Esat sale would take O hUiginn to front rank of Irish business earners


The coming weeks will be crucial for Padraig O hUiginn. Once regarded as the most powerful civil servant in the State, the former secretary general at the Department of An Taoiseach and confidante of Charles Haughey will be a primary beneficiary if Esat Telecom, in which he holds 97,500 shares, is taken over by the state-owned Norwegian firm Telenor. Telenor's current bid values his stake, less than 1 per cent of the company, at $4.14 million (€4 million).

Worth $1.9 billion, the proposed deal has been rejected by Esat on the basis that the consideration of $85 per American Depository share, or $42.5 per Esat share, fundamentally undervalues the company. Esat has commenced negotiations with a number of other possible bidders who may offer more for the firm. If this happens, Telenor is virtually certain to increase its offer.

Either way, Mr O hUiginn will make a substantial gain, crowning a short career in the private sector for the Corkman, now aged 75, who retired from the Civil Service in 1993. Despite his age, many who know him cite his high energy. "He's like a man 25 years younger," said one acquaintance who pointed to hisO hUiginn had a "very active, interested mind".

Mr O hUiginn was granted 60,000 ordinary shares as a founding director of Esat. Under an employee share option scheme introduced when the company was floated in November 1997, he was granted options on a further 17,500 shares, at a weighted average price of £2.44 ($3.2) each. Mr O hUiginn would make a profit of about $668,000 on these options, if exercised in full, under the terms of Telenor's current offer. An additional 20,000 share options were granted in December 1998, at a weighted average price of £11.23 ($14.72) each. If exercised, the profit on these options would be $556,000 under the terms of the Telenor offer. But Esat is not his only interest. Mr O hUiginn has his eye also on An Bord Pleanala, which is due to deliver a decision after January 15th on a £20 million (€25.4 million) proposal by the US-owned group Value Retail to build a tourist retail village at Goffs, Co Kildare.

Mr O hUiginn is a director of Value Retail's Irish operation, Irish International Tourism Outlets (IITO), which plans 47 retail spaces for branded manufacturers to sell goods directly at discounts of 25-75 per cent. This would be geared mainly at the tourist industry. Mr O hUiginn has argued that the development, which is opposed by retailers in Naas, would bring additional business to the Co Kildare town.

As a board member and former chairman of Bord Failte, and part-time special adviser to the Minister for Tourism and Sport, Mr McDaid, Mr O hUiginn is, of course, well placed to identify opportunities in the tourist sector. Ironically, it was only nine years ago that he characterised the State's tourism business as a "Mickey Mouse" industry.

With fellow-entrepreneur Oliver Barry, Mr O hUiginn also sits on the board of Millennium Theatre Company, which has taken a long-term lease on the Ambassador Cinema in central Dublin and plans to invest £1.5 million to develop entertainment facilities there. Other interests include a directorship of Bank of Bermuda at the IFSC in Dublin.

It is with Esat, however, that Mr O hUiginn is likely to join the front rank of the State's business earners. Described as "very loyal to people loyal to him", he is said to have been a valuable board member at Esat, especially when the company complained to the EU in 1996 over interconnection charges charged by Eircom, then Telecom Eireann. "He has contacts throughout the system at every level," said one source.

But business success has come late to Mr O hUiginn, who spent five decades honing his considerable diplomatic and political skills in the Civil Service, European Commission, United Nations and An Foras Forbartha, of which he was founding managing director in 1964.

Appointed Secretary of the Department of the Taoiseach in 1982, 40 years after joining the Civil Service, he is principally remembered for his strong loyalty to Mr Haughey during his 1982 and 1987 governments. Indeed, Mr Haughey postponed Mr O hUiginn's retirement on two occasions during the latter administration.

An earlier indication of Mr Haughey's high regard for him was Fianna Fail's adoption of the 1982 programme for government, which was written by Mr O hUiginn, as its election manifesto when that government fell.

"He was very focused, very good on paper, had very good communication skills and was good at drafting memoranda," says one observer who was familiar with Mr O hUiginn at this time. "He was very demanding and very ambitious."

So close was Mr Haughey to Mr O hUiginn that he was perceived to be marginalised by Dr Garret FitzGerald's Fine Gael-Labour coalition, which came to power in late 1982. "He obviously had worked so assiduously with Charlie that he was left out," said a figure who was close to the coalition.

The Northern crisis was high on the agenda at this time and Dr FitzGerald worked closely with the Secretary to the Cabinet, Mr Dermot Nally, during the drawnout negotiations which led to the Anglo Irish Agreement.

Mr O hUiginn concentrated during this period on chairing the National Economic and Social Council, which produced the influential Strategy for National Development 1986-1990 report in 1986.

When Mr Haughey returned to power in 1987, Mr O hUiginn resumed his central role at the heart of government. "There was certainly a sense that he was close to the power," says another figure. "He was very sharp and very shrewd in every sense. A great fixer."

These attributes were displayed prominently when Mr O hUiginn was involved in the first social partnership negotiations between the government, trade unions, the farming lobby and business organisations, reaching agreements which were to form the bedrock of the State's economic recovery in the 1990s.

"He drove that very hard. He believed in that consensus approach very strongly and played an absolutely key role," said one former civil servant. Asked about Mr O hUiginn's close links to Mr Haughey, he said: "That happened to a lot of civil servants at that time. The job was to be loyal to the Taoiseach of the day." However, another source suggested that some of Mr O hUiginn's peers were resentful of his close working relationship with Mr Haughey.

While Mr O hUiginn's forte was in economic affairs, the Cabinet Secretary, Mr Nally, was one of Mr Haughey's leading officials when dealing with Northern Ireland affairs.

One manoeuvre by Mr O hUiginn which was criticised officially was an amendment to an IDA development plan for Goodman International, the meat firm at the centre of the Beef Tribunal in the early 1990s. Performance clauses guaranteeing that money would be paid to the company only after it had created jobs had been changed to effect that the plan was to be "interpreted" that the company would undertake to use its "best endeavours" to fulfil job targets.

The chairman of the tribunal, Mr Justice Hamilton, said in his report that the Government had no power to alter the terms of the scheme once it had been approved. "There is no doubt whatsoever that the Government . . . wrongfully and in excess of its powers . . . directed the Authority [IDA] to remove the performance clause from the grant agreement . . . and that this direction was made either at the instigation of the then Taoiseach or the Secretary to his Department."

The tribunal heard that Goodman International's owner, Mr Larry Goodman, had objected to this performance clause to Mr Haughey. Coincidently - and independently of Mr Haughey - Mr O hUiginn had contacted the IDA seeking information about the problem. Mr O hUiginn came to the view that Goodman "had a reasonable case" and advised Mr Haughey accordingly in a note to him, delivered when he was at a Cabinet meeting. The Cabinet thus changed the plan and, a week later, the IDA agreed to implement the change.

Other developments at this time included the establishment of the International Financial Services Centre in Dublin, of which Mr O hUiginn was chairman. "He could execute and deliver very well on government decisions," said one former official of his role in this initiative. "He could find very original solutions to problems. Sometimes civil servants might have felt he was over-creative."

Following his retirement from the Department of the Taoiseach, Mr O hUiginn spent three years as chairman of Bord Failte, where he was instrumental in introducing structural changes recommended by London consultants AD Little in 1994. In what was considered to be a tough time for the organisation, Mr O hUiginn is said to have been very skilful in negotiations. "We went through difficult sessions without any of us feeling angry," said one source.

Fine Gael TD, Mr Enda Kenny, who was Minister for Tourism during this period, said it was obvious that O hUiginn was a man of "exceptional experience". "If you had a really intractable problem, he's the kind of person who you send for," he said.

Overall, the picture is very much one of a man at ease with himself and his talents. Erudite, fluent in French and Irish, Mr O hUiginn is a keen collector of modern art and passionately interested in golf. Golfing friends include the Minister for Finance, Mr McCreevy, and businessmen Dermot Desmond and J.P. McManus. His party piece is a version in French of The Banks, which he translated himself.

"He's urbane, knows his way around any kind of international company. He's very, very good company. No problem is too big. He's always in good humour and in good form," said one acquaintance.

O hUiginn declined to be interviewed for this article.