Corporate Schadenfreude
There is plenty in the news today about Jim Flavin’s decision to step down as executive chairman of DCC, on the foot of :
“a new legal manoeuvre against the company by the official enforcer of corporate law, Paul Appleby, who wants the High Court to appoint inspectors to investigate how it sold a major stake in fruit importer Fyffes in 2000.”
Appleby’s action comes after the elite of corporate investment decided that it could no longer ignore the Supreme Court decision last summer that Flavin was guilty of insider trading. Is it possible that the Irish Association of Investment Managers (IAIM) got wind of Appleby’s proposed actions and decided that it had to appear to do something?
Flavin’s defense in the Supreme Court case, and the line provided by DCC up until last Tuesday, was that Flavin’s actions were an ‘unwitting breach of civil law’.
Jim Flavin has been in business a long time, and like other big movers he is purposefully circumspect in his dealings and extremely private, but he is still widely known as a very shrewd, and indeed ruthless, business man. The defense is also a complete joke considering that as a result of the sale of Fyffe stock in 2000, just before a profit warning, DCC netted a gob smacking €85 million. Although some of this was lost in litigation with Fyffes, it is no wonder that the directors of DCC were sticking by Flavin to the last.
What is clear is that, from the establishment’s point of view, Flavin’s financial manoeuvres were too blatant, especially if more was to come to light following the legal action of the director of Corporate Enforcement, which even without the statement from IAIM was going to be news this week. Effectively, by behaving in such an egregious manner he was spoiling it for all the other scalpers. It is not in their interest, after all, for the public to know just how things really work in Ireland, where a very small number of influential people control so much. If we are to look a little closer at the people behind this we would see that they are, in fact, very influential indeed.
Fyffes, who won the civil case against DCC in the Supreme Court is, of course, largely controlled by the mega-rich McCann family. Writing in Dublin Opinion back in March when Bertie Ahern’s close associate Tom Collins was talking to the Mahon Tribunal, I outlined how the McCann family benefited from the purchase and the sale to the State shortly after, of the Oldbridge Estate. Since then it has since been turned into The Battle of the Boyne site, and was the choice location for Bertie Ahern’s swansong photo-op with Ian Paisley, which seemed carefully choreographed to coincide with his retirement from politics.
The curious circumstances of the purchase, literally months before Minister for Foreign Affairs at the time David Andrews announced that it intended to buy the site is an example of how the McCann family themselves enjoyed a bit of ‘insider trading’. What was most startling about that situation is that the McCann family, which had set up a company called Deepriver Ltd specifically to buy the property, was able to pass the tax bill accrued from the profits of the sale on to the Office of Public Works.
As Judy Corcoran reported in the Irish Independent in 2006:
“In 1997, the Battle of the Boyne site was bought for €3.4m by the McCann family, who control Fyffes, the giant fruit import company. They formed a separate company to own the land, Deepriver Ltd, of which Tim Collins had 12.5 per cent of the shares.
A month after the McCann transaction was completed, the then Minister for Foreign Affairs, David Andrews, announced that the Government planned to develop the Battle of the Boyne site as part of the peace process.
Negotiations to purchase the site on behalf of the State began, and were concluded in 2000, at a cost to the taxpayer of just under €10m.
That tax bill of almost €1m was instead paid by the OPW when it wound up Deepriver some years later.”
There is also the curious relationship between Jim Flavin and the McCann family. Flavin at the time of the sale of Fyffes stock was a director of the banana-based business and it would seem that his relationship with the McCanns was quite good. If we are to accept the notion that acrimonious court battles lead to personal animosity between the parties then we have only been taken in the soap opera aspect of this case.
Usually such situations are seen simply as business, and while particular parties love winning and hate losing there is little to suggest that relations between the McCanns ‘soured’ as a result of the litigation.
That this protracted case between Fyffes and DCC is just business can be seen from this 2002 Sunday Business Post article by Kathleen Barrington, which points to reports that the McCann’s were very happy with Jim Flavin’s plans to sell their stock just before a profit warning was issued.
“Several stories that appeared in the media last weekend had one thing in common: they quoted DCC sources as saying that champagne corks popped at a meeting between Flavin and the McCanns ahead of his proposed sale of his shares in Fyffes.
The meeting was held in the Great Southern Hotel on February 3, 2000, the day before DCC sold the bulk of its 10 per cent shareholding in Fyffes; the balance was sold on February 15.
A picture can be worth a thousand words and the cracking open of a bottle of champagne strongly suggested that back in February 2000, the McCanns were happy that Flavin was selling his stake.
It was apparently the McCanns who bought the champagne prompting Flavin to wonder if they were also celebrating getting rid of the man they had come to consider as “a thorn in their side”.”
Considering that Jim Flavin has found himself in the media spotlight having shunned it for so long, wishing no doubt to continue his financial scalping without anyone noticing, the 2002 profile is worth reading. And while the fall from grace is not so great, we the little people can enjoy our moment of schadenfreude as the DCC bear slips on the Fyffes banana skin.
Photo by Eric Luke, courtesy of the Irish Times.
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Comment by: Tomaltach
May 28th 2008 at 12:05
Good post. God, corporate (and political) Ireland reeks!
Comment by: Donagh
May 28th 2008 at 12:05
Thanks Tomaltach. You’re right, but I wish you weren’t. Of course, Flavin and DCC are now the subject of an investigation by corporate enforcement, whatever that is. The only possible censure as a result of that, however, is Flavin being struck off as a director, which, if it ever happens, is a long way off.