DCC chief executive Jim Flavin has told the High Court that if Fyffes genuinely believed he had engaged in the "criminal activity" of insider trading in Fyffes shares, then it was a "bizarre" thing for the company to have bought him a bottle of champagne on February 3rd, 2000, the evening following the first of three controversial share sales.
"I got no guidance from anyone that this was an incorrect act; quite to the contrary, I was encouraged," Mr Flavin said. He said the then Fyffes chairman Neil McCann wrote to him on February 4th, 2000, encouraging the sale of the balance of the DCC stake in Fyffes.
Mr Flavin said he had on February 3rd, 2000, given Mr McCann some five hours notice prior to the sale of the first tranche of the DCC shares. If Fyffes then believed he was about to engage in insider trading, it was bound then to advise him to that effect but had not done so, he said. There was no such suggestion until many months later.
He rejected claims by Fyffes that information sent to him in January 2000 about Fyffes trading performance for the first quarter of the fiscal year 2000 was price-sensitive information. Fyffes has claimed it was price sensitive because it disclosed a negative trading performance by the company for that quarter which cast doubt about the company's ability to meet its half-year targets.
Mr Flavin said the information contained nothing surprising about trading that Fyffes itself had not already indicated to the market in its preliminary results announcement of December 14th 1999. The information certainly didn't convey any changed expectation by Fyffes management for 2000, he said.
While the information did show Fyffes was €7.5 million behind budget for the first two months of fiscal year 2000, the first quarter in Fyffes fiscal year was traditionally difficult and accounted for just some 6 per cent of the annual profits, he said. He would not have been concerned by such information and was aware that planned cutbacks in banana volumes were expected to lead to improved trading in the second half of 2000.
Neither he nor Fyffes knew in early 2000 that Fyffes would not meet its targets for 2000, which turned out to be an extraordinarily difficult year.
"Hindsight is marvellous," he said. He believed hindsight was being used in many of the allegations against him personally and DCC.
Mr Flavin said he and all of the other witnesses on behalf of DCC who have yet to give evidence would be failing in their communication to the court "if we do not make it absolutely clear that the receipt of this information had nothing whatsoever to do with unsolicited offers being made for the DCC group shareholding and nothing whatsoever to do with the decision that those offers were accepted".
Even if he had received information that Fyffes was €3 million ahead of budget in early 2000, he believed the unsolicited offers (for the DCC stake) would still have been made. The DCC board had had a strategy for several years prior to the share sale that it would sell its Fyffes stake. He added that he had maintained strict confidentiality on the Fyffes trading results from about 1996 onwards.
Mr Flavin was continuing his direct evidence on the 40th day of proceedings by Fyffes alleging "insider dealing" regarding the sale of the DCC stake in Fyffes in February 2000.
The action is against DCC, Mr Flavin and two DCC subsidiaries - S and L Investments Ltd and Lotus Green Ltd - who deny the claims and plead the share sales were properly organised by Lotus Green. The defendants also deny possession of price-sensitive information at the time of the sales.
The information that Fyffes alleges to be price sensitive is contained in two documents - management accounts for Fyffes for November 1999 and a December 1999 trading report, which also included a forecast for the January 2000 trading performance. Fyffes claims those documents showed a very poor trading performance by Fyffes in the last months of 1999 that was continuing into 2000.
The fruit company alleges the information about negative trading was not known to the market and, had it been generally available, would have materially and negatively affected the Fyffes share price.
Yesterday, Mr Flavin told Mr Kevin Feeney SC, for DCC, that the Fyffes' board was brought up to date on current trading when it met on October 29th, 1999. It was noted then that the banana market was still very difficult and a discussion took place on whether there was a need to inform the market of the difficult trading.
At that same meeting, Fyffes executive directors had also presented a trading budget for the year to October 31st 2000. In framing that budget, Fyffes management would have been aware of the difficult banana market at that time and its adverse consequences on Fyffes banana trading results in the second half of the financial year to October 31st 1999.
The budget was approved by the board and, in his experience, Fyffes had a realistic approach to budgeting. In the previous 10 years, it had met or exceeded budget expectations.
Mr Flavin said he had received the alleged price-sensitive documents in January 2000. He noted nothing surprising in them and the information about trading was in line with his expectations and with what the company had told the market in December 14th 1999 in its carefully considered preliminary results announcement and outlook statement.
In that context, the information which Fyffes alleged to be price sensitive was "nothing of the sort".
