Desmond's role in Esat's bid not known to official

The civil servant who chaired the group which selected Esat Digifone as the winner of the second mobile phone licence competition, has said he did not know at the time that Mr Dermot Desmond's IIU Ltd was involved in the consortium.

Mr Martin Brennan told the Moriarty tribunal that he did not learn of IIU's involvement until months later, when the licence was about to be issued to Digifone.

Digifone won the exclusive right to negotiate for the licence on October 25th, 1995, and was awarded the licence on May 16th, 1996, following negotiations. Mr Brennan told Mr Jerry Healy SC, for the tribunal, that he was not centrally involved in the negotiations leading to the award of the licence.

He said he was not aware at the time that Mr Desmond's company had been paid more than £3 million by the other two members of the consortium, Esat Telecom and Telenor, for 5 per cent of the Digifone shares. This occurred because the department insisted the consortium, when given the licence, should be 40 per cent owned by Esat Telecom, 40 per cent by Telenor and 20 per cent by investors. This led to IIU, which had been given 25 per cent, selling 5 per cent back to the original founding partners in the consortium.

Mr Brennan said the 40:40:20 configuration was what had been outlined in the original bid. "Parties out there were watching our every move, and we didn't want to increase the risks," Mr Brennan said.

He said he still thought the decision to send back a letter received by the department on September 29th, 1995, was the correct one. The letter, from Mr Michael Walsh of IIU, was addressed to Mr Brennan and disclosed that IIU was to underwrite the percentage of Digifone not owned by Telenor.

The letter was opened by Mr Fintan Towey, another civil servant involved in the assessment group.

He telephoned Mr Brennan, told him a letter had been received concerning the Digifone bid, and that he thought it should be sent back. Mr Brennan agreed. He was not told the contents of the letter.

Mr Brennan said the consortiums bidding for the licence had been told not to make additional submissions. The letter from IIU was returned to Mr Denis O'Brien, chairman of Esat Digifone, with a covering letter signed by Mr Brennan.

Mr Justice Moriarty asked was there not a difference between new information and "substituted information". If Telenor had been replaced by Deutsche Telecom, for instance, he said. "We would not have allowed that," Mr Brennan replied.

Mr Brennan was also asked about Dáil questions put to the then minister for transport, energy and communications, Mr Michael Lowry, in November 1995. Mr Brennan said 18 questions on the matter were to originally be taken in groups of two and three. However, it was subsequently decided by the minister that all the questions would be taken together.

He said a draft reply to a question on the ownership of Digifone was written at a time when the questions were to be taken in smaller bundles and should have been thrown out when it was decided to take all the questions together. The draft reply to a possible supplementary question on ownership said the question would be answered later.

Mr Brennan said he noted afterwards that the ownership question had not been replied to by the minister. He noticed the minister "stopped at some stage during the process and didn't answer any of the remaining questions."