Davy executive emerges as key witness to sale

The deputy chairman and head of capital markets at Davy Stockbrokers, Mr Kyran McLaughlin, looks set to become a key witness in the Fyffes/DCC insider dealing case.

Davy acted, and indeed still acts, as broker to Fyffes and DCC and acted in the share sale at the heart of the case.

The two key issues in the case are whether information DCC chief executive Mr Jim Flavin had in February 2000 was price sensitive information and whether Mr Flavin played a role in the share sale.

DCC says the sale was decided upon and executed by a Dutch-resident subsidiary, Lotus Green. It also says the sale came about as a result of an approach to DCC from prospective buyers, an approach which Mr Flavin passed on to Lotus Green.

Yesterday, Fyffes chairman Mr Carl McCann told the court that, on February 3rd, 2000 - the day he first heard of the DCC sale - he was in London and called Mr McLaughlin.

Mr McLaughlin told him that there were buyers seeking to buy Fyffes shares from DCC.

"Davy approached Jim. He said he would have to think about it and talk to the company," reads Mr McCann's note of the conversation.

Mr McLaughlin bid a lower price for the shares than Mr Flavin wanted. Mr Flavin said Goodbody brokers were offering a higher price, according to the note of the conversation.

The case has already heard that, on the same day, Fyffes chief executive Mr David McCann telephoned Mr Ronan Godfrey of Davy and was told there was "nothing cooking" in relation to Fyffes shares.

On July 10th, 2000, by which time Fyffes had issued a profit warning and the DCC sale had become controversial, Mr McLaughlin met with Mr Neil McCann and Mr Carl McCann.

The father and son later agreed that, at the meeting, Mr McLaughlin made it "quite clear" that Mr Flavin "initiated the sale process".

A file note by Mr Neil McCann states that Mr McLaughlin was quite open during the July 10th meeting.

Mr McLaughlin was critical of Mr Flavin and the way he "played off Goodbody against Davy in spite of a 20-year association with Davy, pleading fiduciary responsibility to get the best deal for his shareholders.

"It is quite clear that he had decided as early as Thursday January 27th that he was going to dispose of all his shares. [ Mr McLaughlin] believes [ Mr Flavin] may have a problem and it is possible that the outcome might depend on whatever information we have at our end."

The entire content of the memo was not read out yesterday.

Another section of the memo was read out earlier in the case when Mr David McCann was giving evidence.

He has said he believed Davy was told by DCC not to give information to Fyffes on February 3rd, 2000.

Mr David McCann also said he believed a presentation to potential investors arranged by Davy in late January was in fact arranged to assist the sale of the DCC-held shareholding in Fyffes.

The section from the memo read out during Mr David McCann's evidence recorded Mr Neil McCann asking Mr McLaughlin about the late January 2000 presentation and Mr McLaughlin responding that, "once the intention was clear, they would put the normal machinery into action".

Yesterday the court also heard that, in the early 1990s, the McCann family was under financial pressure and needed to offload shares.

Mr Flavin sought increased influence for DCC over Fyffes in return for DCC buying the shares, Mr Carl McCann said. In the event, the sale went ahead without this occurring.