Donlon told of risk of O'Reilly newspaper hostility

The former senior adviser to the Rainbow Coalition, Mr Seán Donlon, has told the tribunal he was left in no doubt about Independent Newspapers' hostility to the government parties if outstanding issues were not resolved to their satisfaction.

Mr Donlon, a former secretary general of the Department of Foreign Affairs and adviser to the 1994 to 1997 Rainbow Coalition, said the Independent newspaper group's attitude was made clear to him during a "relaxed and cordial" lunch in Independent offices on Hatch Street, Dublin, in September 1996.

Mr Donlon said that not long after the creation of the Rainbow Coalition in December 1994, the newspaper group began to display hostility towards the then minister for transport, energy and communications, Mr Michael Lowry.

"This was when in particular the issue of illegal [TV] deflectors was not dealt with. I think the seeds were sown pretty early on in the life of the government," Mr Donlon told Mr Rory O'Hanlon SC, counsel for Mr Lowry.

At the time Independent News & Media (IN&M) was investing heavily in the MMDS television channel distribution system, yet unauthorised groups were providing a cheaper service through the use of TV deflectors. The issue had become a political one and IN&M was annoyed at Mr Lowry's department's failure to take action.

A memo of the meeting at Hatch Street was displayed at the tribunal.

Mr Donlon attended alone and met with Mr Liam Healy, Mr Brendan Hopkins and Mr Mike Burns, the latter being a consultant to the Independent group. Mr Donlon said he believed the memo was drafted by Mr Hopkins, the Independent executive who had a particular interest in the MMDS issue. He said the MMDS issue took up more than half of the meeting.

"Despite the relaxed mood I was left in no doubt about Independent Newspapers' hostility to the government parties if outstanding issues were not resolved to their satisfaction," he said.

The meeting had been set up following an earlier one-to-one meeting between Mr Bruton and Sir Anthony in Glandore, Co Cork, in the latter's home.

Mr Bruton had expected the Glandore meeting might occur and had asked Mr Donlon for a briefing beforehand on issues that might arise.

At the meeting Sir Anthony expressed his dissatisfaction to Mr Bruton with the Rainbow government and mentioned the MMDS issue.

He also briefly mentioned: his disappointment over not winning the 1995 mobile phone licence competition; the level of grant being paid to a Heinz factory in the Co Louth region; and access to a mine in the Midlands. Sir Anthony is a former president and managing director of Heinz.

Mr Donlon said the Hatch Street meeting concentrated on the MMDS issue and Mr Healy said he had not been briefed on the other matters. "It was clear that Independent were not in a mood to discuss these matters," Mr Donlon said. He said his role was to see if the matter could be discussed to the extent that there could be a "re-opening" of negotiations between Mr Lowry's department and IN&M.

The IN&M memo of the meeting noted: "We said they would lose INP (IN&M) as friends."

Mr Donlon said that after the meeting he telephoned Mr Lowry. "I indicated to him that the focus of hostility at the lunch was very much on him." This was because of Mr Lowry's alleged failure in relation to the MMDS issue. Mr Lowry, in return, said he had had an "unfriendly or hostile contact" with Sir Anthony at a race meeting, Mr Donlon said.

Mr Jerry Healy SC, for the tribunal said that Mr Lowry, in a statement of intended evidence, had said he was invited to the executive box at the races at the Curragh in July 1995, to see Sir Anthony. He said Sir Anthony had sought to impress on him his commitment to Ireland and his level of investment in the State. He said Sir Anthony had said he "expected his consortium" to win the licence and he also expected Mr Lowry to order the shutdown of the TV deflector operations.

In a subsequent statement of intended evidence, Mr Lowry said that when he said Sir Anthony used the word "expected" in relation to the competition, he meant it in the sense of the expression of a view, not the making of a demand.

Mr Donlon said it did not come as a surprise to Mr Lowry that he was not in the "best odour" in Hatch Street.