A damning indictment of Lowry and O'Brien

ANALYSIS:The tribunal is in no doubt the ex-minister interfered in the licence award to Esat's gain

THE VOLUMINOUS report published yesterday by Mr Justice Michael Moriarty constitutes a damning indictment of former minister Michael Lowry and businessman Denis O’Brien, as well as a number of their associates who sought to protect them from the tribunal’s inquiries.

While it is a report filled with convoluted detail and a large cast, the core issues and key findings are simple:

Michael Lowry “secured the winning” of the 1995 competition for the State’s second mobile phone licence for O’Brien’s Esat Digifone.

Denis O’Brien made a number of payments to Lowry including one, for £147,000 in July 1996, when he was still a senior government minister.

The £147,000 payment went from an account of O’Brien’s in Dublin to the Isle of Man to Jersey and back to the Isle of Man, where Lowry opened an account with Irish Nationwide to receive the money.

O’Brien got the money from the very first tranche of funds he received after he successfully completed a placement in the US that was to finance his Esat project.

The killer blow in the report comes on page 1,056. The High Court judge says the payments and other benefits conveyed to Lowry by O’Brien, were “demonstrably referable to the acts and conduct of Mr Lowry in regard to the [licence] process, that inured to the benefit of Mr O’Brien’s winning consortium, Esat Digifone.”

The report was released unexpectedly by the tribunal, which posted it on its website. O’Brien had spent the night in Ashford Castle in Co Mayo, where he had attended a party for more than 100 managers of his successful Digicel group, which is based in the Caribbean. He left the hotel to come to Dublin for a series of media interviews about the report. Its findings will travel swiftly around the Caribbean.

In an interview with this reporter yesterday evening, O’Brien insisted he never sought to make a payment to Lowry, and that his evidence to the tribunal was the truth. Lowry was out of the country yesterday but rejected the tribunal findings, asserting they were “fundamentally flawed”.

But the judge did not accept the evidence of O’Brien and Lowry. Furthermore, he said there were sustained efforts to mislead the tribunal and to prevent it learning about the financial connections between Lowry and O’Brien. These included the altering of documents by people associated with O’Brien and Lowry, documents that were then submitted to the tribunal. Financial pressure was put on O’Brien by an Omagh-based man called Kevin Phelan who, the judge says, knew that the tribunal had been supplied with altered documents.

The judge said he was satisfied that a payment of £150,000 sterling to Phelan in August 2002 by one of O’Brien’s companies, Westferry, was primarily intended to ensure that Phelan would not undermine the false information that had been given to the tribunal. He said Lowry’s accountant, Denis O’Connor, was involved in these dealings with Phelan.

All in all, it is a pretty sorry picture. Citizens can take some succour from the fact that Lowry gained nothing. The £147,000 payment was returned by Lowry on the date in February 1997 when the McCracken (Dunnes Payments) tribunal was established. The financial assistance he received towards buying property in Mansfield and Cheadle did not lead to any profit, though at one stage Lowry came close to gaining more than £1 million sterling.

The cost of the Moriarty tribunal may exceed a quarter of a billion euro. A large part of that was due to the misleading testimony given to the tribunal as it sought to pry into links between Lowry and O’Brien. Lowry, who topped the poll in Tipperary North at the recent election with over 14,000 first preference votes, is turning out to be one of the most expensive Irish public representatives ever elected.

The second key aspect of the Moriarty report concerns the Esat licence. The evidence in relation to the findings in this regard was less straightforward than the money-trail evidence and the associated attempts to mislead the tribunal.

Mr Justice Moriarty found that “Lowry secured the winning of the competition for Esat Digifone”. He listed a series of events where the then minister interfered in a process that was meant to be run by civil servants. When doing so he wrote that “each of these elements of Mr Lowry’s insidious and pervasive influence on the process will now be addressed”.

The judge itemised instances where Lowry interfered in the process. Evidence supporting these findings has been heard. However, to give these events the impact Mr Justice Moriarty does all but requires that the evidence given over a number of days by a Danish consultant, Michael Andersen, is dismissed.

Andersen has taken part in more than 200 licence competitions around the world, and is an acknowledged expert. He was the lead consultant to the competition won by Esat and his evidence was that the bid deserved to win. He also said that, given his experience and the fact that the civil servants involved had never run such a process before, he would have noticed instantly if there had been an attempt to favour any particular candidate.

Andersen’s evidence was not challenged when he was in the witness box. All of the civil servants involved have said they were not “overborne” in any way by Lowry.

In relation to the famous meeting between O’Brien and Lowry in Hartigan’s pub on Dublin’s Leeson Street, in September 1995, Mr Justice Moriarty was satisfied that at the meeting Lowry conveyed to O’Brien information he had been given by the civil servant chairing the group that was then involved in assessing the licence bids. Lowry told O’Brien that the assessors had worries about Esat’s finances, the judge found.

O’Brien then told Lowry that there was a proposition that Dermot Desmond might join the Esat consortium and underwrite O’Brien’s finances. “Mr Lowry provided comfort to Mr O’Brien” that notification of this to the project chairman, in breach of the competition’s rules, would not adversely impact on Esat’s prospects.

Desmond became involved, this was notified to the project chairman, but the letter was returned as the closing date for submissions had passed.

Desmond became a 20 per cent shareholder in Esat. He had not been mentioned in the original bid for the licence. Desmond made in excess of £100 million from his involvement.

In a statement last night, Dermot Desmond said all the civil servants involved had given evidence to the effect that there had been no political interference in the licence process. “In the absence of any political interference in the adjudication process, any interactions which may or may not have taken place between Denis O’Brien and Michael Lowry are just side shows to the central issue of the award of the licence,” he said.

It has been a very expensive side show.

Colm Keena is Public Affairs Correspondent