Chairman allows Desmond questions

The tribunal chairman said it would be operating in "cloud cuckoo land" if he did not allow questions on the findings concerning Mr Dermot Desmond in the Glackin report during the tribunal's inquiry into the awarding of a mobile phone licence to Esat Digifone.

Tribunal counsel Mr John Coughlan SC read out a number of the findings contained in the Glackin report that differed completely with statements made to the Glackin inquiry by Mr Desmond.

Mr Desmond told the Glackin inquiry he had no interest in the success or failure of two companies involved in the sale of the former Johnston Mooney & O'Brien site in Ballsbridge, Dublin. However Mr Glackin found that he did in fact have a financial interest in the success or failure of the companies, Chestvale Properties Ltd and Huddle Investments.

Mr Coughlan also read out findings in the Glackin report that Mr Desmond had made misrepresentations to banks and had secured an apology from the Irish Independent about a story which he knew was substantially correct.

He put it to the witness, civil servant Mr Fintan Towey, that the findings were "very strong negative findings in relation to Mr Desmond". Mr Richard Nesbitt SC, for the Department of Communications, objected to the question. Mr Justice Moriarty said the findings of the report stood as fact but said the tribunal would be living in "cloud cuckoo land" if it didn't allow the evidence during this aspect of its inquiry. Mr Towey, a member of the team that selected the winner of the 1995 mobile phone licence competition, said he had been generally aware of the findings of the Glackin report though he had not read the report.

Mr Coughlan then asked Mr Towey about a letter received from Mr Desmond's company, IIU Ltd, on September 29th, 1995, during the course of the licence competition. The letter, from Prof Michael Walsh of IIU, said it had agreed to underwrite that part of Esat Digifone not owned by Norwegian company, Telenor.

Mr Towey said that at the time he had no understanding as to what IIU was or that there was any link between the company and Mr Desmond. He said he did not note the fact that Mr D. F. Desmond was given as the chairman of the company in a list of directors and partners given at the bottom of the headed notepaper.

When Mr Coughlan put it to him that it was incredible, "in the legal sense of the word", that he had not noticed Mr Desmond's name at the bottom of the letter, and had not been aware of Mr Desmond's involvement with IIU, Mr Towey said he did not agree.

The consortiums competing for the licence had been told not to send in unsolicited material after the closing date and the assessment team was anxious to maintain parity of treatment between the applicants.

The letter was "clearly an attempt to enhance" the Digifone application and his overwhelming concern was to address the letter in a way which did not convey any advantage. For this reason, he returned the letter to Mr Denis O'Brien and did not keep a copy on the department's files.

He told Mr Coughlan it was his interpretation of the letter that IIU was prepared to underwrite the shareholding in Digifone held by Mr O'Brien's Communicorp group, and would also take up the 20 per cent of the consortium that had originally been earmarked for four major financial institutions including AIB and Investment Bank of Ireland.

Mr Coughlan said: "You had never heard of that crowd IIU?" Mr Towey said: "No. He said that later, in 1996, when it was disclosed that Mr Desmond was to be an investor in Esat Digifone, he had forgotten the content of the September 1995 letter and did not make any link between the two matters.

Mr Towey is to resume his evidence today.