Esat Telecom didn’t have money to pay share of licence fee, inquiry told
Esat Telecom, a wholly owned subsidiary of Mr O’Brien’s Communicorp, was bailed out to the tune of £6m by its two partners on the same day the licence was handed over to the umbrella company, Esat Digifone, papers read out at the tribunal reveal.
The inquiry is to investigate why the licence was handed over, on May 16, 1996, when 40% shareholders Esat Telecom did not have the financing and whether this decision was influenced by Communications Minister Michael Lowry or others.
On the day the licence was issued, Telenor agreed to lend £4m and Dermot Desmond’s International Investments and Underwriting (IIU) £2m so Mr O’Brien’s company could pays its share of the £15m fee.
In addition, Esat Telecom and Telenor agreed to pay £2.7m for an equal share of 5% of IIU’s holdings. This brought IIU’s holding down to 20% to comply with the consortium’s initial bid submission. However, Esat Telecom’s payment was deferred because it did not have the money.
The tribunal heard allegations relating to the increasingly fractious relationship between the Norwegian giant Telenor and its two Irish partners in the days running up to the licence handover.
A series of memos revealed how Mr O’Brien attempted to buy 12.5% of IIU’s then 25% holding. This would bring it up to 50%, a condition placed by a New York bank in return for funding. However, Telenor would not agree to any deal that would leave it with less than an equal share with Telecom.
After one meeting in Norway, Telenor executive Arve Johanson noted: “This was the first time I experienced real hard, unpleasant push from Denis.”
Mr Johanson, in other notes, describes talks in the last days before the announcement as a “mess”. He said if the 12.5% deal went ahead, IIU would end up with cash and 12.5% of the company having “delivered absolutely nothing, having done nothing but complicate the award of the licence”.
The executive described the proposed deal as “absolutely unbelievable”.
The deal didn’t go through and Esat Telecom could not get the New York funding, which meant it was unable to pay its share of the fee. Mr O’Brien was equally angry, according to a letter written to Mr Johanson.
He said he was disturbed about personal comments to colleagues made by the Norwegian at an earlier meeting.
He said it was unacceptable and outrageous that his integrity had been questioned and aspersions cast on his character.
