DCC chief executive Mr Jim Flavin has said Fyffes plc chairman Mr Neil McCann and his son David had a bottle of champagne "on ice" to celebrate a controversial sale of DCC shares in Fyffes on February 3rd, 2000.
The two McCanns met Mr Flavin in the Great Southern Hotel in Dublin that same afternoon, the High Court heard yesterday.
In a letter of February 4th, 2000, from Mr Flavin to Mr McCann, Mr Flavin said he had enjoyed the meeting and the "bottle of bubbly" and that the DCC exit from Fyffes was good for both Fyffes and DCC.
He also said it was appropriate that he resign from the Fyffes board and noted the board had concluded he was "not independent" - a conclusion with which he disagreed.
In a response to Mr Flavin also on February 4th, Mr Neil McCann said he was encouraged that the Fyffes share price had "stood up" after February 3rd but that it would be "in all our interests" if the rest of the DCC shares in Fyffes were disposed of so they would not be "overhanging the market".
He added: "It is quite an achievement to have disposed of such a volume and get such a good reaction. Hopefully, it augurs well for the balance."
He said Mr Flavin's resignation "should take effect from the end of next week, by which time the newspaper publicity should have died down".
"I very much appreciate and accept unreservedly your assurance of co-operation on other matters, as discussed last evening," he added.
Documents read to the court included a file note from a Mr Gernon of Fyffes stating that Mr Neil McCann had contacted Mr Gernon at about 3.10 p.m. on February 3rd, 2000, to say that Mr McCann had received a call from Mr Flavin to say that the shares would be sold to a group of buyers for €3.20 each. It was noted that Mr Flavin had not written to the chairman to formally ask permission to sell the shares.
The court also heard that a note of Mr Carl McCann of Fyffes in relation to a phone call with Mr Flavin on the evening of either February 8th or 9th, 2000, noted that Mr Flavin had said he had "huge respect" for Neil, David and Karl McCann. There was also a reference to "apologies for nasty comments". Mr McCann noted it was "a weird conversation".
The court was also told that, in a letter of June 2000, Mr Neil McCann expressed surprise that Mr Flavin had not sought Mr McCann's permission prior to the sale of the DCC stake in Fyffes.
The DCC shareholding was sold in tranches on February 3rd, 8th and 14th, 2000, for some €106 million, realising a profit of some €85 million.
In legal proceedings, Fyffes claims the share sales from February 3rd to 14th, 2000, were set up by Mr Flavin and constituted unlawful "insider dealing".
Mr Flavin, who resigned from the Fyffes board on February 9th, denies those claims as do DCC and two associated companies.
Mr Paul Gallagher SC, for Fyffes, yesterday continued his opening of the action by Fyffes against DCC; S&L investments, of DCC House, Stillorgan, Co Dublin; Mr Flavin, of Shankill, Co Dublin; and Lotus Green Ltd, of Fitzwilton House, Wilton Place, Dublin, a subsidiary of DCC which owned 10 per cent of Fyffes.
Fyffes claims Mr Flavin had price-sensitive information regarding Fyffes trading performance. The defendants deny the claim and, Mr Gallagher has outlined, will plead that Lotus Green dealt in the shares and that Mr Flavin had no involvement other than passing on to Lotus Green unsolicited bids for the shares.
An inquiry was set up by the Irish Stock Exchange in September 2000.
Minutes of Fyffes board meetings read referred to concerns expressed by directors about the impact of the DCC share sale on the market's perception of Fyffes.
An initial response from DCC's compliance officer, Mr Michael Scholefield, answering queries from the exchange in September 2000 in relation to the sale of the DCC stake was also read.
Mr Scholefield said DCC had decided for some time prior to the share sale that it would realise its investment in Fyffes when a good opportunity arose. When the opportunity to divest the Fyffes stake arose in February 2000, Mr Scholefield said the persons involved were the board of Lotus Green [ a Dutch subsidiary of Fyffes which DCC claims is the beneficial owner of the Fyffes shares], Mr Jim Flavin and Mr Scholefield as compliance officer of the DCC group.
However, in a later letter, Mr Scholefield said that his September 8th, 2000, response to the stock exchange had been reviewed and he believed the response was misleading.
He said he had thought the exchange was seeking details of any knowledge which the DCC board might have had but it was now clear that the exchange wanted to establish who made the "decision" to dispose of the Fyffes shareholding.
If the latter was the case, Mr Scholefield said it was incorrect of him to have said there was any involvement by either Mr Flavin or himself in that decision because neither of them had any involvement. The decision, he said, was made solely by the board of Lotus Green and both he and Mr Flavin, he said, had previously made that clear.
In a letter in late June 2001, Mr Flavin told Mr Neil McCann it appeared Mr McCann had become "somewhat begrudging" of the profit of DCC.
Mr McCann responded on August 16th that there was no begrudgery of the profit but he indicated that "explanations" were required about the sale of the shares for the shareholders.
Mr Gallagher also read transcripts of several phone calls made on February 3rd, 2000, including transcripts of calls between Mr Flavin and Mr Ronan Godfrey of Davy Stockbrokers. Other transcripts recorded conversations that same day between Mr Godfrey and Mr Bruce Ashmore, an equity dealer with Goodbody Stockbrokers.
Fyffes claims the transcripts show Mr Flavin set up a share deal made that day in Fyffes shares and that he agreed the commission to be paid to Davy and Goodbody, a commission of 0.5 per cent.
There were exchanges between Mr Gallagher and Mr Kevin Feeney SC, for DCC, in relation to whether there was evidence that Mr Flavin was involved in agreeing the commissions. Mr Gallagher said he understood Mr Roy Barrett, of Goodbody, would give evidence to that effect, while Mr Feeney said they understood Mr Barrett would say he had no recollection whatsoever of any such agreement.
The case continues today.
