Devastating findings for O'Brien


ANALYSIS:According to Denis O’Brien, the Moriarty tribunal report will find the Esat mobile licence was issued illegally, writes COLM KEENA.

THE BUSINESSMAN Denis O’Brien has in broad terms revealed the provisional findings of the Moriarty tribunal as they concern him. They are devastating. The picture he has painted is just about as bad as it could be based on the evidence that has been heard.

In a series of interviews to Sunday newspapers, O’Brien expressed his determination to fight the tribunal street by street as it prepares to publish its final report.

The core issue is the awarding by the State in 1996 of its second mobile phone licence to O’Brien’s consortium, Esat Digifone. It was arguably the most attractive and profitable licence ever issued by the State and, according to O’Brien’s interview with the Sunday Times, the tribunal is of a mind to find that the licence was illegally issued. Furthermore, according to the interviews, the tribunal appears also to have found, provisionally, that O’Brien had a corrupt relationship with then minister for transport, energy and communications Michael Lowry. Link the two matters together in the same report, and add in a few more details concerning other aspects of how Esat won the licence, and you have a pretty sorry picture indeed of ethical standards in the highest echelons of the Irish State. The reputations of Irish politics, the Civil Service, and once again the Irish business class all seem set for a serious hit.

If Mr Justice Moriarty’s final report ends up being similar to the provisional findings alluded to by O’Brien – and O’Brien himself has said he does not believe they are likely to be changed – then this negative image of Ireland will be carried in the media around the globe, delivering another mauling to Ireland’s already rather battered name.

As for O’Brien, one of his generation’s most successful business figures, his reputation would be shredded. He is the largest media proprietor in the State, with a substantial shareholding in Independent News Media as well as ownership of a number of commercial radio stations including Today FM and Newstalk. A final tribunal report of the nature described by O’Brien will raise questions about the propriety of having him involved in media ownership.

The consortium that came second in the licence competition, Persona, lodged a case against the State many years ago, seeking damages. The High Court threw out the case on the basis that it had failed within a reasonable period of time to get on with it. The matter is being appealed to the Supreme Court. If the appeal fails, that should be the end of the matter. If the appeal succeeds, that does not in any way mean Persona is facing an open goal. It would have a hard task at this stage to argue that it should have won the competition which, the tribunal evidence has shown, ran into difficulties of its own in terms of accurately weighing up the various bids.

However, the size of any potential damages Persona might win is huge and so any possibility of it being able to take a case represents a threat to the taxpayer. The

rights to Persona are now owned by Irish businessman Tony Boyle and an associate. Comcast, a consortium with which businessman Declan Ganley is involved, may also seek to profit from a negative finding.

O’Brien has said the tribunal has made 60 negative findings against him, although he has not described them. “There are 60 findings and they are all wrong,” he said.

A number of months ago The Irish Timeswas threatened with an injunction by the tribunal if it published the provisional findings.

As well as the so-called “money trail” issues linking Lowry and O’Brien, and the actual award of the licence, the tribunal has also investigated the 1995 competition run by Lowry’s department and which resulted in O’Brien’s Esat winning the exclusive right to negotiate for the actual licence. Something that has taken up a significant amount of time has been the fact that after Esat submitted its bid, Dermot Desmond’s IIU Nominees Ltd became a 20 per cent shareholder in the consortium. The illegality referred to by O’Brien concerns the issue as to whether the consortium that bid for the licence was the same entity as the consortium that actually got the licence, given the appearance of Desmond halfway through the process. (He took the place of suggested institutional investors mentioned in the original bid.)

Last week counsel for the Department of Communications, Richard Nesbitt SC, took the stand to give evidence, an unprecedented event in Irish tribunal history. He told Mr Justice Moriarty that, in his opinion, written legal advice he gave the department in 1996 covered the IIU issue and was to the effect that the appearance of IIU was not a legal obstacle. Furthermore, he said he had a crystal clear memory of giving oral advice to this effect at the time. From his comments, Mr Justice Moriarty appears to be of the view that a stipulation in the initial request for bids – that the ownership of the entities making the bids had to be fully disclosed – was a relevant factor. Nesbitt does not share this view.

The tribunal has heard evidence to the effect that Lowry might have suggested to O’Brien, during a meeting in Hartigan’s pub in Dublin’s Leeson Street, and while the licence bids were being assessed, that O’Brien should take Desmond in as an investor. All three men have strongly rejected this.

This evidence does not directly affect the legality issue addressed by Nesbitt, but could, depending on how it features in the final report, form part of an overall scenario that would help foster an image of Ireland as a dodgy political entity. Desmond made more than €100 million from his involvement with Esat; O’Brien more than double that.

A lot of O’Brien’s comments to newspapers at the weekend were centred on the cost of the tribunal. He has recently taken out newspaper advertisements drawing attention to the cost of the tribunal, and to the fact that one of its counsel charged the State for two bars of Belgian chocolate bought while abroad on tribunal business. Other members of the tribunal legal team charged the State for expensive meals. It appears that O’Brien is hoping to damage the reputation of the tribunal as much as he can, in an effort to lessen the impact of its final report.

The tribunal’s three senior counsel – Jerry Healy, John Coughlan, and Jacqueline O’Brien – are paid more than €2,000 a day and have been working for the tribunal since 1997 (O’Brien became a senior counsel in the course of her engagement). The irony is that O’Brien’s own legal representatives are almost certainly on higher per-day rates. Indeed, this reporter once overheard a tribunal barrister say wistfully to one of O’Brien’s counsel, a number of years ago when the tribunal was in full flight: “I wish I was earning your fees.”

On the basis of his Sunday interviews, and O’Brien’s view that the judge is unlikely to change his provisional findings, O’Brien may find himself being refused part of his €12 million – and growing – legal costs. Insofar as the tribunal rejects evidence he has given, he could also be ordered to pay part of its costs. This possibility holds true for other parties who have been before the tribunal.

The tribunal will cost the taxpayer a hefty amount, but it may not be quite as hefty as some have been presuming, and could yet involve a direct financial, as well as harsh reputational, cost for O’Brien and others.

Colm Keena is Public Affairs Correspondent of The Irish Times