Civil servant disappointed that Danish consultant is unlikely to give evidence

MORIARTY TRIBUNAL: The Danish consultant who played a key role in the 1995 competition for the State's second mobile phone licence is unlikely to be turning up to give evidence, the Moriarty Tribunal heard yesterday.

Mr Jerry Healy SC, for the tribunal, said Mr Michael Andersen has disposed of his interest in Andersen Management International (AMI), the consultancy which worked on the 1995 project, and "may be involved in a dispute arising from that".

He also said that AMI was now owned by a firm which has an association with the Norwegian company Telenor, one of the shareholders in Esat Digifone at the time it won the licence competition.

Mr Healy said the two matters were not connected.

Mr Martin Brennan, the senior civil servant who chaired the 1995 competition project group, said he was disappointed to hear that Mr Andersen would not be attending. The tribunal was shown a document where AMI tendered for the competition consultancy and in which it was stated that AMI was not in a position where it was likely to be accused of having any "past, present or future" connection with any of the consortia expected to bid for the Irish licence.

The Department of Transport, Energy and Communication's strategy for the development of the mobile telephony market was changed significantly because of demands from the Department of Finance for more money, the tribunal was told.

Mr Brennan said the Department of Transport, Energy and Communications wanted to introduce competition into the telecommunications marketplace and thereby reduce tariffs for consumers.

For this reason it did not want the winner of the second mobile phone licence competition to be saddled with a large fee for the licence.

The Department believed a significant fee would be recouped from consumers by way of higher tariffs.

The department decided by early 1995 it would seek a maximum fee of £5 million from the winner of the licence competition, a fee which was significantly lower than the fees charged elsewhere in the EU at the time when compared on a per capita basis.

However in his preparations for the budget that year the then minister for finance, Mr Ruairí Quinn, sought a contribution to the exchequer from the telecommunications sector of £25 million.

The then minister for transport, energy and communications, Mr Michael Lowry, decided not to seek a dividend that year from Telecom Éireann, as he believed this would hinder that company's development.

He instead decided to change the £5 million maximum fee to be charged for the new mobile phone licence to a £5 million minimum fee, with applicants for the licence being invited to suggest a higher price which they would pay. It was expected that up to £25 million, or more, would be secured in this way.

Mr Brennan, who chaired the group which decided which applicant won the licence, said by early 1995 the department was not envisaging charging a fee to the Telecom Éireann subsidiary, Eircell.

The tribunal heard that Mr Alfie Kane, the then chief executive of Telecom Éireann, wrote to the department in January 1995 urging it to charge the winner of the competition a fee for the second licence which would be significantly higher than £5 million.

Mr Kane, in his letter, said a £5 million fee would be "tantamount to giving money away" and would be difficult to justify.

He said such a fee would mean the licence winner would "make a very excessive financial return" on its investment.

Mr Brennan, asked to comment on the letter, told Mr Jerry Healy SC, for the tribunal, that Mr Kane was seeking a high fee for "the other guys" while Eircell would not be paying any fee at all. "There is a huge element of special pleading in it," he said.