Moriarty Tribunal: Mr Dermot Desmond's real exposure to losing money from becoming involved in Esat Digifone was limited to 25 per cent of the cost of preparing the bid for the State's second mobile phone licence, the tribunal heard.
Mr Michael Walsh, an executive with International Investment and Underwriting Ltd (IIU), yesterday told Mr John Coughlan SC, for the tribunal, that this assessment of Mr Desmond's exposure assumed that his decision that the project must be a good one if Telenor was involved, was correct.
State-owned Norwegian company Telenor was operational partner to Mr Denis O'Brien's Esat Telecom in the Esat Digifone consortium. Mr Desmond's IIU Ltd was given the right to 25 per cent of the consortium in return for writing an underwriting letter to the Dept of Transport, Energy and Communications on September 29th, 1995.
IIU also committed itself to paying its portion of the bid costs should the licence bid fail. The bid costs were estimated at between £1.3 million and £1.5 million. Mr Desmond has told the tribunal he made more than £100 million from his involvement in Esat Digifone.
Mr Walsh said he took exception to questions asked of him on Tuesday by Mr Coughlan which, he said, implied that IIU had not had the authorisation required under the Investment Intermediaries Act 1995, when it entered into the September 1995 underwriting agreement. He had checked and the act included a transitional period and it would not have been possible for IIU to have been in breach of it in September 1995.
He said the letter he submitted to the department on September 29th, 1995, was "precisely correct". He did not accept Mr Coughlan's suggestion that the letter was not a "true factual statement". It did not disclose Mr Desmond's right to 25 per cent of Esat Digifone, but it did not disclose any of the commercial terms and conditions associated with IIU supplying the underwriting commitment.
He said that if the department had wanted to know more about IIU's involvement in the consortium it could have asked. He said the letter included Mr Desmond's name in the list of directors printed at the bottom of the page. There was no sensitivity concerning the issue of Mr Desmond being involved.
Mr Coughlan asked if there was a sensitivity concerning Mr Desmond because of the controversy involving the Johnston, Mooney & O'Brien (JMOB) site in Ballsbridge? Mr Walsh said if there was a sensitivity the letter would not have been sent on IIU headed notepaper with Mr Desmond's name on it. He said "people either love or hate Dermot in the way they love or hate Charlie" (Haughey).
Mr Walsh said it may have been April or May 1996 before Mr Desmond decided whether he would hold onto his Esat Digifone shares or sell them on.
He said he would have been in favour of an early sale, while Mr Desmond was in favour of holding onto the shares for a longer period. "I would be more risk adverse than Dermot, which is probably why he is twice as successful." The tribunal adjourned until Monday, when Mr Desmond is to appear to give evidence.
