Dukes not aware of Desmond link

Senior civil servants in the Department of Transport, Energy and Communications did not tell the new minister, Mr Alan Dukes, in December 1996 about the history of Mr Dermot Desmond's involvement in Esat Digifone.

The tribunal heard that in a statement of intended evidence, Mr Dukes has said he was appointed Minister for Transport, Energy and Communications in December 1996, following the resignation of Mr Michael Lowry.

He was aware of the questions which had been aired in the Dáil and the media about the competition for the State's second mobile phone licence. He felt it was incumbent on him to discuss the matter with the civil servants involved and satisfy himself as to the probity of the process and that it was sound and above board.

He held a number of discussions with the secretary of the department, Mr Seán Loughrey, the civil servant who had chaired the team which selected the licence winner, Mr Martin Brennan, and an assistant secretary in the department, Mr John Fitzgerald.

In relation to a letter from him to Mr Bobby Molloy, dated December 6th, 1996, Mr Dukes said he did not draft the letter. He was not aware at the time that before Digifone was awarded the licence on May 16th, 1996, Mr Desmond's company IIU Nominees Ltd had held 25 per cent of Digifone.

Mr Dukes said he did not know at the time that it was at the request of the department or Mr Lowry that the IIU Nominees shareholding had been reduced to 20 per cent before the licence was issued.

The letter said that when the licence was awarded, "Esat Digifone was in a position to announce that it had placed the 20 per cent with IIU Nominees Ltd and it was certified to the department at the time that Mr Desmond was the sole beneficial owner of the 20 per cent".

The letter also said: "On April 19th, when the department held a press briefing, the fact that it was not in a position to give final definitive information on the placing of the 20 per cent minority shareholding may have reduced the clarity of the exchanges."

The tribunal has already heard that by April 19th, the department had been told that IIU Nominees had 25 per cent of Digifone. Mr Brennan said he believed he was involved in the drafting of the letter signed by Mr Dukes.

He told Mr Jerry Healy SC, for the tribunal, that on April 19th the department was taking legal and financial advice on the matter of the IIU Nominees shareholding.

The initial bid had envisaged 20 per cent of Digifone being placed with financial institutions. Mr Brennan said he could not recall if he had ever told Mr Dukes that IIU Nominees had had to reduce its shareholding by 5 per cent.

When Mr Healy said the letter signed by Mr Dukes was designed to "evade, obscure and suppress" the true facts in relation to the IIU Nominees shareholding, Mr Brennan said the letter gave the shareholding configuration at the time of the competition and at the time the licence was awarded.

Mr Healy said the letter said it was setting out to clarify the situation but "avoids setting out the true facts". Mr Brennan said after the originally envisaged shareholding configuration was restored, the issue was "not uppermost in our minds". Mr Healy said had anyone in public life or the media learned of the true facts, "Mr Dukes would have been hung out to dry" and would have had to resign. Mr Brennan said he did not accept that.

Mr Healy asked what was "impelling" the civil servants in the department to give the impression that the IIU Nominees shareholding had always been 20 per cent. "What was the sensitivity?"

Mr Brennan said the sensitivity was that the shareholding configuration, whereby IIU Nominees held 25 per cent of Esat Digifone, was not the configuration which had been in the licence application.

Mr Brennan agreed with Mr Bill Shipsey SC, for Mr Desmond, that on September 29th, 1995, the day that IIU Nominees signed a deal with Mr Denis O'Brien of Esat Digifone, the department had been informed. Mr Shipsey said there was no indication that at any time thereafter there was any reluctance on the part of Mr Desmond or IIU Nominees to have its involvement mentioned. Mr Brennan agreed.

He continues his evidence today.