The chief executive of DCC Jim Flavin was "not enthusiastic or anxious" to ensure the sale of its stake in Fyffes, the High Court has been told. Mr Fergal O'Dwyer, the chief financial officer of DCC and a director of the subsidiary that held the Fyffes stake said that Mr Flavin gave no indication that that he wanted the sale to proceed.
However, given the sharp rise in the Fyffes share price from January 2000 and DCC's long-term strategy to exit Fyffes when the price was right, a sale of the stake was what "any logical person", including Mr Flavin, would want to do at that time, Mr O'Dwyer said. The price going for the Fyffes shares was "great".
Mr O'Dwyer was also the sole Irish director of the DCC Dutch-registered subsidiary, Lotus Green Limited. DCC claims Lotus organised the sale of the Fyffes stake in February 2000 without any direction from its parent.
He told the court the market was "going mad" in late January 2000 for dotcom stocks and the Fyffes share price had risen sharply (from under €2 a share in December 1999 to more than €3 a share in early February 2000).
Towards the end of January 2000, Mr Flavin had informed Mr O'Dwyer, as a director of Lotus Green, of phone calls from Davy stockbrokers expressing interest in acquiring the DCC group's shareholding in Fyffes, Mr O'Dwyer said.
On January 31st, 2000, Mr Flavin told him of increasing interest in the stake and that it was possible an offer might be made. Mr O'Dwyer told Mr Michael Cush SC, for DCC, that his actions as a director of Lotus Green over the coming days were driven by his awareness that the authority to dispose of any Fyffes shares lay with Lotus Green and that any decision it might make should be informed and independent.
He wanted to ensure, in the event of a share sale, that the process and related paper work would be entirely consistent with the detailed tax advice DCC had received when - to achieve tax savings of more than €8 million through avoiding liability for Capital Gains Tax - it transferred beneficial ownership of the Fyffes shareholding to Lotus Green in 1995.
He said DCC had not followed initial advice from Price Waterhouse Coopers of April 27th, 1998, to the effect that, if the Fyffes share price reached a certain level, Lotus Green should sell its entire stake in Fyffes and specifically authorise Mr Flavin to make any arrangements to conclude the sale of the stake.
Mr O'Dwyer said that particular advice was "a stopgap piece of advice" given in a situation where an offer for the Fyffes stake might conceivably have been made on April 28th 1998 and where any such initial approach would have been made to Mr Flavin, as the market was unaware of Lotus Green's existence.
That situation did not in fact transpire then as the Fyffes price fell later in 1998, Mr O'Dwyer said.
His personal view in 1998 was that it was not appropriate, having regard to management control issues for Lotus Green, for the chief executive of the top company, DCC plc, to be authorised to negotiate on behalf of Lotus Green.
In later advice, of May 1st 1998, PWC advised that any decisions regarding the Fyffes shareholding be made by the board of Lotus Green and that Lotus Green not be put in the position of "merely rubber stamping decisions already made".
Mr O'Dwyer said he had adhered to that later advice in relation to the disposal of the Fyffes shareholding in February 2000. He said no unpublished information regarding Fyffes was ever made available to the Lotus Green board, which was kept up to date on Fyffes performance from a range of published information.
The decision to accept unsolicited offers from brokers for the Fyffes stake was taken independently by the board of Lotus Green and the board had not sought nor received any direction from DCC or any other party, he said.
Mr O'Dwyer was continuing his evidence on the 51st day of proceedings by Fyffes alleging insider dealing in connection with the €106 million sale in February 2000.
The defendants - DCC plc, Mr Flavin and two DCC subsidiaries S and L Investments Limited and Lotus Green - deny the claims and plead the share sales were properly organised by Lotus Green.
In cross-examination later yesterday, Mr Paul Sreenan SC, for Fyffes, suggested to Mr O'Dwyer it was "inconceivable" that Mr O'Dwyer had not picked up from Mr Flavin from late January 2000 that Mr Flavin was strongly in favour of the sale of the Fyffes shares.
Mr O'Dwyer said he could not say he could definitively have picked that up from people's body language in DCC. Everybody in DCC House was in good form at that time; the market was just going mad, he said.
Mr Sreenan suggested no document existed to evidence the delegation by the DCC board of exclusive authority to Lotus Green for the share sale. He asked Mr O'Dwyer to check overnight if any such document existed. Mr O'Dwyer said he was saying "as a matter of fact what Lotus Green had".
