On September 12th, 1995, a number of Esat Digifone representatives made an oral presentation as part of the bid process for the State's second mobile phone licence.
The situation as of that date, according to John Coughlan SC, was that the July 12th deal with Advent had not led to a letter of comfort to Telenor which was acceptable to the Norwegians, and that Communicorp had no binding entitlement to £30 million in funding from Advent. Also Telenor had been told that Communicorp was looking for a source of funding that would be an improvement on the Advent offer.
Denis O'Brien had started negotiations with Dermot Desmond on August 10th about the businessman replacing the institutional investors who were to take up 20 per cent of Digifone. He was also negotiating with Desmond in relation to Desmond supporting Communicorp's total funding requirements for Digifone, ie providing a better deal than that being offered by Advent.
The oral presentations made by the various bidders were taped. At the Digifone presentation Arve Johansen of Telenor told the department officials that Digifone was an Irish company. Communicorp was Irish and the institutional investors would be AIB, Investment Bank of Ireland, Standard Life Ireland, and Advent. "We already have the funding in place," Johansen told the meeting. "The available funding exceeds the requirements considerably."
Telenor's board had committed £30 million, and that was not a hard limit. "The Communicorp group has committed £30 million and the institutions have committed £11 million, meaning that we have available £71 million in equity." O'Brien said: "The business plan is sound. No blue skies, no dreaming. It's a business plan that makes sense. And as Arve has mentioned, both Communicorp and the financial institutions are going to share in this investment 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."
Billy Riordan of the Department of Finance asked about the letter of financial support from Advent. O'Brien said Advent had invested £19.5 million in Communicorp since October 1994 "which is completely apart from this new investment which will come and is guaranteed if we receive this licence." He further told Riordan that the £30 million Advent had committed to the Digifone project, via Communicorp, would be paid in return for equity in Communicorp and would bring Advent's share of that company to approximately 47 per cent.
He pointed out that the Advent shares carried less voting strength than the ones owned by Irish investors. He also said the involvement of Advent via Communicorp as well as by way of institutional investment, would not give Advent leverage in Digifone. It was likely the four institutions would get into a vehicle together "so the Irish institutions again would control that block".
When Riordan said the commitment from Advent was big enough to leave some "fat", O'Brien said it was "an irrevocable commitment of fat". A unidentified speaker then said: "Sorry, Denis, do I understand there is already an agreement in place between Communicorp and Advent on that?" O'Brien responded: "Yes."
The Moriarty tribunal is to investigate how Johansen and O'Brien could have made these statements and whether the group which assessed the licence submissions properly examined their veracity.
