The chief executive of Fyffes, Mr David McCann, has told the High Court that there was "very little" about Fyffes' business that DCC chief executive Mr Jim Flavin didn't know.
He also said Mr Flavin was always interested in how the stock market would view decisions taken by the fruit distributor. After the DCC shareholding of some 10 per cent of Fyffes was transferred in 1995 to Lotus Green, a Dutch subsidiary of DCC, Mr McCann said he did not believe the role of Mr Flavin regarding Fyffes changed in any way.
Mr McCann said he never had any sense that anyone else controlled the shareholding. He also said that Mr Flavin's fees as a director were paid by Fyffes to DCC. "There was very little about the company that he didn't know," Mr McCann said.
Mr McCann was beginning his evidence in the continuing action by Fyffes against DCC plc; S&L Investments, of DCC House, Stillorgan, Co Dublin; Mr Flavin, of Shankill, Co Dublin; and Lotus Green Ltd, of Fitzwilton House, Wilton Place, Dublin, a Dutch subsidiary of DCC which owned 10 per cent of Fyffes.
Fyffes claims the defendants had price-sensitive and confidential information regarding Fyffes trading performance at the time of the €106 million share deals - which yielded a profit of €85 million - on February 3rd, 8th and 14th, 2000. It claims the deals were organised by Mr Flavin and constitute unlawful "insider deals" in breach of provisions of the Companies Act 1990.
The defendants deny those claims and plead that Lotus Green dealt in the shares and that Mr Flavin had no involvement other than passing on to Lotus Green unsolicited bids for the shares. They also say that Lotus Green had no price-sensitive information and was entitled to deal.
Yesterday afternoon, Mr Paul Gallagher, SC, concluded his six-day opening of the case with a summary of the arguments, factual and legal, which his side would be making to support their claim that the defendants deal in Fyffes share contrary to "insider dealing" provisions of the Companies Act and at a time when they had price-sensitive information.
Mr Gallagher also told the court that it was "fortuitous" for his side that they had tape recordings of conversations between Mr Flavin and stockbrokers on February 3rd, 2000. He explained that such tapes are normally destroyed after six months but Davy stockbrokers had not destroyed the tapes of their brokers' dealings in February 2000.
He said Goodbody Stockbrokers had destroyed their tapes so Fyffes did not have tapes regarding the sales of Fyffes shares on February 8th and 14th, 2000, which sales were conducted by Goodbody.
Mr Gallagher said the tapes available showed that Mr Flavin had, at the very least, negotiated and obtained the offers for the Fyffes shares and, for some unexplained reason, had only announced the existence of Lotus Green when those offers crystallised.
Mr David McCann told Mr Paul Sreenan SC, for Fyffes, that he had graduated with a law degree and joined Fyffes (then FII plc) in 1986, having previously been a partner in a Dublin law firm. He was based in the UK from 1986 to 1990 and became chief executive of Fyffes in 1995.
Mr McCann said DCC sponsored and advised Fyffes, then Fruit Importers of Ireland, in relation to the flotation of the company in 1981. Mr Flavin was then and remained chief executive of DCC.
Mr McCann said Mr Flavin had an excellent record of attendance at Fyffes board meetings and it was relatively rare for him not to comment on items discussed. He understood the Fyffes business very well and the strategies and factors that drove profitability in the company.
Mr McCann said Mr Flavin had a particular interest in communications with the stock market. At a Fyffes board meeting in February 1998, Mr Flavin had referred to the need to be "pushing brokers" and pressing on with investor relations activity. He had said: "We should hammer home warnings growth."
When asked about a remark by Mr Flavin in 1999 that DCC never had a black-and-white view on exit [ from Fyffes] but was influenced by an exit request made 18 months earlier by Mr Carl McCann, the witness said there had been a number of discussions over time regarding Mr Flavin and his future with the company. He believed the reference to Mr Carl McCann related to a lunchtime meeting with Mr Flavin. Mr Sreenan said Mr Carl McCann would give evidence about that.
Mr McCann said the core of the business was bananas. Bananas accounted for some 27 per cent of sales in 1999 but for 75 per cent of profits. The UK banana market was very important for Fyffes. In 1998, about 60 per cent of banana profits came from the UK but that profit figure was down to about 30 per cent in 1999. The stock market would not be aware of the UK banana percentages, he said.
The case continues on Tuesday.
