The opening salvo in what may be one of the most controversial civil actions in Irish corporate history will begin in the High Court today when Mr Dermot Gleeson SC will submit a statement of claim for Fyffes in the fruit distributor's insider trading action against former non-executive director Mr Jim Flavin, and former shareholder, DCC.
Mr Flavin is chief executive of DCC.Fyffes is claiming that as a non-executive director, Mr Flavin had detailed financial information on Fyffes trading for the months of November and December, 1999, and trading forecasts for January 2000, and that he took advantage of this information to procure the sale of DCC's stake in Fyffes in February 2000 at a profit of €85 million (£67 million).
For his part, Mr Flavin has flatly rejected the claim that he was in possession of price-sensitive information and also denied that he passed on any such information to Lotus Green, the Dutch subsidiary of DCC that had control over the Fyffes shareholding.
DCC has already mounted a rebuttal to the allegations of insider trading, in a statement to the Stock Exchange last Thursday.
In its defence to the Fyffes allegations, DCC and Mr Flavin are expected to argue that if Fyffes believed DCC had price-sensitive information, then why did Fyffes chairman Mr Neil McCann actively encourage DCC to sell the balance of its shareholding after half of the shares had been sold on February 3rd, 2000?
DCC is also expected to argue that if Fyffes believed there was price-sensitive information, then why did Fyffes executives mount a series of institutional presentations both before and after the February 3rd sale without revealing this information in those presentations?
DCC will argue that if Fyffes believed there was price-sensitive information, then why was then executive director of Fyffes, Mr John Ellis, allowed to sell 45,000 shares on January 26th, 2000 - a week before the sale of the first tranche of Fyffes shares by DCC.
Mr Ellis could only have sold these shares after receiving permission from the Fyffes chairman.
On the same day as Mr Ellis sold his 45,000 shares, Fyffes company secretary Mr Philip Halpenny accepted options over 50,000 shares.
DCC is expected to argue that if Fyffes believed there was price-sensitive information, why were these share dealings by its executive directors allowed to take place?
The Fyffes statement of claim, details of which were exclusively reported in The Irish Times on Saturday, does not address these counter-claims by DCC.
It goes into detail, however, on the financial information on which Mr Flavin is alleged to have procured the sale of the DCC shares in Fyffes, and quantifies DCC's profit on the sale at €85 million (£67 million).
Fyffes has taken its action against DCC and Mr Flavin one week before it would have become statute-barred. But so far, none of the institutions - mainly British - who bought the 31 million Fyffes shares from DCC has brought any action in respect of their own losses. If Fyffes is successful in its action and receives damages, it is open to the company to compensate these investors at least in part for their losses.
While nothing can be guaranteed, it seems unlikely that as this litigation progresses there will be any settlement between the two parties. "This is all about reputations, not money, settlement doesn't even enter into it," said one source close to DCC.
Fyffes has publicly questioned the probity and honesty of Mr Flavin in its allegations of insider trading.
In return, DCC has made equally serious allegations about the behaviour of Mr McCann and other senior Fyffes executives. Sources say that neither side can be seen to be backing down without the most serious damage to both personal and corporate reputations.
Given the battery of high profile solicitors and barristers, the costs will run into millions.
