Moriarty report fallout set to continue
Cantillon:The coming year should see some interesting legal developments as the fallout from the Moriarty tribunal’s report on the second mobile phone licence competition continues.
On February 11th next the State’s application to have Denis O’Brien and Michael Lowry joined as third parties in the case being taken by Persona, a failed bidder for the licence, against the State, is to be heard.
The State, while stating that it is vigorously defending the competition against Persona’s allegations, is asking the court to have O’Brien and Lowry joined as third parties. It says it is entitled to an indemnity from them.
The argument is that, although the State’s case is that nothing corrupt or untoward took place, if the court finds otherwise, it is the Esat Digifone founder, O’Brien, and the then minister, Lowry, who were up to the alleged no good and should pay the cost.
Both O’Brien and Lowry have said they would welcome the allegations made against the licence award being tested in a court of law.
They say that the case that was made in the tribunal would not survive in the context of the rules that apply in a court hearing.
If the two men are joined to the case, and it goes ahead, then Persona, if it loses the case, could be looking at a legal costs bill that would be a multiple of the one that would apply if there had been only one defendant.
Persona is owned by Dublin businessmen Tony Boyle and Michael McGinley.
Furthermore, Lowry and O’Brien may think that, in public relations terms, the best they can hope for is a failure of the Persona case in the High Court, which they could then use to counter the reputational blow that was the tribunal’s findings.
They are unlikely, on that basis, to agree to any settlement – though there is no reason to believe the State is contemplating any such move. Any dropping of the case by Persona would also constitute a PR win, though of lesser value.
Frustration over bank guarantee
Some people might think that Bank of Ireland chief executive Richie Boucher has a brass neck being “frustrated” at the extension last week of the eligible liabilities guarantee into mid-2013.
After all, Bank of Ireland might not be still here were it not for the support of the State for our banking system in late 2008 when it was on the brink of collapse.
Bank of Ireland might not have been the worst offender in terms of its lending practices in the Celtic Tiger years, but it still required substantial financial support from the Government at the time, along with the comfort that the bank guarantee offered institutions when the markets were closed off to it.
To many, the €449 million it handed over for the guarantee in 2011 was a small price to pay for its survival. There is certainly merit to that argument.
However, it is also not in the long-term interest of the country for the bank and sovereign to be tied together as if in some school sports day father-and-son three-legged race.
Bank of Ireland seems to be heading in the right direction. Of those with restructured loans, 86 per cent are making their payments.