THE DIRECTOR of corporate enforcement has told a hearing of the Fyffes/DCC insider dealing case he is concerned that persons who "actively participated" in insider dealing could be able to continue in leading roles in Irish corporate affairs, writes Colm Keena, Public Affairs Correspondent
Paul Appleby made his comment in a submission to Mr Justice John MacMenamin, who is to decide in June the size of the damages DCC must pay Fyffes arising from the sale of Fyffes shares in February 2000 by DCC executive chairman Jim Flavin at a time when he had price-sensitive information. Mr Flavin dealt in Fyffes shares worth €106.7 million on behalf of DCC at a time when he was also a non-executive director of Fyffes. His company made a profit of more than €80 million.
In the period when he and other Fyffes directors were in possession of the price-sensitive information, Fyffes awarded share options to some of its senior executives and allowed a UK-based executive to sell Fyffes shares. A month after the share sales, Fyffes issued a trading statement that led to its share price dropping by 25 per cent.
The High Court judge who heard the original case said none of these events should have occurred if the information at the core of the case was price-sensitive. Ms Justice Mary Laffoy found the information was not price-sensitive, but that finding was overturned by the Supreme Court. After that ruling, the DCC board expressed its full confidence in and support for Mr Flavin.
Mr Justice MacMenamin is expected to award damages of €20-€80 million to Fyffes. But counsel for Mr Appleby, Brian O'Moore SC, yesterday told the court it had the power to also make an order disqualifying persons it saw fit from operating as company directors. Mr Appleby said in an affidavit he was concerned he might have to bring separate proceedings that would involve extra time, complexity, evidential difficulty and cost. The case has already cost tens of millions of euro.
"Insider dealing is an abuse of the market in company securities, one which rightly attracts heavy penalties," Mr Appleby said. "It can be reasonably said that the profitable exploitation of inside information to the detriment of other investors has been a matter of some public concern."