Desmond's link to Esat in phone licence queried

The Moriarty tribunal is to inquire into when civil servants became aware of the involvement of Mr Dermot Desmond in the successful Esat Digifone bid for the Republic's second GSM phone licence.

Continuing his opening statement yesterday, Mr John Coughlan SC, for the tribunal, outlined a range of financial options being considered by Mr Denis O'Brien to support his bid for the licence, including the involvement of Mr Dermot Desmond and his company International Investment Underwriters (IIU) in 1995.

Mr Coughlan said the tribunal "will be inquiring into whether IIU and Dermot Desmond had overlapping interests in the bid - that the Department was unaware of - at this stage". The issue is material in that Mr O'Brien was required to tell the project team assessing the bids, who his backers were and what financial competence he had to bid for the licence and commence operations.

The tribunal heard that a letter from Mr O'Brien's company to the project team, which outlined the involvement of Mr Desmond was received by the team on September 29th, 1995, after the closing date for submissions. It was then returned to Mr O'Brien on October 2nd, by agreement without a copy being kept on file.

Mr Coughlan said the chairman of the the project team, Mr Martin Brennan, had told the tribunal in evidence that he believed "the IIU connection surfaced sometime relatively close to the award".

He said Mr John Loughrey, the secretary of the Department at the time, was also unsure as to when the involvement of Mr Desmond's interests first became known.

Mr Coughlan said Mr Loughrey had given evidence that he had no knowledge of Mr Desmond's involvement up to October 25th, 1996, after which final negotiating rights were awarded to Esat Digifione. There had been some concern in the project team at the close of 1995 that the bidder's funding would be consistent with the bid. But a memorandum written by Ms Regina Finn, an official of the Department of Transport and Communications, on April 16th, 1996, showed clearly that it was then known that IIU was a 25 per cent stakeholder in Esat Digifone.

Mr Coughlan also said the tribunal would be investigating the intervention of the then minister for transport and communications, Mr Lowry, in a row between the ESB and Esat Digifone on locating antennae on ESB masts.

On January 30th, 1996, Mr Padraig O'hUiginn, a director of Esat, suggested to the chairman of the ESB, Mr William McCann, a scheme for the co-location of Esat masts on the ESB network.

Mr O'hUiginn said he had a copy of a government policy document about to be released by the Minister for the Environment, suggesting that bodies involved in communications infrastructure engage in mast-sharing where possible. Mr O'hUiginn offered a rent of £4,000 per site, per year.

However, in increasingly tetchy correspondence between Mr O'hUiginn and Mr McCann, Mr McCann pointed out that Esat had then only been awarded sole negotiating rights and not the mobile licence itself. Mr McCann pointed out that the ESB was involved in the competition for the licence itself, through its participation in the Persona consortium.

However, Mr McCann did suggest that the ESB had facilities which could be of use to a mobile telephone operator. He said it would be "helpful" if Esat would say if it had considered giving the ESB equity in Esat in return for use of its facilities.

Mr Lowry eventually intervened, writing to Mr McCann to ask him to facilitate the policy of co-location and warning that he would consider regulations to compel State companies to co-operate if necessary.