An accountant on secondment to the Department of Communications from PriceWaterhouseCoopers conducted an analysis of the financial strength of the Esat Digifone consortium immediately prior to the issuing of the State's second mobile phone licence in May 1996. Colm Keena reports.
Mr Donal Buggy, currently chief financial officer of Independent News & Media, told the tribunal he was asked to draft a report on whether the consortium was financially strong enough to build a GSM network and provide the service it promised. On the day he was asked to produce the report, May 13th, 1996, Mr Buggy learned that 20 per cent of the consortium being held by IIU Ltd was being beneficially held for Mr Dermot Desmond. He looked at the various members of the consortium to see if they were financially strong enough to take over from Mr Denis O'Brien's Communicorp should that company get into financial difficulty.
He gave his report to the secretary of the Department, Mr John Loughrey, on May 15th, the day before the licence was issued.
Mr Buggy said that Andersen Management International (AMI), the Danish consultants working on the bid process, marked down any consortium which had a weak member. He said AMI evaluated Esat Digifone as having one financially strong member, Telenor, and one financially weak member, Communicorp. A draft final report from the team that selected the winning bid noted Communicorp's weak financial position relative to the size of the capital investment required by Esat Digifone.
Communicorp could be responsible for up to €39 million in capital requirements, the report noted. It noted that the venture capital group, Advent International, owned 34 per cent of Communicorp and that it could increase its share of the company if it was required to provide further finance towards the Digifone project. Advent could gain control of Communicorp, the report noted.
A minute of one of the assessment team's meetings noted that a full discussion of the annex in the draft final report covering these matters would be required. Mr Buggy said he had no recall of any such discussion. Mr John Coughlan SC, for the tribunal, said that a table in the final report purporting to show the breakdown of the weighting agreed for the top criteria under which the bids would be assessed, was wrong. He said the table in the final report had been changed to agree with the breakdown that had actually been applied during a crucial meeting of some members of the assessment team in Copenhagen in late September.
Mr Buggy said he had no recollection of the team being told of the nature of the discussion that took place in Copenhagen. The Copenhagen meeting was attended by two civil servants, Mr Martin Brennan and Mr Fintan Towey, and one and possibly two members of AMI.
It drew up a table or tables showing the final ranking of the bids submitted for the licence.
Mr Coughlan said that one analysis of the figures suggested that if the original breakdown of the weighting for the criteria was used, then Esat Digifone would have come out joint first with another consortium, Persona.