The Government's plans to float Telecom Eireann have suffered an embarrassing setback with the recently-appointed chairman, Mr Brian Thompson, resigning the post to take up a job in a US telecommunications company.
A former EU commissioner, Mr Ray MacSharry, has taken over the post amid strong political criticism of his suitability.
Last night both Fine Gael and Labour strongly criticised the Public Enterprise Minister, Ms O'Rourke.
The Labour leader, Mr Ruairi Quinn, accused her of ineptness and incompetence, and said appointing Mr MacSharry was an act of "political cronyism".
Fine Gael deputy Mr Ivan Yates said Mr MacSharry's CV was far more reflective of his political than his commercial experience. For Mr Thompson to resign so soon after his appointment showed Ms O'Rourke had either misjudged or mishandled his situation.
Mr Thompson's resignation comes as Telecom prepares for the stock market floatation, scheduled for early summer, when up to 35 per cent of the company will be sold to private and institutional investors.
Mr Thompson is becoming chairman and chief executive of Global TeleSystems (GTS), which has a presence in Ireland through a company previously known as ITL.
In a statement, he said he had "regretfully yet appropriately" tendered his resignation of the post he took up in January. This was caused by the potential, "however minimal", for any conflict of interest in holding both positions.
He had hoped to maintain both positions until a conflict became real, but it was apparent that in the "fast-moving world of telecoms" such a conflict could arise sooner rather than later.
Mr Thompson's agreement to chair Telecom was seen as a major coup for Ms O'Rourke. A former chairman of Qwest, a US telecommunications group, his presence on the board would have made selling Telecom shares to major US investors much easier.
Mr Thompson took over the chairmanship when the current vice-chairman, Mr Ron Bolger, vacated the post at Ms O'Rourke's request as part of a board reshuffle in January. She asked three board members to step down.
Now the Government is searching for another international figure to appoint to the board. The appointment will also shortly be announced as executive director of Mr Malcolm Fallen, formerly chief financial officer of a UK company, British Biotech. He is joining Telecom as chief financial officer. There was surprise among some other board members last night that Mr MacSharry, who has no telecoms experience, had taken the chairman's role.