What the reports says: Part II, Volume 2

In the cynical and venal abuse of office, the brazen refusal to acknowledge the impropriety of his financial arrangements with Mr Denis O’Brien and Mr Ben Dunne, Mr Lowry has cast a further shadow over this country's public life

A PATTERN of repeated “inappropriate” meetings and political interference in the awarding of the State’s second mobile phone licence to Esat Digifone by then minister for communications Michael Lowry is catalogued in the second volume of the Moriarty tribunal’s report.

FIRST CONTACTS

The first face-to-face meeting between Mr Lowry and Mr O’Brien took place in February 1995 and was arranged by the late Jim Mitchell. The tribunal report characterised this brief meeting as an opportunity for Mr O’Brien to “assuage a belief that appears to have been current in Fine Gael” – namely that Mr O’Brien was a Fianna Fáil supporter.

In early 2005, Mr O’Brien and his various companies began to make financial contributions to the Fine Gael party.

Between March 1995 and June 1996, Mr O’Brien or his companies are recorded as having supported 14 Fine Gael fundraising events – including a Fine Gael golf classic held on October 16th, in the middle of a critical period in the licence process. Mr O’Brien or his companies also contributed a total of £22,140 in party donations. This figure does not include a $50,000 donation by Esat and its Norwegian partner Telenor.

LICENCE COMPETITION PROTOCOL

The competition for the second mobile phone licence was launched by the Department of Transport, Energy and Communications on March 2nd, 1995.

The department established a project group, chaired by Martin Brennan, an official in the development division. At its first meeting on March 6th, it adopted a protocol to regulate contacts between the department and potential applicants. This “made clear that one-to-one meetings or social outings were to be avoided” and that records should be kept of any meetings that did occur.

The department’s secretary general, John Loughrey, brought this protocol to the attention of Mr Lowry, advising him on several occasions to exercise caution. In his evidence, Mr Lowry stated he did not believe this protocol applied to him as a minister.

EVALUATING THE LICENCE BIDS

Danish consultants AMI, headed by Michael Andersen, were appointed to evaluate the applicants. The initial quantitative rankings by AMI ranked Persona first, followed by Eurofone, with Esat Digifone – the consortium formed between Mr O’Brien’s Communicorp group and Norwegian firm Telenor – in third place.

It was apparent that Esat Digifone’s financial position was poor, due to the financial weakness of Communicorp.

In total, three quantitative reports were prepared, none of which placed Esat Digifone higher than third. Each report also used statistically incorrect weightings when ranking the six applicants.

In any event, the quantitative rankings were not returned to and played no role in the final evaluation report, while the qualitative side of the adjudication was “far from transparent, and not readily intelligible or verifiable”.

Nevertheless, as of September 9th, it had become apparent that Esat Digifone was ahead on the qualitative side of the evaluation, and that Persona ranked first on the hard data.

KEY SEPTEMBER MEETINGS

The licence fee process overseen by the project group should have been sealed. However, “substantive information was also made available” to Mr Lowry, “who, contrary to his testimony to the tribunal, was far from being a disinterested minister”.

In mid-September, Mr Lowry telephoned Fintan Towey, a member of the project group, wishing to know if a winner had been identified. Mr Brennan had at least four “substantive interactions” with Mr Lowry at this time, during which the tribunal concludes he made Mr Lowry aware of the concerns surrounding the finances of the top two, Esat Digifone and Persona.

It was then agreed between Mr O’Brien and financier Dermot Desmond that Mr Desmond would underwrite the £24 million equity participation in Esat Digifone, through his investment vehicle IIU, in exchange for a stake in the licence. This was agreed on September 17th, the same day that Mr O’Brien “had significant contacts” with Mr Lowry.

On this day, Mr Lowry and Mr O’Brien caught up during half-time at the All-Ireland football final at Croke Park. They agreed to meet at Houricans pub on Leeson Street and later repaired to Hartigans across the road, where they remained alone for half-an-hour. Mr Lowry and Mr O’Brien have always contended that they did not discuss the licence process at this meeting.

However, the tribunal found that this conversation was “decisive as to the principle of Mr Desmond joining the consortium” and underwriting Communicorp’s financial obligations.

“The only realistic inference to be drawn” is that Mr Lowry told Mr O’Brien of the project group’s misgivings about Esat Digifone’s financial standing, it states.

On Monday morning, Mr O’Brien instructed his solicitor to write a letter to the department informing it of Mr Desmond’s financial involvement, even though it was a rule of the competition that no further information should be submitted. The letter, faxed to the department on September 29th, was rejected and returned by Mr Brennan directly to Mr O’Brien.

FAST-TRACKING THE DECISION

An evaluation meeting took place in Copenhagen on September 28th, at which it was concluded, based on a flawed weightings model, that Esat Digifone was the better applicant.

“It is beyond doubt that a significant departure was made in the weightings applied at this decisive point in the evaluation process,” the tribunal notes.

Furthermore, the results of the process were conveyed to Mr Lowry before the full project group was told of them.

On October 3rd, it was noted at a department meeting that Mr Lowry wished to accelerate the process. The first draft evaluation report was received by the department on October 4th. This included a statement that the weakest feature of the Esat Digifone application was the negative equity of Communicorp.

The tribunal concluded that by his interactions with Mr Brennan in the first week of October, Mr Lowry “directly endeavoured to and did influence both the project group and the departmental handling of the process”.

At a meeting on October 9th, some members of the project group expressed surprise that Mr Lowry was already aware of the draft rankings, as this meant they would be difficult to reverse. Seán McMahon, a member of the group, refused to support the result.

Only Mr Brennan and Mr Towey had the opportunity to study the draft report in advance of the meeting and only they knew of IIU’s underwriting. As a result, the tribunal concluded that “events had overtaken the project group” as the decision-maker in the process.

EARLY ANNOUNCEMENT

It was on October 24th that it became known to the project group that Mr Lowry intended to announce the result on the following day. According to project group member Ed O’Callaghan, it was a fait accompli.

The tribunal “has no doubt” that it was Mr Lowry who determined that the result was announced on October 25th, more than one month early. He also “put in place a strategy” that allowed the result to be announced without a full government decision.

Mr Lowry made his recommendation to party leaders at around 4pm, omitting to mention any concerns about the financial prowess of the winning bid. At 5pm, he held a press conference and announced the winner.

The tribunal accepted the evidence of Mr Loughrey, indicating that there was no complete copy of the final report in the department on this date. It also notes that two members of the project group – Mr McMahon and Mr O’Callaghan – were not informed of Mr Lowry’s plan to announce the result that day until very shortly before the press conference.

“A guillotine was brought down on the work of the project group by Mr Lowry.”

HAUGHEY AND LOWRY

In concluding observations, Mr Justice Moriarty said that in separate governments of entirely different political composition, it had been possible for former taoiseach Charles Haughey and Michael Lowry in succession to show favour to wealthy individuals and, in recompense, to obtain payments or other benefits.

The improper benefits that accrued to Mr Lowry never reached “the monetary scale or degree of fruition” obtained by Mr Haughey. “But, in the cynical and venal abuse of office, the brazen refusal to acknowledge the impropriety of his financial arrangements with Mr Denis O’Brien and Mr Ben Dunne, and by his contemptuous disregard of his taxation obligations, Mr Lowry displayed qualities similar in nature, and has cast a further shadow over this country’s public life.”