Ownership Issues in the Applications for the Second Mobile Phone Licence
The main line of inquiry pursued by the Moriarty Tribunal in relation to the second mobile phone licence process relates to what the Tribunal refers to as the “ownership issue”. As described by the Moriarty Tribunal, this concerns the “emergence of Dermot Desmond / IIU” as a 20% shareholder in Esat Digifone.
The Tribunal has long been greatly exercised by the fact that Dermot Desmond / IIU were not named in Esat Digifone’s bid application as submitted on 4 August 1995. The Moriarty Tribunal has alleged that Dermot Desmond / IIU somehow “escaped evaluation” although it has never been explained how IIU’s capital was any less valuable or credible as the capital being provided by 4 named financial institutions. IIU were never an operating partner in Esat Digifone; their role was always limited to the provision of investment capital required to fund the Esat Digifone roll-out.
The Moriarty Tribunal have, very cleverly, ignored what was actually submitted by Esat Digifone in the context of the ownership of that entity at the time the bid was submitted. Esat Digifone’s bid confirmed that Esat Digifone was held 50/50 between Communicorp Group Limited and Telenor. As is set out on Page 10 of the AMI Evaluation Report, Esat’s bid made clear that:
“It is the intention of the applicant to make 20% of the equity available to institutional investors during the period prior to commercial launch”
In the event, this was precisely what happened with International Investment and Underwriting Limited (100% owned by Mr. Dermot Desmond) taking up 20% of the equity in Esat Digifone. Quite apart from what had been stated on numerous occasions by the Moriarty Tribunal, what happened was actually consistent with what Esat Digifone’s bid application said would happen.
The Moriarty Tribunal has also laboured the allegation that paragraph 3 of the Request For Proposals as issued by the Irish Government on 2 March 1995 required the applicant to provide “full ownership details”. The Moriarty Tribunal has gone on to severely criticise Esat Digifone (and others) for an alleged failure on the part of Esat Digifone Limited to comply with this requirement. In considering this, it is worth reviewing the relative information as to ownership as provided by the other applicants. A few examples:
A6 (Eurofone)
“…40% of the shares as to be administered by an independent trust. Coras Iompair Eireann (CIE), which is not exposed as a fully fledged consortium member in the A6 application, has a 10% option and 30% or more might be subject to flotations after the award of the licence”
One can only imagine the howls of protest that would have emanated from the losing consortia and the Moriarty Tribunal had the Esat Digifone application included any shareholdings held via “an independent trust”; let alone a 40% block. Does this comply with Para 3 of the RFP?
A4 (Irish Cellular Telephones):
5% was identified as being held by an unnamed “Semi State body”. Surely the identify of this body would be important so as to assess potential conflict of interest issues? Did this comply with Para 3 of the RFP? As is set out in the AMI Report, ICT’s application included the following:
“Later on however, Prince Holdings will re-allocate its shares such that United and Phillips Communications BV will increase its shareholding to 26%. Independent Newspapers Plc will increase its shareholding to a level of 26%. Riordan Communications will increase its shareholding to 5% and Tele-Communications Inc., affiliated with Comcast in the US, is to become a 12% owner”
In any event, this entire ownership issue in relation to Esat Digifone was exhaustively reviewed by the Office of the Attorney General (who received advices from Richard Nesbitt SC) prior to the actual awarding of the second mobile phone licence to Esat Digifone. Having considered the issue, the Office of the Attorney General sanctioned the awarding of the licence to Esat Digifone on the basis that the 20% ownership issue did not render Esat’s application or pending licence award invalid. The only party seeking to challenge this advice; some 14 years after the event, is the Moriarty Tribunal itself.
