Dermot Desmond made more than €100 million from Esat Digifone, writes Colm Keena
An investigation into Mr Dermot Desmond's wealth was conducted before the second mobile phone licence was awarded to Esat Digifone in May 1996.
Senior civil servants involved in selecting Esat Digifone as the winner of the State's second mobile phone licence in October 1995 did not know at the time of Mr Desmond's involvement.
When Esat was selected as the winner in October 1995, the civil servants believed it was 40 per cent owned by Mr Denis O'Brien's company, Esat Telecom, and 40 per cent by a Norwegian company, Telenor. They believed the remaining 20 per cent was to be placed by Davy Stockbrokers with a number of financial institutions.
Four institutions, AIB, Bank of Ireland, Standard Life and Advent International, were interested.
On September 29th, 1995, during the course of the assessment of the six bids received for the licence, the Department was sent a letter from Mr Michael Walsh of IIU Ltd, a company owned by Mr Desmond.
The letter was received after Mr O'Brien and other members of Esat Digifone made oral presentations to the Department. Among the matters on which the consortium was questioned was the financial robustness of Communicorp, Mr O'Brien's company which in turn owned Esat Telecom.
The letter was received by Mr Fintan Towey, one of the civil servants assessing the six bids. He discussed the matter with Mr Martin Brennan, the civil servant who was chairing the assessment group.
Mr Towey and Mr Brennan decided the letter should be returned. Mr Brennan was not told the contents of the letter. No copy was kept.
Mr Loughrey, the secretary of the Department, was not told about the letter, he said in his statement. If he had known he would have approved of the decision taken by Mr Brennan and Mr Towey, he said.
Mr Loughrey said he did not learn of Mr Desmond's involvement until after Esat won the competition. He learned about it from the newspapers.
In October 1995 Esat became the company with which the Department entered into exclusive negotiations concerning the awarding of the licence.
When selecting Esat in October 1995, there had been some concern about the financial resources of Communicorp.
The Department decided that even if it transpired that Esat Telecom (Communicorp) could not keep its end of the deal, Telenor would be quite capable of taking on the whole project, Mr Loughrey said in his statement to the tribunal.
Prior to the actual awarding of the licence in May 1996, the Department set out to make sure the finances of the Esat consortium were as they should be, Mr Loughrey told the tribunal.
When it was discovered that Mr Desmond's IIU had 25 per cent of Esat Digifone, the Department insisted this be reduced to 20 per cent. This was so that the original 40-40-20 arrangement between shareholders would be in place at the time of the licence award.
Mr Loughrey also said a deal was put in place whereby IIU and Telenor would take up any shortfall which might emerge if Esat Telecom or Communicorp could not afford to keep up its end. "So the project was not jeopardised by Communicorp not having a triple A credit rating."
A document seen by The Irish Times shows that one of the questions put to Mr Michael Lowry by the tribunal concerned his connection, if any, with "a financial analysis of IIU Ltd/Dermot Desmond undertaken by Mr Donal Buggy on 15th May, 1996".
This was one day before the licence was issued to Esat Digifone.
The Irish Times reported earlier this year that IIU got €3.49 million for the 5 per cent of Digifone it sold back to Esat Telecom and Telenor in May 1996, just one month after it had bought the shareholding for €190,5000.
Last year Mr Desmond told the Moriarty tribunal in evidence that he made more than €100 million from his involvement in Esat Digifone. He also said that although he only became an official shareholder in Esat Digifone in May 1996, when the licence was granted, he had been "acting" as a shareholder since August 1995.