Witness tells of glee at IIU 'putting one over' on stockbrokers

Moriarty Tribunal: An associate of Mr Dermot Desmond has said he took pleasure in Mr Desmond's company, IIU Ltd, replacing Davy Stockbrokers in their role in Esat Digifone in 1995.

Mr Michael Walsh told the tribunal that IIU had not long been established when it became involved with Esat Digifone. This followed a conversation between Mr Desmond and Mr Denis O'Brien after a football match.

IIU's association meant that Davy's role, in arranging the involvement of a number of financial institutions, was superseded.

"We were delighted to be putting one over on Davy's," Mr Walsh told Mr John Coughlan SC, for the tribunal. Mr Walsh drafted a letter to Davy's "saying goodbye to them". The letter was not sent.

He agreed with the chairman, Mr Justice Moriarty, that he later said "somewhat jocularly" to Mr John Loughrey, secretary general of the Department of Transport, Energy and Communications, that "the new kids on the block" had put one over on an established firm.

The draft letter to Mr Kyran McLaughlin of Davy's was not so much to ask him to step aside as "telling him he was no longer needed". Mr Walsh said Mr McLaughlin was an excellent adviser but he was "delighted to beat him".

On September 29th, 1995, an agreement was entered into between Esat Digifone and IIU Ltd, whereby IIU got the right to 25 per cent of Esat Digifone in return for providing an underwriting commitment. IIU's rights and obligations under the agreement were assigned to Bottin Investment International Ltd, a Gibraltar-based company owned and controlled by Mr Desmond.

Mr Walsh said it was his understanding that what occurred was "entirely in compliance" with Central Bank regulations on the operation of investment and underwriting businesses.

He said that in December 1994 Mr Desmond's stockbroking firm, NCB, was sold to Ulster Bank. In 1995 IIU Ltd began business. In March it completed the acquisition of Glasgow Celtic and a month later invested in Pembroke Capital, an aircraft leasing company. It was following initial discussions on August 10th, 1995 that negotiations began over IIU becoming involved in Esat Digifone.

Mr Coughlan said the documents which were available indicated that prior to the weekend of September 15th to 17th, 1995, the discussions between Mr O'Brien and IIU seemed to include the provision of finance to Mr O'Brien for his various businesses, including his fixed-line business. However, after that weekend the focus shifted to the provision of underwriting to the mobile phone consortium and the fixed-line issue was dropped.

Mr O'Brien's diary indicated he met Mr Walsh on Friday, September 15th, 1995. Mr O'Brien met Mr Michael Lowry in a pub after the All-Ireland on September 17th. He also met Mr Desmond that same evening. Mr Walsh said that at the time he did not know of the Sunday meetings.

Mr Walsh said he was told that Mr O'Brien had told Mr Desmond in August 1995 that he, Mr O'Brien, was uncomfortable about the funding side of his bid for the State's second mobile phone licence. There were letters of comfort from financial institutions, but no binding commitments.

Mr Coughlan said it seemed as if not much had happened between August 10th, 1995, and the meetings on the weekend of the All-Ireland. It was after that weekend that "things started to move". Mr Walsh said he was not sure that he agreed. He suspected there might have been more meetings that were not recorded.