Moriarty TribunalA letter confirming that IIU Ltd was arranging indemnity for the Esat Digifone consortium was sent urgently to the Department of Transport, Energy and Communications to provide security and comfort, the tribunal was told.
Mr Gerard Halpenny, in 1995 solicitor for the consortium, including Mr Denis O'Brien's company Communicorp, was questioned about the letter sent by Mr Dermot Desmond's IIU Ltd on September 29th, 1995, in relation to the bid for the State's second mobile telephone licence.
Ms Jacqueline O'Brien SC, for the tribunal, quoted the letter: "We confirm that we have arranged underwriting on behalf of the consortium for all of the equity, i.e., circa 60 per cent not intended to be subscribed for by Telenor."
It also said the consortium had available equity finance in excess of £58 million. It was signed by Mr Michael Walsh of IIU Ltd.
She said the result of the process was not due until the end of November 1995. She asked what the urgency was to get the letter to the Department by that Friday to such an extent that it seemed to have been contemplated that it would be sent before the agreement with IIU was signed. Mr Halpenny said that on September 16th, 1995, he sent a memo to Mr Walsh stating he would be uncomfortable with signing the letter with the agreement being entered into later on.
He told the tribunal he was not happy with the letter going to the Department unless the IIU had first agreed the arrangement.
Asked what the urgency was that it had to be completed by the Friday, Mr Halpenny said: "The urgency was simply to provide something, given the financial strength of the consortium, it was probably felt that they should provide some security or comfort to the Department."
Ms O'Brien said there was no doubt as to what Mr Desmond and IIU were entitled to under the arrangement. It was 25 per cent. Mr Halpenny agreed the Department was not being told that IIU would be entitled to 25 per cent of the shares.
When put to him that this was not telling the Department the true position, Mr Halpenny said: "That's one perception of it. The Department would have been aware and would have been very keen to be assured that Telenor and ESAT were both involved as equal partners in the venture. I don't think there is anything in this letter to suggest that it was changing."
On October 2nd, 1995, the Department sent a letter to Mr O'Brien stating that it was in breach of competition rules.