Official says Lowry asked him to 'go easy' on Esat checks

Mr Michael Lowry asked a senior civil servant to "go easy" on monitoring activities which were affecting Esat Telecom, the Moriarty tribunal has been told.

The then minister for transport, energy and communications, told an assistant secretary at the Department, Mr Seán Fitzgerald, to "go easy" after the minister had a meeting with Esat Telecom executives.

Mr Fitzgerald told the tribunal that in late 1996, possibly around October, he was asked to go "immediately" to the minister's office, where Mr Denis O'Brien and Mr Leslie Buckley, of Esat Telecom, were discussing regulatory problems concerning that company.

"Strong concerns" were put forward that potential damage could be done to Esat's business by the implementation of a proposal to limit the provision of certain lines provided by Telecom Éireann unless monitoring by the Department of the nature and volume of traffic in and out of their system justified a need for more capacity.

"The limitation of lines and monitoring of traffic had been approved by the minister some months previously as a means of curbing suspected unauthorised voice telephone traffic on independent networks which was legally within the monopoly of Telecom Éireann."

After the visitors left, the former assistant secretary said, the minister asked him to "go easy" on the monitoring and, if at all possible, not to do anything until after Christmas.

Mr Fitzgerald said that around this time Mr O'Brien was anxious to increase the capacity of his fixed-line business so that he could put this in the prospectus he was drawing up for the purposes of a private placement in the US.

He also said that in late 1995 he had an "off the record" meeting with Mr O'Brien after the Department learned that Telecom Éireann was to take Esat Telecom to court in proceedings over the non-payment of bills.

He said that he had asked Mr O'Brien to take action to avoid the litigation and said that the litigation did not take place. Mr O'Brien was disputing the rates Telecom Éireann was charging for use of the Telecom lines.

Mr O'Brien eventually brought the matter to the European Commission and obtained a ruling in his favour. However, at the time of his meeting with Mr O'Brien, Esat Telecom had not paid the charges which had been billed to it by Telecom Éireann and he was concerned that that information would get into the public domain. He was concerned about the "knock-on effects" of the dispute becoming a public issue.

"The concern in my mind was that funding a share of the [Esat Digifone] mobile operation was going to be extremely difficult in the best of circumstances and I did not want further obstacles put in the way."

Mr Fitzgerald told Ms Jacqueline O'Brien, for the tribunal, that it was not true that Mr O'Brien was "out of favour" with the Department at the time. The Department, which was acting as telecoms regulator, dealt objectively with the parties involved.

He said he had never said to Mr Lowry that Mr O'Brien was not in favour with the Department. The only dealings he ever had with Mr O'Brien were in relation to regulatory affairs. As far as he was aware, there had been no improper interference in the mobile phone licence competition and no attempt had been made by Mr Lowry to influence the process.

Asked about the intervention of the European Commission, Mr Fitzgerald said there had been an ongoing argument with the Department of Finance over the issue of a cap on the licence fee or having an open-ended price. A compromise was arrived at, but he was always apprehensive that the commission would intervene. "We anticipated that it was a possibility, but it certainly wasn't welcome".

Wwhen he was first told by civil servant Mr Martin Brennan of a possible solution to the dispute with the commission, he encouraged Mr Brennan to pursue it. The solution involved capping the fee at £15 million and charging Eircell £10 million for its licence.