DCC witness cross-examined

It is a matter "of opinion" whether the rise in the Fyffes share price from mid-December 1999 was due to market interest in a proposed internet venture, or other factors, the High Court heard yesterday.

Richard Taffler, a professor of accounting and finance attached to Cranfield University in the UK, said Fyffes had released a number of pieces of information in a statement to the market on December 14th, 1999. What weight was to be attached to those pieces of information was a matter of opinion on his part, and on the part of other experts who had given evidence to the court, and it was not something which could be identified analytically.

It was a matter of opinion whether it was the information about worldoffruit.com or trading information or statements by Fyffes about plans for the internet business that caused the rise in the share price, he said. All he could actually say was that the price had moved over the two days contemporaneous with the Fyffes preliminary results announcement of December 14th, 1999. The court would have to look at events over the period that seemed to be associated with the price movements.

He also said media reports in the days after the December 14th announcement had referred to prospects for the online venture.

Mr Paul Gallagher SC, for Fyffes, put a number of questions to Prof Taffler regarding the method by which the professor had assessed whether movements in the share price from mid-December 1999 to June 2000 were material. Prof Taffler said he had used the DSII index, which was constructed on a weighted basis and was made up of firms that contributed 80 per cent of the market valuation of the internet sector across European markets.

Prof Taffler said he could not name which firms were included in the DSII index in 1999/2000 and that data was not available at this point. In finance, it was not viewed as relevant to look at individual members of an overall index as a comparator, he said.

He denied a suggestion that his use of the DSII index to answer a question about Fyffes share price movements, in circumstances where he was excluding the impact of the dotcom bubble, introduced an inherent bias into his report.

Mr Gallagher yesterday began his cross-examination of Prof Taffler, who has been called as an expert for DCC in the action by Fyffes alleging insider dealing in connection with the €106 million sale of the DCC stake in Fyffes over three days in February 2000.

The action is against DCC plc, chief executive Jim Flavin, and two DCC subsidiaries - S&L Investments and Lotus Green. All deny the claims and plead the sales were properly organised by Lotus Green, a Dutch-resident DCC subsidiary to which beneficial ownership was transferred in 1995 for tax reasons.

Earlier yesterday, the 72nd day of the hearing, Prof Taffler concluded his direct evidence to Mr Michael Ashe SC for DCC.

Prof Taffler said there was a dramatic rise in Fyffes market valuation from early 2000, which he believed was on the basis of the interest in the worldoffruit.com venture. When the Fyffes share price peaked on February 18th at €4, Fyffes total market capitalisation was €1,182 million compared with €506 million at the beginning of November 1999, an increase of 133 per cent. Of the €1,182 million figure, worldoffruit appeared to be accounting for some €714 million, some 150 per cent of the valuation estimate for the entire business, despite apparently earning no revenues.

In his opinion, the dramatic share price rise from mid December 1999 into 2000 could only be explained by irrational euphoric market behaviour associated with the late stage of the internet bubble and its associated excesses.

The case continues today before Ms Justice Laffoy.