The head of group taxation with DCC plc acted on the instructions of the chief financial officer when she made alterations to the draft minutes of meetings of the board of Lotus Green Limited, a Dutch-registered subsidiary of DCC, the High Court was told yesterday.
Maireád O'Malley agreed that one particular alteration, which was included in the final signed minutes of the Lotus Green board, had stated the board had discussed a certain matter related to the payment of an interim dividend when the board had not actually discussed that matter.
Another alteration involved an insertion into the draft minutes of a Lotus board meeting of July 31st, 1997 to the effect that DCC chief financial officer Fergal O'Dwyer (also the sole Irish director on the Lotus Green Board) had reported to the board of receiving dividends from Fyffes plc, she said. She agreed that matter was not referred to in the first draft of the minutes received from a staff member of ING Bank in Holland who had attended the board meeting in question.
Ms O'Malley also agreed that some of the alterations, insertions and deletions made to the draft minutes of the Lotus board on the instructions of Mr O'Dwyer were included in the final minutes signed by the Lotus board.
The court has heard beneficial ownership of the DCC shareholding in Fyffes plc was transferred to Lotus Green in 1995 as part of a structure set up following advice from PricewaterhouseCoopers (PwC) and legal advice, to avoid payment of capital gains tax on any subsequent sale of the Fyffes shares. Those shares were sold for €106 million over three days in February 2000, yielding a profit of €85 million for DCC.
In its defence to proceedings brought by Fyffes alleging insider dealing in relation to those share sales of February 2000, DCC has denied the claims and has pleaded the share sales were properly organised by Lotus Green.
The Fyffes action is against DCC plc, DCC chief executive Jim Flavin and two DCC subsidiaries - S and L Investments Ltd and Lotus Green.
On the 57th day of the case yesterday, Mr Brian Murray SC, for Fyffes, began his cross-examination of Ms O'Malley, who began working for DCC in March 1997.
Ms O'Malley agreed she had begun dealing with the minutes of Lotus Green board meetings shortly after taking up employment with DCC.
She said, from April 1997 to April 1998, she would receive first drafts of board minutes from staff of ING Bank in Holland who carried out administrative work for Lotus. She would correct typing errors, and errors in the English used in the minutes, and then bring drafts to Mr O'Dwyer, who would go through the drafts with her from his notes and sometimes suggest insertions and alterations. She said Mr O'Dwyer would give her his notes and board packs. She had shredded Mr O'Dwyer's notes because she believed the minutes were finalised.
She said she did not think it at all strange that she, a tax specialist, should be doing the minutes. She said she was part of financial control at DCC and the work regarding the minutes had passed to her from the former DCC deputy group secretary, who had left on sabbatical. She understood her role regarding the minutes was as an administrative middle person. She was the contact person between Mr O'Dwyer and ING. She did not recall making any changes herself to the minutes; she "tidied up comments".
Ms O'Malley said she had taken Mr O'Dwyer's comments and fed those on to ING, who would return a second draft of the minutes incorporating any changes suggested by Mr O'Dwyer. Asked had any substantial changes to the minutes between April 1997 and April 1998 come from Mr O'Dwyer, she said they had.
After April 1998, she had prepared the minutes herself, Ms O'Malley said. She said she had suggested to Mr O'Dwyer that she do so because, under the previous arrangement where the first drafts came from ING, there was a lot of "toing and froing" with ING, which was tedious, and she believed doing them herself would be quicker.
Mr Murray suggested that most of the paperwork arose because things were being put into the minutes that were never actually discussed at the board meetings. Ms O'Malley said she did not know that to be the case because she was taking the changes from Mr O'Dwyer.
In preparing the minutes of the Lotus board meetings after April 1998, she would do "standard" items herself and prepare the rest of the minutes after discussing what happened at them with Mr O'Dwyer and obtaining his notes and papers. She did not believe there was a single occasion when any of the other Lotus directors had queried, disagreed with or questioned the minutes. Sometimes she got dates wrong or other small matters. There was no occasion when the Lotus board or the boards of other DCC subsidiaries in the UK had not approved the minutes of their board meetings.
Ms O'Malley also said she had, on February 3rd and 4th, 2000, typed up documents to be forwarded to Lotus Green in relation to the sale of the first tranche of the Fyffes shares. She said she had shown those documents to Mr O'Dwyer prior to faxing them to the Lotus company secretary, Mr Tom Diepenhorst. One of those documents confirmed acceptance by Lotus of an offer of €3.20 each for some 17.8 million Fyffes shares.
Mr Murray asked what Ms O'Malley understood was meant by a reference - in a document faxed from PwC Amsterdam of February 4th, 2000 to DCC House in Dublin - to "a clearly documented plan to sell the shareholding in trances (sic)...".
Ms O'Malley said she understood this meant there would be a record created that showed the sale of the Fyffes shareholding was really "all kind of one transaction" but done in a certain way not to flood the market.
Mr Murray suggested that record could be used afterwards with the Dutch tax authorities. Ms O'Malley said she didn't know; it was understood they had to write to the Dutch tax authorities separately. There was no document actually used subsequently, she said. The hearing continues today before Ms Justice Laffoy.
