Former Dunloe Ewart managing director Mr Philip Byrne, who is standing trial on charges of insider trading, told gardaí he only made the transactions to fund separation proceedings from his wife, the Dublin Circuit Criminal Court has heard.

Mr Byrne (44), of Trafalgar Terrace, Monkstown, told Det James Mullen of the Garda Bureau of Fraud Investigation that "the background to this entire matter related back to my personal situation in April 1997".

In what is the State's first such trial, Mr Byrne has pleaded not guilty to two counts of insider dealing contrary to the Companies Act 1990.

It is alleged that Mr Byrne, who bought 750,000 Dunloe (then Dunloe House) shares for 10p each in 1995, sold 260,000 shares for 34p each on the Irish Stock Exchange in April 1997 knowing Dunloe had to lower its share prices to finance a reverse takeover of another major property company.

The prosecution claims Mr Byrne acquired this price-sensitive insider information as a director of Aviette Limited, owned by Dublin solicitor and property developer Mr Noel Smyth, the chief executive and chairman of Dunloe Ewart, and involved in the deal.

When Mr Byrne joined Aviette in April 1997 it was in the process of joining several of its properties with another major player in the property market, Mr Phil Monahan's Monarch Properties, to form a new entity called the Cradder Group. Dunloe was then to take over Cradder.

Det Garda Mullen told Mr George Birmingham, prosecuting, that Mr Byrne furnished a written statement saying his Dunloe share sale was solely "connected to the separation negotiations with his wife and the subsequent purchase of a £200,000 new residence for himself".

His total share portfolio, managed by Mr Dermot Walsh at Davy Stockbrokers, amounted to £1.5 million (€1.9 million) and consisted of joint holdings with his then wife Mrs Mary Byrne.

Mr Byrne said he had sold his Smurfit shares at the same time and "this was done independent of any information" he had on either company.

He also told Det Garda Mullen there was no profit motive in the transaction, and had the shares been retained and further entitlement taken up, it would have increased his future profits, earning him much more than the £88,000 it did in April 1997.

Mr Byrne said he had disclosed the sale voluntarily and "no other party would have become aware of the transaction" if he himself had not revealed it.

He explained that at the end of April 1997 there was "total uncertainty" as to whether the Cradder transaction, which involved the merging of Aviette and Monarch, would proceed.

Mr Byrne added no negotiations had taken place at this stage between Cradder and Dunloe regarding details of any transaction and asserted that Dunloe was not party to the heads of agreement signed between Monarch and Aviette in February 1997.

It was his belief that in April 1997 the lack of progress on the Cradder deal, the "total uncertainty" of its details and the doubt whether it would be completed at all, made it "impossible to state what, if any, affect it would have had on Dunloe share price".Mr Byrne agreed that he had bought back Dunloe shares in September the same year.

He said it was part of the Placing and Open Offer which, as an existing shareholder gave him nine shares for every five he held.

Besides being "a good investment", he said it was also a way to "demonstrate to institutions that the management were committed to this company ".The trial, now in its eighth day, is continuing before Judge Dominic Lynch.