Possible 'significant breaches' were identified, writes Colm Keena, Public Affairs Correspondent
The Moriarty tribunal on Thursday identified possible "significant breaches" it believes may have occurred during the "sealed" assessment in 1995 of bids for the State's second mobile phone licence.
In a ruling by Mr Justice Michael Moriarty in response to legal submissions from a number of parties, including Denis O'Brien, the tribunal, in effect, summarised the current position in its four-year inquiry into the licence competition.
The eventual findings by the tribunal in relation to the competition will have either positive or negative effects on the reputations of the parties involved.
They could also provide encouragement to Persona, the consortium that came second to Mr O'Brien's Esat Digifone in the competition. Persona is suing the State. Should it succeed, it would seek huge damages, up to or beyond €100 million.
In his ruling, Mr Justice Moriarty rejected argument from Mr O'Brien and others that the tribunal should abandon its inquiry into the competition because a Danish consultant who played a key role in the process, Michael Andersen, was refusing to come to give evidence.
In the course of his ruling Mr Justice Moriarty expressed some harsh views on the competition process. An evaluation team of civil servants, working with Mr Andersen, was supposed to have assessed the submissions according to quantitative and qualitative criteria. The team was to be "sealed" from influence from the then minister for transport, energy and communications, Michael Lowry. It was also to use "weightings" that would be applied to the quantitative aspects of the assessment and which would be known only to it.
In the event, the team encountered difficulties applying its evaluation model to the bids received. The quantitative evaluation of the bids was abandoned.
What then happened is that numbers were assigned to the qualitative ratings. The weightings that were to have been applied to the quantitative part of the evaluation, were then applied to the numbers that had been applied to the qualitative part.
In his ruling, Mr Justice Moriarty pointed out that the assessment of one aspect of all the bids, called the internal rate of return (IRR), was not carried out as originally envisaged, but was recalculated by the assessment team.
"For the purposes of the tribunal's inquiries, it was of particular interest that ESAT Digifone would only have been entitled to an E grade if scored on the IRR value submitted with their application, whereas, as a result of the recalculation, they were ultimately awarded an A. Once again this underlined what appeared to me to be legitimately characterised as possible defects in the process," he said.
Later in his ruling he made it clear that it is his view the change in how the IRRs were scored arose "purely fortuitously".
A key meeting in the process occurred in Copenhagen in late September 1995. Civil servants Martin Brennan and Fintan Towey travelled to the Danish city and worked on the competition with Mr Andersen.
"At Copenhagen a tentative scoring or ranking was proposed. However, according to the evidence of Mr Brennan and Mr Towey, they were unable to recognise a ranking.
"At that point, two steps were taken with a view to clarifying the grading on the one hand and secondly the ranking or scoring of the applications."
Key decisions were made at this meeting that did not involve the rest of the project team. Before the meetings it had not been clear whether Esat Digifone or Persona was in the lead; by their end, Esat's bid was in front.
"It would appear that prior to the communication of this tentative first draft result to the Project Team, the ranking had been communicated to the Minister who, if the evidence of Mr McMahon's notes is accepted, directed that the process thereafter be accelerated." Mr McMahon was a member of the evaluation team.
Overall, the key point for the tribunal is whether "there were any significant deviations from the evaluation model which were prompted by outside interference or outside influence, however slight."
There were a number of apparent significant breaches to the confidential way the process should have worked, the chairman said. He listed seven.
Three involve Mr Lowry seeming to know matters that he should not have had knowledge of. Some directly concern Esat.
The key issue is that if Mr Lowry could penetrate the supposedly "sealed" nature of the process, then he would be in a potential position to influence it.
Mr Justice Moriarty referred to a meeting between Mr Lowry and Mr O'Brien in Hartigan's pub, Dublin, on September 17th, 1995.
Some evidence suggested the two men discussed the Esat bid, Mr Justice Moriarty said. Both men have denied this.
On the same day Mr O'Brien met Dermot Desmond, to discuss Mr Desmond's company, IIU Ltd, becoming involved in the Esat consortium.
By September 29th, IIU had a 25 per cent stake in Esat Digifone. Mr Desmond made in excess of €130 million from his involvement in the phone company.
The result of the competition was announced on October 25th, 1995. Mr Justice Moriarty said he will examine how the process was accelerated after the Copenhagen meeting, and whether "by reason of the acceleration of the process or any other interventions by the Minister . . . there was a reluctance or a certain disinterest on the part of officials to scrutinise certain aspects, and more specifically, certain weaknesses in either of the leading two applications."
He said Mr Lowry and Mr O'Brien had complained about the effect the lengthy inquiry was having on their reputations and their careers. However, he noted Mr Lowry had been returned to the Dáil by North Tipperary, and Mr O'Brien "has been appointed to one of the most responsible positions in Irish business".
The latter is understood to be a reference to Mr O'Brien's recent appointment as deputy governor of the Bank of Ireland.