Moriarty Tribunal
Colm Keena
Former government press secretary Mr P J Mara is to give evidence today about his role in advising Mr Denis O'Brien and Esat Digifone in relation to Esat Digifone's bid for the State's second mobile phone licence in 1995.
Yesterday, a non-executive director of Mr O'Brien's company Communicorp, corporate finance specialist Mr Paul Connolly, told the tribunal of his view in 1995 that the Digifone bid needed to be improved in relation to its finances.
He said this was the main reason for the introduction of Mr Dermot Desmond into the consortium.
He told Mr Rossa Fanning, for Mr Michael Lowry, that he had never been told by Mr O'Brien that Mr Lowry had suggested to Mr O'Brien that Mr Desmond be invited to become involved in the consortium.
He did not believe this was the case.
He told Ms Jacqueline O'Brien, for the tribunal, that it was his assessment at the time, putting it in Leaving Cert terms, that the financing part of the bid deserved a "pass grade or a D".
He said the consortium was not satisfied with the quality of the letters it had received from financial institutions, including Standard Life, AIB and Bank of Ireland.
He was of the view that there was no hope that the institutions would improve their involvement to the extent of underwriting the consortium.
These financial institutions never underwrote "project risk".
The bid was submitted on August 4th, 1995. Mr O'Brien has told the tribunal that negotiations with Mr Desmond began on August 10th.
Asked why the consortium had not addressed the issue of underwriting prior to the making of the submission, Mr Connolly said the opportunity had not arisen.
In return for becoming involved, Mr Desmond was given 25 per cent of Esat Digifone.
This was later reduced to 20 per cent at the insistence of Mr Lowry, with Mr Desmond being paid £2.75 million for the 5 per cent.
Mr Connolly said the price was arrived at through negotiation and was "above par".
After Mr Desmond became involved, a letter advising the Department that Communicorp's part of the consortium was now underwritten was sent to the Department but returned.
He said he was disappointed when the letter was returned.
Mr Connolly was asked by Ms O'Brien about a passage in a book, The Esat Story, by Mr Brendan O'Kelly, a former Esat director.
The book records that in the days before the announcement that Esat Digifone had won the licence competition, a letter from venture capitalists Advent was received, stating that Mr O'Brien should step down as chief executive of Esat Telecom given the cash flow problems it was encountering.
The book stated that Mr O'Brien and Mr Connolly ceremoniously burned the letter.
Mr Connelly said the book was "slightly sexed up" in places.