THE TRIBUNAL RESUMED ON THE 9TH OF JUNE, 2009, AS FOLLOWS:
MS. O’BRIEN: Sir, the Tribunal is sitting on this occasion
to hear some limited further evidence from three witnesses
who were, at the time of the second GSM process, officials
of the Department of Transport, Energy and Communications,
as it was then known, and from whom the Tribunal has
already heard lengthy evidence.
Those witnesses are, firstly, Mr. John Loughrey, who was
Secretary General of the Department, and from whom the
Tribunal heard evidence over ten days in February and July
of 2003. Secondly, Mr. Martin Brennan, who was Chairman of
the Project Group established to conduct the second GSM
licence process and who gave evidence over days in all,
days from December 20to February 2003, a further
three days in June 20and on a single day in November
2005. And thirdly, Mr. Fintan Towey, who was a member of
the Project Group and who gave evidence over twelve days in
all, eleven of which were in May of 20and one of which
was in November 2005.
The necessity of hearing further evidence from these
witnesses arises solely by reason of the fact that,
following circulation of the Tribunal’s provisional
findings on the 18th of November, 2008, the State, through
the Department, has waived its claimed to legal
professional privilege over an opinion of senior counsel,
which claim was invoked and maintained throughout the
course of the Tribunal’s work until the 13th of March,
2009, some nearly eight years after the commencement of the
Tribunal’s inquiries into the second GSM process. The
privilege related to an opinion and a covering letter of
senior counsel, both dated 9th of May, 1996, which was one
of a small number of opinions sought by the Department and
provided by senior counsel during the course of the second
GSM process.
Before proceeding to outline the circumstances in which
that opinion was sought by the Department and the matters
to which the opinion was directed, it is necessary to refer
briefly to the Tribunal’s dealings with the Department in
relation to the production of documentation, including the
production of the opinion in question.
From May 2001, the Tribunal was in contact with the
Department, initially directly and subsequently through the
Office of the Chief State Solicitor, with a view to
obtaining copies of all documents held in relation to the
second GSM process. As had been the Tribunal’s preference
throughout the course of its work, the Department agreed to
produce the documents to the Tribunal voluntarily, and that
production of documents commenced in mid-20and it
proceeded over a number of months into the year 2002. The
documentation included copies of the small number of
opinions furnished to the Department by senior counsel in
the course of the second GSM process, including an opinion
of the 9th May, 1996, and over all of which opinions, the
Department invoked a claim to legal professional privilege.
The terms on which those privileged documents were provided
to the Tribunal were stipulated in a letter dated the 4th
of March, 2002, from the Chief State Solicitor, which terms
were agreed by the Tribunal. And I am just going to refer
now, sir, to that letter from the Chief State Solicitor
relating to the terms on which the privileged documents
were furnished to the Tribunal in the course of its private
investigative work.
Now, that’s a letter which is in, in fact, dated below the
signature. It was dated the 4th of March, 2002. It’s
addressed to Mr. John Davis, who was then Solicitor to the
Tribunal, and it’s “re my client: Department of Public
Enterprise”. I should just say that the Department of
Transport, Energy and Communications was by then known as
the Department of Public Enterprise.
“Dear Mr. Davis,
“I refer to previous correspondence in connection with the
above matter and in particular to our conversation on
Thursday last.
“You will note from previous correspondence that documents
were withheld by my client pending consideration of a claim
of legal privilege. I have now received instructions to
make available copies of the aforesaid documents subject to
the following conditions:
“(a) strictly on a confidential basis.
“(b) without waiving the assertion of privilege.
“(c) on the agreed basis that should the Tribunal believe
documents to be relevant, the Tribunal will write to the
Department setting out which documents they believe to be
relevant and returning the other documents.
“(d) if the documents are documents over which the
Department wishes to claim privilege, the Department will
assert privilege and the Tribunal will return the
documents.
“(e) at that stage, any dispute over whether or not the
documents are covered by privilege will be resolved in the
usual way.
“You might also acknowledge receipt of the Regulatory
Division Files regarding Esat Telecom which were furnished
to you on the 27th ult. Some documents were withheld from
this batch, however they are now included with the
documents enclosed herewith and are covered by the contents
of this letter.
“If you have any queries, please do not hesitate to contact
the writer.”
And it was on those terms, therefore, sir, that the
privileged documents were furnished to the Tribunal, and
those documents included the opinion and covering letter of
the 9th of May, 1996.
In practical terms, what that agreement meant was that
whilst the Tribunal could examine the opinions in the
course of its private investigative work, it could not
refer to their contents in the course of evidence. That
arrangement was at all times respected by the Tribunal, and
no reference, however, was made by the Tribunal to the
contents of any opinion, including the opinion of the 9th
of May at other sittings. The fact that the opinion had
been sought was, nonetheless, directly material to the
Tribunal’s inquiries, and was pursued in evidence.
As it seemed to the Tribunal, having read the opinion of
9th May, 1996, that it did not, in fact, address one of the
matters on which legal advice had been sought by the
Department, the Tribunal explored and canvassed, in the
course of evidence, the views of departmental officials,
and, in particular, those of Mr. Loughrey on that point.
The Department was fully represented and in attendance at
those public sittings and can have been in no doubt as to
the lines of inquiry pursued by the Tribunal or the
Tribunal’s working view regarding the scope of that
opinion.
The issue of privilege attaching to the opinion was
subsequently challenged by an affected person, in
circumstances which will be returned to more fully in this
Opening Statement, and despite the Tribunal endeavouring to
secure the Department’s agreement to a limited form of
waiver of privilege to enable affected persons to have
access on a confidential footing to the contents of the
opinion, the Department declined to waive privilege, even
to that limited extent, and ultimately the Tribunal was
obliged to rule on the matter, which it did by a ruling of
the 25th of February, 2008.
In order to put these matters into context, it is now
necessary to refer to the circumstances in which and the
matters on which legal advice was sought by the Department
and to some of the evidence heard by the Tribunal in the
course of its sittings in 2003.
It will be recalled that the second GSM licensing process
which led to the licensing of Esat Digifone comprised two
distinct phases.
The first phase, which involved the competitive evaluation
of applications submitted by interested parties, commenced
on the 4th of August, 1995, with the receipt of
applications, and concluded on the 25th of October, 1995,
with the announcement that Esat Digifone was the winner of
that competitive process. What Esat Digifone won was not
the right to the second GSM licence, but, rather, the
exclusive entitlement to negotiate with the Department for
the grant of the licence and for the terms of that licence.
The second phase of the process involved negotiations
between Esat Digifone and the Department which ultimately
led to the granting of the licence. The second phase
commenced very shortly after the announcement of 25th
October, 1995, and concluded on 16th May, 1996, when the
licence was issued to Esat Digifone.
It was at a late stage in the second phase of the process
that the opinion in question was sought, after consultation
between the Department and officials of the Office of the
Attorney General. Those consultations followed receipt of
notification on the 17th April, 1996, from Messrs. William
Fry, solicitors for Esat Digifone, concerning the intended
shareholding of the proposed licencee company. This
notification and the Department’s response to it can only
be understood in the light of the rules of the competitive
process as stipulated in the formal document entitled
“Request for Tenders” which, as will be recalled, had been
issued by the Department on the previous 2nd March of 1995,
and the issue of this document marked the launch of the
competitive process and it prescribed the rules of the
competition.
That document invited interested parties to submit
applications, and it stipulated at paragraph that, and I
am quoting:
“Applicants must give full ownership details for proposed
licencee.”
The ownership details of the proposed licencee, as
furnished in the Esat Digifone application, were
Communicorp and Telenor as each holding 50% of the shares,
with their respective shareholdings falling to 40% each
either in the run-up to or on the award of the licence
being made to enable 20% equity to be allocated to
financial institutions. In other words, the ownership of
the proposed licencee was defined as Communicorp holding a
40% shareholding, Telenor holding a 40% shareholding and
financial institutions holding a 20% shareholding. The
extent to which that 20% shareholding had already been
determined was described with varying degrees of certainty
in the application and in the course of the evaluation
process.
In the Esat Digifone Executive Summary, it was stated that:
“On award of licence, 20% of the equity of the company (10%
each of Communicorp and Telenor) will be made available to
third party investors. This allocation has been placed by
Davy Stockbrokers (Ireland’s largest stockbroking firm)
with: Allied Irish Bank, Investment Bank of Ireland,
Standard Life Ireland, Advent International. Confirmation
letters from all equity partners are contained in the
financial appendix.
A slightly different statement was made in the main body of
the application where, in the management book at paragraph
2.1, it was stated as follows — and a copy of that, I
think, is available, and we have it there on the overhead
projector.
2.1, “The Operating Partners”:
“Esat Digifone has two operating partners – Communicorp
Group Limited of Ireland and Telenor Invest AS of Norway.
Together, they bring Esat Digifone complementary cultures,
skills and experiences covering all areas necessary for the
company to succeed.”
Then at 2.1.1, “Communicorp Group Limited,” subheading:
“Communicorp is an Irish media and telecommunications
services group with operations in Ireland, Scandinavia and
Central Europe. Communicorp is particularly experienced in
starting up new companies and competing with incumbent
telecommunications operators and radio stations. Its
subsidiary, Esat Telecom, has proven, in a short space of
time, its ability to compete effectively with Telecom
Eireann in the provision of telecommunications services in
Ireland. At the core of Esat Telecom’s telecoms success
are high quality and competitively priced services.
Communicorp and Esat Telecom have an entrepreneurial and
dynamic culture, a deep appreciation of the Irish market
for telecommunications services, experience of the Irish
business environment and Irish marketing flair.”
Then at 2.1.2, under the heading “Telenor Invest AS”:
“Telenor Invest AS is the international investment arm of
Telenor AS, Norway’s leading full service
telecommunications operator. It is one of the world’s most
successful cellular communications operators measured in
terms of market penetration. Norway’s cellular penetration
already exceeds 19% of the population and is forecast to
grow beyond 22% by end 19and to 60% by 2005. Telenor
has successfully implemented and launched GSM networks in
Norway, Hungary and St. Petersburg, in addition to its
analogue NMT networks. Telenor’s years’ experience of
managing cellular communications businesses includes
design, deployment, operations and marketing. In addition,
Telenor has a comprehensive range of tools, systems,
training programmes and business processes which will be
transferred to Esat Digifone, getting the company off to a
fast, professional start and efficient development.”
And then at subsection 2.2, The Company’s Ownership
Structure:
“Esat Digifone is an Irish incorporated company.
Currently, 50% of the shares are held by Communicorp and
the other 50% by Telenor. On award of the licence, 20% of
the equity in the company (10% each from Communicorp and
Telenor) will be made available to third-party investors.
This allocation has been placed by Davy Stockbrokers
(Ireland’s largest stockbroking firm) with:
Allied Irish Bank
Investment Bank of Ireland
Standard Life Ireland
Advent International.
Confirmation letters from all equity partners are contained
in the financial appendix. The shareholders plan to make a
percentage of the company’s shares publicly available on
the Irish Stock Exchange some two or three years after
licence award.”
That, in fact, section, sir, is taken from the Executive
Summary, and that’s what was stated in the Executive
Summary.
And I’ll come on now to the slightly different description
that was contained in the management section of the
application, and, again, that’s also numbered 2.1, and it’s
section 2: “Esat Digifone,” subsection 2.1: “Ownership
and Equity Holding”:
“Esat Digifone is a limited liability company registered in
Ireland. The company is jointly owned by Communicorp Group
Limited and Telenor Invest AS, Norway. Communicorp Limited
is the holding company for Esat Telecom, which holds a
licence from the Department of Communications (a
Section 1licence issued in December 1992) for the
provision of international and inland long-distance
services to Irish companies. Telenor Invest AS is a
wholly-owned subsidiary of Telenor International AS, a
company in the Telenor Group, the Norwegian State-owned
telecommunications operator.”
I should say, sir, there that the question mark and the
circle around “inland,” that was actually on the copy of
the application that was furnished to the Tribunal. It’s
not a mark that was made by the Tribunal.”The terms of the shareholders’ agreement between the
parties are presented in Management Appendix A. Financial
reports of Communicorp Group and Telenor Invest AS are
presented in management Appendices B and C respectively.
“The shareholders agreement states that Communicorp Group
and Telenor will each initially hold 50% of the equity of
Esat Digifone. In the period leading up to the award of
the licence, 20% of the equity (10% from each of the
partners) will be formally placed by Davy Stockbrokers,
Ireland’s largest stockbroker.
“As of submission of this application, Davy Stockbrokers
has received written investment commitments from:
Allied Irish Bank to make an equity commitment of IR£
million;
Investment Bank of Ireland to make an equity commitment of
IR£million;
Standard Life Ireland to make an equity commitment of
IR£2.million;
Advent International plc to take at least a 5% of the
equity.
“Letters of commitment are presented in Management
Appendix D.”
It then goes on to state:
“Within three years of service launch, the Communicorp
Group and Telenor Invest AS will each make a further
tranche of equity available to independent investors in
order to reach a position whereby the equity in Esat
Digifone is equally shared between Communicorp, Telenor
Invest AS and independent investors. Under this agreement,
32% of Esat Digifone’s equity will be made available to
public and institutional investors, thus distributing the
benefits of the licence widely.
“Esat Telecom is the trading name of Esat
Telecommunications Limited which is the telecommunications
operating company of the Communicorp Group. For
convenience and clarity, Esat Telecom rather than
Communicorp is referenced in those sections of this volume
which address complementarity of skills from a specifically
telecommunications perspective.
“In forming Esat Digifone, the prime objective was to
identify partners who could offer complementary resources
and compatible business approaches. Esat Digifone
undertook extensive research and initiated discussions with
telecommunications operators around the world. A shortlist
of operators in eight countries was visited between
December 19and January 1995. This resulted in an
invitation to Telenor to participate in the company.”
And then, over the page: “The result is a company which
has a unique portfolio of talent and skills. Esat Digifone
successfully combines specialist expertise, sound
experience and financial strength and an entrepreneurial
spirit.
“The diagram below illustrates the initial ownership of
Esat Digifone Limited.”
And I think that diagram can be seen there on the overhead
projector, sir, and you’ll see that, at the top, in the
large box is Esat Digifone Limited, and, on the left-hand
side, that shows Telenor Invest AS at to 50%. In the
middle, it shows Communicorp Group at to 50%. And then,
on the right-hand side, it shows institutional investors up
to 20%, and, again, they are named below that box with
bullet points: first bullet point, AIB; second bullet
point, Investment Bank of Ireland; third is Standard Life
Ireland; fourth bullet point, Advent International.
So that then, sir, was the slightly different description
which appeared in the main body of the application in the
management section.
Now, at the Esat Digifone oral presentation on the 9th of
September, 1995, Mr. Arve Johansen of Telenor described the
ownership profile of the proposed licencee as follows:
“Esat Digifone is an Irish company. It’s evidenced, first
of all, by the Communicorp Group holding 40% as we get
going, and we have institutional investors holding 20%, and
they are the AIB, the Investment Bank of Ireland, Standard
Life Ireland and Advent International. In addition, we
have Telenor, through its subsidiary Telenor Invest, and
Telenor is the major telecommunications operating company
in Norway.”
The matter was returned to in the course of the
presentation by Mr. Denis O’Brien, when he observed as
follows:
“And as Arve has mentioned, both Communicorp and the
financial institutions are going to share in this
investment, and I think this is important because it’s the
first time a utility will make available shares to
financial institutions. There is a hell of a lot of money,
pension money leaving this country, and this is a way of
tapping that vast resource. So we have two operating
partners and financial institutions. So that’s done.”
At a later point in his submission, Mr. O’Brien observed
that: “It’s also likely that the Irish institutions will
probably go into a vehicle together just for simplicity
that there would be that 20% block so the Irish
institutions again would control that block effectively in
terms of equity terms.”
And that was the information, sir, that the Department was
furnished in relation to the ownership of the proposed
licencee which, as I have already indicated, was a
requirement under the rules of the competition as set forth
in the RFP document issued on the 2nd March of 1995.
As has already been adverted to, it was the contents of a
letter dated the 17th April, 1996, from Mr. Owen O’Connell
of Messrs. William Fry, solicitors for Esat Digifone, which
prompted the Department to seek legal advice. That letter
was addressed to the ownership and capital configuration of
Esat Digifone Limited, the proposed licencee.
And there is a copy of that letter, sir, on the overhead
monitor. It’s addressed to Ms. Regina Finn, Department of
Transport, Energy and Communications, and just to remind
people, sir, Ms. Finn was an Assistant Principal who was —
who had been transferred from the Broadcasting Section of
the Regulatory Division to the Telecommunications Section,
I think in late February or early March of 1996. She had
had no involvement whatsoever in the competition process,
and it was her evidence that she became responsible for
coordinating the drafting of the terms of the licence at
that stage and she reported to Mr. Sean McMahon.
It’s: “Esat Digifone Limited.
“Dear Regina,
“I refer to our telephone conversation of yesterday
regarding the ownership of Esat Digifone Limited and of
Esat Telecommunications Holdings Limited. The position is
as follows:
“Esat Digifone Limited.
There are 3,000,0ordinary shares of £each in issue in
this company. They are held as to 1,125,0shares by each
of Esat Telecommunications Holdings Limited and Telenor
Invest AS, and as to 750,0shares by IIU Nominees
Limited.
“It is intended that by the time notification is received
from you that the second GSM licence is available for
issue, the issued share capital will have increased by £million to £million (all comprising shares of £each)
held as to 6,750,0by each of Esat Telecommunications
Holdings Limited and Telenor Invest AS, and as to 4,500,0by IIU Nominees Limited.
“The 25% of Esat Digifone Limited held by IIU Nominees
Limited effectively represents the institutional and
investor shareholding referred to in Esat Digifone’s bid
for the licence. You will recall that this referred to an
immediate institutional-investor holding of 20%, with a
further 12% in short and medium term stages. Of the
anticipated 12%, 5% has been prepared with IIU Nominees
Limited. It is understood that most, or all, of the shares
held by IIU Nominees Limited will, in due course, be
disposed of by it, probably to private and institutional
investors.”
Next heading then is “Esat Telecommunications Holdings
Limited”.
“This company is owned (either directly or indirectly) as
to approximately 57% of its issued share capital by Denis
O’Brien and as to approximately 31% thereof by a group of
investment funds managed and controlled by Advent
International. The remaining 12% is owned (again directly
or indirectly) by a number of individuals (including Denis
O’Brien) who are primarily present or former directors,
employees, advisers or shareholders in Esat Telecom
Limited. (These percentages assume the full conversion of
all existing issued convertible debentures in the company,
i.e. they are expressed on a “fully diluted” basis.)
“A placing of shares is near to completion in the United
States whereby the effective ownership of Esat
Telecommunications Holdings Limited will be altered by the
subscription for a substantial number of shares by a number
of US financial institutions. The US institutions are
likely to hold approximately one third of Esat
Telecommunications Holdings Limited after the placing
(although Mr. O’Brien will retain a majority of voting
shares); in addition, Advent International may increase its
holdings somewhat by participating in the placing.”
Then the final subheading is: “Other group companies”:
“You asked me about a number of other companies of which
you were aware, including Esat GSM Holdings Limited and
Communicorp Group Limited. While these companies remain in
being and are within the overall group structure, they will
not have a direct role in the licence.
“I believe that the foregoing accurately summarises the
effective and beneficial shareholdings of the parties
concerned, although the full shareholding structure is
somewhat more complex than outlined and, as I told you on
the telephone, many of the effective shareholdings are held
indirectly through other companies. If you wish, a full
briefing can be given as to the exact shareholdings of all
parties in and through all companies, but I am not sure
that this will serve any productive purpose. Please
contact me if you would like such a briefing.
“At the risk of labouring the point, I must reiterate the
anxiety of Esat Digifone to procure a grant of the second
GSM licence as soon as possible, since significant damage
to its plans and prospects is already being incurred and
could largely be avoided by the grant of the licence.
“I look forward to hearing from you.”
In effect, what Mr. O’Connell informed the Department was
that the shares in Esat Digifone were held as to 37.5% by
Communicorp, as to 37.5% by Telenor, and as to 25% by IIU
Nominees Limited. Whilst their respective shareholdings
would increase prior to the award of the licence, that
increase would be pro rata, and would not impact on their
relative shareholdings.
As regards the 25% of the shares in Esat Digifone Limited
held by IIU Nominees Limited, Mr. O’Connell informed the
Department that these represented the institutional and
investor shareholding, as he described it, of 20%, together
with a further 5% arising from the dilution of the holdings
of Communicorp and Telenor.
That letter was sent by Mr. O’Connell to Ms. Regina Finn,
who, as I have already stated, was an Assistant Principal
Officer and who had joined the Telecommunications Section
of the Regulatory Division in late February or early March
1996, and who had commenced working with Mr. Sean McMahon
on coordinating the drafting of the licence. Ms. Finn had
no previous involvement whatsoever with the second GSM
process. She had telephoned Mr. O’Connell on the previous
day, which was the 16th April, 1996, to inquire about the
ownership of Esat Digifone in the context of preparing the
draft licence. Ms. Finn recorded the information which
Mr. O’Connell conveyed to her in a memorandum which she
forwarded to Mr. Martin Brennan and Mr. Fintan Towey, and
she, likewise, forwarded a copy of the letter of the 17th
April, 1995, to Mr. Towey on receipt of it.
I refer you, sir, also to that fax and enclosed memorandum.
It’s to Martin Brennan/Fintan Towey, Communications
Division, from Regina Finn, Department of Transport, Energy
and Communications, dated 16th April, 1996, and the
comments are:
“Martin, Fintan, attached is the latest information to come
to light about the shareholdings in Esat Digifone. Owen
O’Connell is to provide further detail in writing. You may
wish to pursue further.”
And then we go over the page. I am going to deal with just
the narrative that Ms. Finn made, first of all, and then
refer back to the diagram. She stated in her memorandum
and recorded:
“Owen O’Connell, William Fry Solicitors, provided the
following information on behalf of Esat Digifone Limited.
“At present, Communicorp is the vehicle whereby Denis
O’Brien holds shares in Esat Digifone. Communicorp also
has ownership of Esat Telecom and the radio interests of
Denis O’Brien. The objective is to uncouple the
telecommunications and the radio elements of Communicorp
because they are incompatible from the point of view of
investors. With this in mind, Communicorp will retain the
radio interests and slide out of the current picture in
relation to telecommunications.”
There is then a subheading: “Esat Telecommunications
Holdings Limited has been incorporated to take over the
telecommunications interests of Communicorp. Ownership
comprises:
“Denis O’Brien: 57%;
Advent: 31%;
Miscellaneous: 12%;
Denis O’Brien: 6%;
Employees of Esat: 6%.
“A flotation is currently underway by First Boston Bank
which involves the placing of shares in Esat
Telecommunications Holdings Limited. It is not yet known
what percentage of the company will finally be owned by
American investors.
Esat Telecommunications Holdings Limited, in turn, owns
Esat Telecommunications Limited: 100%;
Esat Digifone Limited: 37.5%.”
So that portion of her memorandum related primarily, sir,
or entirely, sir, to the restructuring of Mr. Denis
O’Brien’s interests through Communicorp.
She then has a heading: “Telenor Invest AS owns 37.5% of
Esat Digifone Limited”.
“IIU (a Dermot Desmond company) currently holds 20% of Esat
Digifone which it intends placing with institutional
investors. It also has the right to acquire a further 5%
(by means of the 12% of Esat Holdings Limited which is held
by miscellaneous?)” And she puts a question mark. Owen
O’Connell is to provide further information in writing,
including deadlines for this change of ownership.”
And, above that, she had prepared a diagram in which she
represented that same information which appeared in her
narrative. And you see at the foot of that diagram, sir,
she has “Esat Digifone Limited” and above that she has
37.5% allocated to Esat Telecom, which was the —
effectively represented Communicorp. On the left, she has
Telenor Invest AS holding 37.5%, and on the right she has
“IIU (Dermot Desmond)” with a line down, 20%, and I think
that’s plus 5%.
Now, in their evidence to the Tribunal, Mr. Loughrey,
Mr. Brennan and Mr. Towey agreed that the ownership
information contained in Ms. Finn’s memorandum and
Mr. O’Connell’s letter was new information and represented
a departure from the ownership details furnished in the
course of the licensing process in two respects.
First, the share configuration had changed from a 40:40:configuration with Communicorp and Telenor each holding a
40% shareholding, to a 37.5:37.5:configuration with a
Communicorp and Telenor shareholding diluted to 37.5% each.
And secondly, the financial institutions’ shareholding was
not to be placed by Davy Stockbrokers with Allied Irish
Bank, Investment Bank of Ireland, Standard Life Ireland or
Advent International, but had, instead, been taken up by
IIU Limited on behalf of Mr. Dermot Desmond.
Mr. John Loughrey, who was then Secretary General of the
Department, in his evidence to the Tribunal, on day 188,
testified that he was very surprised when he received those
documents and that he was not best pleased.
Mr. Brennan testified, on day 178, that the information
triggered two responses: First, that the Department had to
check who IIU was, and whether they were ‘good for it’, as
he put it; and secondly, that they had to seek legal advice
on where stood the application. In other words, the
Department had to determine whether IIU Limited had the
financial capacity to fund its shareholding and whether the
ownership of the proposed licencee company was permissible,
having regard to the competition.
On the 22nd April, 1996, Mr. Fintan Towey and Ms. Regina
Finn consulted with Mr. Denis McFadden and Mr. John Gormley
of the Attorney General’s Office. Mr. Towey and Ms. Finn
have already given evidence concerning that meeting. Two
days later, on the 24th April, 1996, Mr. Towey prepared a
note of the meeting, and that document has already been led
in evidence, and inquiries pursued by the Tribunal with Mr.
Towey and Ms. Finn and indeed with a number of other
witnesses in relation to its contents.
Now, that note recorded as follows:
It’s headed “Note of Meeting” and it’s in five numbered
paragraphs, and if we just look over the page, it’s signed
by Mr. Towey, and if we just move it up a little, it’s
dated the 24th April, and it’s been cc’ed to Mr. Brennan,
Mr. McMahon and Ms. Finn.
Paragraph 1:
“Ms. R. Finn and the undersigned met with Mr. D. McFadden,
Mr. J. Gormley and Mr. L. Bacon, Office of the Attorney
General, on the April, 1996. The purpose of the meeting
was to discuss:”(a) the disclosure of information to unsuccessful
applicants for the GSM licence and
“(b) the transposition of Directive 96/and its impact on
the award of the GSM licence to Esat Digifone.
“2. Mr. McFadden indicated that the Attorney General would
approve the draft letter inviting unsuccessful applicants
to debriefing sessions by the following day. The
Department agreed to provide a brief for senior counsel on
the procedure to be followed at the sessions.
“3. With regard to the transposition of Commission
Directive 96/2, the Attorney General Offices was
particularly concerned about the applicability of the
appeal procedures of the Directive to the GSM competition
if the GSM licence is awarded pursuant to a Statutory
Instrument to transpose the Directive. It may be possible
to provide in the SI that applications received prior to
the adoption of the Directive are not subject to the appeal
procedures. Alternatively, the licence could be granted
under Section 1(1) and (2) of the 19Act and the SI
could provide that it is deemed to be awarded under the
proposed new legal base for mobile licences. The
Department expressed a preference for the award of the
licence pursuant to a SI transposing the Directive, but
would not press this course if the AG’s Office advised
against on the grounds of increased exposure to legal
action. The fact that it would be preferable to licence
Esat Digifone and Eircell on the same legal basis was also
pointed out. It was agreed that these questions should be
addressed to senior counsel. In the meantime, the AG’s
Office agreed to provide a first draft of the Regulations
to the Department the following day.
“4. The Department agreed to provide the following to the
Office of the Attorney General in order to facilitate
further consideration of licence award.
” — a report on the compatibility of the conditions of the
draft GSM licence with Directive 96/2.
” — a consolidated text for Section 1of the 19Act,
as amended by SI of 19and including proposed
amendments pursuant to Directive 96/2.
” — the Department’s view on consulting with the
Commission on the impact of Directive 96/on the award of
the GSM licence and on the compatibility of the conditions
with the Directive.
“5. The Department also gave to the Office of the Attorney
General a copy of an extract from Esat Digifone’s
application outlining the ownership of the company,
together with an internal departmental document and a
letter from William Fry & Co., Solicitors, concerning
restructuring of the Esat element. The Department
indicated that clarification would be necessary of any
change in the ownership structure of Esat Digifone relative
to that outlined in the application.”
And that was Mr. Towey’s note made on the 24th April of the
meeting which he attended in the Attorney General’s Office
and with officials of the Attorney General’s Office on the
22nd April.
On the same day, the 24th April, 1996, Mr. Towey wrote to
Mr. McFadden and Mr. Gormley of the Attorney General’s
Office, enclosing some additional material, making a number
of points regarding other aspects of the legal advice
sought and confirming the Department’s requirement for a
legal opinion on the restructuring of the ownership of Esat
Digifone Limited. That letter, which has likewise already
been led in evidence and on which inquiries have been made,
was in the following terms:
It’s dated the 24th April, 1996.
It’s addressed to Mr. D. McFadden/Mr. J. Gormley,
Office of the Attorney General.
“Dear Mr. McFadden/Mr. Gormley,
“Further to our meetings on 22nd and 23rd April, I enclose
the following:
” — a report on the Department’s assessment of the
compatibility of the conditions of the draft GSM licence
with Directive 96/and
” — a consolidated text of Section 1of the Post and
Telecommunications Services Act, 1983, incorporating
amendments contained in SI of 19and amendments
proposed in the transposition of Commission Directive 96/2.
“I have also, as requested, consulted internally on the
question of consulting the European Commission in relation
to the terms of the licence. The Department is of the view
that, apart from the time constraints, it may not be
prudent to invite the Commission’s scrutiny at this point.
The question of compliance with the provisions of Directive
96/will no doubt fall to be examined in detail by the
licencee in due course, possibly in consultation with the
Commission.
“I would also like to reiterate our requirement for a legal
opinion on the restructuring of the ownership of Esat
Digifone (relevant papers provided at our meeting on the
22nd April). In particular, the question of whether recent
correspondence suggests any change in the identity of the
beneficial owners of the company which could be considered
incompatible with the ownership proposals outlined in the
company’s application, must be addressed. Before the
ultimate award of the licence, it is now considered that it
would be preferable to seek warranties in relation both to
the beneficial ownership of Esat Digifone and the financing
package for the project. This is considered prudent, given
the nature of the concession being given to the company.
Perhaps you would advise, however, whether such a
requirement could be challenged by Esat Digifone as an
imposition not envisaged in the competition process or
otherwise unreasonable on legal grounds.
“Finally, I will provide a brief for counsel on the
proposed disclosure procedure as soon as possible, but
would, as discussed, appreciate your early opinion on the
question of whether debriefing sessions should proceed in
the shadow of a complaint to the Commission regarding the
process.”
And it’s signed “Fintan Towey”.
It is clear from the contents of Mr. Towey’s note, dated
24th April, 1996, and the contents of his letter of the
same date, that the Department was seeking legal advice in
relation to four separate matters.
First, the transposition of Counsel Directive 96/into
Irish law, and whether the second GSM licence should be
issued under the framework provided by that directive, or
under Section 1of the Postal and Telecommunications Act,
1983, bearing in mind that the process which would lead to
the grant of the second GSM licence had commenced prior to
the coming into force of that directive early in 1996.
Second, the draft terms of the licence to be issued by the
Minister, and, in particular, the extent to which the
Minister could restrict the transfer of shares in the
licensed company.
Thirdly, the legal implications of the Department meeting
with unsuccessful applicants.
And fourthly, the ownership conformity issue.
It was this fourth and final aspect of the legal advice
sought which was, and is, of interest to the Tribunal, and
was, and is, material to the Tribunal’s inquiries.
Both Mr. Towey’s note of the 24th April, 1996, and his
letter of the same date referred to papers which had been
provided by Mr. Towey at the meeting of the 22nd April,
1996, relevant to the ownership conformity issue. In his
note of the meeting, Mr. Towey had described those
documents, it will be recalled, as comprising “copy of an
extract from Esat Digifone’s application outlining the
ownership of the company, together with an internal
Department docket and a letter from William Fry & Co.,
Solicitors, concerning restructuring of the Esat element.”
The Tribunal took up inquiries with Mr. Towey in relation
to those documents which he had provided to the Attorney
General’s Office, in the course of his evidence on the 20th
May, 2003, which was day 2of the Tribunal’s public
sittings, and the transcript for that date records the
following exchange, and, in fact, a copy of the transcript
is on the monitor, sir.
“Question 180, question: Can you — I know it was a long
time ago — can you remember what documents were given to
the Attorney General’s Office at that stage about the
portion of the application outlined in the ownership?
Answer: I thought I had seen a copy of this in the papers.
Question: Right.
Answer: And what I — I think the papers bear out that
what I gave was an extract from the Esat Digifone
application.
Question: Right.
Answer: Copy of the letter from William Fry’s and a copy
of the chart produced.
Question: The Regina Finn chart?
Answer: Yes.”
Now, the Tribunal has received documentation from the
Attorney General’s Office which had not previously been led
in evidence and which seemed to confirm that Mr. Towey’s
recollection of the documents which he provided was
correct. That documentation was provided, it seems, to the
Attorney General’s Office, or duplicate copies of it, on
the 24th April by Mr. Towey, and the letter which he
forwarded, or the fax which he forwarded to the Attorney
General’s Office is, in fact, stamped the 25th April, and
it appears that those duplicate copies were received on
that date, and I’ll just turn those up now, sir. Copies of
those can be found at book 85, which is the book that the
Tribunal has circulated for the purposes of these public
sittings, at Divider G — sorry, it’s Divider E of that
book. And we can just get those on the monitor now, sir.
You will see it’s a handwritten fax copy sheet. It’s
“To: Denis McFadden.
From: Fintan Towey.”
The fax number is there, and, below that, “pages,” and
you will see from the stamp on the right-hand side above
“copy” that it was received by the Office of the Attorney
General on the 25th April, 1996. And what that included
was, firstly, the extract from the management section of
the application of Esat Digifone which I read out earlier.
Subsection 2.1. It included the section of the page, which
was the diagram that I also referred to. And then further
material from that section relating to the principal
shareholders, the management and decision-making structure.
Secondly, the documentation included a copy, as Mr. Towey
had indicated in his evidence, a copy of the letter dated
the 17th April, 1996, from Mr. O’Connell to Ms. Regina
Finn.
And thirdly, a copy of Ms. Finn’s note, headed
“Departmental Note,” in which she had recorded, both
diagrammatically and in the narrative below her diagram,
the information which Mr. O’Connell had furnished to her
regarding ownership matters on the 16th April.
Now, it seems that these documents, together with
Mr. Towey’s fax cover sheet stamped by the Attorney
General’s Office as having been received on the 25th April,
were furnished ultimately to senior counsel under cover of
a letter which, although dated the 24th April, 1996, was
probably, it seems, not actually sent until the 25th April
of 1996, and I can refer you to a copy of that letter.
It’s a letter from the Office of the Attorney General, it’s
dated the 24th April, 1996. It’s addressed to senior
counsel. It’s headed “Urgent”.
“re: Proposal of the Minister for Transport, Energy and
Communications to grant a licence to Esat Digifone Limited
to be the second provider and operator of a GSM mobile
telephony service in Ireland and Commission Directive
96/2/EC amending Commission Directive 90/388/EEC and minute
of the Department of Transport, Energy and Communications
dated 24th April, 1996.”
And it states:
“Dear Richard,
“With reference to the above matters and yesterday’s
consultation, please find attached a copy of the above
minute received from the Department and its enclosures.
The “consolidated text” of Section 1is not enclosed as
it does not incorporate the more recent draft of the
proposed amendments thereto.
“A copy of the ‘relevant papers’ referred to in the third
paragraph of the Department’s minute is also enclosed,
together with a new draft Article of the proposed licence
which is relevant, and your opinion on the issues set out
in that paragraph would be appreciated.”And over the page at the top of the second page:
“If you require any additional information or consider that
a consultation would be desirable, please let us know.”
And it’s signed “John Gormley” and “Denis McFadden”.
Now, I should add that the Article referred to in the
second paragraph of that letter was a draft of an Article
to be included in the proposed licence which would govern
the entitlement of shareholders of the licensed company to
transfer or dispose of their shares after the licence was
issued. It seems that the final terms of that article were
agreed at a very late stage prior to the 16th of May of
1996, and were subject to the terms of a side letter from
Mr. Lowry, as Minister, to Mr. Knut Digerud, the Chief
Executive of Esat Digifone.
Now, from the documentation available to the Tribunal and
the evidence already heard, it appears that no further
instructions were furnished to senior counsel or to the
Attorney General’s Office relating to the ownership
conformity issue in advance of the furnishing of senior
Council’s opinion dated the 9th of May of 1996.
In response to those instructions of the 24th April, 1996,
senior counsel, in fact, furnished two opinions to the
Office of the Attorney General. The first was dated the
25th April, 1996, and the second was the opinion in
question, dated the 9th of May of 1996. The State’s waiver
of privilege extends only to the second opinion of 9th May,
1996. Senior counsel forwarded his opinion to the Office
of the Attorney General under cover of a letter of the 9th
of May of 1996.
And I now propose, sir, to open and read both the covering
letter from senior counsel dated the 9th of May of 1996,
and the opinion of the same date.
I should add, sir, that in the course of cross-examination
of Mr. John Loughrey and of Mr. Owen O’Connell, Mr. John
Loughrey in 20and I think Mr. Owen O’Connell later in
the year of 2003, some short passages were opened from this
covering letter and from the opinion by counsel for
Mr. O’Brien, but the entire of the letter and the entire of
the opinion have never been opened previously.
CHAIRMAN: And I think you will come back to those at a
later —
MS. O’BRIEN: Absolutely, sir, yes, indeed, I will.
Now, the letter is the 9th of May of 1996. It’s addressed
to the “Office of the Attorney General,
Government Buildings,
Upper Merrion Street,
“re licensing mobile telephones:
“Dear John,
“I enclose my suggested amendments to the Esat licence, my
suggested amendments to the Statutory Instrument given to
me and some general advices.
“I am sending my views on the complaint made to the
Commission under separate cover. However, I remain of the
view that the Minister should not drag his feet in issuing
the licence. If there was to be litigation, so be it, but
delaying does not achieve any end. Before issuing the
licence, you should make it clear to Persona’s solicitors
that he is not holding his hand on the issue of the
licence. The form of draft letter has already been
discussed with you. My reasoning in this regard is that
the Minister is committed to grant a licence. He is now in
between two competing interests: One, Esat, who say that
they are entitled to the licence; and the other, Persona,
who are indicating that the licence should not issue.
Delaying issuing the licence will clearly damage Esat. If
Persona wish to stop Esat getting the licence, they should
be required to take appropriate legal action to restrain
the issue. They will then be required to give undertakings
to the parties affected, particularly Esat. This will
concentrate their minds, particularly in circumstances
where the Commission are likely to be making unsympathetic
noises in relation to their complaint.
“There is one final matter that is important. It occurred
to me that the Minister may wish to impose, on the persons
backing Esat Digifone, an obligation to stay with their
commitment to back Esat Digifone for a given period, say
to years. It could be possible to include in the licence
a condition that the licence shall not be actioned until an
appropriately worded commitment is to hand. I do not know
enough about the terms of the application to know what sort
of commitment you could seek or from whom. However, it is
a matter worth considering and, in my opinion, a
sustainable condition to attach to the granting of a
licence to carry on an activity which, by definition, means
that somebody else will be deprived of the opportunity to
carry on that activity.
“Yours sincerely,”
and it’s signed there by senior counsel.
Then the opinion itself, sir. It’s headed “Advices
Querist: The Minister for Transport, Energy and
Communications and the Department of Transport, Energy and
Communications.
“re: The Esat Digifone (GSM) mobile telephony licence.”
And it states: “I have now had the opportunity of
considering the complicated issues which arise relating to
the introduction of a Statutory Instrument to take into
account the effects of Commission Directive 96/2/EC and to
settling the terms of the draft ‘Esat Digifone
telecommunications licence’ which the Minister wishes to
issue.” Then there is a subheading “The Draft Licence”.
“I have dealt with the draft licence by taking the draft of
the 2nd May, 1996, and indicating where I think there
should be amendments. The balance of the document can
remain in its current form. Attached to these advices are
the amendments I suggest. You should also include in the
licence the subheadings that exist in the articles. I did
not trouble to repeat them in the amendments that I have
suggested.
“The terms of the amendments I have suggested to Article 1,
2, and should be self-explanatory.
“The amendments I have suggested to Article are more
substantial. Article imposes conditions material to the
ownership of the licence and the management of the licence
service, most particularly the ownership of shares in the
licencee company. I view these matters as being
particularly sensitive and an area where the Minister’s
hand is substantially tied. The Minister agreed to give
the licence in question prior to the introduction of
Commission Directive 96/2/EC. However, as a matter of law,
I am forced to conclude that if the licence document
includes terms and conditions which are not sustainable
under the Directive, and licencee, in my opinion, is free
to apply to the courts to have such non-conforming
provisions struck down.
“If one analyses why the Minister is concerned about the
ownership of shares in the licencee, the only legitimate
concern he can have is that if there is a change of
ownership, the service that has to be provided will in some
way be compromised. I do not think it is tenable to
suggest that the licencee has been awarded the licence
because of the parties who own the licencee; rather, the
licencee has been awarded the licence because its plans and
proposals were the most meritorious and it provided a
funding plan which looked feasible. There is no reason why
any of these matters have to be compromised by a change in
ownership. However, I do accept that there is a
possibility that this might occur. It is also a real issue
in the mind of the public.
“In the circumstances, I have proposed changing Article
quite fundamentally. What I have proposed is that the
licence continue to be personal to Esat Digifone, the
restrictions on transfers and assignments of interest in
the licence and assets remain and that the Minister include
in the licence provisions which will allow him add
additional conditions to the licence should Esat Digifone
wish to issue shares to the public or by private placing
and give to the Minister the right to veto any proposal to
issue shares or transfer the ownership of existing shares.
However, the right must be prescribed, and I have done this
by only allowing the Minister to act if he forms the
opinion that the proposals will be to the detriment or will
compromise all or any of the matters which the directive
indicates are proper concerns for the Minister when issuing
licences. I find it difficult to imagine circumstances
where the Minister will see a proposed issuing of shares
and/or change of ownership which justifies saying he will
not consent to it. However, I think it is prudent to try
and maintain such right. It will certainly allow the
Minister to say that he has taken appropriate steps to
protect the public interest in this regard.
“I am dubious as to whether or not the Minister can demand
that the administration and management of the business be
carried on in premises in the State. However, I can
understand why this has been included.
“In relation to Article 15, I have suggested an amendment.
It is largely cosmetic.
“Article holds the licencee to the provision of a
service which develops in accordance with the promises he
made in his submission at competition stage. I am
concerned that the penalties that are imposed on failure to
deliver as promised are likely to be subject to attack
falling outside what the Minister can do, given the recent
Commission Directive. However, I understand why they are
being imposed and simply flag these as provisions in the
licence which could be subject to attack.
“As I have already stated, I am gravely concerned about the
terms of Article 18. I am aware that Mr. O’Brien promised
such a windfall gains provision in his submission and
should be held to his promise, but I am equally satisfied
that such an arrangement falls well outside what’s
permitted under the recent Commission Directive. I have
left it in terms as drafted, but, again, point out that, if
challenged, it will be in difficulty.”In respect of the proposed Statutory Instrument, I have
caused this to be retyped and where I have made amendments
I have over-lined the sections in question. Essentially,
since the implementation of Commission Directive 96/2/EC,
which amends directive 90/3/88/EC, the State is obliged to
offer available radio frequencies to prospective
communications service providers. The frequencies are to
be licensed by open, non-discriminatory and transparent
procedures.
“The proposed Statutory Instrument amends Section 1of
the act by inserting two new subsections, (2B) and (2C),
for the provision of mobile and personal communications
services, and mobile and personal communications systems is
subject to licence by the Minister. What the Statutory
Instrument does not do is to provide a mechanism by which
the Minister will alert people to the available frequencies
or provide the practical arrangements which need to be put
in place for the processing of applications by persons who
want to operate such services or systems. It would be
prudent for the Department to consider how this is to be
done, because otherwise there will be complaints by persons
who would like to operate such a scheme that are not being
advised as to the availability of frequencies and have not
been provided with a procedure whereby applications can be
submitted. This will not stop people making applications,
but it does call into question how open, non-discriminatory
and transparent the procedures really are. Frankly, I do
not know enough about the availability of frequencies to
make any sensible suggestions at this stage. However, it
is something that needs to be considered urgently and be
the subject matter of a set of regulations.
“The ability of the State to limit the number of licences
for mobile and personal communication systems is restricted
to certain specified non-economic reasons in the public
interest and the lack of availability of frequency
spectrum. Restrictions have to be proportionate to the aim
to be achieved. It is also clear that the directive seeks
to outlaw restrictions on operators in respect of the
establishment of their own infrastructure, the use of
infrastructure provided by third parties and the sharing of
infrastructure and other facilities and sites.
Interconnection must be permitted and restrictions on
interconnection lifted. Finally, access to the public
network must be guaranteed. Obviously, interconnection
requires conditions, but these must be based on objective
criteria which are transparent, non-discriminatory and
compatible with the principle of proportionality. Clearly,
the Department should think about setting out a set of
interconnection conditions of general application to allow
prospective licence applicants know what lies in store for
them. Rather than repeat the amendments I have made to the
Statutory Instrument, I suggest you take time to consider
the draft I return and I can deal with any questions that
arise.
“Nothing further occurs at present.”
Signed by senior counsel, dated 9th May, 1996.
The State has now also waived legal professional privilege
over a letter dated the 13th May, 1996, under cover of
which senior counsel’s covering letter and opinion were
formally provided by the Attorney General to the
Department. It seems, however, from other documentation
available to the Tribunal, that advance copies of the
material provided by senior counsel may have been furnished
informally to the Department the previous Friday, 10th May,
1996, and this is a matter which the Tribunal will explore
in the course of evidence.
And I’ll just refer to that letter of the 13th May, 1996.
It’s from the Office of the Attorney General. It’s dated
the 13th May, 1996. It’s addressed to the Secretary,
Department of Transport, Energy and Communications.
“Attention: Fintan Towey,
Communications (Development and Corporate Affairs)
Division.
“re: 1. Proposal of the Minister for Transport, Energy
and Communications to grant a licence to Esat Digifone
Limited to be the second provider and operator of a GSM
mobile telephony service in Ireland and
“2. Stamped draft of regulations entitled ‘European
Communities (Mobile and Personal Communications)
Regulations, 1996′ to give effect to Commission Directive
Number 90/388/EEC of June, 1990, and Commission
Directive 96/2/EC of January, 1996, and
“3. Stamped draft of licence to be granted under
subsection (2) of Section 1of the Postal and
Telecommunications Act, 1983, as amended by the
above-mentioned regulations when made.”
And it states:
“With reference to previous correspondence, we have been
directed by the Attorney General to forward to you the
above-mentioned draft regulations and draft licence which
have been prepared in the office of the parliamentary
draftsman by Mr. Bacon, together with the advices of
Richard Law Nesbitt, Esquire, SC, dated May, 1996,
concerning same.”
“Commission Directive 96/2/EC, which was first brought to
the attention of this office last month, further
complicates the already legally complex proposal to licence
a second provider and operator of a GSM mobile telephony
service in Ireland. A very large number of issues could be
raised in relation to the exact meaning of that directive
and Directive Number 90/388/EEC of June, 1990, which it
amends. These issues have not been explored with the
Commission and most likely will arise in the future and
perhaps be the subject of litigation, the outcome of which
cannot be predicted with any certainty. In this regard, it
is to be noted that the Commission have not had sight of
drafts of either the proposed regulations or licence to
date.
“The preparation of the draft regulations and licence
within the time-frame allowed has been an extremely
difficult task, particularly because of the opaqueness of
the directives.
“The Attorney General has asked that it be pointed out
that, in view of these factors, there is the possibility
that some of the terms of the licence proposed to be
granted could be successfully challenged. Mr. Law Nesbitt,
in his advices, has highlighted some terms which he
considers could be subject to attack.
“The drafts now furnished represent, in our view, the best
available solutions, bearing in mind the various
constraints which applied.
“Finally, we would ask you to note that the regulations
should be made prior to the licence being granted, and if
both are made and granted on the same day, the time of the
making and granting should be recorded to prove that the
regulations were made prior to the granting of the
licence.”
And it’s signed by Mr. Gormley and Mr. McFadden.
Now, in the course of its inquiries at public sittings in
2003, the Tribunal was unable to refer to the contents of
that letter dated the 9th May, 1996, or of the enclosed
opinion, or indeed of the letter dated 13th May, 1996.
However, having seen the letter and the opinion of 9th May,
1996, the Tribunal’s working view, for the purposes of its
inquiries, was that the focus of the opinion was on the
draft licence and on the technical issue of the statutory
framework under which the licence should be issued, and
that the ownership issue was addressed solely within the
context of Article of the proposed licence, that is the
restrictions to be imposed on the transferability of shares
after the licence had issued.
In other words, it was the Tribunal’s working impression,
for the purpose of pursuing its inquiries, that the opinion
did not address whether the ownership information notified
in the letter of 17th April, 1996, and as recorded in
Ms. Finn’s note of 16th April, 1996, was in conformity with
the details of ownership of the proposed licencee furnished
in the application and evaluated in the course of the
process, and, if not, what legal consequences flowed from
that change.
The Tribunal raised that issue with the departmental
witnesses from whom it heard evidence, and, most
significantly, with Mr. Loughrey, who was then Secretary
General of the Department, and who testified that, on
receipt of a letter of 17th April, 19- that’s the letter
from Mr. Owen O’Connell of William Fry – he took overall
responsibility for dealing with the issues which had arisen
from the information notified to the Department.
Mr. Loughrey was examined by counsel for the Tribunal on
the 21st February, 20(day 188).
Having referred Mr. Loughrey to the third paragraph of
Mr. Towey’s letter to Mr. McFadden and Mr. Gormley dated
the 24th April, 1996, the transcript records as follows,
and I am starting on question 2on page of the
transcript for that date.
“Question: And I suppose that’s the answer — on the 24th
April, 1996, Mr. Towey wrote to the officials in the
Attorney General’s Office. And he refers to the meeting,
their meetings, and he enclosed a report on the
Department’s assessment of the compatibility of the
conditions of the draft GSM licence with Directive 96/2,
and a consolidated text of Section 1of the PTSA 1983,
incorporating amendments contained in Section 1of the
19and amendments proposed in the transposition of
Commission Directive 96/2.
“I have also, as requested, consulted internally on the
question of consulting the European Commission in relation
to the terms of the licence. The Department is of the view
that, apart from the time constraints, it may not be
prudent to invite the Commission’s scrutiny at this point.
The question of compliance with the provisions of the
Directive 96/will no doubt fall to be examined in detail
by the licence in due course, possibly in consultation with
the Commission.”
And then counsel referred to the third paragraph in the
letter of the 24th April, in which it was stated:
“I would also like to reiterate our requirement for a legal
opinion on the restructuring of the ownership of Esat
Digifone (relevant papers were provided at our meeting on
the 22nd April.) In particular, the question of whether
recent correspondence suggests any change in the identity
of the beneficial owners of the company which could be
considered incompatible with the ownership proposals
outlined in the company’s application, must be addressed.
Before the ultimate award of the licence, it is now
considered that it would be preferable to seek warranties
in relation both to the beneficial ownership of Esat
Digifone and the financing package for the project. This
is considered prudent, given the nature of the concessions
being given to the company. Perhaps you would advise,
however, whether such a requirement could be challenged by
Esat Digifone as an imposition not envisaged in the
competition process or otherwise unreasonable on legal
grounds.”
And counsel commented: “This is the relevant portion of
the letter.”
“Answer” — this is Mr. Loughrey — “once again, is, I
don’t believe I have ever seen this letter. As I say, in
the last two weeks or so I was informed, obviously, that in
tackling this problem, obviously that would be an intrinsic
part of it, to make sure our lines were cleared legally, so
to speak.
Question: Yes. Now, that particular issue was not
addressed in any legal advice which was furnished to the
Department?
Answer: It is clear, in perusal of the papers, actually,
that that appears to be the case, Mr. Coughlan. However,
at the time we took – or, personally, I took the decision,
I was not so aware. Let me put it this way: Nobody had
informed me that there was any problem on the legal side.
I assumed, therefore, that I would have been — let’s say
if a problem had arisen, I would have been informed. So I
am now aware, clearly, from the papers here, that I don’t
see any evidence of that, actually, so that must be the
case.
Question: Yes.
Answer: But having said that —
Question: And I can assure you it is because the Attorney
General himself has informed the Tribunal so?
Answer: Of course I would accept that.”
And that’s the end of the relevant portion from the
transcript.
The letter to which reference was made by counsel for the
Tribunal was a letter received by the Tribunal from the
Attorney General dated 20th December, 2002, which the
Tribunal understood to confirm that advice on the ownership
conformity issue had not been given.
The letter and opinion of the 9th May, 1996, was taken up
in cross-examination of Mr. Loughrey by counsel for
Mr. Denis O’Brien on the 27th February, 2003, day 191, when
extracts from the letter dated the 9th May and passages
from the opinion of senior counsel were opened and read by
counsel for Mr. O’Brien, expressly without objection from
counsel for the State. The relevant portion of the
evidence commences on page 25, question of the
transcript, and concludes on page 31, question of that
transcript.
Question 70:
“Question: The other matter I just want to draw to your
attention to, because it seems to me to be relevant as a
line of inquiry, is the advices which were given to the
Department, the Office of the Attorney General by Richard
Nesbitt, who is counsel for the Department, I know, but he
was advising the Department at this time.
Answer: Correct.
Question: I don’t know if you have a copy of it, it is
dated the 9th May, 1996.
Answer: I’ve had sight of that very recently, but I don’t
have a copy in front of me right now, but if a copy could
be provided.
Question: Certainly.
Answer: There is one thing, Mr. Chairman, I just — in
case there is — just in case there is in a very, very
outside chance there is — I am quite happy to assist the
Tribunal in any way, but, in fact, as Mr. Nesbitt is a very
valued member of the State’s team and, by extension, right
now, a member of my team, there is nothing untoward in
expressing an opinion.
“Chairman: It is my understanding that Mr. McGonigal may
have mentioned this to the other counsel in the case and
would I be correct in surmising that although it may not be
an aspect over which you enthuse, that you accept that
Mr. McGonigal is entitled to broach the matter?
“Mr. O’Donnell: Mr. McGonigal raised this with me before.
I don’t think Mr. Loughrey will be able to add very much,
but certainly I am not objecting to the opinion —
“Chairman: I don’t think you should feel inhibited,
Mr. Loughrey.
“Mr. McGonigal: Sorry, in fairness to Mr. Loughrey,
My Lord, Mr. Chairman, I am not in the least bit trying to
infiltrate in relation to Mr. Nesbitt’s opinion or question
it in any way. The document speaks for itself. But what I
am suggesting is that there are aspects of the document
which open lines of inquiry for the Tribunal, more so than
Mr. Loughrey, but they give a flavour, insofar as
Mr. Nesbitt was briefed, as to the concerns which were
happening in the Department at that time, and insofar as
that is relevant as a line of inquiry, it seems to me that
it should be brought to the Tribunal’s attention in public
session. It is for no reason other than that.
“Chairman: Yes, I accept that Mr. McGonigal.
“Mr. McGonigal: I am not trying to have Mr. Nesbitt change
his seat for another seat or to leave us prematurely
either.
“Mr. Coughlan: I should perhaps just bring it to people’s
attention. I have mentioned it on a number of occasions, I
think My Friend, Mr. Healy — the Attorney General has
communicated directly with the Tribunal. It is a letter
from the Attorney General himself. It’s a document which I
would suggest that the best way to handle it, sir, would
be, the first instance, that counsel involved for the
various interested parties before the Tribunal might have
sight of the particular information which the Attorney
General and the view the Attorney General has given to the
Tribunal.
“Chairman: Yes, and, if it arises, it is probably more
appropriate when Mr. Towey comes to give evidence. Very
good.
“Mr. McGonigal: Mr. Loughrey, the only bits that I want to
draw your attention to is the second paragraph of the
letter itself, where he explains aspects of what his
advices are concerned with, and he says: ‘I am sending my
views on the complaint made to the Commission under
separate cover. However, I remain of the view that the
Minister should not drag his feet in issuing the licence.
If there was to be litigation, so be it, but delaying does
not achieve any end. Before issuing the licence, you
should make it clear to Persona’s solicitors that he is not
holding his hand on the issue of the licence. A formal
draft letter has already been discussed with you. My
reasoning in this regard is that the Minister is committed
to grant the licence. He is now in between two competing
interests: One, Esat Digifone, they say they are entitled
to the licence, and the other, Persona, are indicating that
the licence should not issue. Delay in issuing the licence
would clearly damage Esat. If Persona wish to stop Esat
getting the licence, they should be required to take
appropriate legal action to restrain the issue. They will
then be required to give undertakings to the parties
affected, particularly Esat. This will concentrate their
minds, particularly in circumstances where the Commission
are likely to be making unsympathetic noises in relation to
their complaint.
Now, that encapsulates, Mr. Loughrey, I would suggest, the
concern in the Department in relation to the issues that
had arisen arising out of the Persona complaint.
Answer: Yes, Mr. McGonigal, I believe you are correct, but
just to state is, I believe I got the thrust of that advice
at the time, I don’t believe that I actually saw
Mr. Nesbitt’s letter or the accompanying advice at the
time, but I believe I was briefed on the thrust of the
advice at the time.
Question: The other bit I want to draw your attention to
is the advice itself. It is advices as opposed to an
opinion, I acknowledge that, and page 2, in particular, the
second paragraph there: ‘If one analyses why the Minister
is concerned about the ownership of shares in the licencee,
the only legitimate concern he can have is that if there is
a change of ownership, a service that has to be provided
will in some way be compromised. I do not think that this
is tenable to suggest that the licencee has been awarded
the licence because of the parties who own the licencee;
rather, the licencee has been awarded the licence because
its plans and proposals were the most meritorious and
providing a funding plan which looked feasible. There is
no reason why any of these matters had to be compromised by
a change of ownership. However, I do accept that there is
a possibility that this might occur. It was also a real
issue in the mind of the public.”
“In actual fact, I think that mirrors a lot of views that
you had yourself in relation to the licence and the
consortia?
Answer: Not quite, Mr. McGonigal. No, I — I am afraid I
couldn’t go along entirely with that paragraph, because, in
theory, it’s possible to decouple the licence in the form
of the entity and of the so — the business plan that the
entity had put forward. In practice it is not possible, I
think certainly not in my mind, to decouple ownership
entirely. Can I put it in a very practical way is, while I
was — I think I made quite clear I was quite relaxed about
the ownership of the financial investors. I don’t think
that that amounted to any — made any serious impact on the
strategic or operational effect of rolling out competition
in this area. I would have been extraordinarily loath and
I wouldn’t have found it acceptable that, if I may put it
this way, that the pioneering umph of Esat and the leading
edge in demonstrated capacity of Telenor would be assigned
elsewhere. It may well be that Esat Digifone, as an
entity, would adhere to the business plan, but if, for
instance, without being in any way derogatory, if, in fact,
is, Esat’s percent shareholding had been assigned, for
instance, to some traditional utility like France Telecom
or British Telecom, whose standing would not be in
question, I doubt if they would bring the same drive or
hunger as background promoters as Esat would have. So,
while I can agree, broadly speaking, with this paragraph,
and notably where it applies to financial or third-party
investors, I couldn’t — I think if I am reading
Mr. Nesbitt correctly, agree with the totality of the
paragraph.
Question: The next paragraph simply deals with the
exchanging of Article which was, in fact, causing quite a
lot of difficulties.
Answer: Could you repeat that again, Mr. McGonigal?
Pardon?
Question: The next paragraph deals with a change in
Article which related to ownership, I think?
Answer: Correct, yes.
Question: And that was causing significant difficulties in
relation to getting it right for different reasons?
Answer: Yes, it was.”
It should be explained that whilst the letter and opinion
being privileged were not included within the public
sittings books circulated by the Tribunal in advance of the
commencement of its public sittings in December 2002, the
Tribunal had inadvertently included copies of those
documents with some advance documentation provided to
Mr. O’Brien’s solicitors, and it was in those circumstances
that Mr. O’Brien’s counsel was in a position to refer to
them in evidence. In fairness to Mr. O’Brien and to his
legal representatives, it must be acknowledged that even
though the letter and opinion had been excluded from the
public sittings books, they would not have known at that
time that the documents were subject to a subsisting claim
of legal professional privilege.
Counsel for Mr. Denis O’Brien again sought to introduce the
letter and opinion in the course of cross-examination of
Mr. Owen O’Connell of William Fry Solicitors, who had
represented Esat Digifone in the negotiations with the
Department which had commenced in November 19and which
concluded on the 16th May, 1996. The questions which
counsel for Mr. O’Brien put to Mr. O’Connell prompted an
exchange between counsel for Mr. O’Brien, counsel for the
Tribunal and the Sole Member of the Tribunal, and the
relevant transcript on day 247, which was the 4th November,
2003, records that questioning and those exchanges as
follows:
Question 82:
“Question: Now, the next document that I want to ask you
about is the last document, which is apparently an opinion
from counsel invited by the Attorney General to do one, and
I think you have that?
Answer: I have that, yes.
Question: And were you aware of this opinion?
Answer: I don’t think I was aware of it at the time. I
became aware of it later.
Question: The bit that I want to draw your attention to is
on the second page.
Answer: Of the opinion or the covering letter?
Question: Yes, of the opinion.
Answer: Yes.
Question: And the following terms: ‘If one analyses why
the Minister is concerned about the ownership of shares in
the licencee, the only legitimate concern he can have is if
there is a change of ownership. The service that has to be
provided will in some way’…
“Mr. Coughlan: As far as I am aware, this document has
never been opened by the Tribunal. I just want to be
careful about this now and how it is being presented here.
It would not be — it may have been provided to people all
right, but it was for the Tribunal, in the first instance,
to consider whether it was appropriate to open the opinion
of counsel, an opinion furnished in the matter. I am just
unsure, and perhaps I’d like to discuss it with My Friend
before he proceeds with this particular question, just what
is — what he seeks to elicit here. This hasn’t been
brought to the attention of the Tribunal in this respect.
“Chairman: Well, it certainly hasn’t been opened.
“Mr. Coughlan: Certainly not, certainly not.
“Mr. McGonigal: But this is a relevant document, Chairman.”Mr. Coughlan: It’s a matter perhaps that Mr. McGonigal
should discuss with me in the first instance. It is not
the practice of the Tribunal to open an opinion of counsel.
“Mr. McGonigal: It may not be, Mr. Chairman, and that’s a
matter for Mr. Coughlan and his procedures.
“Mr. Coughlan: Precisely.
“Mr. McGonigal: This is a document which I understand may
be at book 44, document 203. It’s a document which is
relevant to the issue of ownership and it is a document
which, therefore, should be debated in the Tribunal. As
to —
“Mr. Coughlan: Perhaps this is precisely the type of
dispute I wanted to avoid. The Tribunal sought the view of
the Attorney General himself on this particular matter, who
carried out various inquiries and furnished the Tribunal
with a response, which I read out at the Tribunal. This is
the stated view of the Attorney General on the matter.
“Mr. McGonigal: It might be the view of the Attorney
General, Mr. Chairman, but my view is this is a relevant
document to the issues which the Tribunal is considering,
particularly in relation to ownership, and it is important
that the document be brought to the attention of the
Tribunal in public, as is the appropriate way to deal with
it.”What the Tribunal does, either as a matter of law or as a
matter of weight to be given to that document, is a
separate issue, but certainly there is absolutely no doubt
that this document is relevant to the issues which the
Tribunal is considering, and it would be wrong to exclude
it at this time.
“Chairman: I am certainly —
“Mr. Coughlan: The document has never been excluded. The
document has been furnished to the parties and to their
legal advisors in particular, and the position of the
Attorney General has been indicated to all of the parties.
“Mr. McGonigal: It’s been excluded if it has been opened
to the public.
“Chairman: What I’ll do is this, Mr. McGonigal: I accept
that if there is a material matter that merits from the
content of what may have been set out at this stage being
brought to the Tribunal’s attention, it would certainly not
be my intention or wish to shut you out. I do have some
concern, in the first instance, about what obviously were
high-level confidential advices furnished, in the first
instance, by senior counsel to the Attorney General, being
opened, and I think I will defer, until after lunch, taking
a final view on this aspect. I’ll permit, if you are
having a discussion with Mr. Coughlan over lunch, and, if
needs be, after lunch I’ll rule on it. I accept if there
is a material matter — and I have some familiarity with
the content of a document — that wishes to be, that you
wish to uncover, that I should be extremely hesitant about
depriving you of that opportunity and I will have regard to
that in my ruling. But, just now, to have the entire of
the document opened when perhaps there has been no contact
made with the Attorney’s successor, is something that I
would be very hesitant about.
“Mr. McGonigal: No, I understand what you are saying,
Mr. Chairman, and the paragraph that I want to draw to your
attention is on page 2. It is a paragraph that begins with
“if” and ends with “public” and I have no difficulty in the
Tribunal taking that paragraph — if I am given an
assurance that the paragraph is being given consideration
as if it had been introduced as evidence, I have no
difficulty with that. But I would have difficulty if that
paragraph is not considered as part of the evidence,
because it is material and I will quote it on that basis.
“Chairman: I certainly have already acquainted myself with
that paragraph, Mr. McGonigal. I won’t neglect it. I will
hold over a final ruling as to whether or not it
specifically goes in on the record because I am concerned
of the nature of the document in that context.
“Mr. McGonigal: If I understand that correctly, you are
going to have regard to it?
“Chairman: I will.
“Mr. McGonigal: Well, that solves my problem, I think,
then.”
It is important to correct any misunderstanding that might
arise from references made by counsel in the course of that
extract. Neither senior counsel’s letter nor his opinion
of 9th May, 1996, were ever included in any public-sittings
books circulated by the Tribunal, nor were those documents
made available to affected persons. No affected person,
other than Mr. Denis O’Brien, received copies of those
documents which, as already alluded to, were included in
his case inadvertently in advance documentation made
available to his solicitors.
It was following these exchanges that IIU Limited and
Mr. Dermot Desmond sought access to the entire of the
opinion and covering letter, as they wished to ascertain
for themselves what advice had been given regarding the
ownership of shares — regarding their ownership of shares
in Esat Digifone Limited. The Tribunal had considerable
sympathy with their position and endeavoured to ascertain
whether the State, having regard to the fact that extracts
of and passages from those documents had already been
opened by Mr. O’Brien’s counsel expressly without objection
by counsel for the State, would be agreeable to permitting
some limited form of access to affected persons. Whilst
the State was agreeable to the Tribunal circulating copies
of those extracts and passages which had been opened by
Mr. O’Brien’s counsel at public sittings, it was not
agreeable to any form of further disclosure, even on a
confidential footing. The Tribunal was so informed by
letter dated the 6th December, 2005.
“re: Tribunal of Inquiry” — it’s from the Chief State
Solicitor’s Office:
“Dear Mr. Brady,
“I refer to previous correspondence and in particular to
your letter of 19th September, 2005, wherein you requested
“Whether the State would be prepared to agree to restricted
disclosure of the opinion to IIU Limited, Mr. Dermot
Desmond, Mr. Denis O’Brien, Telenor and the Public
Interest, in the context of sittings of the Tribunal from
which, apart from those entities, the public would be
excluded under Section 2(A) of the 19Act.”
“I note that the request specifically relates to an opinion
of Richard Nesbitt dated May 1996.
My client has considered the matter and is not prepared to
waive privilege in respect of the opinion. You will recall
that this is in line with the position adopted by my client
under cover of my letter dated 3rd October, 2003, to the
Tribunal. I also refer to my letter dated 4th March, 2002,
and to the terms contained therein which my client will
continue to rely upon.”
IIU Limited and Mr. Desmond, as was their entitlement,
challenged the State’s claim to legal professional
privilege over the letter and opinion on the grounds that
the disclosure made by counsel for Mr. O’Brien expressly,
without objection by counsel for the State, constituted a
waiver of privilege by the State. This was disputed by the
State, which contended that the disclosure which had
occurred at public sittings did not amount to or constitute
a waiver of privilege on its behalf.
In order to protect the interests of all persons concerned,
you, sir, instituted a fair procedure whereby you invited
IIU (Mr. Desmond) and the Department to furnish the
Tribunal with written submissions addressed to that issue.
Initial written submissions were received from IIU
(Mr. Desmond) on the 2nd March, 2006, and from the State on
the 12th June, 2006. Copies of the submissions of each of
those parties were, in turn, served on the other and on all
other affected persons, including the Public Interest, and
all were extended the facility of responding to them.
Submissions in response were received on behalf of
Mr. Denis O’Brien on the 18th January, 2008, and copies of
those responding submissions, having been provided to IIU
(Mr. Desmond), the Department and the Public Interest,
supplemental submissions were received from the Department
on the 1st February, 2008, and from the Attorney General,
on behalf of the Public Interest, on the 1st February,
2008.
Mr. O’Brien, having been served with the Public Interest
submissions, provided final submissions on the 20th
February, 2008. The Sole Member, having fully considered
all of the submissions which he had received, then ruled on
the 25th February, 2008, that the disclosure to which
reference had been made could not be visited on the State
and did not, in law, constitute a waiver of privilege by
the State.
There the matter rested until 13th March, 2009, when the
Tribunal, having notified the State of its provisional
finding on 18th November, 2008, received a letter from the
Chief State Solicitor in the following terms:
It’s addressed to Mr. Stuart Brady.
“re Tribunals of Inquiry.
My client: Department of Communications, Energy and
Natural Resources.
My Client: Department of Finance.
“Dear Mr. Brady,
“After careful consideration, my clients have decided to
waive the legal professional privilege attaching to the
opinion of Richard Law Nesbitt, SC, of May, 1996. This
was done pursuant to decision of Cabinet of 10th March,
2009.
“My clients take this course, at this stage, in the unique
and exceptional circumstances of (a) the adverse
provisional findings against them; (b) the fact that
passages of the opinion have been put up on screen during
the public hearings, are recorded in the transcripts of
evidence, and have been referred to extensively by counsel
and witnesses during the public sessions; and (c), that, in
the light of provisional findings, it is clear that
assertion of the privilege has led to a position
disadvantageous to the Department.
“My clients believe that the opinion, in fact, deals with
the issue of identity of the consortium both pre- and
post-licence. My clients relied at the time, inter alia,
upon the opinion and surrounding correspondence and
consultations to conclude that there was no legal
impediment preventing the grant of the licence to the
consortium as constituted as 40% held by Telenor, 40% by
Esat and 20% by IIU. My clients note that Richard Nesbitt,
SC, is prepared to give evidence to prove the opinion as to
the circumstances in which he gave it.
“My clients are willing that the Tribunal discloses the
opinion to those parties who have a direct interest in its
contents. Because of the exceptional circumstances giving
rise to the waiver of privilege over the opinion, my
clients exhort the Tribunal to disclose the opinion only
insofar as is necessary to address the particular issue at
stake.
“Please inform me how you wish to proceed to circulate this
opinion so that it is put formally in evidence.”
CHAIRMAN: Well, Ms. O’Brien, you are coming to the last
portion of your opening which primarily deals with a
summary of the intended evidence of Mr. Brennan, Mr. Towey
and Mr. Loughrey. I think, in the circumstances of the
relatively long opening that you have given, it is probably
best deferred until five past two.
THE TRIBUNAL ADJOURNED FOR LUNCH.
29THE TRIBUNAL RESUMED AFTER LUNCH AS FOLLOWS:
MS. O’BRIEN: Sir, before proceeding, just to complete the
final statement. I just want to refer briefly to the
submissions made on behalf of the Department in connection
with the request made by IIU and Mr. Desmond that you
should treat the privilege attaching to the opinion and
letter of the 9th May as having been waived by reason of
references made to it in the course of the
cross-examination of Mr. Loughrey, expressly without
objection by counsel on behalf of the Department. I am not
going to refer to or quote from any of those submissions,
sir, but what I do want to say in connection with them is
that, as regards both sets of submissions furnished on
behalf of the Department, it was made abundantly clear that
the Department was resisting the contention that there had
been a waiver of privilege by reason of those matters and
it was further made abundantly clear that the Department
was continuing to invoke and maintain the full extent of
the legal professional privilege attaching to the
documentation, and as you know, sir, those submissions and
the other submissions, following consideration by you,
resulted in the ruling which you delivered on the 25th
February, 2008.
Senior counsel’s letter and opinion of the 9th May, 1996,
is material to a relatively minor aspect of the lengthy
inquiries pursued by the Tribunal in public sittings,
principally in 20and early 2004. Those inquiries
spanned the entire of the second GSM process from the early
development in 19of the policy to introduce competition
in the mobile telecommunications market to the comparative
evaluation process which commenced on the 2nd March, 1995,
and concluded on the 25th October, 1995, to the
post-announcement negotiations between the Department and
Esat Digifone. It is relevant only to the Tribunal’s
inquiries into the steps taken by the Department to
investigate the information provided by Mr. Owen O’Connell
of William Fry on the 16th April, to Ms. Regina Finn, and
on the 17th April, 1996, in his letter also addressed to
Ms. Finn regarding the ownership of the proposed licencee
company, Esat Digifone Limited. Notwithstanding the
evidence which the Tribunal has already heard, the Tribunal
now wishes to hear further evidence from Mr. Loughrey,
Mr. Brennan and Mr. Towey as to their understanding as of
May 19of the legal advice which they had received on
this matter.
The Tribunal has been assisted by Mr. Towey, Mr. Brennan
and Mr. Loughrey by the provision of Memoranda of Intended
Evidence. In his memorandum, Mr. Towey has informed the
Tribunal that his recollection of the specifics of the
receipt of the advice or the consideration given to it is
somewhat limited. However, he does recall the following.
First, he recalls being of the view that senior counsel did
not believe that any wish which the Department may have had
to tightly control ownership changes could be sustained.
He cannot say whether this view arose from the opinion of
the 9th May or earlier or later meetings. He believes
senior counsel also recalls meetings where this view was
put by him.
Secondly, he also recalls a discussion with Mr. Martin
Brennan in which Mr. Brennan expressed the view that senior
counsel’s opinion confirmed that there was no legal reason
to have concerns about the restructuring of ownership being
undertaken in Esat Digifone.
Mr. Towey, in his memorandum, has further confirmed that he
had no questions in his mind as to what the position was
regarding the ownership conformity issue after considering
the opinion of 9th May, 1996. He was clear that even if
there had been a change in the makeup of the ownership of
the consortium between the entry into the competition and
the licensing stage, that had no impact on the entitlement
of the consortium to be awarded the licence and could not
prevent the Department from awarding the licence to the
consortium in question.
Mr. Brennan has informed the Tribunal in his Memorandum of
Intended Evidence that he does not accept that the opinion
on 9th May, 1996, falls to be considered in isolation from
the context which led to its creation, including, first,
that Mr. Towey undoubtedly asked the appropriate question
in his letter of 24th December, 1996; namely, I would also
like to reiterate our requirement for a legal opinion on
the restructuring of the ownership of Esat Digifone, in
particular the question of whether recent correspondence
suggests any change in the identity of the beneficial
owners of the company which could be considered
incompatible with the ownership proposals outlined in the
company’s application must be addressed.
Secondly, that the Attorney General’s Office was the
conduit for seeking the opinion and returning it to the
Department.
Thirdly, that there were several consultations with counsel
during the relevant period.
And fourthly, that counsel was also advising on matters
relating to the licence itself and the statutory
regulations.
Mr. Brennan has informed the Tribunal that the net position
is, that the question whether the ownership then on the
table had any negative implications for the award of the
licence was raised. The opinion was furnished and then
discussed with senior counsel and the representatives of
the Attorney General’s Office. Mr. Brennan formed the
clear view that this issue, namely the difference, if any,
between the ownership at the time of the competition and
the ownership at the time of the licensing presented no
obstacle to the issue of the licence. He believes that the
other people involved in this analysis and discussion were
of the same view. He had no question in his mind after
discussing the opinion with senior counsel and Fintan
Towey. He was clear that even if there had been a change
in the makeup of the ownership of the consortium between
the entry into the competition and the licensing stage,
that had no impact on the entitlement of the consortium to
be awarded the licence and could not prevent the Department
from awarding the licence to the consortium in question.
Mr. Loughrey has informed the Tribunal in his Memorandum of
Intended Evidence that, in giving the evidence to the
Tribunal on day 188, he was less than fully informed, and
that it should be clear from his responses that they were,
at best, a limited reaction on his feet. Now that the
State has granted a waiver of privilege, and, having had an
opportunity to analyse the professional input of senior
counsel, it will be his evidence that senior counsel’s
letter of the 9th May, 1996, was, in effect, a clear
approval of early signature on the basis of the then
consortium of 40% Telenor, 40% Esat and 20% IIU. Senior
counsel’s letters and advices were forwarded to the
Department by the Office of the Attorney General with a
covering letter dated 13th May, 1996, and Mr. Loughrey has
informed the Tribunal that this letter, in referring to
senior counsel’s advices, indicated no apparent
reservation, and, thus, clearly gave the institutional
approval of that office to those advices. Had Mr. Loughrey
had sight of this letter, he would have taken from senior
counsel’s response a clear approval of the consortia makeup
before licence signature.
Mr. Loughrey has further informed the Tribunal that he
clearly recognises that the advice dated 9th May, 1996, was
addressing, for the most part, the Article wording.
However, he is firmly of the view that the first complete
paragraph on page of the advice provides retrospective
cover for the general thrust of his own view of the
essential elements of the winning bid. Mr. Loughrey would
have regarded this as a clear green light on the makeup of
the consortium in general, and the participation of IIU in
particular. He also believes that he would have taken
sufficient comfort from the collateral cover on the
essential call of the winning bid and the central idea that
the Department retained a certain discretion on ownership
so long as the delivery of services would not be
compromised.
In the course of these short sittings, sir, the Tribunal
will pursue inquiries with all three of the witnesses in
relation to those matters.
And that, sir, completes the Opening Statement.