Loughrey 'annoyed' at Digifone changes

MORIARTY TRIBUNAL: The former secretary general of the Department of Transport, Energy and Communications has said he was "extremely surprised and perhaps a little annoyed" when he learned that the shareholding configuration of the Esat Digifone consortium had changed prior to the licence being awarded.

Mr John Loughrey said he held the view "extremely strongly" that the shareholder configuration should be as outlined in the bid before the licence could be awarded.

The tribunal has heard that the bid submitted envisaged Norwegian company Telenor having 40 per cent of the consortium, Mr Denis O'Brien's Communicorp also having 40 per cent and the remaining 20 per cent being sold to financial institutions.

However, prior to the licence being awarded Mr Dermot Desmond took on 25 per cent of Digifone, with the shareholding held by the other two partners dipping to 37.5 per cent each.

Mr Loughrey told Mr John Coughlan SC, for the tribunal, that most of the civil servants in the Department who were involved at the time concurred with his view that the 40:40:20 configuration would have to be restored. He was not sure what the view of Mr Lowry was but he made his view known "upwards and downwards" and was insistent on the point.

He said the central aspects of the consortium was the Irish experience of Communicorp/Esat Telecom and the experience of Telenor in rolling out new services in other jurisdictions. Esat provided the "local rocket fuel" to the consortium and were the "pioneers" of competition in Irish telecommunications. Telenor, at the time, was arguably the best mobile phone company in the world.

Mr Loughrey said he wanted this "twin thrust" provided by Esat and Telenor to be left undiluted, and this remained his view no matter how small the dilution. He could recall saying he wanted the configuration to remain the same "until at least the project had reached cruising".

Mr Loughrey said he was also aware of the media interest in the licence and he did not want the shareholding issue to create further comment.

On Esat's landline business and competition with Telecom Éireann, Mr Loughrey said Mr Lowry was sympathetic to Esat, as was the subsequent minister, Mr Alan Dukes. However, the ministers were also telling Esat it could not step outside the law.

Due to technological changes at the time, the interpretation of the law in relation to telecommunications was a "bit murky". Technology had the ability to "bend the ball" around any barrier Telecom Éireann was trying to put up.

When dealing with the intervention of the European Commission in the licence competition process, Mr Loughrey said the EU competition commissioner was "one of the most powerful Europeans", certainly in the commercial world. The rulings of the "Mario Montis of this world" have ramifications not just throughout Europe but in the United States and elsewhere.