O'Brien recalls view of 'comfort letter'

The entrepreneur Mr Denis O'Brien told the tribunal that he first met Mr Michael Lowry in early 1995, a few months after Mr Lowry was appointed minister for transport, energy and communications.

The tribunal heard the meeting was organised by the late Mr Jim Mitchell, who was acting as a consultant to Mr O'Brien. Mr O'Brien said he could not recall where his meeting with Mr Lowry took place but it could have been at Fine Gael headquarters on Mount Street, Dublin.

He said the meeting lasted for 15 to 30 minutes. He wanted to tell the new minister about his experience in the telecoms market at that time "which was pretty appalling". He spoke to him about the fixed-line telecoms market and also asked if Mr Lowry was going to issue a second mobile phone licence.

Mr O'Brien said he was "good at raising money" and never feared in 1995 that he would not be able to raise funds for his part of any new mobile phone company.

The tribunal heard that as part of the joint venture agreement signed with Norwegian company Telenor in June 1995, Mr O'Brien's company Communicorp committed itself to getting a financial guarantee for £5 million and half of the fee that would be paid for the licence. At that stage, Mr O'Brien said, it was not known how much would have to be paid for the licence.

Mr O'Brien said that in early to mid-1995 he had been trying to raise money for his businesses. Mr O'Brien, who is now a director of the Bank of Ireland, said he went to the clearing banks but did not get the money. "It would have been a five-minute conversation."

He sought a guarantee from Anglo Irish Banks but the application failed over the issue of security. Mr O'Brien said he negotiated a $5 million loan from US venture capitalists Advent International, but at an interest rate of 30 per cent a year. "The trousers were down," Mr O'Brien told Mr John Coughlan SC, for the tribunal. He said he also contributed £600,000 from his own resources.

It was also agreed with Advent around this time that in return for "comfort letters" from it to Telenor and the department, Advent would get the right to take up a 5 per cent shareholding in the Esat Digifone consortium. The Advent letters referred to an offer of up to £30 million to fund Communicorp's involvement in the consortium.

During questioning about the letter from Advent Mr O'Brien took exception to being reminded that he was giving evidence on oath. "You don't need to wave oaths at me. That is a little bit offensive," Mr O'Brien said.

He told Mr Coughlan that he considered the letter from Advent to be a guarantee that was "in my mind" legally enforceable. When told that his solicitor, Mr Owen O'Connell, had said the letter did not constitute a guarantee, Mr O'Brien said he was giving his evidence of his view at the time.

He said that to his mind and in his opinion, the letter from Advent was legally enforceable.

Mr Coughlan then directed Mr O'Brien to a portion of his statement to the tribunal, given in evidence on Tuesday. In the statement Mr O'Brien said that Advent was "not permitted to give guarantees as such", that Advent did issue a comfort letter, and that the letter "while not legally enforceable" amounted to a very strong legal commitment.

He said in the statement he was referring to something like a bank guarantee, "an instrument", but what he got from Advent was, he felt, stronger because it was an offer to give money. "Maybe I am not making myself clear here," Mr O'Brien said. "Maybe not," said Mr Coughlan.

Mr O'Brien said the agreement with Advent was an "explodable agreement" in that it was based on Telenor being satisfied with the letter. In the event, Telenor did not find the letter to be satisfactory.