in the context of responding in a very united way that there was no way that we had price-sensitive information".

Mr McCann responded by saying he was not sure that contacts between the two men were appropriate in the circumstances.

Mr Flavin said he and DCC were very annoyed that the stock exchange had eventually sent a report to the Director of Public Prosecutions, without giving DCC a chance to respond to its findings.

"The reputation of DCC and my reputation are in tatters because of that particular approach," he said.

As part of the discovery process leading up to the hearing, DCC got a copy of a response from Davy Stockbrokers to the stock exchange. Mr Flavin has taken strong issue with its content.

The document was given to DCC in 2004.

It then wrote to Davy, suggesting that it make a fresh submission to the exchange, and gave it a version of events which it invited Davy to adopt.

Davy did not take up the DCC suggestion. The correspondence emerged when a second round of discovery was made prior to the case.