Paul Appleby is seeking the appointment of an inspector to the company, writes Mary Carolan

THE DIRECTOR of Corporate Enforcement has said it is "difficult to see" how a Supreme Court finding that a fraud occurred on the market in the circumstances of the sale of DCC's stake in Fyffes in 2000 and a consequent payment of some €38 million in damages by DCC, is not a matter which "merits investigation" by a court-appointed inspector.

Paul Appleby also said there were circumstances suggesting that "illegality of a similar and related character" occurred in 1995 in relation to the transfer by DCC of beneficial ownership of its Fyffes stake to the DCC wholly-owned subsidiary, Lotus Green.

An inspector's report would establish "the full picture" and bring a level of finality to matters which have caused public disquiet, he submitted. It was the very fact that so many of the features of what happened "remain unexplained", notwithstanding the long history of the matter, that had created public concern, he said.

The submissions were presented to Mr Justice Peter Kelly yesterday at the opening of the first application by the Director of Corporate Enforcement for the appointment of an inspector to a company. Mr Appleby said he believed there were "clear and compelling grounds" for appointing an inspector to DCC and its two subsidiaries, SL Investments and Lotus Green.

Relying on voluntary co-operation would not be sufficient to get to the bottom of events, which Mr Appleby believes include potential breaches of the Companies Acts and potential involvement in that misconduct of senior figures connected with DCC, the judge heard.

An inspector would have the power to take evidence from people such as former DCC chairman Alex Spain and Davy stockbrokers chairman Kyran McLaughlin, who were not called in the High Court proceedings, Brian O'Moore SC, for Mr Appleby, said. While DCC had complained that this matter had been going on for years, it was the actions of DCC which had led to lengthy proceedings, he added.

Opposing the application, Donal O'Donnell SC, for DCC, said there were no grounds to warrant the extremely severe step of an inspector's appointment to go over the same ground as covered by the courts and in circumstances where Mr Appleby had not exhausted his options. Mr Appleby had not indicated anywhere what evidence could be added to the story by people such as Mr Spain or Mr McLaughlin, he added.

The director was adopting a contradictory approach in that he had earlier told the courts that the High Court judgment in the case was a sufficient basis for disqualification orders, but was now seeking to have an inspector appointed, counsel argued.

In submissions, DCC said an inspector's appointment could be extremely damaging, especially for a public company, and extremely costly.

It argued the two necessary criteria for appointment of an inspector - that the court must be satisfied there are circumstances suggesting the affairs of DCC are or have been conducted in an unlawful manner and that an investigation is warranted - had not been met by the director.

While conceding there was evidence "suggesting a breach" of Companies Act provisions requiring DCC to notify the 1995 transfer of its stake in Fyffes to Lotus Green, DCC said "all of the relevant facts are known" in that regard "and there is nothing to investigate". It said the suggestion of a possible breach of the insider dealing provisions of the Act in relation to the 1995 transfer was "untenable", and indicated what Mr O'Donnell called an "absurd" interpretation of the provisions.

All of the material facts regarding the 2000 share sales were already known and there was "not a shred of evidence" to suggest any unlawfulness "on the part of any person or any company other than that which has already been found by the Supreme Court", DCC submitted.

DCC said the Supreme Court had last year found the 2000 share sales were illegal because Mr Flavin had price-sensitive information and for no other reason.

There was "not a shred of evidence" anyone else had the information and the High Court also found there was no evidence that Mr Flavin transmitted the information to the DCC companies, it said.

Mr Appleby wanted an inspector, not to inform the court and himself of what was already known and not because he had insufficient knowledge, but because he was concerned about the evidential status of that knowledge - the High Court and Supreme Court judgements in the Fyffes case, DCC argued. The director wanted an inspector's report because that provided the evidential basis sought.

The director's application follows the Supreme Court decision that DCC and its recently resigned chief executive, Jim Flavin, unlawfully engaged in insider dealing in relation to the sale of DCC's stake in Fyffes. An inspector's report could provide the basis for disqualification proceedings against any persons involved in the share sales.

In an affidavit, Mr Appleby said the circumstances of the 1995 and 2000 transactions suggested Mr Flavin may have "actively advised" the DCC group to acquire and dispose of the Fyffes shares and that a number of other officers and senior managers in DCC may have facilitated transactions which led to possible breaches of the Companies Acts. In light of the facts contained in the High and Supreme Court judgments on the Fyffes case, other senior persons in DCC may have given support to the insider dealing transactions in 2000, he said.

While there were circumstances suggesting "senior persons" in Fyffes benefited from insider dealing transactions in 2000, he had decided, on the basis of the information available and the relatively small value of the dealings, he would not seek a formal investigation of Fyffes at this stage.

The hearing continues today.