ANALYSIS:The report details how Dermot Desmond became involved
THE MORIARTY report outlines in great detail how Michael Lowry intervened in the 1995 mobile phone licence competition in order to “deliver” the licence for Denis O’Brien’s Esat Digifone.
The competition was run by a team of civil servants assisted by a number of Danish consultants, led by Prof Michael Andersen. They were to decide on the winner using an evaluation model and without political interference.
The judge found that Lowry repeatedly interfered in the process, sought information about how it was progressing and passed information to others, notably to O’Brien.
Andersen had taken part in hundreds of licence applications around the globe and his evidence to the tribunal was that the Esat bid was one of the best he had seen. He also said he would have, with his experience, noticed any effort to favour an undeserving candidate. The civil servants said their work was not influenced by Lowry.
However, Mr Justice Moriarty decided Lowry’s “insidious and pervasive influence” on the process was such that he “secured the winning of the competition” for Esat.
About six weeks into the process, the project chairman, civil servant Martin Brennan, told Lowry that Esat was looking like the best of the six bids, although the group had reservations about its finances. Mr Justice Moriarty said Brennan had no way of knowing that Lowry would convey information to O’Brien and had “no reason to suspect Lowry’s motives”.
The judge described Brennan and another member of the team, Fintan Towey, as “energetic, professional and committed civil servants” who, in their concern for administrative efficiency, lost sight of the intended structure for decision-making. He said that by the end of September, they had “superseded the group as the organ of decision-making”.
On September 28th, Brennan and Towey met in Copenhagen with the Danish consultants and the final ranking of bids emerged.
A few days later, Brennan told Lowry that Esat had emerged as the top-ranked bid but that there were concerns. These were about whether O’Brien could fund his portion of the consortium’s costs.
In a later conversation with Brennan, Lowry suggested that once the licence was won by Esat, O’Brien would have no difficulty raising money.
When the project team met on October 9th, it was told for the first time about the Copenhagen outcome. Brennan also told the team that Lowry had been informed of the result. The judge said the group was presented with the outcome “as a foregone conclusion”. Lowry’s suggestion in relation to Esat’s finances was “forcefully asserted” to the meeting, according to the report.
A minority within the group wanted more time to consider the outcome and were granted an extra week when the matter was raised with the department of communication’s secretary general, John Loughrey.
However, Lowry “countermanded” this decision and thereby, the judge found, “ensured” that Esat won.
During the competition process, O’Brien had made a presentation and was questioned about his finances. He was “greatly concerned” about this, the judge said, and was considering doing a deal with Dermot Desmond, even though it would involve a dilution of O’Brien’s shareholding in the Esat consortium.
On September 15th, O’Brien contacted Michael Walsh, former chairman of Irish Nationwide and an associate of Desmond.
Two days later, on the day of the All-Ireland final, O’Brien went to Croke Park in the hope of meeting Lowry, which he did. The judge found that they briefly discussed the licence process and agreed to meet later in Hourican’s pub on Leeson Street.
O’Brien then made contact with Desmond, the judge said, probably by telephone, and this was “decisive” to Desmond joining the consortium.
O’Brien went to Hourican’s and he and Lowry adjourned to a quieter pub, Hartigan’s. Once again, and despite the pair’s evidence to the contrary, the judge said he was satisfied they discussed the competition there.
He decided that Lowry told O’Brien about the concerns of the evaluation group and that O’Brien mentioned the idea of Desmond underwriting O’Brien’s finances.
The date for the submission of bids and associated documentation had passed but, the judge said, he considered it “unworthy of belief” that Lowry did not give O’Brien comfort in relation to worries O’Brien had about submitting new information.
The next day O’Brien and his associate, Leslie Buckley, went to see solicitor Owen O’Connell at the William Fry legal firm and told him they needed an underwriting letter for the Department of Communications.
Desmond wanted 30 per cent of Esat. O’Brien’s partner, Norwegian group Telenor, was involved on the basis that it and O’Brien would each have 40 per cent, with some financial institutions having the remaining 20 per cent.
In late September O’Brien contacted Per Simonsen of Telenor. Simonsen told the tribunal that O’Brien informed him he had met Lowry in a Dublin pub and that Lowry had suggested that Desmond’s investment company, IIU, become involved.
O’Brien denied ever saying this but the judge rejected his evidence. He said the fact O’Brien had said Lowry had suggested Desmond should come on board did not mean that any such suggestion was ever made by Lowry.
On September 29th, a letter from Walsh on behalf of IIU was sent to the department, stating the company had arranged underwriting for all of the Esat consortium that would not be owned by Telenor.
Towey opened the letter and, after discussing the matter with Brennan, was sent by Brennan to O’Brien with a covering note saying the date for submissions was closed and that the IIU letter would not form part of the evaluation. It played no further role in the competition, although the judge noted that when Brennan was forcefully asserting to the project team Lowry’s solution to the concerns about Esat’s finances, he and Towey were the only ones who knew about the IIU involvement.
Desmond made more than £100 million from his involvement with Esat.
