Analysis: Given the reputational issues for both sides involved in the Fyffes/DCC insider trading case, there has been much speculation concerning the motivations of the main players and why they don't settle, writes Colm Keena.
Inevitably, some of this discussion has concerned the personalities involved and the relationship between Mr Jim Flavin, chief executive of DCC, and the three members of the McCann family, Neil, Carl and David.
Yesterday some letters read to the court hinted at a sometimes tense and touchy relationship.
In March 1998, DCC informed Fyffes that it was going to accept Fyffes shares in lieu of a dividend and Mr McCann wrote to Mr Flavin asking that DCC go through the motions of seeking permission, in order to comply with the stock exchange's Model Code.
Mr Flavin wrote back saying DCC would not seek permission, outlining the reasons why. In the course of the letter he wrote: "We are concerned that the recently expressed wish by Carl that we should withdraw from the company is indicative of a developing hostile attitude by Fyffes to DCC."
Mr McCann responded, saying his advice was that DCC did come within the spirit of the code because of Mr Flavin's roles as chief executive of DCC and non-executive director of Fyffes. He said he was puzzled by the reference to hostility "while it would be true to say that there has to be a degree of feeling in Fyffes as a result of the Allied affair".
This latter is understood to concern a stake DCC had in food company Allied Foods, a stake which Fyffes felt raised questions of a conflict of interest for Mr Flavin.
More than a month passed before Mr Flavin responded. In this letter he stuck to his position concerning the Model Code but also made a point that is now a central one in the case before the court. Without mentioning Lotus Green Ltd, the Dutch-resident subsidiary of DCC, he said he was not on the board of the company that had the power to decide to sell the Fyffes shareholding held by DCC, and did not control that company.
In the course of the letter, he referred to his mentioning, many times over the years, a proposal for Fyffes. This is understood to have been a proposal that the McCanns and DCC take Fyffes private. "The opportunity has now probably passed," he wrote.
In May 1998 Mr McCann again repeated his view concerning the Model Code.
"I find it hard to accept that you, as chief executive of DCC, could be in possession of inside information during a closed period or at any other time, and yet DCC could trade in Fyffes shares."
On the same date in May 1998 Mr Flavin wrote to Mr Carl McCann, then the deputy chairman of Fyffes, concerning Fyffes "seeking to bind DCC to the Model Code for directors' dealings". He repeated the DCC position.
"You are seeking something which I have no right to accede to as it might potentially diminish the value of DCC's holding."
In 1999 Fyffes held a top-level analysis of a number of corporate governance issues, in the light of the Combined Code. The code defined an independent director as one that is "independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgment."
It was decided Mr Flavin could not be described as an independent director of Fyffes but Mr Flavin was "very vexed" with the decision, Mr Frank Gernon, group finance director of Fyffes, told the court yesterday.
In January 2000, Mr Flavin discussed the issue a number of times with Mr Gernon and, on January 28th, 2000, he wrote to Mr Neil McCann asking that Fyffes reconsider the matter.
"I believe I have acted independently at all times in the discharge of my duties as director."
Mr McCann replied on February 2nd, 2000 - the day before the first tranche of DCC's shareholding in Fyffes was sold without DCC seeking Fyffes' permission.
"I am sure you know that independence or otherwise is not a failing or criticism but merely reflects the commercial circumstances of a particular company," he wrote. "As you know, certain conflicts of interest have arisen in the past."
Mr Gernon said yesterday that, during his discussions with Mr Flavin concerning this issue, Lotus Green was not mentioned.
Mr Gernon also said that, over the years, Mr Flavin had often asked rhetorically if a plc director could ever sell shares because of the issue of price-sensitive information. Mr Flavin was cognisant of the fact that a director had to take "great care", he said.
In the wake of the February 2000 sales, Fyffes concluded that an upside to DCC not seeking permission prior to the sales was that no onus had been placed on Fyffes in relation to the deals.
