A director of a Dutch-registered DCC subsidiary told the High Court yesterday that he had been nominated to accept €106 million offers for DCC's stake in Fyffes because it "did not seem wise for tax purposes" to have the offers accepted in the Republic.
Mr Tom Diepenhorst agreed that, when he was asked by DCC chief financial officer Fergal O'Dwyer to ring stockbroker Ronan Godfrey about accepting the first offer on February 3rd, 2000, he had never before had dealings with Mr Godfrey. He also agreed he had no previous experience of such a large share dealing.
Mr Diepenhorst, a Dutch director of Lotus Green Limited, a wholly-owned DCC subsidiary to which beneficial ownership of the Fyffes shareholding was transferred by DCC for tax purposes in 1995, said that, given the Fyffes share price had risen sharply in early February 2000, it seemed on February 3rd, 2000, to be the logical thing to act in relation to any offers for the shares.
He said that a memo relating to options for the Fyffes shareholding, which was presented to the board of Lotus Green at a meeting early on the morning of February 3rd, 2000, was "masterminded" by Mr O'Dwyer (the sole Irish director on the Lotus Green board), although it was presented as being in the names of two other Dutch directors of the board.
He understood the memo was drafted by Mr O'Dwyer and discussed with the two Dutch directors on February 2nd.
Asked did he think it was strange that Mr O'Dwyer's name was not on the memo, Mr Diepenhorst said he had paid no attention to that. He believed the memo was an internal document for the Lotus Green board. He understood that Mr O'Dwyer's name was not on it "for taxation" and to prove the decision to sell the Fyffes stake was a decision made by the Dutch company.
He agreed Lotus Green had not received advice from brokers or analysts prior to accepting the offers. He also agreed Lotus Green took no advice regarding "insider trading" or any provisions of Irish law which might have to be addressed.
Given the market conditions, Mr Diepenhorst said the board of Lotus Green felt completely qualified to take the decision itself to accept offers for the shares. He agreed he was not aware of the surge in the Fyffes share price prior to February 3rd, 2000, but, on that day, during the meeting of the Lotus board, he was made aware.
Mr Diepenhorst was being cross-examined by Mr Paul Sreenan SC, for Fyffes, in the continuing action by Fyffes alleging insider dealing in connection with the share sales in February 2000. The action is against DCC plc, its chief executive Jim Flavin, and two DCC subsidiaries - S&L Investments Limited and Lotus Green - who deny the claims and plead the share sales were properly organised by Lotus Green.
Yesterday, the 64th day of the action, Mr Diepenhorst said he attended a board meeting of Lotus Green early on February 3rd, 2000, where he learned the shares were for sale. He had received the memo discussed the previous day between Mr O'Dwyer and the other two Dutch directors of Lotus Green and read it. The meeting lasted about 45 minutes and the board resolved to accept offers of €3 or more for all or part of the Fyffes shareholding. He was nominated to accept offers on the part of Lotus Green but, if he was unavailable, the other directors might also accept offers.
On February 3rd, 2000, he had never had any previous dealings with Davy Stockbrokers. He was not told that Goodbody Stockbrokers were involved at that point. He was not aware Davy and Goodbody had put together a joint bid of €3.20. He agreed he was simply given the name of Mr Godfrey by Mr O'Dwyer.
Having received the phone call from Mr O'Dwyer later on February 3rd of an offer of €3.20 for part of the Fyffes shareholding and having been told the person to ring was Mr Godfrey, Mr Diepenhorst said he had not phoned the other Dutch directors of Lotus prior to ringing Mr Godfrey. He also said he did not know where the Fyffes share certificates physically were but he knew they were "in good hands".
Mr Diepenhorst agreed with Mr Sreenan that he had heard the tape recording of his conversation with Mr Godfrey prior to making his statement for the court proceedings. Mr Sreenan suggested that Mr Diepenhorst was mistaken when he said in his statement that, when he phoned Mr Godfrey, he was expecting Mr Godfrey to make an offer but recalled there was silence at Mr Godfrey's end and that, to some extent, Mr Diepenhorst was filling that silence by saying: "I confirm the transaction."
The taped conversation was then played to the court and Mr Sreenan suggested there was no silence at Mr Godfrey's end and that Mr Diepenhorst went "straight into it", saying: "That is good. How can we proceed? I confirm the transaction." Mr Diepenhorst said the silence came after he had said : "That is good." He said Mr Godfrey had said he was expecting a call "and there I was stuck because I was waiting for an offer". Mr Sreenan suggested there was in fact no silence. Mr Diepenhorst said it was from his side.
Mr Sreenan also asked Mr Diepenhorst if the witness was aware that words Mr Diepenhorst used when answering interrogatories concerning the accuracy of the taped conversations were identical with words used by Mr Flavin when he was asked about his taped conversations. Mr Diepenhorst said he was not.
Mr Diepenhorst also said he was not in contact with the compliance officer of Davy after the share sale on February 3rd. He agreed DCC had prepared correspondence with the brokers which was sent to him in Amsterdam so he could sign it and send it on to the brokers.
The case continues on Tuesday before Ms Justice Laffoy.
