Director is 'absolutely certain' that decision to back Flavin is correct, writes Arthur Beesley

Michael Buckley was centrally involved in the corporate manoeuvres that followed the Supreme Court ruling that DCC's executive chairman Jim Flavin engaged in illegal insider trading when his company made a profit of €85 million on the sale of its Fyffes shares in 2000.

A former chief executive of AIB, he is the senior independent director on DCC's board. He engaged with shareholders and the investment community at large in the aftermath of the Supreme Court ruling. He also played a key role in the board's decision to unanimously back Mr Flavin in the hours after the court handed down its judgment.

Interviewed for the first time since those events, he reiterates the board's support for Mr Flavin and says that stance is "grounded in justice, fairness, honesty and decency".

Stating that he speaks for the entire DCC board, he says that he is not trying to deny the import of the Supreme Court ruling and maintains that any experienced, responsible board would have reached the same conclusion.

He insists that the board has not adopted a "tolerant" attitude to Mr Flavin and says the company has "very high" standards of corporate governance. In addition, he says the board's position is supported by the overwhelming majority of shareholders.

The mammoth case took a new turn two days ago when Paul Appleby, the Director of Corporate Enforcement, asked the Supreme Court to consider whether anyone should be disqualified as a director on foot of its ruling. Mr Appleby did not identify anyone, but seemed to be implicitly referring to Mr Flavin. (There may also be issues for Fyffes and for senior DCC people who supported the share deals, he says.)

While the Supreme Court dismissed Mr Appleby's application, he will bring the matter to the High Court. It remains to be seen whether such proceedings culminate in a move to bar Mr Flavin, but the intervention has clear potential to threaten his position.

D oes Mr Buckley acknowledge that this creates new difficulties for DCC? "So far nothing has changed and it's no surprise that he's taking an interest. And we feel that we have a very, very robust point of view on it, which we set out," he says.

Stating that Mr Appleby "hasn't named anybody and hasn't requested a disqualification", he says that the views of the DCC board were set out in an affidavit in which he claims the "attempted characterisation" of damage to the market as a result of dealings was unfair and unfounded in court rulings.

The document also says that the company should "not be subject to reputational damage by reason of unfair representations of what the courts found".

Mr Appleby has noted Mr Buckley's response but says he stands over his own affidavit, in which he says he would be concerned "if any persons who actively participated in insider dealing transactions should be able to continue to discharge leading roles in Irish corporate affairs".

To do so, he says, would give succour to the belief that "insider dealing involves minimal reputational risk and would encourage others to engage in similar practices".

Still, Mr Buckley says that he is "absolutely certain" the DCC board made the right decision when it chose to back Mr Flavin. What is more, he says he is confident that anyone concerned for the reputation of the Irish market as a result of the affair would reach the same conclusion "in logic and in fairness". At the same time, he says he respects those who do not.

"The board has a majority of non-executive directors - independent non-executive directors, there's six non-execs, three executives. Every one of them has a lot of experience - used to making hard decisions in their own businesses. And they're pretty independent-minded people, so I think it's important just for me to say that first of all," Mr Buckley says.

"The second thing, just to say, is that in all of our discussions about these issues and in every decision we've made what we've been trying to do is to make sure that justice and fairness and honesty and decency were served. They are the principles that we've been operating with.

"Our belief and our judgment is that neither justice nor honesty nor fairness would have been served if Jim Flavin had either resigned or been pushed out by the board after the Supreme Court judgment."

There has been criticism about the speed with which the board reached its decision on the Friday afternoon in question, but Mr Buckley says that the board had as much time as it needed.

"We didn't feel under any particular time constraint . . . By the time the statement came out, the markets were closed. But we got to a conclusion after four hours and therefore having got to a conclusion after four hours there was no reason to delay announcing it."

Asked whether the board considered that it would have to fire Jim Flavin, he says that that was central to the discussion.

"What we had to do was take account of the Supreme Court decision, which was a key decision. Then there were the High Court decisions that had not been appealed to the Supreme Court, that had not been contested in the Supreme Court."

Mr Buckley and DCC at large attach huge importance to the High Court judgment in the case taken against it by Fyffes, which DCC won and which was overturned in decisive terms by the Supreme Court.

In the High Court, Ms Justice Laffoy said "the evidence is not open to the interpretation that Mr Flavin used the information" he held about a serious deterioration in Fyffes business prior to the share sale.

The Supreme Court did not test that finding - it was not appealed by Fyffes - but Ms Justice Susan Denham said in the upper court that it was unlawful for a person connected with a firm to deal in its shares if he holds information "not generally available and which is likely materially to affect the price of those shares" because of the connection with the firm.

In that context, the use or non-use of the information is irrelevant.

However, Mr Buckley says that the board was obliged to examine the "totality" of the two judgments and also points out that the law governing the Fyffes dealings has since changed. "The High Court decisions were very clear, the factual decisions," he says.

"What motivated him [ Mr Flavin] was an approach, an unsolicited approach from two stockbrokers who said they had clients who were dying to buy Fyffes which were then riding high on the basis of the dotcom boom," Mr Buckley says.

"So that was the opportunity to sell, that was the motivation to sell and that's what the High Court said about that, which was a crucial pin in terms of looking at the whole, in terms of probity and honesty, in terms of how the whole thing took place."

Mr Buckley says Mr Flavin's judgment that that trading information was not price-sensitive was the same as that taken by other Fyffes directors at the time.

"Five years later, the High Court arrives at the same judgment as Jim Flavin and the Fyffes directors, having heard all the evidence. When the Supreme Court then, a year and half later, arrived at a different judgment, it arrived at that judgment without attributing any bad faith to DCC or Jim Flavin or anybody else who had that trading information," he says.

"According to the facts found in the High Court, which weren't contested at all in the Supreme Court, there was absolutely no intentional wrongdoing on Jim Flavin's part or anybody's part in DCC. There was no misconduct, there was no lack of probity.

"The Supreme Court decision stands. We absolutely respect it. But as a board we had to look at what were all of the issues that bore on those on considerations of probity and honesty and fairness and that was the totality of the issues that we took into account on the day when we made that decision."

But didn't the Supreme Court find there was illegal insider trading? Flavin dealt. He held the information. The information was price-sensitive.

Surely the question of motivation doesn't enter into the discussion?

"The question of motivation is not relevant to the Supreme Court decision, but it was absolutely central to the decision of the board as to whether Jim Flavin acted in good faith, acted honestly, acted with probity.

"There are broader issues which have to do with the principle of what qualities do you expect a person to have in doing a particular type of job and were those qualities fundamentally questioned or was a judgment made about them.

"My point to you is that those were central to our assessment of what was just, what was fair and those qualities of probity and honesty were not undermined by anything the Supreme Court said and were given very positive affirmation in the High Court judgment," Mr Buckley adds.

F or all that, DCC is facing hefty damages as a result of the Supreme Court ruling. Should Mr Flavin not pay the price for that alone? "I don't think that a financial penalty, even one of the size that has arisen and will arise, whatever is going to finally result from the Supreme Court judgment, is in itself a reason for a board to say you must resign.

"You certainly do have to think about that issue, but you then have to go on and say did this individual act in such a way that it casts doubt over his integrity? For all the reasons I've given you, the High Court judgment makes it very very clear that there is no question of his integrity."

There are many in Irish business who might disagree. However, Mr Buckley says that "in life, you have to do what you believe to be the right thing" even it is not popular in some quarters.