Sunday 4 December 2016

After years of digging, Jim Flavin makes a great escape

Published 24/01/2010 | 05:00

AND with one bound our hero was free. Despite having been a director of fruit distributor Fyffes, and having received market-sensitive information which was not available to most other shareholders, last week's inspectors report ruled that, as former DCC boss Jim Flavin "genuinely believed" he was not in possession of price-sensitive information at the time he sold DCC's 11 per cent stake for €106m in February 2000, no further action should be taken against him.

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Almost a decade after selling the stake and pocketing an €85m profit for DCC, last week's report by senior counsel Bill Shipsey concluded that Mr Flavin was only guilty of "an error of judgement".

While we must humbly accept the learned inspector's conclusions, it's difficult to avoid the feeling that Mr Flavin was very lucky to have done what he did in Ireland rather than in another more rigorous jurisdiction, such as the United States.

Meanwhile, with its founder and former boss banished to outer darkness, it's business as usual at DCC. Last week it announced a restructuring of its UK environmental services business. It is effectively taking majority ownership of the combined operation with a 70 per cent stake. It is paying Michael Tracey (who will head up its UK environmental services arm) an initial £8.5m, with potentially a further £135m due if certain profit targets are met.

DCC has consistently resisted investor pressure to simplify its unwieldy corporate structure. Apart from environmental services, it also has energy, food & drink, healthcare and IT services divisions. The underlying theory behind this convoluted business mix is that the cash flows from its "mature" energy, food & drink and IT divisions would fund the development of its healthcare and environmental divisions.

Things haven't quite worked out as planned. At the half-way stage, energy division profits were up 11 per cent while environmental profits fell by over a third. Despite this, DCC, which briefly held out the prospect of a break-up when Mr Flavin was finally forced to quit in May 2008, is now sticking with its existing structure.

With the Flavin embarrassment finally behind it and the share price almost doubling over the past 11 months, investors seem prepared to give new boss Tommy Breen the benefit of the doubt.

Sunday Independent

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