High Court told Fyffes notes say Flavin initiated share disposal

The chairman of Davy Stockbrokers, Mr Kyran McLaughlin, was "quite clear" in a conversation with then-chairman of Fyffes, Mr Neil McCann, that DCC chief executive Mr Jim Flavin had decided by January 27th 2000 "that he was going to dispose of all of his shares" in Fyffes, the High Court heard yesterday.

Mr McCann had also noted Mr McLaughlin as being "very critical" of the actions of Mr Flavin and being "quite clear" that Mr Flavin had initiated the sale process.

The 10 per cent DCC stake in Fyffes was sold in controversial circumstances over three days in February 2000.

Fyffes' current chairman, Mr Carl McCann, told the court yesterday that he had had a "weird conversation" with Mr Flavin some days after the first DCC share deal.

Mr McCann said he made a note of that conversation.

It stated: "He said he had (1) huge respect for you all, Dad, David and yourself. He said (2), you all treated him disgracefully (3), this is good for everyone (4), said he is nostalgic."

The note also recorded "2 major brokers chasing everywhere". Mr McCann said he understood this to refer to Davy and Goodbody brokers trying very hard to get the business around the DCC share sale.

The note further recorded: "Apologises for nasty comments." Mr McCann said he was not sure if Mr Flavin was referring to saying Fyffes had treated him disgracefully or something else. The note also recorded that Mr Flavin made reference to still having 5.3 million ordinary and 4.3 million preference shares in Fyffes and was "likely to stay with" those. It further recorded: "Congrats on going through 1 BN [ one billion] barrier", a reference to Fyffes' value exceeding that figure. The note concluded: "Weird conversation."

Mr Carl McCann also told the court his father, Mr Neil McCann, had recorded, in a memorandum of July 24th 2000, that Mr McLaughlin was "very critical" of the actions of Mr Flavin.

Part of that memo read to the court stated: "Carl and I had a session with KMcL in Davy and Company on Monday July 10th. He was quite open and gave us what seemed a clear picture about what happened with DCC and themselves over the disposal of the DCC shares in Fyffes. He was very critical of the actions of JF and particularly the fact that he played off Goodbody against Davy, despite a 20-year association with Davy, pleading a fiduciary responsibility to get the best possible deal for his shareholders.

"It is quite clear that he had decided as early as Thursday 27th January that he was going to dispose of all of his shares. K believes that JF may have a problem and it is possible that the outcome might depend on whatever information we have at our end." Mr Carl McCann said he first he knew of the DCC share sale was when he was contacted by his father just before lunchtime on February 3rd, 2000. Mr McCann said he was in London that day holding important meetings. He had immediately telephoned Mr McLaughlin and asked him what was happening. He had noted the conversation at that time.

In his note, Mr McCann recorded that Mr McLaughlin had said that one buyer, Marathon, wanted to buy 10 million shares. He also noted "demand from others".

The note continued: "Davy approached Jim. He said he would have to think and talk to the company. Davy phoned some more - by last night. Jim claims he was talking to Goodbody and they would pay a premium.

"Some strong interest. Kyran bid Jim 300 [ €3 per share] for lot. Jim wanted 330 [ €3.30] Jim said Goodbody said at least 330. Ended last night. Jim phones Kyran this morning and repeats market price. Kyran said max was 300.

"At lunchtime asks about selling part and their advice. Kyran said to Jim he should take all at lower price. Seems like Goodbody can't put it all together. Jim enquiries (sic) about splitting between brokers.

"Very positive for his shares and our shares."

Yesterday, Mr McCann told Mr Paul Gallagher SC, for Fyffes, that he was not aware of any contact between DCC and stockbrokers or prospective purchases prior to February 3rd, 2000.

Also yesterday, Mr McCann denied that the legal action was motivated by ill-will or spite. He said the Fyffes board asked lawyers in June 2000 to look at the circumstances of the share sales and that led to counsel being appointed in September 2000. He himself had not been aware there was a right of recovery if insider dealing was proven.