The report of an inspector appointed to investigate unlawful insider dealing by DCC plc, and by its former chief executive Jim Flavin, is to be given to the Director of Corporate Enforcement (DCE) before it is circulated any further, the Commercial Court has heard.
The report, which was presented to Mr Justice Peter Kelly last Friday, relates to the €106 million sale of the DCC stake in Fyffes in February 2000. It followed court findings about these activities which resulted in DCC paying Fyffes more than €37 million in damages.
Its findings could provide the basis for disqualification proceedings against any persons involved in the 2000 share sales.
Mr Justice Peter Kelly, who received the inspector’s report last Friday, said a limited number of people in the DCE’s office will be allowed to see it before the two companies involved get it and before any publication would take place. It will first go to DCE to give him an opportunity to make observations on it, Mr Justice Kelly ruled.
He was told Sean Ward, an officer in the DCE, had been nominated to receive the report and the judge ordered that Mr Ward would decide the other people with the DCE office, including legal advisors, who could see the report.
The judge ruled the matter should come back before him on January 11th when it should be made available to the two companies, subject to the DCE’s observations. It could come back before the court a week later during which time the companies can have considered.
The judge said all who receive the report would be subject to undertakings of confidentiality.
Mr Justice Kelly appointed senior counsel Bill Shipsey in July last year as inspector after he found circumstances suggesting unlawfulness in the conduct of DCC’s affairs relating to the 1995 transfer of the DCC stake in Fyffes plc and/or the sale of that Fyffes stake in early 2000. A “thorough investigation” was in the public interest, the judge said.
In an interim report handed into court last July, Mr Shipsey said he had interviewed 18 persons, including the directors, officers and advisors of the companies, plus key employees who either assisted with or facilitated the 2000 share sales.
He had also interviewed the principals of the two firms of stockbrokers (Davy and Goodbody’s) who jointly purchased the stake on behalf of third party institutional investors.
Mr Shipsey also indicated his intention to make general recommendations in his final report relating to the corporate responsibility obligations of companies and their directors, officers and advisors.
The appointment of an inspector to DCC and its two subsidiaries - S & L Investments Ltd and Lotus Green Ltd - was sought by the director of Corporate Enforcement, Paul Appleby, following the 2007 Supreme Court finding of unlawful insider dealing by DCC and Mr Flavin in the €106 million sale of the DCC stake in Fyffes in early 2000.
The application, the first ever by the Director, was opposed by DCC. The report could result in disqualification proceedings against any persons involved in the 2000 share sales or in the 1995 transfer of DCC’s Fyffes stake to Lotus Green.
DCC had conceded there was evidence, in relation to the 1995 transfer of the Fyffes stake to Lotus Green, suggesting a breach of the statutory provisions on notification requirements but has denied any breach of the insider dealing provisions relating to either the events of 1995 or 2000.
The director had also pointed out the High Court, during the Fyffes case, had not had the benefit of evidence from persons whom he regarded as important witnesses to the events related to the insider dealing transactions, including Kyran McLaughlin, chairman of Davy stockbrokers, the then chairman of DCC, another director of DCC and two directors of Lotus Green.