Financier says he took 'considerable risk'

The tribunal heard that Mr Dermot Desmond's involvement in the Esat Digifone consortium went back to a favour done by Mr Denis O'Brien for a friend of Mr Desmond. Mr Desmond, who made more than €127 million from Esat Digifone, told Mr John Coughlan SC, for the tribunal, that he had known Mr O'Brien in 1995 though they were not "bosom pals".

In July 1995, he had contacted Mr O'Brien because the son of a friend who lived in Monaco wanted to get experience of working in radio in Ireland. Mr O'Brien arranged a two-week work experience placement in one of his radio stations.

Mr Desmond later invited Mr O'Brien, along with a number of other people, including the friend from Monaco, to attend a Glasgow Celtic match in Glasgow on August 10th, 1995. It was during this trip that the two men first discussed Esat Digifone's bid for the second mobile-phone licence.

Mr Desmond had had no prior business dealings with Mr O'Brien. "Some time in 1993 or 1994, he had asked me to consider investing in his fixed-line telecom business, but I declined and informed him I had no interest."

The bids for the licence had been submitted on August 4th, 1995. "Denis told me that the only possible area of weakness in their application was on the financial side."

Mr Desmond said a number of financial institutions had expressed "waffly" conditional interest, but he was prepared to make a binding commitment before the result of the competition was announced.

"I also took a considerable financial risk in that I was prepared to pay for my share of the bid costs if the application was unsuccessful. Unlike the conditional interest expressed by the proposed institutional investors, I was prepared to take the downside as well as the up."

Mr Desmond said that "Denis may be a Goliath now, but he was a David then, and I like helping the Davids of this world".

A deal was signed on September 29th, 1995, which, Mr Desmond said, strengthened the financial standing of Esat Digifone.

He said it was an inescapable fact that both Mr O'Brien and his Digifone partner, Telenor, believed the agreement with his firm, IIU Ltd, was of value.

They also believed that the letter declaring that IIU was underwriting all of Digifone not owned by Telenor should be sent to the Department, and would add strength to the bid.

"There was and is simply no other rationale or reason for submitting it to the Department." The letter was returned but the Department did not have to return the letter and could have asked questions in relation to it.

"It is also clear that it was heralding the involvement of IIU in a substantial way with the consortium.

" It is simply untenable and incredible that I would have sent the letter in the first place if I wanted to hide my interest."

He said it was widely perceived now that a valuable State licence was given away for a capped sum. "It is easy in hindsight to forget the risks involved."

Mr Desmond completed his evidence and the tribunal adjourned.