Category: Archive

Dublin Report As world watches, tribunal studies phone license deal

February 16, 2011

By Staff Reporter

By John Kelly

Westminster is in thrall. Heads are about to roll all over the UK. Some MPs will never see the private rooms of the Houses of Parliament again. There are predictions that not alone will the Tories be hammered, but that Labor’s landslide will be even bigger than last time.

In Northern Ireland, they are talking about the four elections that are about to take place — yet again — as they do in every Westminster general election.

But in the south of the island, the attention is focussed elsewhere. The prospect of a terrible vista is beginning to dawn on the plain people of a big part of the island.

Could it be that having seemingly escaped the ravages of the foot-and-mouth disease that caused such havoc in the neighboring island, that we may soon face lawsuits that could go into millions, maybe even billions?

Could we shoot ourselves in the head without even knowing that the gun was loaded? And could that gun be the Moriarty Tribunal?

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Let me explain.

Denis O’Brien is a short, stocky early middle-aged young man. He rolls more than he walks. And he carries a very amiable smile.

He is also a little cockier than most people are. But then, that’s not surprising when you consider that he is one of the wealthiest men in Ireland, courtesy of the sale of his company, Esat Digifone.

You have to give him credit. The mobile telephone company, Ireland’s biggest, now employs more than 900 people. It was almost solely his own creation.

He conceived it. He planned it. And he made it successful, thanks to his initiative, his consummate belief in himself and the considerable aid extended by the Norwegian state-owned communications company, Telenor.

Most of all, Denis O’Brien took on the international telecommunications giants when he made his company bid for the second mobile phone license in Ireland. Against him were monsters like the giant multinational Motorola.

Of course, he had the support of Telenor, like him, a 40 percent shareholder in the parent company, Esat Telecom.

But he won the license on his own terms. There is no doubt about that. The consultants who advise governments after studying all of the proposals were unanimous about his ability to deliver.

So, the license was won — and then the trouble began.

The Fine Gael party, encouraged by its major fund-raiser, Michael Lowry, a TD from North Tipperary, held a dinner in the posh Manhattan 21 Club.

The party leader at the time, John Bruton, and all of the hierarchy were present. It was a rather small dinner. But then, it didn’t have to be large. The uggested contribution was $50,000.

Since Esat Digifone had got its mobile telephone license while Lowry held the position of minister for communications, some of the more eager party fund-raisers reckoned that the company might like to make a donation.

One of these was the David Austin, a Dublin businessman who has since died of cancer in France. Austin was a neighbor and friend of the O’Brien family. They lived in Blackrock and were members of the same swimming club. Through him, an invitation was sent to O’Brien to attend the Manhattan knees up.

But O’Brien was then touring the U.S., drumming up shareholders after Esat Digifone gained Nasdaq approval for a U.S. flotation. Also, he did not think it appropriate that he should attend such a dinner so soon after the same Fine Gael government had awarded his company the license.

He claims that he did not believe it was appropriate for his company to make a contribution either. Even if he did, his company was then so undercapitalized that $50,000 was just $50,000 too much.

He claims that he mentioned the matter to an executive at Telenor when they met in Oslo to discuss the appointment of a new executive in Esat Digifone.

The man he met, Arve Johansen, denies this and swears that O’Brien requested his company to make the payment to Fine Gael as a "good will gesture." He also says that he rejected the request out of hand. His company, in strait-laced Norway, just did not behave as the Irish apparently did.

But when O’Brien persisted, he relented somewhat and finally agreed Telenor would loan the $50,000 to Esat Digifone, which could then make the payment itself. However, it would have to be justified in the company books. And the only way that could be done was to list it as an invoice for consultancy work carried out by Austin.

That’s how such matters are solved in some high financial circles and that’s how it was solved — almost — in the case of Esat Digifone.

The money ended up in a tax-free offshore account, finally wending its way into the Fine Gael coffers, courtesy of Austin.

Everybody should have been happy, especially Lowry, who had other close business ties with O’Brien that we have yet to hear about. Indeed, the party prospered. Esat Digifone had its license.

Alas, however, when all of the major shareholders were about to get together to tie up the various loose ends in the new company, Telenor decided it would have to solve the matter of the missing $50,000. It wanted it returned and it also wanted to ensure that it had gone to Fine Gael.

The bomb has now exploded at the Moriarty Tribunal.

Its close trawl had unearthed the important business links between Lowry and O’Brien, and links between mutual friends of both who financed the former minister in various UK property deals.

There is now a distinct possibility that the tribunal will dig up some real dirt on the awarding of the license.

And if that happens, legal eagles from all over the world, particularly the U.S., could descend on the Celtic Tiger demanding their various pints of blood from the Irish government.

The more perceptive among the plain people of Ireland are now asking a valid question: Why should Irish politicians set up multimillion-pound tribunals to beat ourselves with?

They know, they just know with dreadful certainty, that it is the reliable, good oul’ taxpayers who will have to cough up again.

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