Telecom rent deal would have cost taxpayer €3m
Mr Justice Moriarty described the pair’s attempts in 1995 at hiking up the rent on the building leased by then state-owned Telecom Éireann as “profoundly corrupt to a degree that was nothing short of breathtaking” and said Mr Lowry had behaved in a “reprehensible” manner.
In 1995, Mr Dunne, through his firm Bark Island Ltd, took over Marlborough House, more commonly known Telephone House, on Marlborough Street in Dublin city centre.
Telecom Éireann was leasing the 85,000sq ft property at a rent of £5 per square foot or £425,000 annually. A rent review was due in mid-1994 but an arbitrator was called in when valuers for landlord and tenant failed to reach agreement.
In late March or early April 1995, Lowry, then minister for communications and with responsibility for Telecom, contacted fellow Fine Gael trustee, Mark FitzGerald of Sherry FitzGerald estate agents, and asked about an employee of the company who was arbitrator in the case.
Mr FitzGerald established that this was his colleague, Gordon Gill, and decided it would be inappropriate to discuss the issue further, but Mr Lowry rang gain a short time later and arranged a meeting at which he told Mr FitzGerald that Mr Dunne wanted the rent reviewed upwards to £10 per square foot.
Mr FitzGerald said he could not and would not try to influence the arbitration to which, he said in evidence, Mr Lowry replied: “What are we going to do as Ben Dunne has contributed £170,000 to Fine Gael?”
A few days later Mr Lowry got in touch again, insisting Mr FitzGerald personally show him around a house he claimed to be considering buying. He showed little interest in the house but used the opportunity to raise the rent review and again Mr FitzGerald refused to interfere with the process.
Both Mr Dunne and Mr Lowry gave evidence that all they had sought to do was hurry up the arbitration decision. Mr Dunne said he was not thinking in the terms that Mr Lowry was in effect his tenant in Marlborough House. He said he contacted the minister in a personal context and that his intention was to expedite the process, not interfere with it.
Mr Lowry also rejected the suggestion that he had sought to influence the level of rent and insisted he never mentioned Mr Dunne’s financial contribution to Fine Gael.
However, Kevin O’Higgins, a colleague in whom Mr FitzGerald had confided, backed his version of events, while Gordon Gill, who was only told of Mr Lowry’s contacts after he had concluded his review and set a rent of £6 per square foot, said during arbitration, Mr Dunne’s side had been seeking £9.25 per square metre.
Mr Justice Moriarty accepted the evidence of Mr FitzGerald and concluded that, had Mr Lowry and Mr Dunne got their way, Mr Dunne’s firm would have received €431,711 more in rent per year than eventually fixed, amounting to €3.022 million over the seven-year lease.
Given that properties were valued at 15 times annual rent, that, Mr Justice Moriarty said: “would have resulted in a capital value of the property of £12.75m (€16.19m), a virtual doubling of Mr Dunne’s investment of £5.4m (€6.86m) made just months earlier.”
The report states: “Not merely was this patently improper conduct on the part of both Mr Lowry and Mr Dunne, as private individuals, but it was in addition a particularly flagrant dereliction of duty on the apt of Mr Lowry.
“As minister entrusted with telecommunications matters, Mr Lowry in effect stood in the shoes of Telecom Éireann as tenant of Marlborough House, and for him to have sought to procure unwarranted rent increases that would have improperly enriched Mr Dunne over a seven-year period and thereby burdened public funds within his ministerial remit, amounts to a grave conflict of duty and interest.
“What was contemplated and attempted on the part of Mr Dunne and Mr Lowry was profoundly corrupt to a degree that was nothing short of breathtaking.”
