Denis O’Brien profile: high-flying career hits fresh turbulence

There was a time when the arc of the career of businessman Denis O’Brien was racing skywards, but for some time now it has been facing in the wrong direction.

It is hard not to read the news of the expected loss by O’Brien of control of his Digicel group, in favour of bondholders who are owed $1.8 billion, and not think of the career of his one-time arch rival, Tony O’Reilly, whose spectacular career saw him become Ireland’s most successful businessman before, late in the game, debt, circumstance, and poor investment decisions pulled him down.

It would be ridiculous to draw too close a parallel, given that O’Brien will retain a role and a stake in Digicel, still travels the world in a Gulfstream jet, and has long been marked out from the pack by his determination and drive. Still, lots of business titans bow out in a planned way when at the top of their game, and as matters stand that doesn’t look likely with the 64-year-old Dubliner.

[ Denis O'Brien set to lose control of Digicel in €1.8bn debt cut plan ]

[ O'Brien deal caps years-long battle to manage Digicel debt ]

[ Digicel debt saga: A timeline ]

O’Brien burst on to the scene in 1995 when his consortium Esat emerged as the surprise winner of the competition for the State’s second mobile phone licence. By the time he sold out in 2000, the Esat business was doing so well that the deal netted him about €292 million personally. By then, O’Brien had moved tax residence to Portugal (he is now believed to be tax resident in Malta) and had his sights set on repeating the mobile trick in the Caribbean.

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His newly formed Digicel won a Jamaican licence competition and used the island as a launch pad to spread quickly through the region, taking on the long-established behemoth Cable & Wireless. The former High School, Rathgar, and UCD (Politics and History) student, was now playing on the world stage, running a personal headquarters operation in Dublin, negotiating with investors in North America, and growing a telecoms business in a region that contained some of the poorest, most politically unstable, and most corrupt countries on the planet, while keeping an eye out for new business opportunities all the while.

Meanwhile, in Dublin Castle, a tribunal of inquiry was looking into the financial affairs of the one-time communications minister, Michael Lowry. It emerged that the tribunal was looking into possible financial links between Lowry and O’Brien, and whether any such links might be associated with Lowry’s position as minister during the 1995 mobile phone licence competition.

When the tribunal published its findings in 2011, they were devastating. Lowry, the tribunal decided, had interfered with the licence process to the benefit of O’Brien’s Esat, O’Brien had sought to make payments to Lowry, and the two matters were linked. O’Brien and Lowry contested the findings, and O’Brien vowed to fight them, but they still stand.

Among the issues that emerged during the tribunal was O’Brien’s capacity to forcefully go after those he considered his rivals. O’Reilly, for long the controlling shareholder of the Independent newspaper group, had been part of a failed bid for the mobile phone licence won by Esat.

In 2000, the two men were rivals again when the telecoms company Eircom came up for sale. O’Reilly won, loaded the company up with debt, and sold it on at a profit. It became clear during the tribunal sittings that O’Brien believed O’Reilly had used his control of Independent News & Media to influence the Eircom battle, and that he deeply resented this. It also became clear that O’Brien deeply resented the tribunal and was prepared to make personalised attacks against it. Some speculated that the desire to better rivals was a core component of O’Brien’s spectacular business drive.

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However, his rivalry with O’Reilly has cost him dearly. Even before he launched his telecoms career, O’Brien had an interest in media assets by way of a number of radio stations. In the mid-to-late 2000s, against the backdrop of the tribunal, he began to build up a shareholding in Independent News & Media (INM), owner of the Independent titles and at that stage a listed company. O’Reilly tried to fight back, but the younger titan eventually ousted him. The spat cost both men a lot of money and O’Brien’s investment was to lose its once huge value as the years passed. The sums were such that even he had to notice.

The businessman’s dominance in the Irish media landscape added to the air of controversy that surrounded him, as did his tendency to call his lawyers when he felt that coverage in the media of his affairs was defamatory. In 2013, he won an award of €150,000 against the Irish Daily Mail. He lodged multiple sets of High Court proceedings alleging defamation, and even launched an ultimately unsuccessful case against the Oireachtas in relation to comments made in the Dáil about his affairs and how the Oireachtas dealt with them.

Meanwhile, he was taking a lot of money out of Digicel. In the period 2007 to 2015 he was paid dividends of almost $2 billion, and substantial fee income on top of that. The payments straddled the period when the global economy crashed and assets plummeted in value. During the early 2010s, when Ireland’s economy was crawling out of the hole it had fallen into, O’Brien invested €230 million in the Beacon Private Hospital, the Topaz Group, and the building services group, Siteserv. They all had substantial bank debt and in the cases of Topaz and Siteserv, these debts were to the State-owned IBRC.

It is not unusual that a business that has crashed in a slump and is overburdened with debt changes hands in a deal where the debt holders write off some of what they are owed. In the case of Siteserv the O’Brien deal involved €110 million of a €150 million debt being written off, while the Topaz deal saw IBRC taking a hit for about half the €304 million of debt on its books.

The decision to sell Siteserv to O’Brien almost immediately set rumour mills turning, prompting calls for an inquiry. A confidential commission of investigation was established in 2015 and reported last year. It found that the Siteserv deal involved “misleading and incomplete information” being supplied by others to IBRC in relation to two key figures in Siteserv having a stake in the O’Brien-controlled Isle of Man company that bought Siteserv from IBRC. It also decided that IBRC could have received a better price for the business (a finding that was subsequently strongly criticised by one of the corporate financiers involved in the deal). The report found no evidence to support claims made in the Dáil by Catherine Murphy TD about O’Brien’s banking arrangements with the IBRC or claims of insider dealing prior to the sale. It did not directly criticise O’Brien.

The businessman is no longer a player in the Irish media scene, having sold his interests in INM and his radio stations. It is speculated that his losses from his Irish media investments are in the region of €600 million, and possibly greater. The connection with INM is not entirely over. Inspectors appointed under company law are investigating an apparent spying operation on journalists and others within the newspaper group during the time when O’Brien’s long-time business associate Leslie Buckley was chairman. Claims against Buckley are being disputed in the courts. O’Brien’s legal advisers, no doubt, are keeping a watching brief.

While media coverage of O’Brien tends to focus on business dealings and controversies, his own description of his career focuses more on his philanthropic activities. He has his own website, where he is described as a “firm believer in philantrocapitalism”. O’Brien “serves various non-profit groups and organisations in leadership roles”, according to the website. “The model of capitalism has to change,” he is quoted as saying. “If you want to build a sustainable business in an emerging market, you’ve got to fund impactful community projects, particularly in education.”

He has long been involved in funding the Dublin-based human rights organisation, Front Line Defenders, and is well-known for his tendency to react generously to personal and wider catastrophes that come to his attention. He was heavily involved in the response to the devastating earthquake in Haiti (one of Digicel’s biggest markets) in 2010, where he worked closely with former US president Bill Clinton. More recently, he has been linked to a generous response to pleas for financial assistance from a well-known Irish sports figure who, it is alleged, was fraudulently claiming he required treatment for cancer.

O’Brien pulled out of a planned stock market IPO of Digicel shares in 2015, a project from which he could have netted up to $2 billion personally. Digicel earns income in some very poor markets, in their local currencies, but has debts to service the operations that are in dollars. Exchange rates have been working against the arrangement for years and continue to do so. What will happen next will be interesting to watch. Meanwhile, according to his website, O’Brien’s remaining interests in Ireland include the Beacon Hospital and the four-star Ballynahinch Castle Hotel in Co Galway.