Coughlan statement seen as ' incredible outburst'

The former secretary general of the Department of Transport, Energy and Communications, Mr John Loughrey, yesterday described a statement by counsel for the tribunal, Mr John Coughlan SC, as "an incredible outburst".

Mr Loughrey became noticeably emotional when Mr Coughlan was questioning him about his role in the writing of a letter by Mr Alan Dukes to Mr Bobby Molloy and which concerned the history of the awarding of a mobile phone licence to Esat Digifone. He rejected Mr Coughlan's contention that the letter contained an untruth.

Mr Dukes replaced Mr Michael Lowry as minister for transport, energy and communications in November 1996. He was subsequently asked by Mr Molloy about the licence competition, and was helped by Mr Loughrey and other civil servants when drafting the letter. The letter contained no mention of the dispute which had arisen in April/May 1996 over the issue of the size of Mr Dermot Desmond's shareholding in the consortium.

Mr Loughrey said there was no question that he or the other civil servants had set out to deliberately mislead Mr Dukes. He said he had worked with and knew both Mr Dukes and Mr Molloy. He said he would never consciously mislead a minister. "It would not have crossed our minds."

He agreed the letter had the effect of assuring Mr Molloy in relation to his concerns about issues to do with the ownership of Esat Digifone. He said there was no untruth in the letter. "In terms of general sweep it's absolutely correct." When Mr Coughlan said he did not want to get into a lengthy debate on the matter, Mr Loughrey responded: "Please take as long as you like." He said he would not have stood "over any sense of untruth" in the letter.

Mr Coughlan then pointed to one sentence in the letter which he said contained an untruth. When a debate was about to start on the issue, Mr Coughlan said, the "whole system was effectively got on side" and when the Department was told of Mr Desmond's ownership position within the Digifone consortium, it was never examined and the Department never tried to come to terms with it and "proceeded on the basis that the Department was going to get a result".

Mr Loughrey responded: "That's an incredible outburst, Mr Coughlan, and I couldn't agree with one iota of what you said." Mr Loughrey said if he could turn back the clock the letter as issued would not have been issued. He said they were not trying to hide anything.

It was a busy period and the licence issue was less controversial and the "world had moved on".

Mr Loughrey later apologised for his "outburst" and said that, using measured terms, he wanted to repeat there was never any conscious attempt to mislead Mr Dukes or any other minister.

Mr Loughrey said he was not shocked to learn there was trading in the State's second mobile phone licence prior to it being issued.

The tribunal heard that prior to the licence being issued to Esat Digifone on May 16th, 1996, Mr Desmond sold 5 per cent of Esat Digifone back to his two partners in the company, Esat Telecom and Telenor, for £2.75 million.

Mr Coughlan said Mr Desmond was able to set the price. The other consortium members were between "a rock and a hard place", given the Department was insisting that Mr Desmond's stake be reduced from 25 to 20 per cent before the licence be issued. He said the price paid for the 5 per cent put an overall value of £55 million on the licence on the day it was issued. Mr Coughlan said this was a State asset which had not yet been handed over. Mr Loughrey said the parties could have been ill advised, as there was still a "theoretical risk" that the consortium would not get the licence.