‘They are looking for scalps’ Sunday, July 26, 2009 Tensions are building around the Moriarty Tribunal as the inquiry enters its final lap. With the end almost in sight, Denis O’Brien has made his strongest attack yet on the tribunal in a fresh round of media interviews this weekend.
Speaking to The Sunday Business Post, the businessman said that it would be ‘‘devastating’’ if the tribunal finally concludes that there was wrongdoing in the awarding of the licence to Esat Digifone in 1996.
O’Brien - who estimated that his final legal bill for the tribunal could be €12 million - defended the competition process surrounding the licence and said former communications minister Michael Lowry and his Department of Communications had not perverted the licence competition to confer benefit on the Esat consortium.
It emerged last month that the tribunal has made an adverse finding against the state in the manner in which the mobile phone licence competition was operated by the Department of Communications.
The revelation was contained in a letter from the chief state solicitor’s office and was read into the record at the tribunal on June 9. If the tribunal holds to this conclusion in its final report, O’Brien warned that the consequences would be very serious.
‘‘The reputation of Ireland will be severely damaged . . . this is the first time in the history of the state that a group of civil servants have been accused of corruption,” O’Brien said this weekend.
The state is facing legal action from one of the failed bidders, Persona. Any subsequent decision that the process was corrupt may expose the taxpayer to considerable civil liability.
Following a competition, which was run by the Department of Communications in 1995, O’Brien won the exclusive rights to negotiate a contract for the state’s second mobile phone licence.
The Moriarty Tribunal was established to examine possible payments made by O’Brien to Lowry, then communications minister and has been examining a string of land deals in England.
The telecoms magnate admitted English property transactions, which are the subject of the tribunal’s investigations, and which show the involvement of O’Brien’s former accountant Aidan Phelan in deals also involving Lowry were ‘‘a mess’’. But O’Brien denied there was any benefit conferred on Lowry.
Lowry was involved in transactions at Cheadle and Mansfield which also involved Aidan Phelan. The former minister’s one-time solicitor Christopher Vaughan has also told the tribunal Lowry also provided advice on the resolution of issues related to transaction in Doncaster in England.
O’Brien has claimed he was the sole beneficiary of the Doncaster deal. Vaughan has accepted in evidence that there is a difference between documents he originally provided to the tribunal which showed Lowry had only a minor role in a transaction in Cheadle, compared to later documents opened in evidence in recent weeks in which it appeared that Lowry had benefited.
However, it is not clear what view the tribunal will take in relation to those property dealings.
Relations between O’Brien and the tribunal have been at an all-time low since the confidential preliminary findings were issued last November. Both the Irish Times and The Sunday Business Post were threatened with an injunction if either newspaper published details of the preliminary report.
A key issue examined in the hearings is the handling by civil servants of the change in ownership structure of Esat Digifone in the period after Esat won the competition, but before the licence was issued. In this period, Dermot Desmond’s IIU took a shareholding in the company.
This weekend, O’Brien criticised the state for failing to foresee the risk of criticism of senior civil servants, who could be ‘‘impugned’’ if the tribunal finds against them.
‘‘I am taking a stand for the civil servants . . . the state only realised lately it needed to get up off its arse,” he said, in reference to a decision by the state to lift a waiver of privilege over legal advice which the state had received in 1996.
O’Brien has been eager for the tribunal to change its stance on this legal advice given to the state prior to the issuing of the licence in 1996.
Former legal adviser to the state, Richard Nesbitt SC, last week gave evidence at Dublin Castle. He said that he had examined Dermot Desmond’s late arrival as a stakeholder in the consortium and formally advised Lowry ‘‘not to drag his feet’’ in awarding the licence to O’Brien’s Esat in May 1996.
However, Justice Moriarty has already said in a public ruling that he doesn’t believe Nesbitt’s legal opinion in 1996 was relevant as it did not deal with the issue of whether Desmond’s involvement breached the terms of the competition rules due to the fact that it w as not disclosed when the consortium won the initial element of the competition. The state held a claim of legal privilege over documents relating to Nesbitt’s advice for the past 13 years, and only revoked it after a cabinet decision in May of this year.
In an unusual step, both the Department of Communications and O’Brien had asked that Nesbitt be allowed to give evidence, even though he also happens to be the department’s lead counsel at the tribunal. Moriarty resisted the demand, but eventually relented.
It was likely that both the department and O’Brien would have sought a judicial review if Nesbitt had not been permitted to give evidence. Once he was finally in the witness box last Wednesday, Nesbitt recollected that he had given both written and oral advice to the Department of Communications in May 1996, and that he had advised that the awarding of a mobile phone licence to the Esat consortium was legal.
None of the other parties involved could recall Nesbitt’s specific oral advice, although Nesbitt said he was ‘‘crystal clear’’ on the matter. John Coughlan SC said he found Nesbitt’s evidence incredible, causing heating exchanges among barristers for all sides at Dublin Castle.
One independent legal source familiar with tribunal proceedings told this newspaper that it was ‘‘generally unthinkable that a barrister would accuse another of open dishonesty’’. Nesbitt strongly rejected the assertion.
O’Brien described Coughlan’s comments as ‘‘a sign of desperation’’.
He said he believed that the manner in which the tribunal was being run suggested to him that the tribunal ‘‘has an agenda’’. ‘‘They are looking for scalps . . .to defend spending €200 million,” he said.
The final cost of the tribunal will not be known until it concludes.
Last week, the tribunal sat to hear evidence over several days from a number of witnesses whom lawyers for O’Brien said had important evidence. One of these was Italian venture capitalist Massimo Prelz, and O’Brien said his evidence ‘‘went to the heart’’ of contradicting any suggestion that O’Brien ‘‘never had the money’’ to bid for the licence, as the businessman describes the assertion.
O’Brien told the Department of Transport, Energy and Communications in September 1995 that he had an ‘‘irrevocable’’ guarantee for IR»30 million as part of an agreement with Prelz as part of his ultimately successful bid for the licence.
His partner in the bidding consortium, Norwegian firm Telenor, was not satisfied with aspects of the deal between O’Brien and Advent International, a US venture capital company then headed by Prelz, who is now a partner at the Londonbased telecoms investment company GMT Communications Partners.
O’Brien later involved IIU, Dermot Desmond’s investment company in the venture and Prelz’s commitment to provide funds was not called upon by O’Brien.
O’Brien’s consortium partners and members of the departmental project team also had some concerns over O’Brien’s funding plans for his share of the costs of setting up a new mobile phone service.
Telenor executive Per Simonsen told the tribunal in evidence that O’Brien had told him he had met with the minister in a pub in September 1995, and that Lowry had suggested that IIU should be involved in the Digifone consortium.
Both Lowry and O’Brien strongly deny having any conversation in relation to the funding of O’Brien’s submission which was under consideration at the time of the meeting.
When he appeared in the witness box in recent days, Prelz told the tribunal that he had indeed guaranteed IR»30 million to O’Brien prior to the 1995 bid.
The Irish businessman said he was ‘‘concerned’’ at the way the tribunal was being conducted. The tribunal did not appear to be in any rush to call witnesses who were beneficial to his defence, he said.
As the tribunal slowly wends to a conclusion, O’Brien is clearly upping his campaign. Much will now depend on how tribunal chairman Michael Moriarty weighs the final evidence.
|
Text-Only