Counsel for Fyffes has now spent six days outlining the insider trading case it is taking against Mr Jim Flavin, DCC and two of its subsidiaries, and which is set to be played out over the coming weeks and months. Colm Keena reports.

The High Court clash will cost millions in legal bills and could, should it lose, cost DCC plc the €85 million it made when it sold its stake in Fyffes in three tranches during February 2000.

A range of issues that will circle around the hearing were aired during the lengthy opening by Mr Paul Gallagher SC but, as the barrister put it on the first day, the case can be whittled down to two simple questions:

Was confidential information concerning Fyffes trading which was in Mr Flavin's possession in February 2000 price-sensitive information?

Did Mr Flavin deal in the Fyffes shares in February 2000?

DCC's and Mr Flavin's response to both questions is no. They say Mr Flavin received unsolicited bids for the DCC shareholding, and passed on those bids to Lotus Green Ltd, the Irish registered Dutch resident DCC subsidiary which, the defendants say, managed and controlled the shareholding in Fyffes.

Tapes of conversations Mr Flavin had with a stockbroker on the day of the first sale are to be played to the court.

The defendants also say Mr Flavin did not communicate the information he had to any party within the DCC group. They also say the information he had in his possession was not price sensitive.

Lotus Green is set to provide an interesting element to the story now about to unfold. The company was set up as part of a tax scheme and Coopers & Lybrand warned that, should it transpire that the company was controlled and managed from Dublin, rather than from Amsterdam as envisaged in the scheme, then the Irish Revenue might seek to raise capital gains tax on the profit DCC made on the Fyffes shares. Lotus Green used a Dutch tax law to avoid paying any tax on the €85 million profit.

DCC and Lotus Green say the company was managed and controlled in Amsterdam and that it was the Lotus Green board, acting alone, that decided to sell the Fyffes shares in February 2000.

Fyffes' contention is that the reality was that Lotus Green, which had been given a core asset of the DCC group, was at all times kept under the control of DCC's Dublin management. Lotus Green had a majority of Dutch directors but as "B" directors they needed the consent of an "A" director before any decision could be approved. The "A" directors were DCC executives from Dublin.

A huge debate is due to centre on what constitutes price-sensitive information and whether the information in Mr Flavin's possession was price sensitive. In his role as a non-executive director of Fyffes, Mr Flavin had been given access to the November and December management accounts for Fyffes, as well as a firm projection for January 2000. Banana prices were low and the second key factor affecting Fyffes' performance, exchange rates for key currencies, were also difficult.

At the time of the sales at issue, the Fyffes shares were at unprecedented values and attracting unprecedented interest. Both sides agree that a large percentage of the shares' value in early 2000, derived from Fyffes' internet project, worldoffruit.com.

The defendants say the interest was such that the company's trading performance was irrelevant. Fyffes says that this is to take matters too far, and points to the fact that a negative trading statement on March 20th, 2000, led to the shares losing more than 25 per cent in value within two days.

An interesting side issue arises in this regard. The internet project was the focus of these presentations, according to DCC. In January and February 2000, senior Fyffes executives were making presentations in Europe and the US to potential investors. The defendants say this contributed to the increased interest in Fyffes shares, and that it was this increased interest that saw the brokers contacting Mr Flavin with unsolicited bids for the DCC stake in Fyffes.

If the information Mr Flavin had was price sensitive, then what was Fyffes doing encouraging international institutions to invest in the fruit distributor, the defendants ask.

They also point to the granting of share options to a Fyffes executive, and the sale of shares by another executive, presumably with the consent of Fyffes. Why were these trades allowed if the information Mr Flavin, and the rest of the Fyffes board, had was likely to materially affect the share price?

The defendants also point to the fact that on the evening of the sale of the first tranche of shares, Mr Neil McCann and Mr David McCann, of Fyffes, treated Mr Flavin to a "bottle of bubbly" and then encouraged him to offload the remainder of the DCC shareholding, as they did not want to have it overhanging the market.

Fyffes response to these points is that they are not relevant to the trial. In other words, it is DCC and Mr Flavin who are on trial, not Fyffes.

Correspondence between the two sides from the period after the share sales was read to the court. After the February sale and the March price collapse there was negative media comment, and then a stock exchange inquiry.

The inquiry led to a report being produced and being passed to the Director of Public Prosecutions, a fact which became public knowledge.

Fyffes felt all of these matters were damaging to its reputation. Letters between Mr Flavin and Mr Neil McCann were after a period replaced with letters between William Fry solicitors and Arthur Cox solicitors.

The earlier letters indicate that there may have been some tensions between Mr Flavin and the McCann family for some time. Mr Flavin once or twice expressed the view that his contribution to the success of Fyffes over the years had not been sufficiently appreciated. On another instance, he wondered whether there was a sense of "begrudgery", given that DCC had sold its shareholding when the share price was at unprecedented levels. This latter point was rejected by the company.

Mr Flavin had been on the board of Fyffes since the early 1980s and in the correspondence he expressed his great admiration for the McCanns. He was a former consultant to the company and a valued adviser. He was a member of the audit and remuneration committees. He said in 2000 that it was with a "sense of nostalgia" that he left the company.

The defendants allege that Fyffes' view as to whether the information Mr Flavin had in early 2000 was price sensitive changed in 2001 when the company saw the opportunity of making money by suing DCC.

A partnership of 20 years has come to a very unhappy end.

The case is being heard by Ms Justice Mary Laffoy.