Blackmail allegation: The row with the DRFC vendors went to mediation on Friday, September 27th, 2002.

Present for Westferry were O'Brien snr and Ryall. O'Brien snr was later to make a complaint to the London police, alleging blackmail by Richardson and Weaver. A copy of a draft statement from O'Brien to the police was given to the tribunal in January 2003.

In the draft he said that in the week prior to the mediation he was faxed a copy of the September 25th letter. He also said he received a message from O'Connor that he was told originated with Richardson and Weaver, advising O'Brien that a copy of the letter would get to the tribunal or the newspapers, if Westferry did not settle the dispute "in a friendly and generous manner". O'Connor, he said, told him that the information about this matter had come from Kevin Phelan.

He further said that during a side meeting at the mediation, requested by Richardson, he was told that a US telephone company was interested in buying the vendors' files in relation to the Doncaster sale. Richardson then asked if Westferry would like to buy the files "for approximately £2.5 million to stop the US telephone company".

O'Brien stated that the significance of this was that one of the telephone companies that had failed in the 1995 licence competition won by Digifone, was taking action against the Irish State alleging the improper award of the licence. This was a reference to the Persona consortium and Motorola, which formed part of the Persona consortium.

The mediation went ahead and was concluded with the vendors settling for £744,000 in relation to the Doncaster transaction, having originally sought £1.2 million, Mr O'Brien said in his draft statement. The settlement had nothing to do with the issues raised at the side meeting, he said.

In April 2004 members of the tribunal legal team were shown a copy of a later draft statement from O'Brien to the police. The tribunal was not allowed to copy the document, for legal reasons, the High Court was told, but the tribunal noted differences between the two drafts concerning the "apparent dealings between Denis O'Connor and Denis O'Brien snr in September 2002, and the circumstances in which Denis O'Brien snr received a copy of the letter of 25th September 1998 addressed to Michael Lowry, through Denis O'Connor".

The later draft statement said the letter was faxed from O'Connor's office to O'Brien snr but without O'Connor having sight of it as O'Connor had left standing instructions with his secretary that DRFC material be forwarded to O'Brien snr.

In May 2003 the tribunal raised the content of the earlier statement to the police with O'Connor, who said that he did not pass on any threats from Richardson or Weaver to O'Brien snr. O'Connor also said he had never met Richardson or Weaver; that he had no contact with O'Brien snr in relation to the September 25th letter; and that he was not aware that Richardson or Weaver had any such letter.

In a memo provided to the tribunal in July 2004, O'Connor said that in September 2002 there was a call to his office from Weaver but he told his receptionist he would not take any call from Weaver. Later Weaver called again and said he was sending through a fax. O'Connor said he did not wish to see the fax and that it should be forwarded to O'Brien snr. O'Connor said he did not see the fax.

A month after the London mediation, on October 18th, 2002, Weaver made an unexpected visit to Vaughan's offices during which he showed Vaughan a faxed copy of the September 25th letter from Vaughan to Lowry. Vaughan's note of the meeting is now with the tribunal. It states he told Weaver that he was surprised by the letter as he had not thought Lowry had any involvement in the DRFC matter.

"Mark Weaver agreed with that. He knew the whole substance of the DRFC agreement because he was Richardson's runner whilst Richardson was in prison, and Weaver confirmed that he had never had any dealings or come across Michael Lowry at all in the DRFC deal," the note said.

Vaughan in his note mulled over whether Weaver might be trying to blackmail Denis O'Brien. Then he noted that 20 minutes after Weaver left, Denis O'Connor telephoned and mentioned that there was "a letter floating about". Vaughan told O'Connor about his visit from Weaver and O'Connor said he wanted to see Vaughan.

Some days later Vaughan drafted correspondence to a CP Vanderpump, acting for Westferry on the Isle of Man. One letter outlined Weaver's visit and, referring to how he came to write the September 25th letter, Vaughan stated: "I do not think that I misunderstood his comments to me that he was involved in DRFC, but in hindsight I must put it down to some sort of political ego that he was trying to attach his name to what appeared to be a successful venture."

Vaughan also said that in November 1998, a month after the events being referred to, he was sacked from his involvement in the matter (by Kevin Phelan), but reinstated in early 1999.

A second letter drafted for Vanderpump, dated two days later, read in part: "I am quite convinced that during the course of the acquisition of DRFC by Westferry, Kevin Phelan maintained to me that he was the beneficial owner of a trust called the Glebe Trust and also that he had a beneficial interest in Westferry. I am also sure that he made representations to me to the effect that Michael Lowry was also involved in Glebe Trust." Lowry has since told the tribunal, in correspondence, that he had no involvement with any Glebe Trust.

On November 8th, 2002, another solicitor from Carter Ruck, Kate McMillan, sent Vaughan a copy of a draft statement he might send to the police arising out of the blackmail complaint being made by O'Brien. In one part the draft statement reads: "I met him (Lowry) for the first time on the evening of 24th September 1998 at Paul May's house. At this meeting were myself, Kevin Phelan, Michael Lowry and Paul May.

The meeting took place at Paul May's house because Michael Lowry had been late in arriving in England and time was short. The meeting was fairly brief and took place before the other three went out for dinner somewhere." The draft statement was sent to Vaughan for his perusal and he placed a correct mark opposite the above quoted paragraph.

The same draft statement said Vaughan met O'Connor on October 23rd, 2002, after Weaver's visit to Vaughan, and gave O'Connor a copy of the September 25th letter.

McMillan and Vaughan had spoken on the telephone on October 22nd and McMillan had kept a note. Vaughan was recorded as saying O'Connor was coming from Ireland to see him and had in his possession a copy of the September 25th letter.

"The letter of 25 September 1998 which MW had produced on October 18th, 2002 had been sent only to ML. CV said that he was of the view that the letter could only have come from ML. The letter had not been stolen from CV's file. CV said he understood that ML had passed all his files to Kevin Phelan at one stage."

Later the note read: "ML had said he was involved in DRFC. CV said that perhaps was (sic) ML had said to him about DRFC was politician's puff CV said that he believed that ML was not involved in DRFC at all."

He later said he and Phelan had fallen out in a big way, and referred to Phelan as "a very dangerous character".