The Irish Takeover Panel has decided that the independent directors of Fitzwilton who recommended in favour of its takeover by Stoneworth, the company controlled by Dr Tony O'Reilly and Mr Peter Goulandris, did not have a conflict of interest in their business and personal associations with Dr O'Reilly.

The case was taken to the panel by well-known dissident shareholder, Mr Neal Duggan.

He asked the panel to rule whether the independent directors - Kevin McGoran, Vincent Ferguson, Patrick Dowling, Maurice Hayes, Len O'Hagan, Donal Flinn, Christopher Collins and Paul Power - had a conflict of interest and thus should not have offered advice to shareholders, were incapable of giving independent advice and were not capable of acting in disregard of their personal interest.

The panel heard evidence on Friday and Saturday before publishing its ruling yesterday.

In its ruling, the panel said that the alleged conflict of interest arose from: (i) the personal and business relationships between the independent directors and Dr O'Reilly; (ii) Mr Flinn's position as a director of companies associated with Salomon Smith Barney, advisers to Stoneworth; and (iii) the position of Mr McGoran, Mr Dowling and Mr O'Hagan as executive directors of Fitzwilton.

The panel concluded that while the directors had various associations with Dr O'Reilly and Salomon Smith Barney, they "had obtained legal advice between November 1997 and May 1998 on their duties and obligations in relation to the offer."

As a result, the panel ruled that there was no conflict of interest under any of the headings raised by Mr Duggan.