State vows to fight Esat licence lawsuits

The Department of Public Enterprise has pledged to vigorously defend any proceedings brought against it by consortiums which …

The Department of Public Enterprise has pledged to vigorously defend any proceedings brought against it by consortiums which were unsuccessful bidders for the second mobile phone licence. The licence was awarded to Esat in 1995 and aspects of the award are under investigation by the Moriarty tribunal.

It has emerged that parties in two of the losing consortiums have begun court proceedings for damages against the State and others. If successful, the claims could cost the Exchequer millions of euros.

The actions are being taken by Persona Digital Telephony and Sigma Wireless Networks and by the Cellstar consortium. Cellstar includes US group Comcast and Galway-based businessman Mr Declan Ganley whose company Ganley International is involved in the actions.

It is understood that the Cellstar consortium began its legal moves possibly over a year ago. Sigma Wireless and Persona Digital Telephony are also thought to have begun their action at least seven weeks ago.

The Cellstar proceedings are understood to cite the then Minister for Transport, Energy and Communications, Mr Lowry, Esat Telecom, Esat founder Mr Denis O'Brien and Ireland and the Attorney General.

Members of both these consortiums were extremely angry and disquieted over the handling of the competition at the time and spent several months considering their positions.

It is understood these parties have been closely following the tribunal proceedings since they began and the details which have emerged served only to heighten their disquiet.

One source said it had been important to begin proceedings at this time to ensure such moves would not be closed off because they would be statute barred after six years.

"We want to do the minimum necessary to keep all our options open," said the source. "We do not want to get in the way of the Moriarty tribunal's work, but nor do we want to narrow our options."

Sigma and Persona are understood to be citing the Public Enterprise Minister (formerly Transport, Energy and Communications), Ireland and the Attorney General.

A spokesman for the Department of Public Enterprise said the Government was aware of legal moves by the consortiums. He said the Government would vigorously defend any actions taken against it.

Both consortiums, although not taking proceedings against exactly the same parties, have lodged similar actions. The actions, however, are being taken independently of one another.

Persona and Sigma claim damages for alleged misfeasance in public office, breach of duty and statutory duty, breach of contract and breach of EU laws. They are also seeking a declaration that the EU mobile and personal communications regulations 1996 contravene EU law.

Cellstar wants a declaration that the decision to award the licence is unlawful and null and void.

It is also seeking damages for alleged breach of duty, breach of statutory duty, breach and contract, misfeasance in public office and breach of, or procuring breach of, the Prevention of Corruption Act 1996, fraud and deceit.

British Telecom bought Esat Telecom - which held a 50 per cent stake in Esat Digifone - for £1.9 billion (€2.3 billion) more than two years ago.

The fee for the second mobile phone licence was capped at £15 million following a complaint to the EU.

A source close to the Comcast consortium said last night that some very high figures of many millions of euros in damages were being talked about, but these were unrealistic.

"There are only two points of reference," said the source, "the licence fee and the amount for which Esat was eventually sold."

The source added that nobody wanted to see the Exchequer stuck for hundreds of millions of euros, but that companies had a duty to their shareholders to take such actions, if they felt they were warranted.

A spokesman for Mr Denis O'Brien, who was cited in proceedings by one consortium, said last night: "We have the same sentiments as we did seven years ago. We won the licence fairly and squarely and this is just sour grapes."