DCC plc chief executive Jim Flavin's account of the meaning of certain recorded phone conversations between himself and stockbrokers at the time of the €106 million sale of the DCC stake in Fyffes seemed to suggest that words on the transcript "don't mean what they say", the High Court was told yesterday.
Mr Paul Gallagher SC made the suggestion when beginning his cross-examination of Mr Flavin with a detailed analysis of transcripts of phone calls between Mr Flavin and a stockbroker on February 3rd, 2000, when the first of three sales of the DCC stake in Fyffes occurred.
While agreeing that, "for the most part", the words in the transcripts "mean what they say", Mr Flavin said he had used "loose language" on occasion and that "words can have an awful lot of different meanings".
He said the conversations had to be seen in the context of earlier conversations with brokers (for which transcripts are not available), of their being a sudden "tidal wave" at the time of stock market interest in Fyffes stock to which he was reacting and of intense competition between brokers for the stock.
Yesterday was the 42nd day of proceedings by Fyffes alleging insider dealing in connection with the sale of the DCC stake over three days in February 2000. The action is against DCC, Mr Flavin and DCC subsidiaries S&L Investments Ltd and Lotus Green Ltd. The defendants deny the claims and plead the sales were properly organised by Lotus, a Dutch-based subsidiary of DCC.
Yesterday, Mr Gallagher referred to a transcript of a conversation between Mr Flavin and Ronan Godfrey of Davy Stockbrokers on February 3rd.
Mr Godfrey was recorded as saying: "Jim, you received a bid from us for the entire block of stock yesterday and we've given you a further bid today for the smaller block." Mr Flavin replied: "For 10 million."
Mr Godfrey then asked whether a bid was received from anyone else and Mr Flavin replied: "Just, I mean... we, as I've said is that we would consider a bid for the whole lot at €3.20 or we'd consider a bid for half, exactly half and there is a reason for that."
Mr Flavin later said: "At €3.20 plus the pref dividend, ah look, but anyway, we don't have that either so I know that Roy Barrett [ of Goodbody Stockbrokers] is going to call you or somebody or other and that you might come back jointly and... as soon as possible so I know exactly where we stand."
Asked about that exchange, Mr Flavin said he had received unsolicited offers from Davy and Goodbody for Fyffes shares on dates from January 27th, 2000, and passed on the offers as he got them to Lotus Green which had "exclusive authority" to accept offers for the shares. He had no authority in that regard.
He said Davy and Goodbody had eventually decided to put together a joint bid for the Fyffes stock. When he was talking to Mr Godfrey, the two broking firms were on the "same team".
He said it was "open to interpretation" that he, Mr Flavin, was requesting Mr Godfrey on the tape to "come back jointly". He agreed the words "you might come back jointly" were there but words could have "an awful lot of different meanings".
Asked would that be another instance of words in the transcript "not meaning what they say", Mr Flavin said a sentence where he was quoted as saying "we have appointed you jointly" was "just not correct" and "very loose language by me". He was just checking what Mr Godfrey was saying to him reflected fully the joint position of Davy and Goodbody.
Mr Flavin denied that he had played the two broker firms off each other. While he had not set out to be a conduit between brokers and Lotus Green, he had ended up as one. Not in DCC's wildest dreams had it envisaged a scenario where the phone would be hopping from various brokers trying to buy Fyffes stock at a price which was double that of two months earlier.
He knew early on February 3rd, 2000, that the board of Lotus Green had met that morning and decided to accept offers of €3 or more for the Fyffes stock. From the time of the first unsolicited offer for the stock from Davy, he had made an instinctive decision not to tell the brokers about Lotus Green having the exclusive authority to accept offers because he believed that would undermine Lotus's position.
He agreed he had described as a "crazy price" a price of €3 from Kyran McLaughlin of Davy for the Fyffes stock on February 2nd. He said the price was crazy because the market price was €3.30 a share.
When Mr Gallagher suggested that Mr Flavin had rejected that "bid", Mr Flavin said he was uncomfortable with the word "rejected". He had passed on to Mr McLaughlin information about a higher price being offered. He said "bid" was not a correct description of what took place and Mr McLaughlin had expressed confidence Davy could put together an offer at that price.
Mr Flavin said if he had had the authority to negotiate the sale of the stock, he was confident he could have secured a price of about €3.30 per share on February 1st from Goodbody. He would have loved to be "off the leash" to negotiate but he had not negotiated, he had reacted to offers and passed them on.
Earlier, at the close of his direct examination, Mr Flavin said he was "appalled" to learn from a newspaper article on November 24th, 2001, that the Irish Stock Exchange (ISE) had referred a file to the Director of Public Prosecution (DPP) arising from inquiries it had made about alleged insider dealing in connection with the sale of the DCC stake in Fyffes in February 2000.
He said the ISE had referred the matter to the DPP after sending just one letter to DCC in September 2000, which DCC had responded to as a routine inquiry, and without any further follow up to DCC. He later learned that there had been several contacts between the ISE and Fyffes relating to the alleged insider dealing. It was very hard to see how the ISE had concluded there was insider trading and DCC would have given a fuller response had it known the ISE suspected such, he said.
The case continues today.
