Poor signal for compensation bid

The defeated mobile phone licence bidders may not get the payout they expect, writes investigative correspondent Conor Ryan

THE defeated bidders for the second mobile phone licence have described the Moriarty Tribunal as a roadmap in their efforts to secure huge compensation packages from the State.

They cannot use the tribunal report as evidence. But it can point them in the direction of useful material on the compromised actions of former minister Michael Lowry.

Despite Judge Michael Moriarty’s categoric findings, the decision to press ahead with the latest court case has been labelled “risky” by Declan Ganley, a man central to one of the challenges.

And the lessons from a similar, but little-known High Court case suggest a payout is possible but not at the levels currently being spoken about.

Mr Ganley and his fellow businessmen would do well to take readings from this legal navigation aid as they prepare the case the Supreme Court has now allowed them to pursue.

The action was taken by the unsuccessful contestant in another high profile and botched tendering process carried out on behalf of the State.

In this case, just like the Esat Digifone debacle, the unsuccessful bidder claimed the tender process had not adhered to the overriding rules and the outcome was unlawful.

The earlier case resulted in a settlement payout to an international consortium that had tried, but failed, to secure the rights to build and operate the controversial National Aquatic Centre in Abbotstown.

This protracted battle proceeded in the background of more high-profile and costly issues with the NAC.

Similar to the Esat challenge the State tried to derail it on the grounds of an undue delay. Like the current case, this was unsuccessful.

And the ultimate outcome serves as one of the few guides for what is ahead for the Comcast International Holdings and Persona Digital Telephony in their efforts to be compensated for Mr Lowry’s and Denis O’Brien’s actions.

Dublin International Arena Ltd (DIAL) lodged its case with the High Court in May 2002.

This came after a rival consortium, Dublin Waterworld Ltd, won the right to build the €70m centre.

The selection of DWW was preceded by a disastrous tendering process which initially selected a shell company in England, with virtually no assets, to deliver the country’s flagship swimming pool.

On the basis of the shambolic selection process DIAL lodged its papers. It said the State was bound by European tendering rules that were not followed.

In a recent letter to the Dáil Public Accounts Committee, DIAL’s director Martin Kenney explained that his consortium had sought compensation for the losses it incurred “as a result of the apparently unlawfully conducted tender process”.

The High Court case underpinning the ESAT challenge has also cited the apparently unlawful decision of the government to move the goalposts just as the closing dates for tenders were due.

DIAL looked for compensation of €50m, and signed a confidentiality clause when it reached its settlement.

But it does not want this to remain a secret.

It has written to the Public Accounts Committee to say it is willing to lift the confidentiality clause if the Department of Sport and Campus Stadium Development Ireland agree to do likewise. This has not happened.

It is understood DIAL received €2m in compensation following more than eight years of litigation. The additional legal bill absorbed by the State was €1m.

Like the Esat affair there has been an investigation of sorts into the tender process for the NAC. This was conducted in Mar 2002 by the then attorney general Michael McDowell.

This expressly did not seek to re-open the process or rule on whether or not DIAL, or other competing consortia, should have got the award.

It just highlighted that the selection process was wrong.

Similarly the Moriarty Tribunal did not rule on whether Esat should have got the mobile phone licence, even if Mr Lowry had allowed a level playing pitch. In fact, an independent assessment given in the final days of tribunal evidence suggested Esat was the best bidder regardless of what relationship existed between the then minister and Mr O’Brien.

Without a tangible statement that the unsuccessful companies lost out because of the State’s botched tendering activities Comcast International Holdings Incorporated and Persona Digital Telephony Ltd may, like DIAL, struggle to secure the level of compensation being sought.