ESAT wanted department approval, says O’Brien

ESAT Digifone would never have signed the country’s second mobile phone licence if the Department of Communications was unhappy financier Dermot Desmond had come on board, entrepreneur Denis O’Brien told the Moriarty Tribunal yesterday.

Mr Desmond's International Investment & Underwriting Ltd (IIU) acquired a 25% stake after the joint venture comprising Mr O'Brien's Communicorp Group and Norwegian State telecom firm Telenor won the right to negotiate for the GSM2 licence in late 1995.

Department officials insisted the licence would only be issued if Mr Desmond reduced his stake to the 20% originally intended for institutional investors set out in the bid document. Mr Desmond sold 5% back to the original partners days before the licence was handed over on May 16, 1996.

In a memorandum written on May 4, 1996 the day after a meeting with the department Telenor executive Arve Johannsen reported it was "clear IIU was not a favourable name from the Irish public's point of view".

The memo went on: "On the contrary, the ministry asked for help to explain why we had substituted Advent, Davy Stockbrokers and the other recognised, named institutional investors in the bid."

Mr O'Brien said: "I couldn't imagine a civil servant saying that somebody was not a favourable name." Mr O'Brien told tribunal lawyer John Coughlan SC he himself was not at the meeting at which officials allegedly made the comment quoted by Mr Johannsen.

The memo also stated: "Eventually, the project co-ordinator from the ministry Martin Brennan appealed (off the record) to Telenor to write 'a letter of comfort' so we would serve as a last resort for the Digifone company for funds and operational support."

Mr O'Brien said the Johannsen memo was "a bit of a rant by a man who has his boss looking over his shoulder".

Mr O'Brien continues his evidence today.