Rows between partners ‘threatened Esat survival’
Four days before the May 16, 1996, licence award, Digifone solicitors recorded that consortium chairman Denis O’Brien was also at loggerheads with financier Dermot Desmond, another party in the GSM network deal.
A memo of a meeting on May 12 involving Mr O’Brien’s Communicorp Group and Mr Desmond’s IIU company said Mr O’Brien no longer trusted Mr Desmond’s involvement in the consortium. The memo said Mr O’Brien would seek an injunction to block the signing of the licence.
A reference to Mr O’Brien, by Mr Desmond as reported by IIU colleague Michael Walsh, states: “He doesn’t trust me and he can f**k off.”
When Digifone was awarded the licence in October 1995, it emerged Mr Desmond had already made a deal to secure a 20% shareholding intended for institutional investors and he also planned to underwrite Mr O’Brien’s shareholding. At the height of another dispute during May 1996 involving
O’Brien and his Norwegian partners, Telenor chairman Arve Johansen accused O’Brien of taking decisions on behalf of the consortium without getting Telenor’s prior consent.
Concerned at IIU’s involvement and the prospect of IIU shares being transferred to Mr O’Brien’s Communicorp, Mr Johansen warned that Telenor could not confirm it would continue to support the Digifone project.
He laid down markers that no share transfer deals were to be signed without Telenor’s prior written consent. He stressed it was necessary for the parties to sign shareholders agreements prior to the award of the licence.
Mr O’Brien rejected the accusations and said he was disturbed by the contents and inaccuracy of Mr Johansen’s memo. Ominously, Mr O’Brien warned if the financing arrangement to secure the GSM licence fell down, no financial alternative was available.
Senior civil servant Martin Brennan, who headed the GSM project team that evaluated the bids from six competing consortia during 1995, said at this stage he was no longer the prime mover in the way he had been in the earlier stages.
Tribunal counsel Jerry Healy SC had asked him to explain why, despite the flurry of meetings in the lead-up to the licence being awarded, no records were available in the department to reflect this activity or what transpired.
Mr Healy pointed out the tribunal had to rely on notes recorded by Digifone solicitors who accompanied members of the consortium to meetings in the Department of Communications to get a sense of what was happening.
Mr Brennan said there was a fair amount of discussion within the department that the configuration of the consortium should be 40% each for Communicorp and Telenor with 20% to be allocated to institutional
investors.
