DCC is campaigning for support from the investment community for its executive chairman Jim Flavin after the Supreme Court ruled he held insider information when making a deal in which the firm made an €85 million profit. The company's interests range from healthcare to energy.
With some market participants privately questioning whether Mr Flavin can stay in his job in light of the ruling, the company's board of directors sent a letter yesterday morning to the Irish Association of Investment Managers (IAIM) in which it gave further detail about its unanimous support for him.
The letter highlighted favourable aspects of a High Court ruling dealing with the same share trades which were cited in the Supreme Court judgment. It was forwarded to the IAIM'S 12 members, who include some of Ireland's largest financial institutions.
It gave the same information to the company's large shareholders and issued it publicly last night in a Stock Exchange statement, the third such statement it has made since the ruling.
The DCC board includes some of Ireland's most senior business figures. Non-executive members of the board include former Bank of Ireland chief executive Maurice Keane, former AIB chief Michael Buckley, former Central Bank director Bernard Somers, former CRH chief Tony Barry, and former chairman of the Irish Association of Pension Funds Paddy Gallagher. Róisín Brennan, chief executive of Bank of Ireland subsidiary IBI Corporate Finance, is also a non-executive director. In addition to Mr Flavin there are two other executive directors. Tommy Breen is group managing director and Fergal O'Dwyer is chief financial officer.
The case began in 2002, when Fyffes sued DCC in the High Court over the sale of its 10 per cent stake in Fyffes two years earlier. DCC received €106 million for its shares, and an €85 million profit. The court found against Fyffes in 2005 but the Supreme Court overturned the ruling on Friday.
In a unanimous judgment, the five-judge court found Mr Flavin had price-sensitive information in breach of the 1990 Companies Act when DCC sold the Fyffes shares.
The full DCC board met last Friday to discuss the matter. The board said in its latest statement it had carefully considered whether the ruling had any implications for Mr Flavin's position. Stating that Mr Flavin was not present when his position was discussed, the board reiterated its full support for him and said his continuation was in shareholders' best interests.
"In reaching its conclusion, the board was cognisant of the fact that the Supreme Court decision to overturn the High Court's judgment did not imply that Mr Flavin had used price sensitive information in the share sales."
The IAIM, which oversees corporate governance in listed companies, plans a special meeting this week at which its members will examine the implications of the Supreme Court's judgment.
"Irish Association of Investment Managers members are aware of the Supreme Court judgment given last Friday. Individual firms are considering the implications of the judgment prior to an IAIM meeting this week," said its chief executive Frank O'Dwyer.
There was no comment on the ruling yesterday from the Irish Stock Exchange, which regulates the market or from the Office of the Director of Public Prosecutions, which has prosecutorial power in relation to any questionable stock market trades before 2005.
The three largest shareholders in DCC - FMR, Schroders Investment Managers and Bank of Ireland Asset Management - have declined to comment on the ruling.
A spokesman for DCC said last night it had not received any complaints from shareholders in relation to the ruling. Asked whether Bank of Ireland was comfortable with Ms Brennan's support for Mr Flavin, a bank spokeswoman said: "Many of our senior management hold board memberships of other companies. Róisín is, in a personal capacity, a non-executive director of DCC and the bank will not comment further."
