THE BOARD of DCC is coming under mounting pressure to withdraw its support for the firm's executive chairman Jim Flavin after the industry body for the investment sector said he should not continue in his post in light of a Supreme Court ruling that he engaged in illegal insider dealing.
The Irish Association of Investment Managers (IAIM) - whose membership include the investment arms of AIB, Bank of Ireland, Irish Life Permanent and Anglo Irish Bank, and insurers Hibernian and Eagle Star - said last night that the court's ruling was "hugely significant" and that it disagreed with the stance of the company's board.
"Having regard to all of the governance issues raised by this matter, the IAIM does not consider it appropriate for Mr Flavin to continue as executive chairman of DCC," the body said.
There was no detailed response last night from DCC, whose board reiterated its unanimous support for Mr Flavin for a fourth time last Tuesday. "DCC notes the statement issued this evening by IAIM. Until it has been considered there will be no further comment," said a spokesman.
The statement follows the settlement last month of protracted litigation between DCC - a holding company with interests in energy, healthcare and distribution - and fruit importer Fyffes over Mr Flavin's sale of DCC's stake in Fyffes in 2000.
The Supreme Court ruled that Mr Flavin held insider information about Fyffes when selling the shares, for a profit of €85 million, in deals executed not long before Fyffes issued a profit warning.
It is the position of DCC's entire board that such transactions "did not involve any intentional wrongdoing" by Mr Flavin and that they constituted "in essence" an unwitting breach of civil law. The IAIM, which has never before publicly called on a listed company to remove its highest-ranking executive, said the Supreme Court ruling raised serious issues for DCC. "It is a serious matter to be taken seriously to be dealt with seriously and yes, it is a big step," said IAIM chief Frank O'Dwyer of the decision to issue its statement.
"The view of the association is that there are a series of governance matters. The net point is that the finding that there was a breach of the [Companies] Act is a hugely significant finding. In this particular case, the view of the IAIM is that the breach of the act was of itself - and the finding of the Supreme Court that the act was breached - was a matter of such significance that it led to the conclusion which the association has published today."
Mr O'Dwyer said that it was "not an unreasonable deduction" to suggest the statement would not have been published if any of the IAIM's members were in disagreement.
"We have examined the court document. We've taken legal advice ourselves on certain aspects of interpretation. People have to recognise that every case as substantial as this, where a judgment of the High Court is appealed to the Supreme Court, must by definition be complex and involve complex issues," he said.
"We have never either internally and certainly not externally engaged in trying to look at individual parts of judgments. We've just tried to form a composite view of what is the import of the net finding. As I say, the conclusion we've reached was the one we're publishing today."
The DCC board includes some of Ireland's most senior business figures. Non-executive members include former AIB chief Michael Buckley, former Bank of Ireland chief executive Maurice Keane, former Central Bank director Bernard Somers and former CRH chief Tony Barry. There are two other executive directors. Tommy Breen is group managing director and Fergal O'Dwyer is chief financial officer.
