Head of firm was on CIE, rail board

A former non-executive director of CIE and Iarnrod Eireann is now chairman of Modern Networks Ltd (MNL), the Dublin company involved in installing a new rail signalling system for Iarnrod Eireann.

Mr Patrick Lynch (64), who is chairman of FAS, was on the board of Iarnrod Eireann in 1997 when the contract for the new system was considered and approved. He retired from the CIE board in November 1998 and from the Iarnrod Eireann board in February 1999.

Mr Lynch was appointed a director and chairman of MNL on July 27th, 1999, according to documents in the Companies Registration Office (CRO).

He is described in the documents as also on the board of Aughinish Aluminia Ltd and SAUR Utilities. He could not be contacted yesterday.

On the same day he was appointed to MNL, three other men were appointed to the board, including Mr Brian Powell (42), a former head of procurement at Iarnrod Eireann. Mr Powell is one of the people listed in a report commissioned by CIE as having been involved for Iarnrod Eireann in the awarding, negotiating, and operation of the contract for the rail signalling system.

The contract was awarded to an Italian company, Sasib, after a competitive tendering process, with MNL involved as partners in the submission.

The other former Iarnrod Eireann personnel listed in the PricewaterhouseCoopers (PCW) report commissioned by CIE as having been involved are: Mr Bernard Kernan, signalling engineer and project manager, and Ms Mary Hand, Iarnrod Eireann's solicitor in the negotiations. Both now work for MNL. Mr Kernan joined the board of MNL on February 15th, 2000.

According to the PCW report, another former Iarnrod Eireann employee, Mr Pat Judge, a signalling engineer, has also joined MNL this year. Mr Powell has been reported as contesting that any conflict of interest is involved in former Iarnrod Eireann employees joining MNL. A spokesman for MNL said yesterday it would not be issuing any statement or making any comment on the affair.

MNL made a profit of £617,404 in the year to March 31st, 1999. The previous year the company made £306,120, according to results filed in the CRO. Total retained profits carried forward at March 31st, 1999 were £978,896. Directors' remuneration in 1999 was £428,823, up from £338,996 the previous year. Cash in the bank at March 31st, 1999 was £1.25 million.

MNL, which has its registered office at St John's Court, Santry, Dublin 9, is a wholly owned subsidiary of Advanced Networks Ltd. Mr Lynch and Mr Powell were appointed company directors on the day they were appointed to the board of MNL.

Likewise, Mr Kernan was appointed to the board of Advanced Networks on the day he was appointed a director of MNL.

According to the MNL website, the company was founded in 1972 and has "played a dominant role in the Irish telecommunications industry since them". Former clients listed include local authorities, Telecom, ESB, Cablelink and CIE. The company has also been active in Poland.

A joint tender for the signalling project was submitted under the name of Sasib, although the PCW report states that CIE was aware of the MNL involvement. The contract with Sasib was for £15.7 million and some £13 million is known to have been paid so far by Iarnrod Eireann. Sasib was subsequently bought by a company called Alstom.