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Regulator's inquiry into C&C shares adds to woes

Businessman Philip Lynch, who was back in the Commercial Court with his family in their dispute with AIB, wouldn't comment on the Financial Regulator's ongoing inquiry into his share dealings at the listed drinks company C&C in 2008.

The probe, which began in early 2009, centres on 600,000 C&C shares he purchased for more than €800,000 in October 2008. Mr Lynch was and continues to be a director of the C&C group.

The Financial Regulator's probe was sparked by a spike in C&C's share price following the appointment of a new management team in November 2008, a month after Mr Lynch purchased the shares.

At that time, C&C's chief executive Maurice Pratt left the company and was replaced by John Dunsmore, a former chief executive of rival company Scottish & Newcastle.

Two of Mr Dunsmore's colleagues also joined the management team at that time.

C&C said it was co-operating fully with the inquiry. Tony O'Brien, who was C&C's chairman at that time, has also been assisting the investigation.

When the share purchases were made, a spokesman for Mr Lynch said he had Mr O'Brien's full permission to buy them.

Mr Lynch is understood to have spent €1.4m buying C&C shares between 2005 and 2008 and currently holds 760,000 of the company's shares. He joined the C&C board as a non-executive director in 2004 shortly after it became a publicly quoted company.

The revelations came in the fourth week of the Lynch family's battle with AIB about a €25m loan they took out jointly with developer Gerry Conlan in 2007 to develop a site in Waterford.

They claim they were given the loan on a non-recourse basis, saying the bank was entitled to take the land back if they were unable to repay the loan and could not hold them personally liable for the money.

AIB disputes this. The family's action is also against two firms of solicitors, LK Shields, who advised them, and Matheson Ormsby Prentice, who advised Mr Conlan.

Mr Lynch has said Mr Conlan arranged the loan with AIB. Its terms and conditions were negotiated and finalised by two of his representatives, Conor Gunne and Richard Godsil, who dealt with AIB official Derek O'Shea.

Earlier this week the court heard Mr Conlan will claim in his separate legal action against AIB that Mr Lynch arranged the finance.

The bank's decision not to submit any defence to the Lynch claim led to accusations that it was trying to "shield" Mr O'Shea from giving evidence.

The court heard that in his affidavit Mr O'Shea referred to a conversation with Mr Godsil regarding the terms of the loan where he queried why the bank felt it necessary to include a special condition clause making Mr Lynch and Mr Conlan both personally liable for the loan.

That special clause was subsequently removed. Mr Godsil's query was described as being "light-hearted" when he suggested that without that special clause it meant the men were not being held personally liable for it and that Mr Conlan was not obliged to repay them.

The bank claims that while that clause was deleted, Mr Lynch, his family and Mr Conlan were always personally liable to repay it.

Irish Independent