The former Minister for Transport, Energy and Communications, Mr Michael Lowry, yesterday claimed he had no option but to direct Eircom in 1996 to provide certain services to Esat Telecom.

His direction meant Esat Telecom could use elements of the network run by Eircom, then State-owned and known as Telecom Eireann, to provide voice telephony to corporate customers.

These became a significant source of revenue for Esat, whose Esat Digifone joint venture with the Norwegian firm Telenor was awarded a mobile phone licence in 1995.

The Moriarty tribunal was notified last week of a $50,000 payment, after that award, by Telenor to Fine Gael, of which Mr Lowry was then a member.

Telenor has claimed the payment was made on behalf of Esat although that was denied by Esat's then chairman, Mr Denis O'Brien.

In a statement yesterday, Mr Lowry said he had previously instructed Eircom not to release capacity on its network to any operator "if there was a risk that the law would be violated".

He changed his direction only after the European Commission notified his department, now the Department of Public Enterprise, that it disagreed with the interpretation of the law.

The European Commission became involved after a complaint by Esat.

"To have done otherwise would have exposed the State to a claim that it was obstructing the implementation of a European Services Directive," Mr Lowry said. "As Minister I had a responsibility to uphold in as far as was possible the European Commission's position on deregulation and competition."

Mr Lowry's direction meant Esat could use routers and autodiallers owned by Eircom to run its services.

He said: "In a direct response to Esat, the Commission confirmed that Esat had a legitimate right to use routers in order to provide voice services to its customers. The Department was put on notice that the European Commission disagreed with the Department's interpretation and implementation of the Service Directive." This "completely contradicted" the earlier advice of Department officials.

Mr Lowry said he acted in a fair and equitable manner when deciding on the award of the mobile licence.

However, the revelation of the $50,000 payment to Fine Gael has prompted the Oireachtas Joint Committee on Public Enterprise and Transport to seek "information" from the Department and the working group that managed the process.

Chaired by Mr Sean Doherty, it wants briefing from the secretary general at the Department of Public Enterprise, Mr Brendan Touhy, and his predecessor, Mr John Loughry, on the circumstances surrounding the award of the licence.

In the US last week, the Tanaiste, Ms Harney, said the events surrounding the award should be investigated by an Oireachtas Committee.

Before her departure to Japan, she cited the views of Motorola, one of the unsuccessful bidders for the licence. "When I came on my first visit to the United States in 1997 with the IDA, the first company I met was Motorola and they were very aggrieved at the whole process, very angry and I remember the whole meeting was taken up with discussing that issue.

"I think the other consortia that tendered for that mobile licence, and there were a number of them, I can't remember how many, felt very aggrieved at the process. I think that the circumstances surrounding it - and all documentation - should go to the Dail Committee for investigation."