A former director general of RTE told the Flood tribunal yesterday that he reacted with shock and disbelief when he saw a directive from the then minister for communications, Mr Ray Burke, in 1989 setting the cost of transmission to be charged to Century Radio at considerably below the agreed sum.
Mr Vincent Finn, director general at the time, said there was also a very strong reaction within RTE when the reality of the financial implications were realised.
"There was a mixture of shock and rage, to tell you the truth," he said.
Mr Finn told the tribunal that by January 1989 agreement was reached between RTE and the Department of Communications that the figure for transmission fees was to be £694,000. This was before the IRTC made a decision on who was to be awarded the franchise.
Mr Finn said that as far as he was concerned, the minister also agreed to that figure. "It was a done deal," he said.
Mr Finn said there was no further communication with the Department until Mr Burke invited RTE to a meeting and asked it to look at the transmission charges again in terms of reducing them. In the end, he said, the figure was reduced from £694,000 to £614,000. Mr Pat Hanratty SC, for the tribunal, said the minister issued a directive on March 14th 1989 that the sum that should be paid in transmission charges was £375,000.
Asked if there was any communication between RTE and his Department or the minister from the time of the meeting until the directive, Mr Finn said that the RTE chairman had met the minister in the Concert Hall on February 24th. The chairman had said that the minister told him he had written to the IRTC to say that £614,000 was the agreed figure.
"I assumed until March 14th that the figure of £614,000 would stand," Mr Finn said.
Asked what reaction he had when he saw the directive, Mr Finn replied: "Absolute shock and disbelief. This was a done deal at £614,000."
He said there was no reason whatsoever to believe that such a directive would be issued. There was also a very strong reaction of shock and rage in the company as the belief was that it had settled the matter at £614,000.
Mr Finn said they decided to seek a legal opinion on the legality of the minister's directive. Mr Hugh Geoghegan SC, now a High Court judge, stated that in his opinion the minister had acted ultra vires (beyond his powers) on two grounds. Mr Finn said in spite of this, they were reluctant to go the legal route on the issue. There would have been a public perception that RTE was ridding itself of a competitor. On balance, taking the matter to court would not have been wise. There was a meeting with the minister on March 31st. Asked if the minister gave an indication that there might be some flexibility on the figures, Mr Finn said: "Quite the reverse, his mind was made up."
Earlier, Mr Gerry O'Brien, RTE's financial director, was asked about the advertising cap placed on RTE until 1993 when the government removed it.
Mr O'Brien said that the losses would have been so large that RTE could not have remained in business. The loss from 1993 to 1999 would have totalled £186.2 million.
The breakdown was: a loss in 1993 of £15.3 million; in 1994 £20.1 million; in 1995, £25.2 million; 1996 £28.9 million; in 1997 £29.5 million; in 1998 £30.6 million; and in 1999 £36.3 million.