Desmond link escaped licence probe

SENIOR civil servant Martin Brennan told the Moriarty Tribunal yesterday he would have probed Dermot Desmond’s link to the second mobile phone licence if he had known about the financier’s part in an earlier controversial property deal.

Tribunal counsel Jerry Healy SC said anybody who was aware of the Glackin Report and had any idea of the flavour of the findings had reason to do a very deep scrutiny of Mr Desmond in relation to his dealings with Esat Digifone.

"That's fair comment," replied Mr Brennan, who chaired the licence evaluation project team. He said he hadn't heard of the Glackin Report as he was then working and living in Brussels.

During a casual conversation very recently, he thought Department of Finance official Jimmy McMeel had told him the Glackin Report didn't make any findings or recommendations adverse to Mr Desmond.

Mr Healy asked if the Glackin Report had contained negative findings would the witness have regarded it as relevant to the GSM licence and a factor to be taken into account.

"If I was aware that it had made negative findings, which bore on the decision being taken, then I would of course have to take it into account," Mr Brennan said.

John Glackin, a State inspector, probed the controversial sale of the Johnston Mooney & O'Brien bakery site in Ballsbridge. He identified Mr Desmond as a central character in the sale of the property to Telecom Éireann.

The inspector found Mr Desmond misrepresented the true situation on a number of occasions. He found he had a controlling financial interest in companies involved in the transactions while at the same time acting as Telecom chairman Dr Michael Smurfit's adviser on the purchase.

Less than two years later and eight months before the second GSM licence was awarded Mr Desmond's IIU company became a minority shareholder in the Digifone consortium when he acquired a 20% stake.

According to Mr Healy, IIU was not a financial institution but a vehicle for Mr Desmond and had not filed accounts.

Mr Desmond's Digifone share subsequently rose to 25% and, under some pressure from the department, he sold back the 5% to the original Irish-Norwegian joint venture partners only days before former minister Michael Lowry issued the licence on May 16, 1996.

Denis O'Brien's Communicorp Group and Telenor paid Mr Desmond £2.7m for the return of the 5% stake, prompting Mr Healy to remark the licence was being traded even before it was granted. "It looks like that," said Mr Brennan. Tribunal evidence before the tribunal shows Mr Desmond's Digifone stake was officially first made known to the department a month previously.

Former department secretary John Loughrey approved a financial analysis of the Digifone consortium, including Mr Desmond's IIU company, only hours before the licence was granted.

The tribunal resumes next Tuesday.