High Court to rule on DCC inspector application

THE High Court will rule next week on the Director of Corporate Enforcement’s application to appoint an inspector to business services group DCC following a Supreme Court finding of unlawful insider dealing by DCC and its former chief executive Jim Flavin in the €106 million sale of its stake in Fyffes in 2000.

The application, the first ever by the Director, was heard last month by Mr Justice Peter Kelly who will give his decision on Tuesday.

The Director, Mr Paul Appleby, has said he believes there are “clear and compelling grounds” for appointing an inspector to DCC and its two subsidiaries, S&L Investments Ltd and Lotus Green Ltd.

The circumstances of the 1995 transfer of the DCC stake in Fyffes to Lotus Green and the sale of that stake on three dates in February 2000 suggested potential breaches of the Companies Acts and the potential involvement in that misconduct of “senior persons” connected with DCC, he said.

An inspectors’ report could provide the basis for disqualification proceedings against any persons involved in the 2000 share sales or in the 1995 transfer which aimed to avoid payment of capital gains tax on any subsequent sale of the shares.

The appointment would also address public concerns and establish whether the legal basis for the governance of companies was adequate or if lessons could be learned for the future, it was argued on behalf of the Director.

The statement of the DCC board earlier this year supporting Mr Flavin was not “repentant” but “bullish”, expressed no concerns about how the company had behaved in the past and the court should take this approach into account where allegations of insider dealing had been established after a “Titanic legal battle”, it was further argued.

DCC has opposed the application, arguing there is no real or substantial need for such an appointment and that no substantial benefit would be gained from it.

It has argued the Director was seeking to go over the same ground covered in the lengthy High Court action between Fyffes and DCC over the insider dealing but sought to do this in order to get a report of evidential significance.

DCC claimed there has been a “startling and unexplained” change of position by the Director in that he had earlier this year told the courts they had all the information necessary to consider disqualification orders but was now saying he needed more information via an inspection.

The High Court had found the price sensitive information in Mr Flavin’s possession at the time of the share sales was not used by him and not transmitted to other persons, DCC also argued. In light of that, there was no evidence to support the Director’s suggestion that other persons had any involvement in these events, it said.