Cabinet position on Esat licence actions ill-judged

Tue, Oct 23, 2012, 01:00

ANALYSIS:THE GOVERNMENT has adopted an odd and arguably feeble position in resisting damages claims arising from the 1995 mobile phone licence competition.

It is fighting demands for compensation from two failed bidders for the licence, while the bidders are making a case that an Oireachtas-appointed tribunal, the Moriarty tribunal, has found believable.

Furthermore, Taoiseach Enda Kenny has said he accepts in their entirety the findings of the tribunal. He did so at the MacGill summer school, having previously resisted a number of invitations in the Dáil to do so from Fianna Fáil leader Micheál Martin.

The claims look set to come to court following the decision of the Supreme Court to allow the two parties, Persona and Comcast, to proceed.

The High Court had ruled against the cases going ahead for reasons of delay. The Supreme Court overruled that decision in July, and the five judges gave their reasoned judgments last week. The judgments set out in very stark terms the seriousness of the issue now facing the State, making liberal use as they did so of a word that is absent from the tribunal report: corruption.

The Moriarty tribunal found that billionaire businessman Denis O’Brien gave money to former Fine Gael minister Michael Lowry, and that the latter interfered in the 1995 competition so as to secure the licence for O’Brien’s Esat Digifone.

Furthermore, Mr Justice Michael Moriarty found that the payments were referable to Lowry’s interference in the competition process.

O’Brien and Lowry, for their parts, have said the judge got it wrong, that there were no payments and that the licence was won fairly.

Tony Boyle, a businessman and shareholder in Persona, the bidder that came second in the competition (with Esat first), has called on the Taoiseach, and the Government, to deal “honourably” with the situation.

Why is it, he asks, that he, a businessman who spent millions preparing a bid for a State competition, is facing a State that is doing all it can to stop him making his case? “We are trying to get truth and justice, and they are trying to block us at every turn.”

The net effect of the position taken by the State, according to Boyle, is that it is protecting O’Brien and Lowry, against whom the tribunal made the above mentioned findings, while doing everything to obstruct the victims of O’Brien’s and Lowry’s improper and covert dealings.

According to Boyle, the Government should act on its acceptance of the tribunal’s findings, come to an honourable settlement with the victims, and then go after those who benefited from the events outlined in the tribunal findings.

By this, of course, he means Lowry and O’Brien. For O’Brien, the winning of the licence provided a platform from which he has gone on to become one of Ireland’s wealthiest citizens.

As matters stand, the Government has decided it will fight the cases being brought by Persona and Comcast. (Comcast came sixth out of the six bids for the licence and its case is associated with Galway businessman Declan Ganley.)

A spokesman for Minister for Communications Pat Rabbitte told The Irish Times last week that the Government had received a report in July on the Supreme Court decision “and decided that any action would be defended. That position has not changed”.

This means the Cabinet decided on its position before the judges of the Supreme Court published their reasoning for overturning the earlier High Court ruling in relation to delay.

In her judgment the Chief Justice, Mrs Justice Susan Denham, made a point repeated by her colleagues when she said: “In considering this case, the serious and important nature of the matters of corruption claimed by the appellants is a relevant factor.

“These proceedings make serious allegations of corruption by a minister of the government, not a matter which should be struck out on a technicality but which should be addressed in a full hearing in open court.

“In submissions it was argued by the State that the appellants’ actions were not in the public interest, but were private commercial interests.

“However, this is not a case between private companies, rather it involves allegations of corruption by a minister of State. There is a public interest in determining such a claim of corruption in high office.”

Another key aspect of the Supreme Court judgments has to do with the nature of the evidence that is available. The delay in taking the case was due to the fact that the two failed bidders were waiting to see what emerged in evidence at the tribunal.

From 2002 to 2006 the State made no issue of this, but it then took a case in which it argued that the delay was inexcusable. One of the reasons delay can be an issue with court cases is that the memories of available witnesses can be weakened by the passage of time.

Lowry and O’Brien welcomed the decision of the Supreme Court last July on the basis that they had long complained about the rules governing tribunals. They say the material that led to the tribunal’s findings would not lead to similar findings in a court.

In contacts with the media they have also asked the rhetorical question as to who would be the failed bidders’ chief witness.

The Supreme Court, in its observations on the issue of delay, pointed to the fact that much of the evidence on which the tribunal based its findings was documentary in nature.

Mr Justice Adrian Hardiman, in his judgment, said “the processes leading to the evaluation of the tenders for the second mobile phone licence, and the award of that licence, are highly documented, as the report of the Moriarty tribunal demonstrates. So, it appears, is the money trail which that tribunal exposed.”

He also noted that the tribunal chairman, Mr Justice Moriarty, did not consider the evidence of corruption to be implausible.

The evidence called by the tribunal provides a road map for the case to be taken by the two failed bidders.

If the State does as it has indicated, and fights the case being brought by Persona and Comcast, it will most likely have to go against the findings of the tribunal. If the State loses it will probably have to pay very substantial damages. Moreover, the upholding of the claims by a court would, as Mr Justice Hardiman said, “disgrace the nation and the State”.

Either way, the monetary and reputational cost of the 1995 mobile phone licence competition continues to climb. The Cabinet needs to decide its position with the greatest of care. Seen from that perspective, its decision to decide on its stance in advance of the Supreme Court judgments appears ill-considered.


Colm Keena is public affairs correspondent