Denis O'Brien's Caribbean phone company Digicel threatened the Antiguan government it would sue for libel if it published a report into the activities of the Antiguan Public Utility Authority.

Digicel said the report contained an unlawful and "highly defamatory representation of the company". It is not known what the allegedly defamatory section of the report referred to.

However, the retired judge who wrote the report, Judge Don Mitchell, told The Irish Times the part of the report being objected to was written in error by him and would have to be corrected. He said he was sympathetic to Digicel's objections and that his report contained statements that he now knows to be untrue.

A spokeswoman for Digicel said it would be writing to the Antiguan attorney general to say it will drop its objection to the publication of the report if it is assured that the now acknowledged errors are excised.

A list of the judge's recommendations has been published and includes one that a contract with Digicel negotiated concerning the purchase of a stake in the Antiguan state mobile phone company "be rejected by cabinet unless cabinet is otherwise advised that it is in the best interests of the country". The company is run by the utilities authority.

The judge recommended that if the authority is to enter into a contract with Digicel, it should be instructed by senior counsel with experience in telecommunications contracts.

The cabinet, in a response, said it noted the recommendation and would seek advice when reviewing the proposed contract.

The Digicel spokeswoman said a memorandum of understanding (MOU) is currently before the Government of Antigua & Barbuda, and Digicel looked forward to the review. "Digicel entered into a MOU with the executive board of Antigua Public Utility Authority Personal Communication Services (APUA/PCS) in late September 2005 to acquire 67 per cent of the mobile telecommunications operations following a fully accountable and transparent process. Both parties felt that a strong market price had been offered and accepted," she said.

Digicel already operates in Antigua by way of its ownership of the Cingular group.

The report by Judge Mitchell covers a number of issues to do with utilities run by the authority as well as the authority itself. It deals with the award of free utilities to the authority's commissioners, duty free concessions on cars, and alleged conflicts of interest. It found that the failings of the dismissed commissioners "were due to the cultural and historical milieu in which they found themselves".

A former telecoms advisor to the Antiguan Minister of Works and Communication, Dean Jonas, was charged some time ago with making approaches to the Tenders Board and its chairman, in relation to the sale of APUA PCS. Mr Jonas was sympathetic to Digicel buying the company.

He also received €15,700 in financial assitance for a school he runs, from Digicel. He said he requested the money when he discovered Digicel made charitable donations.

Mr Jonas told The Irish Times yesterday he did not believe the case would go ahead, due to lack of evidence.

He said Digicel was caught in a political situation in Antigua. "It's really unfortunate."

Mr Jonas said he intended going forward for election in the future against the sitting Minster for Public Works, Wilmoth Daniel, for whom he formerly acted as adviser.

The Digicel spokeswoman said the company's total investment in the Caribbean is approaching $1 billion (€814 million).