DCC chief executive Jim Flavin has denied a suggestion from Fyffes' counsel that he had laughed after telling a stockbroker that he had "no authority" to conduct the sale of the DCC stake in Fyffes because both he and the stockbroker knew that Mr Flavin did have authority to do the deal.
Mr Flavin said he accepted that a transcript of a recorded conversation between him and Ronan Godfrey on February 3rd, 2000, appeared to indicate something like a laugh after Mr Flavin said to Mr Godfrey: "I have no authority." He said he had such a mannerism and he had noticed two other similar laughs on the recording where no-one was cracking any joke.
Paul Gallagher SC, for Fyffes, suggested to Mr Flavin he had laughed because both he and Mr Godfrey knew at that point on February 3rd that there was no question of the deal not being done and no question of Mr Flavin not having authority.
Mr Flavin said he completely rejected that as "an unfair categorisation" of the situation. He maintained that the sale was conducted by Lotus Green Limited (a Dutch-based subsidiary of DCC to which beneficial ownership of the DCC stake in Fyffes was transferred in 1995 in order to avoid DCC paying a "double layer" of capital gains tax in the event of realising its strategy to dispose of the stake in Fyffes).
Asked about Mr Flavin telling Mr Godfrey in another phone call that he did not want any "trail of paper" between Davys and DCC regarding the share sale, Mr Flavin said he was concerned to ensure the paperwork reflected that he had no authority on the matter and that the authority was in Holland.
He wanted the paperwork to reflect the reality that the authority rested with Lotus Green. He had forgotten at that time that the shares continued to be registered in the names of DCC and another DCC subsidiary, S&L Investments, he said.
Mr Gallagher yesterday continued his cross-examination of Mr Flavin in the continuing action by Fyffes alleging "insider dealing" regarding the sale of the DCC stake in Fyffes over three days in February 2000. DCC, Mr Flavin and two DCC subsidiaries - S&L Investments and Lotus Green - deny the claims and plead the share sales were properly conducted by Lotus Green.
On the 43rd day of the hearing, Mr Flavin agreed that a letter apparently faxed on January 31st, 2000, to DCC chief financial officer Fergal O'Dwyer from the chairman of Lotus Green, Henri Roskam (in which Mr Roskam stated he had noticed a recent rise in the Fyffes share price and believed a board meeting of Lotus Green should be held to consider that development in light of its important investment in Fyffes), did not reflect the reality of the background to the convening of a board meeting of Lotus Green on February 3rd, 2000.
Mr Gallagher suggested the letter did not reflect the reality because Mr Flavin had said he had told Mr O'Dwyer about receiving unsolicited offers for the DCC stake in Fyffes and that Mr Flavin had said he believed a board meeting of Lotus Green would be necessary.
Mr Flavin said he had told Mr O'Dwyer offers were coming in and that it was "in my mind" at that time that, for those offers to be accepted, it would almost certainly require a board meeting of Lotus Green. He said he had not instructed Mr O'Dwyer to organise a board meeting.
He believed the letter of Mr Roskam's was written "for tax reasons". He added he was uncomfortable about giving evidence on behalf of Lotus Green and that the matter would be dealt with by them. He did not have detailed knowledge of it.
Mr Gallagher said Mr O'Dwyer had said in his statement of evidence that Mr O'Dwyer had suggested to Mr Roskam that, for tax reasons, it might be best if Mr Roskam wrote the letter in question to Mr O'Dwyer. Mr Flavin said he was aware of that situation.
Mr Gallagher asked Mr Flavin "did it jump out at you that the chief financial officer of DCC had told Mr Roskam to write a letter that did not reflect the true position?" Mr Flavin said he knew Mr O'Dwyer to be a person of outstanding integrity and capability who obviously thought this should be done in the circumstances based on some advice. Mr Flavin added that he did not understand the significance of it tax wise.
He agreed there was no reference in minutes of the board meeting of Lotus Green held on February 3rd, 2000, to approaches being made to Mr Flavin for the Fyffes shares. He agreed that the impetus for the board meeting that morning came from him.
Asked was there a deliberate decision not to refer to that in the minutes, he said he did not know but he had general knowledge that tax advice was received in relation to Mr Roskam's letter.
He said sometimes a board might agree not to have certain matters recorded in minutes. He added that a board meeting did have to be called and there was nothing unusual about a letter from the chairman going to the board. While he accepted the lettetr did not accurately reflect what went on, there was not, he thought, a lot wrong with the letter otherwise.
Earlier, Mr Flavin said he may have told Roy Barrett of Goodbody stockbrokers on February 2nd, 2000, that the DCC stake in Fyffes was not for sale but, he believed, it was "more likely" he did not indicate whether it was for sale or not. He was aware Mr Barrett had said in a statement that Mr Flavin had told Mr Barrett the stock was not for sale.
He also agreed the conversation with Mr Barrett had occurred at a time when, according to Mr Flavin's own evidence, the "exclusive" authority to consider or decide on offers for the stake was for Lotus Green and that Mr Flavin had no authority on the matter.
Asked why he had not referred onwards to Lotus Green calls made by brokers to him (from January 27th, 2000, to February 18th, 2000) about the Fyffes stock, Mr Flavin said he had thought to do so would alert brokers to the fact the stock was for sale and would have "undermined" Lotus Green's position. He said he had passed on approaches from brokers to Lotus Green.
Mr Flavin denied a suggestion that, when he told Mr Godfrey on February 3rd, 2000, that preference shares in Fyffes were worth €3.31 each, he was "negotiating". He said he was expressing his "belief" that €3.31 was the value of the shares. He could not recall who had passed on the figure of €3.31 to him but it could have come from DCC's compliance officer, Michael Schofield.
He repeated on a number of occasions that he was not "dealing" in the Fyffes shares. Nor had he "accepted" or "rejected" offers for the shares on either February 1st, 2nd or 3rd, 2000, he said. He said he had no authority to negotiate or to deal and that authority was exclusively Lotus Green's.
Mr Gallagher suggested the transcripts of the phone calls showed Mr Flavin was negotiating with Mr Godfrey and inviting an offer for the shares. Mr Flavin denied that. He said his clear understanding on February 3rd was that an offer for the shares was likely and he wanted clarification. He denied he was inviting an offer for the shares. He wanted to say unambigiously that at no stage had he ever offered stock for sale and had never solicited offers.
The case continues today before Ms Justice Laffoy.
