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    GENERAL JOURNAL

    My occasional longer publications on everything of interest to me. For my more frequent utterances in 140-character bursts, join me on Twitter. (The most recent "tweets" are displayed in the left-hand column)

    Most Popular Recent PostMy Travel Insurance Claim - Day 409

    Monday
    Jul192010

    Not Lying - Dreaming

    Colm McCarthy thinks that he has discovered an episode of "moral hazard" (though he does not use that phrase) in the last pre-nationalisation days of Anglo-Irish Bank. I am not sure that he's correct - but I do agree that it merits investigation.

    The sad reality, it seems to me, is that Colm's observation

    ... after end-September 2008...there could have been no plausible expectation of profits to shelter
    is not correct. No-one at the top levels of Irish bank management took on board the reality of the profit position for quite some time after that. Remember the PWC report (two months later) ?

    Even sadder, I strongly suspect that there are - even now - quite a few at such levels who are "in denial", at least to the extent of still clinging to the delusion that, without the external shock of Lehman Brothers' collapse and internal "talkers-down of the economy", a "soft landing" was in prospect.

    It is all too plausible, I fear, that those who generate at least some of the allegedly misleading data about which NAMA claims to be irritated are the same people. They are not mendacious, as is constantly but, in my opinion, too glibly alleged. They are delusional.

    Of course, such people should have been - firmly, and politely ! - shown the door long ago.

    Thursday
    Jun102010

    My Travel Insurance Claim - Day 409

    You may recall that my last report on this matter had the news that I had heard from an adjudicator, which might have been expected to herald further progress.

    Indeed, I was soon telephoned by the adjudicator, who had the enviable opportunity to hear my passionate oral advocacy. Lucky girl !

    Alas ! She was not long after replaced by another adjudicator and months of silence followed.

    However, today* I received the new adjudicator's considered View of the case. This View is not a decision, unless the parties accept it. If either the insurer or the policyholder contest the View, the complaint goes before an Ombudsman for final decision.

    The adjudicator's View does not so much disappoint as perplex me.

    Briefly, while acknowledging that the insurer had handled the claim in an unsatisfactory manner, she suggested that the final result, in which it had grudgingly offered the full contractual value of my claim, was O.K., and that no further action would be appropriate.

    It should not surprise you to learn that I am contesting this view.

    *Not really today. Today (June 10 2010) is day 423. Apologies for resuming a bad habit

    Go here to read the story of the claim so far

    Saturday
    May082010

    A Sad Family Announcement

    A day that was threatening for a long time - for years, to be truthful - finally arrived yesterday at a little before 8 p.m.: my father, Fergus J. O'Rourke, died, peacefully in his sleep, in his own bed, in his 87th year.

    I may not be able to do so, but I hope to post more information here over the next 48 hours. If I do not, those interested and able to do so, may wish to keep an eye on Monday's editions of "The Irish Times" and "Irish Examiner".

    For those who know nothing of what was indisputably a most distinguished life, this set of Google results will give a flavour. (Diverse though his enthusiasms were, the two references to fire-fighting in Chicago in those Google results are to another FJO'R). He was a medically qualified biological scientist, originally a myrmecologist, and that is what his readily accessible published work reflects. What is not reflected is the breadth of his other scholarly interests, some of which also issued in published work. Early in his life, he was quite the archaeologist, for example; Christian theology, palaeontology, modern art featured, too.

    He had virtually no interest in politics, the Law or banking & finance. What that says about me and about him, I will leave for another day !

    Thursday
    Apr222010

    "Where all the evidence had been available to the Irish authorities"

    The European Arrest Warrant is a mechanism which enables a member state of the European Union to request extradition of a person named in such a warrant from any other member state. It is currently in the news because of a development in the investigation in France of the death, 13 years ago, in Ireland of a French film-producer, Sophie Toscan du Plantier.

    There are some circumstances in which extradition can be refused. One example is, according to page 14 of a guide still being offered on the website of the Irish Department of Justice :

    6. Where a prosecution is still being considered in Ireland against the person for an offence or a decision has been taken to bring proceedings or not to bring proceedings in Ireland for an offence forming part of the offence specified in the European Arrest Warrant (S. 42).

    The wording of section 42 of the 2003 Act is as follows

    42.—A person shall not be surrendered under this Act if—

    (a) the Director of Public Prosecutions or the Attorney General is considering, but has not yet decided, whether to bring proceedings against the person for an offence,

    (b) proceedings have been brought in the State against the person for an offence consisting of an act or omission that constitutes in whole or in part the offence specified in the European arrest warrant issued in respect of him or her, or

    (c) the Director of Public Prosecutions or the Attorney General, as the case may be, has decided not to bring, or to enter a nolle prosequi under section 12 of the Criminal Justice (Administration) Act 1924 in proceedings against the person for an offence consisting of an act or omission that constitutes in whole or in part the offence specified in the European arrest warrant issued in respect of him or her, for reasons other than that a European arrest warrant has been issued in respect of that person.

    Alas, the passages in bold are, in fact, no longer law.

    Even though the document on the DOJ website notes at page 2 that the law was amended in 2005, it fails to fully reflect the changes to section 42.

    In the words of then Minister for Justice, Brian Lenihan (for it was he), as he proposed the alteration to that section in the Senate

    The essence of this amendment is to provide for the deletion of section 42(c) of the European Arrest Warrant Act

    In fact, the new section - adopted to murmurs of approval by the Opposition - simply re-enacts s.42(a) and (b). Why does the 2005 Act not simply repeal s.42(c), instead of laboriously re-enacting (by its section 83) s.42 (a) and (b) of the 2003 Act ?

    Moreover, if one consults the "Arrangement of Sections" of the 2005 Act, one will see several sections entitled "Amendment of Section ... of the 2003 Act" but s.83's title is "Proceedings in the State".

    Indeed, a total of fifteen sections of the 2003 Act are amended by Part 8 of the 2005 one, and the changes are really significant. The Arrangement of Sections for Part 8, however, only refers to five amendments of the 2003 Act.

    If I were very cynical, I might say that there was an organised attempt to confuse observers. I am not that cynical, not least because similar "messing" is evident throughout legislation in recent years, and even lawyers are being confused (though the more venal glorify in the work it creates for them).

    It seems to me that enactment of a European Arrest Warrant (Amendment) Act would have been more straighforward.

    And so, finally, to the point I started this post to make: the end result is a ridiculous one, in which an Irish resident is to be forced to fight an extradition request to face charges in France relating to a death which occurred in Ireland. The case has already been exhaustively, if inconclusively, investigated in Ireland, the Director of Public Prosecutions has declined to proceed, and the subject has been successful in related defamation proceedings. (See here for a short summary of the long saga.)

    Mr Lenihan justified the removal of s42(c) by saying

    The existing provision would be workable in a case where all the evidence had been known and available to the Irish authorities when the decision was taken not to bring proceedings or to enter a nolle prosequi. However, a number of circumstances can arise where this is not the case. As a result, an accused person would be able to evade justice in circumstances where there is no good reason, in principle, that he or she should not be surrendered. The most obvious case where this can arise is where there is no evidence available in this jurisdiction or insufficient evidence to warrant the case proceeding. In these circumstances, a decision may be made not to prosecute the person concerned. As currently worded, the paragraph could operate as a bar to a person’s extradition for the same offence to a jurisdiction which has the evidence to deal with that person.

    We shall see in due course, but one would have to doubt that the French investigation of the du Plantier murder will have been able to come up with new evidence. Even if it did, it should be provided to the DPP who can re-consider his decision not to prosecute.

    Monday
    Mar082010

    On Being "Out of Touch" - Or Not

    A common meme of discussion on politics and politicians in Ireland (and elsewhere) is that politicians are "out of touch" with the feelings, concerns and even the requirements of the voters to whom they are responsible and accountable.

    Maybe they are - some of them certainly are - but it seems to me that it is unlikely that, as a class, politicians are more out of touch than anyone else. To the contrary, in fact.

    Since so much of our discussion of these matters takes place in the mass media, almost always in contexts chosen and moderated by journalists, and in which journalists are often the only interlocutors, it is inevitable that the voters to whom reference is made in those discussions are not the generality of voters but those voters with whom the journalistic class identify.

    I do not intend to suggest that journalists as a class identify solely with a narrow group rather than with the generality. They do tend to so identify, however, and I do intend to insinuate that journalists, and the "lay" people with whom they like to discuss current affairs, may well be more out of touch than politicians are.

    As always, I may well be wrong.

    But I ask you to consider this:

    • Elected politicians owe their jobs to being in touch
    • Out of touch politicians lose their jobs
    • In Ireland at least, journalists have a dreadful record when it comes to predicting election results
    • Journalists who are out of touch with the general electorate do not lose their jobs

    It is not guaranteed to be so, but I suggest that people whose future depends on getting public opinion right are more likely to succeed in that than people whose futures are not so dependent.

    Friday
    Mar052010

    The Perils of a Solicitor's Undertaking

    A recent decision by the Irish High Court (Peart J.) exposes some of the sloppy banking and legal practices which characterised the Madness, and have contributed to the scale of the crash. The case is remarkable in a number of ways and I may return to the sloppy practices on another occasion.

    I will here confine myself to noting this summary by Peart J. - a former solicitor, be it noted ! - of how the court will approach an application to enforce a solicitor's undertaking:

    In summary, the following principles emerge from the judgment of Laffoy J. and Geoghegan J. in Coleman, and the authorities considered therein:

    1. The Court has an inherent jurisdiction in matters concerning the conduct of solicitors, being officers of the court, including but not confined to compliance with their undertakings.
    2. It is both a punitive and compensatory jurisdiction.
    3. It is discretionary and unfettered in nature requiring each case to be considered on its own facts and circumstances.
    4. In its exercise, the Court is concerned to uphold the integrity of the system, and the highest standards of honourable behaviour by its officers - a standard higher than that required by law generally.
    5. The order made by the Court can take whatever form best serves the interests of justice between the parties.
    6. In the matter of undertakings, the Court must consider the entire undertaking in order to reach a conclusion as to its real ultimate purpose.
    7. The Court may order compliance with the undertaking, though late, where there remains a reasonable possibility of so doing.
    8. Even where the undertaking may still be complied with, the Court may nevertheless order the solicitor to make good any loss actually occasioned by the breach of undertaking, which may or may not be the entire of the sum which was the subject of the undertaking.
    9. Where compliance is not possible to achieve by the time the Court is deciding what order to make, if any, it may order the solicitor to make good any loss actually occasioned by the breach of undertaking.
    10. Carelessness or other form of negligence on the part of the person affected by the undertaking, and in relation to the matter the subject thereof, may be a factor which the Court will have regard to when determining what order may be fair and just.
    11. Any order the Court may make ought not be oppressive on the solicitor. Nevertheless, gross carelessness or other conduct considered sufficiently egregious by the Court, though falling short of criminal behaviour or even professional misconduct, will entitle the Court, should it consider it just to do so, to order payment of the entire sum which was the subject of the undertaking, and not simply a lesser sum in respect of loss actually occasioned by the breach of undertaking.

    To these statements of principle which I perceive to emerge from Coleman and the other cases referred to therein, I would add one other which is linked in a way to that at 11 above.

    It is this. It seems to me that the special supervisory jurisdiction being exercised by the Court in these matters is not unlike an equitable jurisdiction, given the wide discretionary nature thereof, and its objective of ensuring that justice is done between the parties in a broad sense.

    In my view, therefore, it seems to me that it is not inappropriate or otherwise wrong for this Court to have regard to the overall behaviour of the solicitor, somewhat akin to seeing whether a person who is claiming an equitable relief has come to court with clean hands, even where the undertaking may be still reasonably capable of being completed, and even where the loss actually occasioned and sustained by the claimant may be less than the entire sum which was the subject of the undertaking.

    The Court went on to order that the firm of solicitors should pay over to the bank the entire amount of the loan (€3m) plus interest and costs. This was approximately €1 million more than it would cost to belatedly comply with the undertaking.

    Now, that's what I call "non-oppression".

    Tuesday
    Mar022010

    What'd You Expect ? You Left the Keys in the Car

    You leave your house to go to work. You get into the car, start the engine and then realise that your windscreen is covered in frost. You jump out, run into the house to get some water, knock down your small child and have to console her. When you emerge again, still only 5 minutes later, your vehicle has been stolen.

    Your insurer says that it will not cover your loss, as you left the vehicle "unlocked and unattended" and with the keys "in or on" it. You therefore failed to take "reasonable care" of your property, and you cannot expect the insurance company to pay for that.

    It's obvious, no ?

    Well, no it isn't,as the UK's Financial Ombudsman Service make clear here.

    Monday
    Mar012010

    Necessary But Not Sufficient

    Have our journalists and politicians forgotten the distinction between "necessary" and "sufficient" ?

    For example, as all adults know, many things (such as water, flour, heat) are necessary in order to produce a loaf of bread. To take just one, bread will not be produced if there is no heat (and not just any heat). So, if heating is not available, it is rational to repeat, until it is accepted and rectified, that the absence of a hot oven is a bar to progress on the bread issue.

    However, it does not follow that solution of the hot oven deficit will be sufficient to solve the bread shortage.

    As for bread, so for a healthy functioning credit system: NAMA, if I am wrong but the Government is correct, is necessary for "the banks are to start lending again", but it is most definitely not sufficient to bring that result about.

    Journalists, politicians and other commentators, please take note. We need a better-quality debate.

    Sunday
    Feb212010

    Reasons To Be Cheerful #5

    Via Gerard O'Neill again

    Irish sales managers and directors ... are increasingly of the view that the worst is over in the Irish market, with recovery coming slowly but eventually. And one good test of their optimism - one in four sales managers expects to expand their sales team this year

    The full survey is here.

    Sunday
    Feb142010

    They "Don't Want-ta"

    I suggest that if you find the story that now follows implausible, you really don't know Ireland.

    Back in the bad old days (circa 1988) when Evil stalked the land, a well-got businessman of my acquaintance imported in his briefcase a floppy disc of business software for which he had paid £100 in Manchester. Although he knew well that there was zero chance of being caught "smuggling" it in, as plenty of others still do regularly, being an upright pillar of the business community, he approached the customs officials at Cork airport seeking to pay the proper excise duty and/or VAT.

    Under pressure now, he may allow that he was indulging his curiosity and/or being a bit disingenuous. If one were being cynical - a rare event hereabouts, I know - one might suspect that he had recently encountered the UK Internal Revenue services on a typically unsympathetic day, and wished to compare and contrast.

    The man to whom he spoke was rather taken aback - "£100 for that ?" - and clearly had never seen a diskette, nor wanted to know of imported software. Having unsuccessfully ventured to suggest to my friend several excuses for non-declaration that might be usefully claimed, he finally said "Yerra, go on, we'll let you off this time", but my friend was insistent. He tried to explain that he intended to use it in his business and it would cause all sorts of accounting problems, as well as awkwardness with the tax and VAT Inspectors if it wasn't all "above board".

    The official looked at him as if he had just tried to persuade him that Charlie Haughey was the Son of God, but agreed to see what he could do. He then walked down to the other end of the office, and made a phone call.

    The official was - you've already "twigged", haven't you ? - one of those endearing characters with a naturally clear Cork voice which carried all the way down to where my friend waited.This is how it went:

    Mick, howzit going ?... Great stuff... Go way ! I hate those Meath fellas more GAA gossip deleted...Listen, Mick, I have this fella here with a piece of plastic that he says he wants to declare...no,no, he's not from expletive deleted Dublin ... yeah, Irish...yeah really...I think he's one of them family name deleted fellas, I know ... looks useless to me...£100...looseware or sumpthin'...no, that's it, soft, yeah...I dunno...is there a code ?...no, I know, yeh, yeh...(snort) yeah...no, Mick,

    ...no...

    I already told him that but he don't want-ta...

    Over at Public Inquiry, Anthony Sheridan says:
    ... the people should indeed take ownership, not of the reform process, but of the political system itself

    I say that many of the people - he calls them "morons" - Anthony and his ilk get most annoyed about, e.g. Eoghan Harris, already tried to get "the People" to do that: they "don't want-ta".

    It's not some kind of accident that we have a Fianna Fáil-dominated government, or that we have had one so often: it is the result of a functioning electoral process that is not "rotten", and produces political leadership which is the genuine free choice of the voters. Like it or not - and I don't - we have to live with this. (Only until the next election, if the opinion polls are to be believed, mind you, when Anthony will get to suffer under a different set of "morons").

    This does not mean that there is nothing for good people like Anthony, his nephew Gavin, Dr Elaine Byrne, John Handelaar and many others to do. Mr HandelaarIf nothing else, and there is plenty more where those named are concerned, they are part of the corps who provide the "eternal vigilance" without which our freedom from tyranny will atrophy.

    Anthony, temporarily (I hope) carried away, calls for our "current rotten system" to be destroyed so that it can be replaced with ... well, "the people should take ownership", Anthony says. This would seem to mean in practice (bear with me !) that pure, idealistic, good people - by whom is meant, one has to suspect, people like himself and Elaine Byrne - with rational, transparent, ideas uncorrupted by money, or anything else, would guide The People to A Better Place.

    Unfortunately, there is no reason to believe that Elaine, anyone who shares her views, or indeed anyone is capable of putting into place - just like that, Tommy Cooper-like - a "system" that works better. It just might be otherwise (though I doubt it) if everyone was like Anthony, or like you, or even like me, but everyone isn't, and they are never going to be.

    And don't fool yourself that it is otherwise anywhere else in the world, even if it is undeniable that Ireland is very imperfect in all sorts of maddening, and impoverishing, ways.

    Saturday
    Feb132010

    Reasons To Be Cheerful #4

    From Gerard O'Neill's Turbulence Ahead blog:

    We already have the highest level of share of population in education of any country in the European Union (according to Eurostat), and our level of participation in education beyond the compulsory school age is also high (85% of Irish 18 year olds are still in education versus just 50% of British and German 18 year olds).

    (Emphasis added by me.)

    Saturday
    Feb132010

    Jim Flavin's Three Mistakes

    I think that I can confidently say that Mr Flavin has made many more than three (but perhaps not as many as I have). However, I am confining myself here to setting out what I see as his three key errors in the transaction which gave rise to the action against his company (DCC plc) by Fyffes plc.

    Failure to Use the Legal Shield

    The law of which Mr Flavin fell foul provided a mechanism which, had it been used, would have protected him and DCC from Fyffes'action.The provision is here.

    The Inspector's report reveals that in 1995, Michael Scholefield, DCC's compliance officer, actually suggested using this mechanism. Unfortunately, the idea was not followed up.

    Talking to the Buyers

    Within DCC, only Mr Flavin had the information which was later deemed price-sensitive. Had he referred the first call from Kyran McLaughlin (representing the first group of eventual buyers of the Fyffes' shares) to Fergal O'Dwyer or another director of Lotus Green, it is likely that the outcome of the court case would have been different.

    Insufficient Legal Advice

    Mr Flavin discussed his awareness of the information with Mr Scholefield and with the company's solicitor, Alvin Price of William Fry, but he did not fully share with either of them the exact nature of the information. He did not seek a meeting with, or formal opinion from, senior counsel.

    Even if more extensive consultation had not changed the advice given, he would have been less likely to have been subject to the criticism that he had merely "gone through the motions".

    Thursday
    Feb112010

    How a Journalist Came to Understand Jim Flavin's Position

    You are a journalist. You are lucky enough to receive a story exclusively which turns out to be sensational and publishable. Following publication, your paper's circulation and advertising rates rise dramatically. You earn satisfying amounts of extra cash on TV and radio talking about the story, and from commissioned articles all over the world. You are promoted to a more senior position.

    The story is about the boss, Mr Big, of major company A plc which was attempting to take-over a slightly less major one, B plc.

    The take-over is aborted, and the boss, though denying the story, loses the confidence of his board and retires. Shortly afterwards, B plc is taken over by C plc. It so happens that members of your family, but not you, own lots of shares in C plc. You didn't know about the shares. No-one knew at the time of publication of your story that C plc was remotely likely to buy B plc.

    Not so long after that, it emerges that your story was a massive hoax, in which you were a totally innocent dupe like everyone else.

    Mr Big comes after you, alleging that you were not innocent at all, that you dreamed the whole thing up yourself, and that you among other things defamed and defrauded him to promote your own career and earn money both for yourself and for your family. He sues for defamation and demands that you be prosecuted for fraud.

    The defamation action proceeds, but the police are "still investigating the case".

    You, and only you, know the full truth, which is that you are actually totally innocent, in the sense that you believed that your story was true, and that you genuinely had no idea that C plc was owned in part by your family. You also knew all along, though, that your anonymous informant was involved with C plc. You have never disclosed her identity - even to your editor. You didn't disclose her connections because you did not think that they were relevant, although the paper's legal adviser had suggested that you might need to examine your conscience. Notwithstanding all that, you defend that because you say, and many agree with you, that you not possibly have realised how really relevant it was.

    The defamation action comes on for trial. You successfully defend it in the High Court, on the basis of the new "reasonable publication" defence created by the Defamation Act 2009.It is quite clear that even the Reynolds privilege would not have sufficed under the pre-2009 legal position. The judge is very unhappy that enormous damage has been done to a lot of lives by your false story, but agrees that you were bona fide fairly careful and lays some emphasis on the fact that your editor and you spent hours discussing the legalities of publishing with solicitor and senior counsel before deciding to publish.

    In her judgment, the judge also forensically (your fave word, until the appeal !) examines the evidence for Mr Big's assertions that you were motivated by malice against him, that your informant perpetrated the hoax in order to stymie the A plc/B plc deal, that you knew this, and that you happily went along with it because it suited your family members. She clearly and emphatically finds that each and every one of these claims is at variance with the evidence.

    During the trial, Mr Big's legal team made an issue of whether the 2009 Act actually applied. It was an entirely technical issue of whether or not the relevant part of the Act had been brought into effect by Ministerial order on the date of publication of your story. (As is fairly standard, the Act has a provision that meant it did not become law until the Minister for Justice made an order bringing it into effect). The High Court judge decided that it had, because the Minister had indeed signed the order, even though it remained sitting on his desk throughout the period that the story ran.

    Mr Big appealed to the Supreme Court on this latter point alone. The appeal succeeded, the court taking the opportunity to clarify the important constitutional principle that a document signed in private cannot change the law until promulgated in public. The senior judge made no attempt to hide his dislike of the new Act, and prefaced his judgment with some robust remarks about it being a charter for smart-aleck trust-fund junkies who wanted the freedom to destroy the careers of public figures without ever having to justify their smears cloaked in the language of serving the public interest.

    Although you do not have a trust-fund, and the judge was probably unconsciously echoing (it happens) someone else's attack on a well-known former journalist turned successful author, everybody you know seems to take it as an accurate label for yourself. Some of your best friends even take to calling you "TFJ" semi-affectionately, and the nick-name sticks. Worse, everyone - even your own colleagues ! - incorrectly thinks that the whole Supreme Court decided that the High Court judge was wrong to dismiss Mr Big's nasty claims about your good faith.

    There is outrage when the DPP announces that you will not be prosecuted.

    You suffer a nervous breakdown ("go bananas"), and never write a by-lined story again.

    Tuesday
    Feb092010

    Fairness and Economic Recovery: A Poll

    Last month, I was musing on the relative merits of a "fair" approach to economic recovery as opposed to one that would be effective. Jim O'Leary's "Irish Times" article very, um, fairly pointed out that even getting agreement on what is fair is fraught with problems.

    I suggested that I might canvass opinion more widely on the question, and for that purpose I have now set up a poll here. Why don't you vote in it ?

    (By the way, while I am discussing this mainly with Irish circumstances in mind, the issue is universally relevant.)

    Tuesday
    Jan262010

    More on Flavin

    Brendan Burgess of askabout money has asked me to clarify further some issues in relation to this, arising out of the discussion on his website. I do so below, and I am taking the opportunity to address some other issues that have been raised elsewhere.

    The Moral Position

    There is no disagreement on this, I think. Neither Jim Flavin, Bill Shipsey, Brendan Burgess, the High Court nor I have ever suggested that it is morally acceptable for someone in possession of inside information to profit from trading on it. When Fennelly J. said in the passage that has been quoted so often and so tendentiously

    To trade on the use of inside information is recognised for what it is...a fraud on the market.

    he was not announcing a decision on a matter in controversy.

    The High Court had found that Mr Flavin did not trade on possession of the information. The Supreme Court was not asked to re-assess that finding, and expressed no opinion upon it.

    What has caused some confusion is that the law in force at the time (but repealed even before the trial) required no connection between possession of the price-sensitive information and the decision to engage in any transaction, so that one could contravene the law without being in the wrong "morally".

    The Factual Position

    There is very little, if any, disagreement on this,either.

    The case that Mr Flavin and his company, DCC, lost was a claim by Fyffes that the sale by DCC of its shareholding in Fyffes had taken place in breach of section 108 of the Companies Act, 1990, and that damages were due as a result. It was not a criminal prosecution. For Mr Flavin's side, the possible outcomes were:

    • A. Successful resistance to Fyffes' claim
    • B. Be held to have breached s.108 and to become liable for €42 million

    Mr Flavin had seen Fyffes' internal trading accounts for November & December 1999, knew that they were disappointing and did not overlook their potential significance (such as it was). He took legal advice before the share sales were completed in February 2000. The advice was that the information was not price-sensitive. The High Court agreed that it was not, but the Supreme Court differed. I repeat that this was the only decision the Supreme Court took. However, it was sufficient to transform outcome A into outcome B i.e.success into failure for Mr Flavin.

    The Director of Corporate Enforcement, like the media and, it has to be said, many independent commentators in academia and elsewhere, was of the view that the trial had exposed potential wrongdoing over and above the s.108 breach. Against the robust opposition of DCC, he persuaded the High Court to appoint Mr Shipsey as an Inspector with powers to obtain testimony on oath from Mr Flavin and from others (including some significant witnesses who had not been called to testify during the trial). The Inspector was then to report on his findings and to recommend further action if he found it appropriate.

    His report is what has sparked the current discussion. The report vindicated Mr Flavin and recommended that no further action be taken. Paul Appleby, Director of Corporate Enforcement, did not have to accept this, but he did, as did the High Court.

    Discussion

    Neither Mr Flavin, the High Court, Bill Shipsey, Brendan Burgess nor I have said, or suggested, that the result in the Supreme Court should be ignored or set aside. It hasn't been: the €42 million has been paid.

    There is no finding of either High or Supreme Court that has been flouted in this case, and Mr Shipsey's report in no way over-rules any court decision. What it does is to correct the verdict of media opinion. Unlike the latter, the quality of the investigation and analysis is high.

    It seems to me that the critics want to mis-interpret the Supreme Court and to pick-and-choose from the findings of the High Court, all the while coruscating Bill Shipsey on the basis of the false, indeed ridiculous, allegation that he has done the same.

    This is impudence of a high order, reflective of a pernicious "group-think" that cannot tolerate its rash pre-judgements being exposed as invalid. The same group-think is already indicating that it will not accept the results of any inquiry into the Bank/Economic/Financial Crisis unless they endorse the verdicts already pronounced by the gurus of the moment.

    I have not addressed all questions arising in this controversy yet, and will post again before the weekend.

    Footnote: All of my comments on the Shipsey report relate to the "insider/price sensitive information" issue only. I have paid no attention to the tax issue, for example, and it should not be presumed that I agree with the Inspector's views on that, or otherwise.

    Thursday
    Jan212010

    My Travel Insurance Claim 

    I have created a separate section for my posts on this topic, accessible by clicking on the heading "My Travel Insurance Claim" in the right-hand column of every page on this site.

    New posts relating to it, however, will continue to be published here in the main journal.

    Wednesday
    Jan202010

    Never Mind the Facts...

    As well as having no connection to the parties, I have, as far as I know, no connection to any members of their families or to their current employees, or to anyone who gave evidence in the case, except that I was present at a meeting with Michael Scholefield in 1988, and had some very brief interaction with him then. I am personally acquainted with many members of the legal teams for both sides, and with the Inspector, but have never discussed the case with any of them.

    There is a lot of quite fair and balanced reportage in today's "Irish Times" on the Jim Flavin story on which I posted yesterday. This makes all the more astonishing the line taken by the paper's leader writer, who clearly needs to revisit the undisputed facts of the case, and to get advice on what the law is.

    The Irish media consensus view of the Fyffes/DCC case is as follows

    Greedy evil bastbusinessman Jim Flavin (GEBJF) sees a set of Fyffes internal accounts and realises that the share price is headed for a fall

    GEBJF decides to sell his shares to some sad innocent dupes (SIDs)

    GEBJF finds SIDs and persuades them to buy the shares

    The share price duly falls.

    The outraged SIDs demand justice

    GEBJF is prosecuted for the crime of insider trading

    GEBJF pulls every trick that he can think of, and nearly gets away but is found guilty and ordered to pay the investors back

    The Supreme Court describes GEBJF's behaviour as a fraud on the market

    It also says that GEBJF is guilty of a CRIMINAL OFFENCE (no less)

    I pause here to try to remember if destruction of evidence is also a CRIMINAL OFFENCE.

    "The authorities" don't have the bottle to punish GEBJF properly but...

    ... the cool,clean hero a.k.a. Paul Appleby does what he can, only to be thwarted by a smarmy barrister...

    ...who hasn't read the script astoundingly gets it all wrong.

    A major problem with this narrative is that it does not fit the facts available at all (but note that I am not - could not possibly be - certifying Mr Flavin as the "poster-boy" for all that is true, good and wholesome, never mind the epitome, as "The Irish Times" would have it, of corporate probity).

    For one example, the High Court found as a fact that

    the evidence is not open to the interpretation that Mr. Flavin used the [price-sensitive information to decide to sell]...On any view of the evidence, that information simply had no bearing on the Share Sales

    There was no appeal against that finding, and the Supreme Court did not question it. That being so, the "Irish Times" leader-writer may wish to consider how a moral issue could possibly arise, at least in respect of Mr Flavin's behaviour.

    For a further example, while Fennelly J. did use the phrase " a fraud on the market", he did so in an introductory paragraph, and he did not characterise Mr Flavin's conduct in that way. Nor did he - or any other judge - so much as even suggest that Mr Flavin was guilty of any criminal offence. The only issue for the Supreme Court to decide was the "technical" one of whether the information Mr Flavin had was "price-sensitive", and while they emphatically, and unanimously, decided that it was, it does not necessarily follow either that they were unquestionably correct or that those who differed from that conclusion were morally impaired.

    Putting on my own moral hat, given that the courts have decided that no profit was made from use of inside information, I wonder how justice or morality - as distinct from the law - have been served by compelling DCC to hand over tens of hard-earned millions of euro to parties whom I cannot see as being deserving of any of it.

    Tuesday
    Jan192010

    Jim Flavin Gets Some Justice

    I do not now, and never have, owned any shares in either DCC plc or Fyffes plc. I do not know, am not related to, and have never met Mr Jim Flavin.

    Bill Shipsey S.C.

    Today, Bill Shipsey S.C.'s report as court-appointed Inspector into the affairs of DCC and certain related companies has been published. In my opinion, it provides a totally appropriate corrective to the torrent of mis-conceived vilification which descended upon Mr Jim Flavin, DCC's founder and then still its Executive Chairman, in 2007. This traducement followed the Supreme Court's decision, reversing the judgment of Laffoy J. in the High Court, that DCC's sale of its holding in Fyffes was technically "insider-trading".

    I have emphasised the word "technically" because it was a more than normally "technical" decision, a consideration which by and in itself should have restrained the nature of the commentary upon it. Briefly, the Supreme Court's decision was that the definition of "price-sensitive information" in the Companies Act 1990 was such that insider-dealing had occurred. This was so even though, at the time of the dealing, all parties (even, it seems, the eventual complainants) agreed, some after taking legal advice, that such dealing was not involved (an opinion that the High Court shared).

    Several commentators did not shrink from stating as a fact that the Supreme Court had found Mr Flavin guilty of the criminal offence of insider-trading, proving thereby that they had not looked at the judgments to which they were so anxious to attribute an excessive significance.

    Mr Shipsey found

    From the Chief Executive down, the officers and employees involved in the transactions in 1995 and 2000 each attempted to do what they understood to be right in all circumstances.

    The report indicates that even the purchasers of the shares did not consider that they were victims of any insider-dealing.

    Mr Shipsey concludes what in my view any objective observer would have concluded (as I did myself)

    I believe that the only effective method of avoiding the adverse consequences which have been visited on DCC and Mr. Flavin by the events which occurred in 2000 would have been to have had in place written arrangements of the type envisaged by Section 108(7) of the 1990 Act.

    The sub-section provides that a company will not be insider-trading:

    ... at any time by reason only of information in the possession of an officer of that company if—

    (a) the decision to enter into the transaction was taken on its behalf by a person other than the officer;

    (b) it had in operation at that time written arrangements to ensure that the information was not communicated to that person and that no advice relating to the transaction was given to him by a person in possession of the information; and

    (c) the information was not so communicated and such advice was not so given.

    Failure to put such an arrangement in place, which I suggest would have altered the form but not the substance of the transaction, was a mistake that was to cost the DCC Group over €42 million in costs and damages. As Mr Shipsey notes, it also gave rise to considerable disruption and upset to Mr Flavin and others, not least due to ill-informed commentary in the media which ultimately led to Mr Flavin retiring prematurely. Mr Shipsey does not say so, but the actions of the Director of Corporate Law Enforcement - in an extraordinary intervention, he asked the Supreme Court, in defiance of due process, to disqualify Mr Flavin from acting as a company director - appear to me to have been founded on a view of the case that owed more to over-excited media commentary than to mature consideration of the facts.

    The Inspector accepts that a large part of the damage done is effectively irreparable but,

    At least, however, the suggestion that the dealing was intentionally wrongful, or that it was evidence of dishonesty on the part of Jim Flavin and of a culture of disrespect for the companies code in DCC can be dispelled...

    ... The actions of Jim Flavin were not undertaken recklessly or with an absence of care. He was ultimately found to have misjudged the information he had in his possession when he was approached by the stockbrokers with a view to buying the shares, but he did not "deal" without considering whether he or DCC were free to sell the shares.

    Monday
    Jan182010

    Fair's Fair: Er, Isn't It ?

    Like other lawyers, I am accustomed to thinking in terms of fair solutions. While lawyers know better than most just how incongruent law and justice often are, they also know that a thirst for fairness/justice is a powerful motivating factor in human intercourse.

    They also know how unfair and blind to fairness most people routinely are when other emotions have been engaged. We have seen this recently in Ireland in the course of recent public fits of indignation e.g. against the people of Listowel.

    The foregoing is by way of background to this observation: an informal (and entirely unscientific) survey of Irish people by me reveals that they are unanimously of the view that the second of these options is better:

    Option 1 A thoroughly ruthless economic recovery plan carrying a guarantee of success within two years

    Option 2 A thoroughly fair plan that will take 10 years to succeed, if at all

    My own "gut" preference is for Option 1 but so far no-one has agreed with me. I have deliberately excluded people like me (lawyers and financial/economist types) from the survey. (I was vindicated in this decision, I think, when I broke the rule this morning and asked an economist. He answered "10" - but then refused to confirm that he was not using the binary base !).

    I am currently exploring options for making a more formal survey, perhaps via FaceBook. In the meantime, I have to say that the results so far would tend to explain the political reaction to our economic situation i.e. rather sclerotic. And it is rather worrying to reflect upon the considerations set out by Jim O'Leary:

    ...notions of fairness must cede some ground, if not priority, to considerations of what works best.

    On this question, analysis of the large reservoir of experience in dealing with fiscal crises, accumulated by governments worldwide over the past four decades, is unambiguous: adjustments based on spending cuts are more effective and more likely to boost economic activity than those based on tax increases....

    Good conscience may well require us to have regard to issues of fairness in designing a response to the current crisis, but it also requires us to go beyond reflexive thinking, to interrogate the basis of our sense of fairness, and to consider the wider and longer-term consequences of pursuing what seems fair.

    Saturday
    Jan162010

    If I Cannot Call Them "Whited Sepulchres"....

    I read "The Irish Independent" as seldom as possible but David Quinn spoke for me yesterday. Addressing one of the fits of righteous indignation into which the majority of the Irish commentariat has driven itself of late, he observed

    [E]ven allowing for the caricature that Old Testament morality is all about judgment and condemnation, what could possibly be more judgmental and condemnatory, more 'Old Testament', than the avalanche of criticism currently pouring down... ?

    He goes on to bring up the "H" word again, and while he uses one of less helpful meanings identified by me the other day , the point that he makes is an excellent one:

    In fact, the liberal hatred of hypocrisy is extremely dangerous because there are only two ways to avoid hypocrisy. The first is to live perfectly, while the second is to preach nothing. But none of us is perfect, and therefore the only sure way to avoid the charge of hypocrisy is option two, to preach nothing and abandon practically all standards.

    (If his intention is to say that only "liberals" - whatever meaning that term has in the Irish context - hate hypocrisy, though, I do not agree with him.)

    As I said recently, I have pulled back from using the term "whited sepulchre" to describe the commentators who surrender themselves so glibly to extreme schadenfreude, but I would love to to find a replacement, as I expect to need it again before long.