Fyffes chief executive Mr David McCann told the High Court yesterday that, with the benefit of hindsight, he believed the company had "made a mistake" when its chairman permitted an executive director, Mr John Ellis, to deal in Fyffes shares in January 2000.
However, Mr McCann said, Mr Ellis did not then have the same information available to him as was available to DCC chief executive Mr Jim Flavin at the time of three controversial share deals of February 2000, which Fyffes alleges were organised by DCC and Mr Flavin and constituted "insider dealing" .
Mr Kevin Feeney SC, for DCC and Mr Flavin, suggested that if Fyffes truly believed Mr Flavin had price-sensitive information at the time of the February 2000 share deals, it would have raised those concerns.
When he asked Mr McCann when anyone in Fyffes first raised a concern that the information was price sensitive, Mr McCann said he could not answer that.
It was some months after the share deals that he had addressed the issue of price-sensitive information, he said. Prior to that, he was busy with other matters and did not think about Mr Flavin. If the matter was formally raised at a board meeting in June 2000, he imagined it was raised informally before that.
Mr McCann said it was very clear to him in January 2000 that Fyffes would not meet its half-year targets for 2000 unless the company won two court cases it was then involved in. He said that Mr Flavin chose to deal on February 3rd, 2000 and "had the same information we had". Mr Feeney suggested that was not the case. Mr McCann said it was plain from documents that Mr Flavin had in December 1999 that there was a "very serious" problem facing Fyffes.
Mr McCann was being cross-examined on the eighth day of the action by Fyffes against DCC plc, S and 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 Dutch subsidiary of DCC which owned 10 per cent of Fyffes.
Fyffes claims that DCC and Mr Flavin organised the sale of Fyffes shares on three dates in February 2000 for €106 million, yielding a profit of €85 million, and that these sales breached "insider dealing" provisions of the Companies Act 1990.
In denying the claims, the defendants 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. They also say that Lotus Green had no price-sensitive information and was entitled to deal. In his cross-examination yesterday, Mr McCann said Fyffes employed some 2,500-3000 people worldwide, including some 40-50 accountants. He agreed the preparation of the company's annual budget was an important event, and that between 1995 and 1999 the predicted profits were exceeded.
Mr McCann said he knew in October 1999, when the budget for the financial year to the end of October 2000 was presented to the board, that although it would be a challenge, he thought then the company could achieve it.
Asked about dealings in Fyffes shares conducted by Mr John Ellis in January 2000, Mr McCann said Mr Ellis wrote to the chairman of Fyffes seeking permission to sell shares and secured permission. It seemed that, in reviewing the situation with the benefit of hindsight, "we made a mistake", Mr McCann said.
When he met Mr Flavin on the evening of February 3rd, he had not considered whether Mr Flavin had price-sensitive information. Mr Feeney suggested that Mr McCann would have been acting in "a dastardly manner" had Mr McCann known Mr Flavin had price-sensitive information and had not told him.
Mr McCann said he had business dealings throughout February 3rd. He was told that day that Mr Flavin was selling and had sold his shareholding. "My view was that it was a story that was over," he said. When he and Mr Neil McCann met Mr Flavin that evening, Mr Neil McCann was extremely annoyed and felt he had been treated discourteously by Mr Flavin, and that Fyffes rules had been ignored.
Mr David McCann said he took the view there should not be a row, and to get on with life. He said he had no obligation to Mr Flavin. Mr Flavin's risks were his own, "not mine".
The case continues today.
