Colm Keena assesses what has been learned as Martin Brennan'sevidence ends at the Moriarty tribunal
The Moriarty (Payments to Politicians) Tribunal resumes today having not sat on Friday to allow civil servant Mr Martin Brennan to rest after 16 days in the witness box. Today the cross-examination of Mr Brennan is set to commence.
Mr Brennan's evidence concerning the 1995 competition for the State's second mobile phone licence and the actual award of the licence in May 1996, is intended to provide the backdrop to the evidence due to be heard from a large number of witnesses over the coming weeks and months.
Mr Brennan chaired the team that assessed the six bids submitted for the licence competition, and was involved in the negotiations that took place prior to the actual awarding of the licence on May 16th, 1996.
A number of issues that have been the cause of controversy in the years since the licence award have now been clarified and a lot more is known about the circumstances surrounding Digifone's success in winning the licence.
Intervention by the European Commission
Intervention by the European Commission in 1995 led to the cancellation of the original June 23rd deadline for the submission of bids. A letter from the then Competition Commissioner Mr Karel Van Miert on April 27th hinted that the Commission might issue proceedings if Ireland went ahead with its plans concerning the fee to be paid for the new licence.
It took some time for this matter to be resolved and, when it was, a new date, August 4th, 1995, was set for the submission of bids.
The intervention led to a £15 million (€19 million) cap being placed on the fee to be paid for the licence, in place of the original plan, which was to allow bidders make offers.
In the wake of the competition being awarded to Esat Digifone, there were claims made that the then minister Mr Michael Lowry might have played a key role in the circumstances whereby the deadline for bids was put back, and/or the fee capped.
The evidence that has now been heard indicates that the intervention by Mr Van Miert came about as a result of a complex scenario involving EU policy on competition in the mobile phone market, the requirements of Telecom Éireann in 1995, and the desire of the Department of Finance to raise as much money as possible from the new licence that was to be issued.
The compromise worked out was that the second licence fee would be capped at €19 million, and that Eircell would pay €12.7 million for the licence it had. There is no evidence of Mr Lowry playing a pivotal, or even important, role in the episode.
The involvement of Dermot Desmond
The Department received six bids on August 4th, 1995, and Mr Lowry announced that Esat Digifone was the winner on October 25th. The team that assessed the bids was made up of civil servants from the Department of Transport, Energy and Communications and the Department of Finance, working with consultants from Andersen Management International of Denmark.
The team selected the Digifone bid as the winner even though it had concerns about the financial wherewithal of Mr Denis O'Brien's holding company, Communicorp. The competition was for the exclusive right to negotiate for the licence and the team recommended that the negotiations involve ensuring the consortium was able to fund itself. Digifone was selected as the winner without the team knowing that Mr Dermot Desmond had become involved.
The original Digifone bid envisaged 20 per cent of Digifone being placed with four financial institutions. On September 29th, 1995, Mr O'Brien signed a deal with Mr Desmond that gave Mr Desmond's company, IIU, the right to 25 per cent of Digifone in return for underwriting Communicorp's involvement in the consortium. The four banks were out of the picture. When a letter was sent into the Department informing it that Mr Desmond's IIU was now involved with Digifone, the letter was returned, as the closing date for new information had passed.
An executive from Norwegian consortium member Telenor, Mr Arve Johansen, was told by Mr O'Brien in September 1995 that "sources" had told him the bid needed to be improved. Mr O'Brien told the Norwegian that the involvement of someone like Mr Desmond would improve its chances.
The evidence heard to date indicates the Norwegians later came to believe that Mr O'Brien's motive for saying this was not, or not solely, to strengthen the bid, but also so that the Communicorp involvement could be underwritten. In other words, Mr O'Brien was seeking to improve his overall position while presenting the case for IIU's involvement as if the sole motive was to improve the consortium.
Time pressures
Mr Lowry rushed the announcement of the fact that Digifone had won. The team that selected the winner had selected Digifone by October 25th but the Department had not yet received a hard copy of the team's final report.
When Mr Lowry was told the team had arrived at a decision and that Digifone had won, he telephoned the then Taoiseach, Mr John Bruton, and after a brief meeting with him, Mr Dick Spring and Mr Proinsias De Rossa, he called a press conference to announce the fact that Digifone had won. The evidence heard to date indicates a strangely messy end to the supposedly high-level process.
Mr Brennan has said that he suggested a quick announcement so as to prevent any "mischief" on the part of disgruntled losers.
At the far end of the process, in April 1996, matters were again rushed. The final issue dealt with by the Department was that of whether the consortium could fund itself. It had only discovered in April 1996 that IIU was involved and spent two days before the licence award investigating the financial wherewithal of Mr Desmond and IIU. Mr Brennan has said the pressure to wrap matters up wasn't coming from him, and it may be the case that the pressure was coming from Mr Lowry.
The story of the 5 per cent
Denis O'Brien met Mr Lowry in a pub on Leeson Street, Dublin, after the All-Ireland in September 1995, when the bids were still being assessed within Mr Lowry's Department. Mr O'Brien and Mr Lowry say they did not discuss the mobile phone competition but rather discussed the match and Mr O'Brien's landline business.
Mr Per Simmonsen of Telenor is to tell the tribunal he was later told by Mr O'Brien that Mr Lowry had suggested that Digifone get Mr Desmond involved. Mr Brennan has told the tribunal he has formed a view as to what was going on within the Digifone consortium at this time. "It seems to me that Denis O'Brien told other people that Michael Lowry said certain things to him."
Mr Brennan seems to be indicating that, like Mr Johansen, he believes Mr O'Brien was telling his partners they needed Mr Desmond when it was really he, Mr O'Brien, who wanted Mr Desmond on board.
Whatever was the case, Mr Desmond was given the right to 25 per cent of Digifone. When the time drew near for awarding the licence, Mr Lowry insisted that the shareholding configuration outlined in the Digifone bid, which saw Communicorp/Esat Telecom and Telenor having 40 per cent each, and investors having the rest, being put in place before the licence was handed over. This meant Mr Desmond's share had to drop by 5 per cent, to 20 per cent.
He sold 2.5 per cent to Communicorp/Esat Telecom and 2.5 per cent to Telenor. The price was approximately €3.5 million. The licence was being traded in before it was even issued.
