On November 4th 1997 a confidential meeting took place in the offices of Dermot Desmond's IIU Ltd. It was held to discuss, among other matters, the possibility of something being very wrong about the largest commercial decision made by an Irish government.

Present were directors of Esat Digifone, the winners of the hotly-contested competition two years earlier for the State's second mobile phone licence. The competition had been overseen by the then Fine Gael minister, Michael Lowry. By November 1997 the recently set up Moriarty tribunal was investigating Lowry's personal finances and whether any decisions he made in office were influenced by payments to him.

Against this backdrop Esat Telecom, a 40 per cent shareholder in Esat Digifone, was about to launch itself on the US Nasdaq stock exchange. This was a problem for the Esat Digifone directors because Esat Telecom's main asset was the telephone company, and should anything emerge in the tribunal to impugn the awarding of the licence to Esat Digifone, it could be disastrous.

The key matter was what should be stated in the prospectus for the launch. The men in the room, and participating by conference phones, concentrated on matters that included two now to be considered by the Moriarty tribunal.

One was that in late 1995, just after Lowry announced who had won the licence competition, Telenor, another 40 per cent shareholder in Esat Digifone, paid $50,000 to the late David Austin. (IIU Nominees Ltd held the balance of the Esat Digifone shares.) The $50,000, intended as a political donation, had been lodged to an offshore account.

Austin, a Fine Gael fundraiser, was a good friend of Lowry. What concerned the directors and advisers was the possibility that the political donation had gone to Lowry.

A second matter was also troubling them. In October 1996 O'Brien had said to Barry Maloney, Esat Digifone CEO, that he'd made a £100,000 payment to Lowry - and a similar payment to a second, unnamed person. Maloney became so concerned about the comment that he'd recommended cancelling the Nasdaq launch until the Moriarty tribunal was over.

Denis O'Brien told fellow Esat Digifone directors he'd never made such payments, that he'd jokingly made the remark to Maloney who'd been vacillating about making "success" payments to people who helped with the licence bid. P.J. Mara was among those concerned.

O'Brien also said that around this time he had decided to give £100,000 to Lowry and had earmarked the amount in a Woodchester Bank account for this. O'Brien had told the directors he had a few millions in cash and he felt sorry for Lowry. In the event he decided not to go ahead with the payment.

In preparation for issuing the prospectus it was decided to check all O'Brien's accounts in Woodchester Bank from 1995 to 1997 to see if there were any transactions which could have been payments to Lowry. None was found.

This week Jerry Healy SC, for the tribunal, outlined what happened next: "In order to extend his inquiry, it would appear that [solicitor] Mr Owen O'Connell, following some discussions with American lawyers involved in the prospectus, made contact with Mr Aidan Phelan to inquire were there any other significant accounts operated by Mr O'Brien. Mr Phelan's response was that there were no such accounts."

Healy said Esat Digifone directors were not told that in July 1996 Phelan had been involved in a £150,000 sterling transaction involving O'Brien and Austin - and it involved transfers of £100,000 sterling and £50,000 sterling from offshore accounts which held money for O'Brien.

The tribunal has been told the transfers were to pay for a Spanish property Denis O'Brien had bought from Austin, a friend of many years. Austin opened an account in Jersey for the £150,000 sterling. In July 1996 he still had the $50,000 given to him by Telenor.

Austin transferred most of the money he got from O'Brien in October 1996 to a new Isle of Man account in the name of Lowry. That was the month when O'Brien made his remark to Maloney.

The money remained in Lowry's account until it was returned on February 7th, 1997, the date the McCracken (Dunnes Payments) tribunal was established. Lowry has told to the Moriarty tribunal it was a loan from Austin for him, Lowry, to renovate a house.

When the money was returned Lowry had returned the house to the builder, the late Michael Holly, who had bought it on his behalf.

So while the men in the IIU offices were putting themselves through the wringer trying to decide what should and should not go in the prospectus, there was in fact a payment which had gone from O'Brien to Austin, and from Austin to Lowry. But the directors didn't know about the first transaction and so could never have found out about the second.

Lowry never told the Moriarty tribunal of the Isle of Man account and it was only discovered this year. The tribunal has also found another instance where money left a Denis O'Brien account and ended up with Lowry. Again Phelan was involved.

In 1998, when the Moriarty tribunal was in full swing, Lowry placed a 10 per cent, £25,000 sterling, deposit on a property in Mansfield, England. In March 1999 Phelan withdrew £300,000 sterling from a London account of O'Brien and lodged it to an account in the names of Phelan and Lowry. Phelan has said the money was for services rendered.

Most of the £300,000 sterling was used to close the Manfield deal and the rest was used by Lowry as a deposit on a Cheadle property. The balance to close this deal, £420,000 sterling, was secured by way of a loan from GE Capital Woodchester, formerly Woodchester Bank. Phelan negotiated the loan.

O'Brien has indicated to the tribunal he knew nothing of these property transactions.