In October 1995 the Rainbow Coalition made a decision that gave an extraordinary financial gain to its beneficiary: it awarded the State's second mobile phone licence to Esat Digifone.
The gain was extraordinary in that the licence was purchased for £15 million. It then formed the basis for building Esat into a company sold five years later for a price that netted its chairman, Mr Denis O'Brien, £221 million.
The pivotal decision to award the licence was made by the then Minister for Transport, Energy and Communications, Mr Michael Lowry.
Mr Lowry was particularly close to Mr David Austin, a wealthy Fine Gael supporter and fundraiser. Within a month of the decision to grant the licence Mr Austin had asked Mr O'Brien for a donation to Fine Gael. Within three months Telenor, which held a 40 per cent stake in Esat, gave $50,000 to Mr Austin, intended as a political donation.
Fine Gael and its then leader and Taoiseach Mr John Bruton say they refused the donation. However, it was not returned to Telenor by Mr Austin but was lodged to a Jersey bank account. On May 6th, 1997, six weeks after the new Esat network was finally launched, Mr Austin paid the money to Fine Gael.
Fine Gael says it thought the money was a personal donation by Mr Austin. Mr Bruton says he was entirely unaware of the donation. The timing and circuitous route of the money from Telenor to Fine Gael, together with the party's decision not to disclose this to the Moriarty tribunal, has tarnished Fine Gael's recent efforts to position itself at the head of the campaign to end business funding of politics.
It was in late 1995, around the time the licence decision was announced, that Mr Austin asked the chairman of Esat, Mr Denis O'Brien, to give money to Fine Gael. The specific request was to support a Fine Gael fundraising dinner in New York which was to be addressed by the Taoiseach and Fine Gael leader Mr John Bruton.
Fine Gael said on Monday the dinner was to take place in November 1995 and the approach to Mr O'Brien took place before this. However, Mr O'Brien's statement of Monday night puts the approach from Mr Austin in December 1995.
All parties to the controversy agree Mr O'Brien said he would not attend, but that he referred Fine Gael to Telenor, a 40 per cent shareholder in Esat. There are different accounts as to what happened next.
Mr O'Brien has said only that he "put Mr Austin in contact" with Telenor and that he "did suggest that Telenor may wish to support the event". In a statement on Monday he said he "understands that Telenor subsequently made a $50,000 donation to the Fine Gael party via Mr Austin".
Fine Gael's version ascribes a more active role to Mr O'Brien. According to Mr James Nugent SC, a long-time party supporter who prepared a legal opinion for Fine Gael on the matter, Mr O'Brien "responded positively" to the request for money. He told Fine Gael "the donation would be paid via the US firm of Telenor, as he wished that his contribution be treated in confidence". Mr O'Brien yesterday rejected this version.
Telenor's account gives Mr O'Brien a still more active role. Esat Digifone asked Telenor to pay the money, according to Mr Dag Vangsnes, executive vice-president of Telenor. "Esat Digifone decided to do this as a corporate citizen of Ireland," he said on Monday. "They wanted to buy one of the tables at the fundraiser."
Mr O'Brien has threatened legal action against newspapers and RTE arising from reports of his involvement in this affair. He said in a statement on Monday that he "categorically denies making or arranging a payment to the Fine Gael party in late 1995/early 1996 of Ir£50,000, US$50,000 or any similar amount". He repeated this yesterday.
It is curious that although Mr O'Brien denies Esat either made or requested Telenor to make this $50,000 donation, it reimbursed Telenor for it. The decision to reimburse Telenor followed an initial refusal, says Mr O'Brien, but the reasons for the reimbursement of money it says it had nothing to do with are not clear. Telenor says the reimbursement proves the truth of its version that Mr O'Brien had asked for the money to be paid in the first place.
However, Mr O'Brien insists it was a payment made by Telenor who "wished to develop political contacts independently of Esat". This is a variation on the usual reason given by business people for making large donations to political parties - indeed the reason given by Mr O'Brien for more recent donations by him - that they feel the need "to support the democratic process".
Whatever the motivation for the payment, it was refused by the Taoiseach and Fine Gael leader Mr Bruton. Mr Bruton says that, in early 1996, he was first informed that a donation was "available to Fine Gael" from a company associated with Esat Telecom. He refused the donation, he says, on the grounds that "it might be construed as being in some way associated with Esat Digifone's then recently successful bid for the second mobile phone licence".
According to Mr Nugent, Mr Bruton used a curious phrase in refusing it. The money should be "left where it was", he said. According to Mr Nugent, "by this he intended to convey to Mr Austin that the subscription was not to be accepted".
However, by this stage, according to a Telenor spokesman yesterday, the money had already been paid to Mr Austin and was lodged to his personal Jersey-based Bank of Ireland account. If true, this gives the suggestion that the money be "left where it was" a different meaning.
According to Mr Bruton's statement of yesterday, he had the conversation with Mr Austin in which he suggested the money should be "left where it was" in early 1996. Mr Nugent says the money was lodged to Mr Austin's account in January 1996 rather than in late December 1995 as stated by Telenor.
No resolution of the dispute over the date was available last night. It therefore remains unclear whether Mr Bruton's instruction that the money be "left where it was" was a clear instruction not to accept it.
Over a year later, on May 6th, 1997 - on the eve of the general election campaign - the money was paid by Mr Austin into Fine Gael's account. It was paid over in an unusual way: a cheque drawn on Mr Austin's personal account was made out to another Fine Gael supporter, Mr Frank Conroy, and endorsed over to the party. Fine Gael says it believed this was a personal contribution by Mr Austin. Mr Bruton said he was not even made aware of this large donation.
Subsequently, and for reasons which have not been explained, Mr Austin invoiced Telenor for $50,000, the exact value of the donation. The invoice, according to Mr Nugent, stated that the invoice was in connection with consultancy fees.
It was only on February 13th, 1998, when Telenor came to see Fine Gael, the party realised this was the Telenor money.
There then followed Fine Gael's attempt to give the money back. They sent a cheque for the pounds equivalent - £33,000 - to Telenor. Telenor endorsed the cheque and sent it to Esat, who didn't cash it but sent it back to Fine Gael again three months later. According to Fine Gael, Mr O'Brien felt that to accept the money back "might lead to adverse inferences about Esat being drawn".
The decision by Fine Gael not to reveal details of this saga to the Moriarty tribunal is deeply embarrassing for the party. The decision was based on legal advice. This advice said the tribunal was to investigate decisions made by Mr Lowry and whether any of these decisions conferred any benefit on any person making substantial payments to Mr Lowry.
Mr Nugent's advice was that as the payment was made to Fine Gael and not to Mr Lowry, this payment did not come under the terms of reference of the tribunal.
Yesterday, in the face of embarrassing public disclosure, Fine Gael announced it is giving the information to the Moriarty tribunal.