Yesterday's developments may not be the end of the Fyffes/DCC saga, writes COLM KEENA

IN FEBRUARY 2000, two members of the McCann family met Jim Flavin at the Great Southern Hotel in Dublin Airport, after Flavin and DCC had made the first of the three share sales that would lead in time to the massive insider dealing dispute between Fyffes and DCC.

Neil McCann and his son David bought a bottle of champagne and had it waiting on ice when Flavin, executive chairman of DCC, turned up for the evening meeting.

It would not be surprising if a few glasses of champagne were poured in McCann family homes last night, as well as those of a few of the other senior executives of Fyffes plc.

Flavin is unlikely to have been feeling so cheerful, though he may well be harbouring hopes that yesterday marks the final episode of a drama that has gone on since March 2000, when Fyffes issued a trading statement and its share price dropped 25 per cent.

The legal dispute between Fyffes and Flavin/DCC was initiated by Fyffes in January 2002 in circumstances where it felt it had little choice but to take the action. It was concerned that the company might be exposed to a potential lawsuit if it was not seen to go after Flavin and DCC, in a context where it had been publicly revealed that the Garda was investigating the share sales.

Once the action was initiated, there was no going back for either side.

In the course of the marathon action, evidence was heard that did not reflect well on either company. A picture also emerged of tensions between Flavin and Neil McCann's two sons, David and Carl. The case was "strictly business" but there was no ignoring the personal tensions that emerged.

Flavin had been involved with Fyffes and its founding father, Neil McCann, from way back, but his relationship with the founder's sons came across as fraught.

Flavin was unhappy about the level of control the McCanns had over Fyffes, and had also made noises about remuneration. He told the court that personal relations formed part of the explanation for the timing, mode and manner of prosecution of the proceedings.

The decision of the High Court in December 2005 that the information Flavin had in his possession in February 2000 - by way of his position as a non-executive director of Fyffes - was not price sensitive, was a blow to Fyffes and the McCanns, and a great relief for Flavin.

The overturning of that decision by the Supreme Court in July 2007 ensured those sentiments were reversed.

The Supreme Court returned the case to the High Court so it could rule on the matter of damages. One reading of the law would indicate that Fyffes was entitled to the entirety of the profit made by DCC on the share sale. The shares had been bought years earlier and were sold when the Fyffes share price was riding on the dot.com boom (at the time Fyffes was developing a subsidiary called worldoffruit.com). Total book profit made by DCC on the €106 million sale was €85 million.

At no point in the case did anyone argue that Flavin had not made a great call.

DCC, for its part, was preparing to argue in the High Court that Fyffes was only entitled to the difference between what DCC got for the shares, and what it would have got if the market had had the information Flavin had. When Fyffes issued a trading statement in March 2000, its share price dropped by 25 per cent. Using that as a guide, Fyffes would have been entitled to €26.25 million. It got €25.8 million.

It appears the lawyers on both sides were of the view that, if Fyffes had successfully argued for the entirety of the profit made by DCC, the decision would have been appealed to the Supreme Court where it might have been found to be unconstitutional. Negotiations led to yesterday's announcement.

The development had the added bonus of appearing to rule out the prospect of the court responding positively to a suggestion made to it by the director of corporate enforcement, Paul Appleby. Appleby had pointed out that, under the law, the court could, of its own motion, decide to impose restriction orders on directors, on the basis of the evidence heard in the course of the proceedings.

Such a move would relieve Appleby's office, with its modest budget, of the burden of having to initiate its own case or cases.

Flavin has been found by an unanimous ruling by five judges of the Supreme Court to have been in possession of price-sensitive information at the time he sold shares worth €106 million. He remains at the helm of DCC plc. Appleby now has to decide if he is going to take on the mammoth task of initiating his own case in the High Court, or be seen to let matters lie.

He must also decide whether to initiate proceedings against others he might have concerns about, arising from the High Court hearings.

Listen to Colm Keena's assessment of the DCC settlement here:

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