The Department of Transport, Energy and Communications was concerned about the ability of the businessman, Mr Dermot Desmond, to invest and/or underwrite an equity security of up to £40 million in Esat Digifone Ltd in 1996, the tribunal heard.
Its concerns surfaced in the days before Esat Digifone Ltd was awarded the State's second mobile phone licence.
As a result it sought documentation on Mr Desmond's assets from the auditors and financial advisers to his company, International Investment and Underwriting Ltd (IIU). The auditors Farrell Grant Sparks assured the Department by letter on May 15th, 1996, that IIU Ltd was wholly owned by Mr Desmond and also of Mr Desmond's ability to make the financial commitment he had made.
The letter, signed by Mr Pierce Farrell, said that while Mr Desmond had undertaken to invest and/or underwrite an equity security of up to £40 million in Esat Digifone Ltd he had assets of some £77 million.
It set out a valuation of his principal assets. These included:
various marketable securities valued in excess of £10 million
principal unquoted investments at cost IIU £13 million
London city airport and associated companies, £25 million
44 per cent of Pembroke Capital Ltd, £9 million
cash at bank £15 million
William Fry (solicitor) client account, reinvestment in Esat Digifone Ltd, £5 million.
The Department's principal officer, Mr Martin Brennan, in a statement to the tribunal, said Mr Michael Walsh of IIU was reluctant to provide any written evidence of the financial strength of Mr Desmond in IIU Ltd at the time.
Mr Brennan said he told him the absence of such evidence "would jeopardise our ability to issue the licence". Mr Brennan felt he was instrumental in securing the letter from Farrell Grant Sparks.
Counsel for the tribunal, Mr John Coughlan SC, said the tribunal asked Mr Pierce Farrell to provide an account of what was discussed at any meetings with the Department leading up to the granting of the licence to Esat Digifone on May 16th, 1996, and any documents it had used to assure the Department of IIU's finances.
"The tribunal indicated in its request that it anticipated Farrell Grant Sparks would require a waiver of confidentiality from IIU Ltd and from Mr Dermot Desmond to enable it to respond to the tribunal's request and that the tribunal intended to seek such waiver from IIU Ltd and Mr Dermot Desmond.
"IIU Ltd and Mr Dermot Desmond have declined to provide a waiver of confidentiality to enable Farrell Grant Sparks to assist the tribunal as requested and in the circumstances the tribunal would intend pursuing these inquiries to which I have just referred with Mr Farrell in the course of its public sittings," counsel said.
He added that an analysis of the financial soundness of the Esat Digifone consortium bid, carried out by Mr Donal Buggy from the Department, would be examined by the tribunal. He had that concluded the shareholders appeared to have sufficient financial strength.
Mr Coughlan said the tribunal would look at how he reached this conclusion given that Esat Telecom was trying to get £22 million together in the US but hadn't yet done so at the time; given that IIU Ltd had only been in existence since August 1995 and no financial statement from the company had been produced at that stage; and on the basis on a statement of Mr Desmond's assets which he said was "unvouched" and which did not contain a statement of his liabilities.
The tribunal would inquire into whether Mr Buggy had any dealings with Department officials in compiling his report, he said.