Disqualification issue raised in DCC case

The Director of Corporate Enforcement is to ask the High Court to consider making disqualification orders arising from the marathon legal battle between DCC and Fyffes.

The case culminated in a Supreme Court decision that DCC chief executive Jim Flavin engaged in unlawful insider dealing when he sold the DCC stake in Fyffes in early 2000.

The Director, Mr Paul Appleby, said in an affidavit to the Supreme Court today that he would concerned "if any persons who actively participated in insider dealing transactions should be able to continue to discharge leading roles in Irish corporate affairs".

Among issues that may need to be addressed were the support that other senior persons in the DCC group gave to the execution of the insider dealing transactions, and Fyffes's conduct, including the grant of share options to some persons in January 2000 when it had information found by the Supreme Court to be price sensitive, Mr Appleby said.

As well as possible disqualification proceedings, DCC is facing an estimated €15 million legal bill, plus payment of multi-million compensation to Fyffes and other institutional investors after the Supreme Court ordered it to pay all the costs of the action, the first major insider dealing case in this State.

The five judge court rejected DCC's application that each side pay their own costs.

The Supreme Court made final orders in the case today, including a declaration that the share sales of early 2000 breached the insider dealing provisions of the Companies Act and an order that the High Court decide DCC's liability to Fyffes in light of the insider dealing finding.

Fyffes has argued it is entitled to some €85 million from DCC over the share sales, while DCC insisted that its aggregate liability, inclusive of legal costs, is closer to €50 million.

After the Supreme Court made the orders, Mr Brian O'Moore SC, for the Director, asked the court to consider joining his client to the proceedings to bring to the attention of the High and Supreme Courts their power to make, if they considered appropriate, disqualification orders under Section 160 of the Companies Act 1990.

Mr O'Moore said said the Director was not identifying who should be disqualified but had in an affidavit indicated his concerns and noted the matter of disqualification had not been raised by either Fyffes or DCC in the proceedings.

Counsel for for Fyffes and DCC did not accept the Director was entitled to interfere in private inter-parties litigation. They also both agreed the Director's jurisdiction to seek orders under Section 160 could not be affected by any direction of the Supreme Court to the High Court.

In an affidavit, Mr Michael Buckley, a non-executive director of DCC, said there were "serious factual inaccuracies" and "mischaracterisations of conclusions" of the High and Supreme Courts in the Director's affidavit that were "unfairly damaging" to DCC.