DCC COULD be faced with a major tax investigation if next week's inspector's report into unlawful insider dealing by the company and its former chief, Jim Flavin, finds that tax arrangements put in place in the Netherlands were bogus.
DCC set up the company Lotus Green in the Netherlands in 1995 to take ownership of the company's stake in Fyffes. This minimised the amount of capital gains tax DCC had to pay when it ultimately sold its Fyffes stake in February 2000.
However, the inspector's report by barrister Bill Shipsey will consider the affairs of Lotus Green and is expected a substantial part of the report will focus on how Lotus Green operated and whether it was effectively controlled from Ireland or the Netherlands. This section is expected to be studied closely by the Revenue Commissioners.
The report by Mr Shipsey is expected to be published on Tuesday. It has already been circulated to the parties affected by it, following an order from the Commercial Court. The corporate watchdog Paul Appleby has already received the report, which concerns the sale of the stake which was valued at €106m. The Revenue Commissioners would be entitled to launch a fresh probe of the tax arrangements surrounding the sale on the basis of the Shipsey report.
If the Netherlands arrangements were found to be bogus, the Revenue Commissioners could hit DCC with a fresh tax demand. However the company is likely to resist this and it has already objected to the appointment of the inspector saying the reasons for the appointment were "flawed''.
Apart from the tax issues, the findings could also provide the basis for disqualification proceedings against any people involved in the share sales. Judge Peter Kelly has directed the report be given to solicitors for DCC and other parties.
The judge this week also ordered the report be given to Enterprise, Trade and Employment Minister Mary Coughlan. Her legal representatives will consider whether any of the companies involved might be liable for costs of the investigation. Mr Shipsey was appointed to DCC and subsidiaries SL Investments and Lotus Green following an application by Mr Appleby. This followed the 2007 Supreme Court finding of unlawful insider dealing by DCC and Mr Flavin in the sale of the DCC stake in Fyffes in early 2000.