Flavin bows to calls and steps down from DCC
Executive chairman yields to mounting pressure over insider-dealing scandal
An upbeat Jim Flavin savouring the initial High Court ruling which was to be overturned later by the Supreme Court
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Jim Flavin has bowed to mounting pressure over the Fyffes insider-dealing controversy by stepping down as executive chairman of DCC.
Yesterday's resignation coincided with a decision by Paul Appelby, the director of corporate enforcement (DCE), to seek to have a High Court inspector appointed to DCC to investigate the Fyffes trades.
Michael Buckley, the former chief executive of AIB who joined the DCC board in 2005, has been appointed non-executive chairman with immediate effect. DCC's group managing director, Tommy Breen, has been appointed chief executive with immediate effect.
Position
Many believe Mr Flavin's position became untenable when the Supreme Court ruled he was in possession of price-sensitive information in February 2000 when he sold DCC's 20pc stake in the fruit distributor.
DCC made an €85m profit on the sale but was forced to hand €41m of that back to Fyffes and others after the Supreme Court finding.
Last week, the DCC board issued a statement on the issue in which the board gave its full support to Mr Flavin, who founded DCC in 1976, rejecting calls for his resignation.
Those calls became louder later last week when, in an unprecedented move, the Irish Association of Investment Managers, which represents Irish institutional investors, called for Mr Flavin to fall on his sword.
Yesterday, DCC said it had been told by the DCE that it was asking for a High Court inspector to be appointed to investigate DCC, S&L Investments, and Lotus Green. The latter was a Dutch-registered company established to help DCC avoid paying tax on the windfall from the sale of the Fyffes shares. Lotus Green owned the Fyffes shares through a subsidiary called S&L Investments.
The application will be heard before High Court on June 9. DCE will argue that if appointed an inspector would look at the "acquisition, maintenance, transfer and disposal of the beneficial and legal interests" of the three DCC companies in Fyffes.
An inspector would focus particular attention on the period between February 1995 and September 1995 and the period between early November 1999 and April 2000.
An inspector would examine whether DCC or its employees violated company law when they sold the Fyffes shares.
DCC said yesterday it was taking legal advice on the DCE application and "is not in a position to make any further comment at this time".
In an earlier statement announcing Mr Flavin's resignation, DCC said: "Mr Flavin informed the board today that, due to the continuing uncertainty arising from the outcome of the litigation with Fyffes, it was in the interests of the company and its shareholders for him to resign as executive chairman and a director of DCC.
"Mr Flavin told the board: 'While I am resigning, I firmly hold the view that I have always acted honourably and in what I believe to be the best interests of the company and all its shareholders.'"
- Tom McEnaney
