Profile/Denis O'Brien: By taking on business giants Denis O'Brien has become extremely wealthy, but he fears more for his reputation than his bank balance, writes Colm Keena
The story of Denis O'Brien to date is one of a sequence of David and Goliath scenarios. His first big break came when he surprised everyone by beating heavyweights such as Motorola and Sir Anthony O'Reilly in the competition for the State's second mobile phone licence back in 1995.
He then took on the State monopoly, Eircell, and his fledgling company Esat Digifone quickly won an impressive share of the mobile phone market. In 2000 he sold out to BT in a deal that netted him €317 million.
In 2001, having exited from Digifone, O'Brien took on the monopoly incumbent in Jamaica and most of the Caribbean, Cable & Wireless. He arrived like some nightmare hurricane season that never ends. Today his pan-Caribbean company, Digicel, has more than 2.6 million subscribers and is starting to move into the Pacific rim, Central American and South American markets.
This week sources close to O'Brien said he is planning to float Digicel on the New York Stock Exchange sometime later this year. Its sale could net O'Brien up to €1.5 billion and, because Digicel is based in Bermuda, O'Brien may not have to pay any tax.
Next year the 48-year-old entrepreneur is planning to enter the US market, where he will take on some of the largest corporations in the world in an attempt to win a slice of the world's richest telecoms market.
Back home, some of those who have been watching his career wonder if his aim is to replace Sir Anthony O'Reilly by becoming super-rich while also holding substantial media interests, a position that would make him one of the most powerful players on the Irish stage.
He already owns a number of radio stations, including Newstalk 106, which will start broadcasting nationwide next month. Last January he caused great surprise when he spent €56.5 million acquiring 3 per cent of the Anthony O'Reilly-controlled Independent News & Media. Speculation is ongoing as to what his intentions are, but a bid for the group when the older O'Reilly eventually bows out has to be a possibility.
The big cloud that hangs over O'Brien, however, is the damage done to his reputation in Ireland by the Moriarty Tribunal into payments to politicians. In May 2001, after a barrister for the tribunal read out a lengthy opening statement outlining possible financial dealings between O'Brien and former minister for communications Michael Lowry, O'Brien thundered down a stairs in Dublin Castle. "That's my reputation out the window," he growled.
His anger with the tribunal has not abated. The tribunal has probed into the possible financial dealings with Lowry, as well as the licence competition that was O'Brien's springboard to mega-wealth and which occurred while Lowry was in office. Trips by O'Brien to the High Court and the Supreme Court have failed to stop the tribunal in its work.
IN THE CONTEXT of his concern about his reputation, O'Brien's appointment in September last year to the post of deputy governor of Bank of Ireland was a real break. Membership of the bank's court, or board, is reserved for blue bloods of the Irish business world. So there was great surprise this week when O'Brien informed the board he was resigning, with immediate effect, citing the demands of his growing international business.
The decision itself, and fact that he resigned with immediate effect, has led to intense speculation. But O'Brien has not commented. Sources close to him say he is busy preparing for the Digicel launch on the New York Stock Exchange later this year.
INTERESTINGLY, EVIDENCE WAS heard by the tribunal some years ago about the great care that went into preparing a prospectus for O'Brien's Esat group when it was about to offer its shares to potential investors in the US in 1997. Companies and directors have to be very careful that they do not leave themselves exposed to the charge that something relevant was kept from the investors, or they can be sued down the line. When the Esat shares were being sold, the prospectus mentioned the existence of the tribunal, because it was looking into Lowry. At the time there was no evidence of any financial links between Lowry and O'Brien.
It was not until 2001 that it emerged that Esat directors had given great thought to whether they were required to notify potential investors that Denis O'Brien had once said to Digifone chief executive Barry Maloney that he, O'Brien, had made, or tried to make, a payment of £100,000 to Lowry in connection with Digifone.
O'Brien told his fellow directors it was blather, aimed at getting Maloney to free up some payments that had to be made, and the directors believed him. No mention of the issue was put in the Esat Telecom prospectus.
However, money had in fact gone from O'Brien to Lowry in 1996, when Lowry was minister. The money had gone from an account in Dublin to the Isle of Man, and from there to an account in Jersey, and from there to an account belonging to Lowry back in the Isle of Man.
The Jersey account had belonged to the late David Austin, a Smurfit executive and friend of both O'Brien and Lowry. O'Brien has said the money was for a house in Spain he bought from Austin. Lowry has said it was a loan he got from Austin. The tribunal's ruling on this matter will be a key aspect of its report on O'Brien.
O'Brien may not have to mention the tribunal in the prospectus on Digicel. Now that he has resigned his position with Bank of Ireland, as well as some other non-executive directorships in Ireland, these, if they feature at all, will feature as former directorships.
The tribunal is not expected to report on matters affecting O'Brien until next year. The Bank of Ireland might be taking comfort in the fact that should the report be critical of O'Brien the question of pressure on him to resign from the bank's board no longer arises. The bank must be taking some comfort from this.
O'BRIEN IS NOT the richest man in Ireland, but he is a good bit younger than Sir Anthony or Fermanagh businessman Seán Quinn. O'Brien's father, businessman Denis O'Brien snr, is still active, and his son has said he sees no reason why he will not still be working in his seventies, just like his father. There certainly seems to be no ebbing of the determination and ambition that are a noticeable part of O'Brien's personality. He used to take part in triathlons: running, cycling and swimming. He doesn't go for jogs, he runs up mountains. As well as running a multinational business empire, he also oversees property and other investments around the globe, as well as organising a number of charities, including the Frontline organisation, which helps human rights workers in difficulty. His chairmanship of the 2003 Special Olympics was a huge success.
He is married to Catherine, with whom he has three children.
He has not been tax resident in Ireland since before the Esat sale. He has houses on Raglan Road in Dublin, in Thomastown, Co Kilkenny, and on a large property in Portugal. More recently he has given his address as being in Malta. He may well have bolt-holes in the Caribbean and New York, locations where he spends a lot of time on business.
In other words, he lives on a Gulf Stream jet.
The O'Brien File
WHO IS HE? A hugely wealthy 48-year-old Dublin-born mobile phone entrepreneur and tax exile
WHY IS HE IN THE NEWS? This week he resigned as deputy governor of Bank of Ireland. Sources say he is preparing to float his telecommunications company, Digicel, on the New York Stock Exchange
MOST APPEALING CHARACTERISTIC His ability to combine great wealth and achievement with an informal manner
LEAST APPEALING CHARACTERISTIC His occasionally very sharp tongue
MOST LIKELY TO SAY "That f***ing tribunal"
LEAST LIKELY TO SAY "Hey, Sir Anto, fancy going down to the pub for a lash?"