O’Brien bid to gain control of Esat Digifone ‘threat to consortium’

ATTEMPTS by chairman Denis O’Brien to gain control of Esat Digifone threatened to collapse the Irish/Norwegian consortium bidding for the country’s second mobile licence, a witness told the Moriarty Tribunal yesterday.

"Up to then it had been very amicable," said Telenor executive Arve Johansen said.

By late September 1995 a month before Digifone won the right to negotiate for the GSM2 licence relations between the partners had deteriorated, typified by Mr O'Brien hanging up the phone on him during a heated conversation. Both joint venture partners then held 37.5%. Mr Johansen said he held firm as Mr O'Brien pushed hard to get Telenor to reduce its stake to 35%.

This would allow Mr O'Brien's own company to hold a controlling interest in the consortium.

It was suggested to Mr Johansen that this move would also facilitate Mr O'Brien's negotiations with financier Dermot Desmond then underway.

Under an agreement dated September 29, 1995, Mr Desmond's International Investments & Underwriting Ltd agreed to underwrite all non-Telenor exposure in return for 25% Digifone equity.

Mr Johansen said this agreement was signed before Telenor could seek legal advice on the document and before it was sent to the Department of Communications.

Tribunal lawyer Jerry Healy SC pointed out that this claim was being disputed.

The Norwegian executive said he was emotional and upset after the IIU involvement emerged and he felt Telenor had been disadvantaged. He considered that IIU was being used as an instrument to get control of the consortium.

He had complete trust in Mr O'Brien's knowledge of the Irish situation and believed if Mr O'Brien felt reinforcement of the financial position of his Communicorp Group was necessary and if IIU could perform this role, then this was desirable.

In a memo marked private and confidential, Mr Johansen noted that Mr O'Brien informed him in Oslo in late September 1995 that based on information from "various very important sources" it was necessary to strengthen the Irish profile of the bid.

Witness said Mr O'Brien gave him a feeling he had good information but he never referred to any concrete channels.

Tribunal counsel said that on the face of it, it could suggest Mr O'Brien had access to information from an official. Mr Johansen said that would be incorrect.

Mr Johansen continues his evidence today.