Extensive behind-the-scenes detail on the making of the largest ever commercial decision taken by a serving government minister is expected today, when the Moriarty (Payments to Politicians) Tribunal resumes public hearings.
The tribunal last held a public hearing on November 7th, 2001. During the past eight months it has been conducting inquiries in private into the granting of the State's second mobile phone licence to Esat Digifone in 1995/1996.
The man who oversaw the awarding of the licence was the former Fine Gael chairman and Minister for Transport, Energy and Communications, Mr Michael Lowry. The tribunal has discovered a payment from Esat to Fine Gael, as well as financial transactions which, at a remove, involved both Mr Lowry and Mr Denis O'Brien. Mr O'Brien was a major shareholder in Esat Telecom, one of the key shareholders in Esat Digifone.
It seems the tribunal will sit for three days and then break for the summer. It is thought a lengthy opening statement outlining the results of the tribunal's inquiries will be read out and the tribunal will then break until late September or early October. It is not expected that witnesses will be called until then.
Many of the parties involved in this stage of the process expect that this is what is going to happen and cannot understand why the tribunal does not wait until after the summer break before reading out the opening statement. Sources whose actions are likely to be detailed in the opening statement are unhappy that an outline of the tribunal's findings will be aired in public and the matter then left hanging for six to eight weeks. What exactly the tribunal has in mind for this session is not clear.
The tribunal's private inquiries involved: the consortium that won the licence; other failed bidders; senior civil servants; Danish consultants who worked on the licence competition; and senior EU officials. The competition was launched in early 1995. At the time, Mr Lowry thought the licence might be sold for as much as €57 million. Mr O'Brien was interested from the start. He put together a consortium called Esat GSM but the group seems to have fallen apart by June. The deadline was June 23rd and it was looking as if Mr O'Brien was out of luck.
Then a complication arose. The EU wanted Eircell, then State-owned, to be charged a fee equivalent to that which would be charged to whoever won the second mobile phone licence. This was in order to level the playing pitch. However, Mr Lowry's Department, which was looking for a strategic partner for Eircell's parent, Telecom Éireann (TE), was concerned about TE having to take on a new multi-million euro tranche of debt. It was also concerned that any large fee for the licence would be passed on to consumers when the whole point of having a second mobile phone company was to encourage competition and thereby reduce prices.
While all this was being sorted out, the Department put back the deadline for the licence competition. This gave Mr O'Brien the time to put a new group together. By the time the new deadline came about, August 4th, 1995, Esat Digifone was able to put in a bid. The fee for the winning bid had by then been reduced by the Department to €19.05 million (£15 million).
Esat Digifone was a consortium made up of: Esat Telecom; a Norwegian State company, Telenor; and Mr Dermot Desmond's IIU Ltd. On the evening of October 25th, 1995, Mr Lowry announced that Esat Digifone had won the competition. The announcement took everyone by surprise, coming earlier than anyone had expected. At the time it was reported that Esat Telecom and Telenor had 40 per cent each of Esat Digifone, with negotiations ongoing with institutions for the final 20 per cent.
The licence was finally handed over on May 16th, 1996, Esat Digifone having in the meantime satisfied certain criteria. Mr Desmond joined the company's board on that date. IIU had been given a 25 per cent stake in the company a month earlier. On the day the licence was granted, IIU sold 5 per cent of Esat Digifone to its other two partners in two equal amounts of 2.5 per cent. It turned a quick profit of €3.4 million on this transaction. In time, Esat Telecom, Telenor and IIU would make a lot of money from the company. When Esat Digifone was sold to BT in early 2000, the consideration was approximately €3 billion.
The tribunal's inquiries into the licence competition have now taken longer than the competition itself. They may have also cost the taxpayer something similar to what the licence cost Esat Digifone.
