Substantial risks for the State and the plaintiffs in allowing cases to proceed

Wed, Jul 18, 2012, 01:00

ANALYSIS:The debacle that was the 1995 mobile phone licence competition continues to rumble on, increasing the cost to the exchequer, writes COLM KEENA

WHILE THE High Court ruled in 2007 that two parties associated with losing bids for the licence could not take their case on the grounds of inexcusable delay, the Supreme Court has now overruled that decision.

This opens the way for the plaintiffs to take cases seeking damages, which could be substantial.

On the other hand, both risk losing the case, and shouldering the huge legal costs that would ensue.

Both plaintiffs have taken cases against the State, while one is also seeking damages from businessman Denis O’Brien and the winner of the licence, Esat Digifone. Digifone was bought by BT in 2000 as part of a £2.3 billion(€2.92 billion) deal.

Last year, the Moriarty tribunal found that O’Brien made payments to the then minister for communications, Michael Lowry, and that Lowry interfered with the licence process to the benefit of Esat.

Furthermore, the tribunal found that the payments and the interference were related.

(Lowry never benefited from the payments, for reasons that need not be gone into here.)

One plaintiff, Persona, was a consortium that came second in the competition. It comprised Motorola, Sygma Wireless, and the ESB.

It is now owned by Irish businessmen Tony Boyle and Michael McGinley, via their company Sygma Wireless. The Persona case is against the State.

The second plaintiff is Comcast International Holdings Incorporated, and Declan Ganley. The former is a Delaware company that is part of the huge US cable TV group Comcast. Yesterday, O’Brien said Comcast has withdrawn from the case. The company could not be contacted yesterday.

The Ganley case is against the State, Esat Digifone, and O’Brien. Comcast and Ganley were part of the Cellstar consortium, which came last in the competition. Cellstar also included RTÉ and Bord na Móna. (They are not plaintiffs in the case.)

The evidence heard by the Moriarty tribunal and the conclusions reached by that tribunal cannot be used as evidence in any High Court case taken by the plaintiffs.

However, they can call witnesses who gave evidence to the tribunal. In this way, the tribunal’s work can guide their case.

The tribunal heard evidence not just about Lowry’s role in the competition process and financial dealings of his allegedly associated with O’Brien, but also about difficulties that arose in the course of the licence competition concerning the scoring of the six bids.

Damages won could, at the lower end of the scale, be limited to costs associated with the bids and legal costs associated with the damages case.

At the other end of the scale, aggravated damages could be very substantial. The licence, when awarded, was viewed as having a value of approximately £60 million. The success of Esat in the period from 1997 to 2000 led to the explosion in Esat’s value.

The plaintiffs have alleged fraud, conspiracy, deceit, corruption and misfeasance in public office in relation to the mobile licence award.

Lowry has welcomed the Supreme Court’s decision on the grounds that he has always wanted the allegations made against him and the competition to be tested in the courts as against a tribunal.

Likewise, O’Brien has welcomed the decision. A win in the courts would be a powerful weapon for Lowry and O’Brien in their campaign against the tribunal’s findings.

It is worth noting that if the State defends the plaintiffs’ claims then it is adopting a position different from the findings of the tribunal.

The tribunal came to its findings based on the evidence it heard, even though no witness involved in the licence process gave evidence that he/she believed there was improper influence from Lowry.

All these witnesses, if they repeat the evidence they gave to the tribunal, will say the decision to award the licence to Esat arose from the assessment of its bid.

In other words, there is no star witness available to Boyle or Ganley.

The case, if heard, will most likely run for some time, and will involve substantial costs. The plaintiffs will have to decide if they want to take the risk.

But similar reasons may put pressure on the State to settle. O’Brien, it would seem, has little reason to do so.