Telenor and the Department of Transport had concerns about the involvement of IIU's beneficial ownership of 25 per cent of Esat Digifone, the Moriarty tribunal heard today.
Telenor, the Norwegian telecoms company with a 37.5 per cent share of Esat Digifone, had, through correspondence and meetings, said the IIU agreement between Mr Denis O'Brien's Communicorp - also with a 37.5 per cent share of Digifone - and IIU was a method for "Denis O'Brien to get back door control of the business [Esat Digifone]".
Telenor executive Mr Arve Johansson in a memo read out in the tribunal, felt that IIU had done "absolutely nothing" to help with the bid for the awarding of the second mobile phone licence and had, in fact, complicated the bidding process.
IIU were not part of the original bid put in place by Communicorp and Telenor. Mr O'Brien felt the financial part of the original bid was weak and asked IIU to take up a 25 per cent share shortly before the awarding of the sole rights to negotiate for the licence.
The tribunal heard that following speculation in the media prior to the awarding of the licence proper in May 1996, the Department of Transport, Energy and Communications became concerned about the ownership of Esat Digifone. The Department had awarded the negotiating rights to Esat Digifone without knowing that IIU had a 25 per cent stake in the company.
Officials within the Department wrote to the Attorney General's office to find out if there were any legal complications as a result in the change of ownership in Esat Digifone.
They also asked for written evidence regarding the financial strength of IIU and Mr Dermot Desmond who was a 100 per cent beneficial owner of IIU. They did this because of concerns within the department about the financial weakness of Esat Telecom Holdings, formally Communicorp.
The officials requested that Esat Digifone should be spilt in the same way as per the original bid. Esat Telecom Holdings (Communicorp) were to hold 40 percent, Telenor Invest AS were to hold 40 per cent and the other 20 per cent was to be held by Mr Desmond's IIU.