Opening Statement 9th June, 2009

 

 

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1 THE TRIBUNAL RESUMED ON THE 9TH OF JUNE, 2009, AS FOLLOWS:

2

3 MS. O'BRIEN: Sir, the Tribunal is sitting on this occasion

4 to hear some limited further evidence from three witnesses

5 who were, at the time of the second GSM process, officials

6 of the Department of Transport, Energy and Communications,

7 as it was then known, and from whom the Tribunal has

8 already heard lengthy evidence.

9

10 Those witnesses are, firstly, Mr. John Loughrey, who was

11 Secretary General of the Department, and from whom the

12 Tribunal heard evidence over ten days in February and July

13 of 2003. Secondly, Mr. Martin Brennan, who was Chairman of

14 the Project Group established to conduct the second GSM

15 licence process and who gave evidence over 24 days in all,

16 19 days from December 2002 to February 2003, a further

17 three days in June 2003 and on a single day in November

18 2005. And thirdly, Mr. Fintan Towey, who was a member of

19 the Project Group and who gave evidence over twelve days in

20 all, eleven of which were in May of 2003 and one of which

21 was in November 2005.

22

23 The necessity of hearing further evidence from these

24 witnesses arises solely by reason of the fact that,

25 following circulation of the Tribunal's provisional

26 findings on the 18th of November, 2008, the State, through

27 the Department, has waived its claimed to legal

28 professional privilege over an opinion of senior counsel,

29 which claim was invoked and maintained throughout the

30 course of the Tribunal's work until the 13th of March,

 

 

 

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1 2009, some nearly eight years after the commencement of the

2 Tribunal's inquiries into the second GSM process. The

3 privilege related to an opinion and a covering letter of

4 senior counsel, both dated 9th of May, 1996, which was one

5 of a small number of opinions sought by the Department and

6 provided by senior counsel during the course of the second

7 GSM process.

8

9 Before proceeding to outline the circumstances in which

10 that opinion was sought by the Department and the matters

11 to which the opinion was directed, it is necessary to refer

12 briefly to the Tribunal's dealings with the Department in

13 relation to the production of documentation, including the

14 production of the opinion in question.

15

16 From May 2001, the Tribunal was in contact with the

17 Department, initially directly and subsequently through the

18 Office of the Chief State Solicitor, with a view to

19 obtaining copies of all documents held in relation to the

20 second GSM process. As had been the Tribunal's preference

21 throughout the course of its work, the Department agreed to

22 produce the documents to the Tribunal voluntarily, and that

23 production of documents commenced in mid-2001 and it

24 proceeded over a number of months into the year 2002. The

25 documentation included copies of the small number of

26 opinions furnished to the Department by senior counsel in

27 the course of the second GSM process, including an opinion

28 of the 9th May, 1996, and over all of which opinions, the

29 Department invoked a claim to legal professional privilege.

30

 

 

 

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1 The terms on which those privileged documents were provided

2 to the Tribunal were stipulated in a letter dated the 4th

3 of March, 2002, from the Chief State Solicitor, which terms

4 were agreed by the Tribunal. And I am just going to refer

5 now, sir, to that letter from the Chief State Solicitor

6 relating to the terms on which the privileged documents

7 were furnished to the Tribunal in the course of its private

8 investigative work.

9

10 Now, that's a letter which is in, in fact, dated below the

11 signature. It was dated the 4th of March, 2002. It's

12 addressed to Mr. John Davis, who was then Solicitor to the

13 Tribunal, and it's "re my client: Department of Public

14 Enterprise". I should just say that the Department of

15 Transport, Energy and Communications was by then known as

16 the Department of Public Enterprise.

17

18 "Dear Mr. Davis,

19

20 "I refer to previous correspondence in connection with the

21 above matter and in particular to our conversation on

22 Thursday last.

23

24 "You will note from previous correspondence that documents

25 were withheld by my client pending consideration of a claim

26 of legal privilege. I have now received instructions to

27 make available copies of the aforesaid documents subject to

28 the following conditions:

29

30 "(a) strictly on a confidential basis.

 

 

 

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1

2 "(b) without waiving the assertion of privilege.

3

4 "(c) on the agreed basis that should the Tribunal believe

5 documents to be relevant, the Tribunal will write to the

6 Department setting out which documents they believe to be

7 relevant and returning the other documents.

8

9 "(d) if the documents are documents over which the

10 Department wishes to claim privilege, the Department will

11 assert privilege and the Tribunal will return the

12 documents.

13

14 "(e) at that stage, any dispute over whether or not the

15 documents are covered by privilege will be resolved in the

16 usual way.

17

18 "You might also acknowledge receipt of the Regulatory

19 Division Files regarding Esat Telecom which were furnished

20 to you on the 27th ult. Some documents were withheld from

21 this batch, however they are now included with the

22 documents enclosed herewith and are covered by the contents

23 of this letter.

24

25 "If you have any queries, please do not hesitate to contact

26 the writer."

27

28 And it was on those terms, therefore, sir, that the

29 privileged documents were furnished to the Tribunal, and

30 those documents included the opinion and covering letter of

 

 

 

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1 the 9th of May, 1996.

2

3 In practical terms, what that agreement meant was that

4 whilst the Tribunal could examine the opinions in the

5 course of its private investigative work, it could not

6 refer to their contents in the course of evidence. That

7 arrangement was at all times respected by the Tribunal, and

8 no reference, however, was made by the Tribunal to the

9 contents of any opinion, including the opinion of the 9th

10 of May at other sittings. The fact that the opinion had

11 been sought was, nonetheless, directly material to the

12 Tribunal's inquiries, and was pursued in evidence.

13

14 As it seemed to the Tribunal, having read the opinion of

15 9th May, 1996, that it did not, in fact, address one of the

16 matters on which legal advice had been sought by the

17 Department, the Tribunal explored and canvassed, in the

18 course of evidence, the views of departmental officials,

19 and, in particular, those of Mr. Loughrey on that point.

20 The Department was fully represented and in attendance at

21 those public sittings and can have been in no doubt as to

22 the lines of inquiry pursued by the Tribunal or the

23 Tribunal's working view regarding the scope of that

24 opinion.

25

26 The issue of privilege attaching to the opinion was

27 subsequently challenged by an affected person, in

28 circumstances which will be returned to more fully in this

29 Opening Statement, and despite the Tribunal endeavouring to

30 secure the Department's agreement to a limited form of

 

 

 

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1 waiver of privilege to enable affected persons to have

2 access on a confidential footing to the contents of the

3 opinion, the Department declined to waive privilege, even

4 to that limited extent, and ultimately the Tribunal was

5 obliged to rule on the matter, which it did by a ruling of

6 the 25th of February, 2008.

7

8 In order to put these matters into context, it is now

9 necessary to refer to the circumstances in which and the

10 matters on which legal advice was sought by the Department

11 and to some of the evidence heard by the Tribunal in the

12 course of its sittings in 2003.

13

14 It will be recalled that the second GSM licensing process

15 which led to the licensing of Esat Digifone comprised two

16 distinct phases.

17

18 The first phase, which involved the competitive evaluation

19 of applications submitted by interested parties, commenced

20 on the 4th of August, 1995, with the receipt of

21 applications, and concluded on the 25th of October, 1995,

22 with the announcement that Esat Digifone was the winner of

23 that competitive process. What Esat Digifone won was not

24 the right to the second GSM licence, but, rather, the

25 exclusive entitlement to negotiate with the Department for

26 the grant of the licence and for the terms of that licence.

27

28 The second phase of the process involved negotiations

29 between Esat Digifone and the Department which ultimately

30 led to the granting of the licence. The second phase

 

 

 

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1 commenced very shortly after the announcement of 25th

2 October, 1995, and concluded on 16th May, 1996, when the

3 licence was issued to Esat Digifone.

4

5 It was at a late stage in the second phase of the process

6 that the opinion in question was sought, after consultation

7 between the Department and officials of the Office of the

8 Attorney General. Those consultations followed receipt of

9 notification on the 17th April, 1996, from Messrs. William

10 Fry, solicitors for Esat Digifone, concerning the intended

11 shareholding of the proposed licencee company. This

12 notification and the Department's response to it can only

13 be understood in the light of the rules of the competitive

14 process as stipulated in the formal document entitled

15 "Request for Tenders" which, as will be recalled, had been

16 issued by the Department on the previous 2nd March of 1995,

17 and the issue of this document marked the launch of the

18 competitive process and it prescribed the rules of the

19 competition.

20

21 That document invited interested parties to submit

22 applications, and it stipulated at paragraph 3 that, and I

23 am quoting:

24

25 "Applicants must give full ownership details for proposed

26 licencee."

27

28 The ownership details of the proposed licencee, as

29 furnished in the Esat Digifone application, were

30 Communicorp and Telenor as each holding 50% of the shares,

 

 

 

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1 with their respective shareholdings falling to 40% each

2 either in the run-up to or on the award of the licence

3 being made to enable 20% equity to be allocated to

4 financial institutions. In other words, the ownership of

5 the proposed licencee was defined as Communicorp holding a

6 40% shareholding, Telenor holding a 40% shareholding and

7 financial institutions holding a 20% shareholding. The

8 extent to which that 20% shareholding had already been

9 determined was described with varying degrees of certainty

10 in the application and in the course of the evaluation

11 process.

12

13 In the Esat Digifone Executive Summary, it was stated that:

14

15 "On award of licence, 20% of the equity of the company (10%

16 each of Communicorp and Telenor) will be made available to

17 third party investors. This allocation has been placed by

18 Davy Stockbrokers (Ireland's largest stockbroking firm)

19 with: Allied Irish Bank, Investment Bank of Ireland,

20 Standard Life Ireland, Advent International. Confirmation

21 letters from all equity partners are contained in the

22 financial appendix.

23

24 A slightly different statement was made in the main body of

25 the application where, in the management book at paragraph

26 2.1, it was stated as follows -- and a copy of that, I

27 think, is available, and we have it there on the overhead

28 projector.

29

30 2.1, "The Operating Partners":

 

 

 

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1

2 "Esat Digifone has two operating partners - Communicorp

3 Group Limited of Ireland and Telenor Invest AS of Norway.

4 Together, they bring Esat Digifone complementary cultures,

5 skills and experiences covering all areas necessary for the

6 company to succeed."

7

8 Then at 2.1.1, "Communicorp Group Limited," subheading:

9

10 "Communicorp is an Irish media and telecommunications

11 services group with operations in Ireland, Scandinavia and

12 Central Europe. Communicorp is particularly experienced in

13 starting up new companies and competing with incumbent

14 telecommunications operators and radio stations. Its

15 subsidiary, Esat Telecom, has proven, in a short space of

16 time, its ability to compete effectively with Telecom

17 Eireann in the provision of telecommunications services in

18 Ireland. At the core of Esat Telecom's telecoms success

19 are high quality and competitively priced services.

20 Communicorp and Esat Telecom have an entrepreneurial and

21 dynamic culture, a deep appreciation of the Irish market

22 for telecommunications services, experience of the Irish

23 business environment and Irish marketing flair."

24

25 Then at 2.1.2, under the heading "Telenor Invest AS":

26

27 "Telenor Invest AS is the international investment arm of

28 Telenor AS, Norway's leading full service

29 telecommunications operator. It is one of the world's most

30 successful cellular communications operators measured in

 

 

 

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1 terms of market penetration. Norway's cellular penetration

2 already exceeds 19% of the population and is forecast to

3 grow beyond 22% by end 1995 and to 60% by 2005. Telenor

4 has successfully implemented and launched GSM networks in

5 Norway, Hungary and St. Petersburg, in addition to its

6 analogue NMT networks. Telenor's 13 years' experience of

7 managing cellular communications businesses includes

8 design, deployment, operations and marketing. In addition,

9 Telenor has a comprehensive range of tools, systems,

10 training programmes and business processes which will be

11 transferred to Esat Digifone, getting the company off to a

12 fast, professional start and efficient development."

13

14 And then at subsection 2.2, The Company's Ownership

15 Structure:

16

17 "Esat Digifone is an Irish incorporated company.

18 Currently, 50% of the shares are held by Communicorp and

19 the other 50% by Telenor. On award of the licence, 20% of

20 the equity in the company (10% each from Communicorp and

21 Telenor) will be made available to third-party investors.

22 This allocation has been placed by Davy Stockbrokers

23 (Ireland's largest stockbroking firm) with:

24 Allied Irish Bank

25 Investment Bank of Ireland

26 Standard Life Ireland

27 Advent International.

28 Confirmation letters from all equity partners are contained

29 in the financial appendix. The shareholders plan to make a

30 percentage of the company's shares publicly available on

 

 

 

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1 the Irish Stock Exchange some two or three years after

2 licence award."

3

4 That, in fact, section, sir, is taken from the Executive

5 Summary, and that's what was stated in the Executive

6 Summary.

7

8 And I'll come on now to the slightly different description

9 that was contained in the management section of the

10 application, and, again, that's also numbered 2.1, and it's

11 section 2: "Esat Digifone," subsection 2.1: "Ownership

12 and Equity Holding":

13

14 "Esat Digifone is a limited liability company registered in

15 Ireland. The company is jointly owned by Communicorp Group

16 Limited and Telenor Invest AS, Norway. Communicorp Limited

17 is the holding company for Esat Telecom, which holds a

18 licence from the Department of Communications (a

19 Section 111 licence issued in December 1992) for the

20 provision of international and inland long-distance

21 services to Irish companies. Telenor Invest AS is a

22 wholly-owned subsidiary of Telenor International AS, a

23 company in the Telenor Group, the Norwegian State-owned

24 telecommunications operator."

25

26 I should say, sir, there that the question mark and the

27 circle around "inland," that was actually on the copy of

28 the application that was furnished to the Tribunal. It's

29 not a mark that was made by the Tribunal.

30

 

 

 

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1 "The terms of the shareholders' agreement between the

2 parties are presented in Management Appendix A. Financial

3 reports of Communicorp Group and Telenor Invest AS are

4 presented in management Appendices B and C respectively.

5

6 "The shareholders agreement states that Communicorp Group

7 and Telenor will each initially hold 50% of the equity of

8 Esat Digifone. In the period leading up to the award of

9 the licence, 20% of the equity (10% from each of the

10 partners) will be formally placed by Davy Stockbrokers,

11 Ireland's largest stockbroker.

12

13 "As of submission of this application, Davy Stockbrokers

14 has received written investment commitments from:

15 Allied Irish Bank to make an equity commitment of IR£3

16 million;

17 Investment Bank of Ireland to make an equity commitment of

18 IR£3 million;

19 Standard Life Ireland to make an equity commitment of

20 IR£2.5 million;

21 Advent International plc to take at least a 5% of the

22 equity.

23

24 "Letters of commitment are presented in Management

25 Appendix D."

26

27 It then goes on to state:

28

29 "Within three years of service launch, the Communicorp

30 Group and Telenor Invest AS will each make a further

 

 

 

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1 tranche of equity available to independent investors in

2 order to reach a position whereby the equity in Esat

3 Digifone is equally shared between Communicorp, Telenor

4 Invest AS and independent investors. Under this agreement,

5 32% of Esat Digifone's equity will be made available to

6 public and institutional investors, thus distributing the

7 benefits of the licence widely.

8

9 "Esat Telecom is the trading name of Esat

10 Telecommunications Limited which is the telecommunications

11 operating company of the Communicorp Group. For

12 convenience and clarity, Esat Telecom rather than

13 Communicorp is referenced in those sections of this volume

14 which address complementarity of skills from a specifically

15 telecommunications perspective.

16

17 "In forming Esat Digifone, the prime objective was to

18 identify partners who could offer complementary resources

19 and compatible business approaches. Esat Digifone

20 undertook extensive research and initiated discussions with

21 telecommunications operators around the world. A shortlist

22 of operators in eight countries was visited between

23 December 1993 and January 1995. This resulted in an

24 invitation to Telenor to participate in the company."

25

26 And then, over the page: "The result is a company which

27 has a unique portfolio of talent and skills. Esat Digifone

28 successfully combines specialist expertise, sound

29 experience and financial strength and an entrepreneurial

30 spirit.

 

 

 

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1

2 "The diagram below illustrates the initial ownership of

3 Esat Digifone Limited."

4

5 And I think that diagram can be seen there on the overhead

6 projector, sir, and you'll see that, at the top, in the

7 large box is Esat Digifone Limited, and, on the left-hand

8 side, that shows Telenor Invest AS at 40 to 50%. In the

9 middle, it shows Communicorp Group at 40 to 50%. And then,

10 on the right-hand side, it shows institutional investors up

11 to 20%, and, again, they are named below that box with

12 bullet points: first bullet point, AIB; second bullet

13 point, Investment Bank of Ireland; third is Standard Life

14 Ireland; fourth bullet point, Advent International.

15

16 So that then, sir, was the slightly different description

17 which appeared in the main body of the application in the

18 management section.

19

20 Now, at the Esat Digifone oral presentation on the 9th of

21 September, 1995, Mr. Arve Johansen of Telenor described the

22 ownership profile of the proposed licencee as follows:

23

24 "Esat Digifone is an Irish company. It's evidenced, first

25 of all, by the Communicorp Group holding 40% as we get

26 going, and we have institutional investors holding 20%, and

27 they are the AIB, the Investment Bank of Ireland, Standard

28 Life Ireland and Advent International. In addition, we

29 have Telenor, through its subsidiary Telenor Invest, and

30 Telenor is the major telecommunications operating company

 

 

 

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1 in Norway."

2

3 The matter was returned to in the course of the

4 presentation by Mr. Denis O'Brien, when he observed as

5 follows:

6

7 "And as Arve has mentioned, both Communicorp and the

8 financial institutions are going to share in this

9 investment, and I think this is important because it's the

10 first time a utility will make available shares to

11 financial institutions. There is a hell of a lot of money,

12 pension money leaving this country, and this is a way of

13 tapping that vast resource. So we have two operating

14 partners and financial institutions. So that's done."

15

16 At a later point in his submission, Mr. O'Brien observed

17 that: "It's also likely that the Irish institutions will

18 probably go into a vehicle together just for simplicity

19 that there would be that 20% block so the Irish

20 institutions again would control that block effectively in

21 terms of equity terms."

22

23 And that was the information, sir, that the Department was

24 furnished in relation to the ownership of the proposed

25 licencee which, as I have already indicated, was a

26 requirement under the rules of the competition as set forth

27 in the RFP document issued on the 2nd March of 1995.

28

29 As has already been adverted to, it was the contents of a

30 letter dated the 17th April, 1996, from Mr. Owen O'Connell

 

 

 

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1 of Messrs. William Fry, solicitors for Esat Digifone, which

2 prompted the Department to seek legal advice. That letter

3 was addressed to the ownership and capital configuration of

4 Esat Digifone Limited, the proposed licencee.

5

6 And there is a copy of that letter, sir, on the overhead

7 monitor. It's addressed to Ms. Regina Finn, Department of

8 Transport, Energy and Communications, and just to remind

9 people, sir, Ms. Finn was an Assistant Principal who was --

10 who had been transferred from the Broadcasting Section of

11 the Regulatory Division to the Telecommunications Section,

12 I think in late February or early March of 1996. She had

13 had no involvement whatsoever in the competition process,

14 and it was her evidence that she became responsible for

15 coordinating the drafting of the terms of the licence at

16 that stage and she reported to Mr. Sean McMahon.

17

18 It's: "Esat Digifone Limited.

19

20 "Dear Regina,

21

22 "I refer to our telephone conversation of yesterday

23 regarding the ownership of Esat Digifone Limited and of

24 Esat Telecommunications Holdings Limited. The position is

25 as follows:

26

27 "Esat Digifone Limited.

28 There are 3,000,000 ordinary shares of £1 each in issue in

29 this company. They are held as to 1,125,000 shares by each

30 of Esat Telecommunications Holdings Limited and Telenor

 

 

 

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1 Invest AS, and as to 750,000 shares by IIU Nominees

2 Limited.

3

4 "It is intended that by the time notification is received

5 from you that the second GSM licence is available for

6 issue, the issued share capital will have increased by £15

7 million to £18 million (all comprising shares of £1 each)

8 held as to 6,750,000 by each of Esat Telecommunications

9 Holdings Limited and Telenor Invest AS, and as to 4,500,000

10 by IIU Nominees Limited.

11

12 "The 25% of Esat Digifone Limited held by IIU Nominees

13 Limited effectively represents the institutional and

14 investor shareholding referred to in Esat Digifone's bid

15 for the licence. You will recall that this referred to an

16 immediate institutional-investor holding of 20%, with a

17 further 12% in short and medium term stages. Of the

18 anticipated 12%, 5% has been prepared with IIU Nominees

19 Limited. It is understood that most, or all, of the shares

20 held by IIU Nominees Limited will, in due course, be

21 disposed of by it, probably to private and institutional

22 investors."

23

24 Next heading then is "Esat Telecommunications Holdings

25 Limited".

26

27 "This company is owned (either directly or indirectly) as

28 to approximately 57% of its issued share capital by Denis

29 O'Brien and as to approximately 31% thereof by a group of

30 investment funds managed and controlled by Advent

 

 

 

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1 International. The remaining 12% is owned (again directly

2 or indirectly) by a number of individuals (including Denis

3 O'Brien) who are primarily present or former directors,

4 employees, advisers or shareholders in Esat Telecom

5 Limited. (These percentages assume the full conversion of

6 all existing issued convertible debentures in the company,

7 i.e. they are expressed on a "fully diluted" basis.)

8

9 "A placing of shares is near to completion in the United

10 States whereby the effective ownership of Esat

11 Telecommunications Holdings Limited will be altered by the

12 subscription for a substantial number of shares by a number

13 of US financial institutions. The US institutions are

14 likely to hold approximately one third of Esat

15 Telecommunications Holdings Limited after the placing

16 (although Mr. O'Brien will retain a majority of voting

17 shares); in addition, Advent International may increase its

18 holdings somewhat by participating in the placing."

19

20 Then the final subheading is: "Other group companies":

21

22 "You asked me about a number of other companies of which

23 you were aware, including Esat GSM Holdings Limited and

24 Communicorp Group Limited. While these companies remain in

25 being and are within the overall group structure, they will

26 not have a direct role in the licence.

27

28 "I believe that the foregoing accurately summarises the

29 effective and beneficial shareholdings of the parties

30 concerned, although the full shareholding structure is

 

 

 

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1 somewhat more complex than outlined and, as I told you on

2 the telephone, many of the effective shareholdings are held

3 indirectly through other companies. If you wish, a full

4 briefing can be given as to the exact shareholdings of all

5 parties in and through all companies, but I am not sure

6 that this will serve any productive purpose. Please

7 contact me if you would like such a briefing.

8

9 "At the risk of labouring the point, I must reiterate the

10 anxiety of Esat Digifone to procure a grant of the second

11 GSM licence as soon as possible, since significant damage

12 to its plans and prospects is already being incurred and

13 could largely be avoided by the grant of the licence.

14

15 "I look forward to hearing from you."

16

17 In effect, what Mr. O'Connell informed the Department was

18 that the shares in Esat Digifone were held as to 37.5% by

19 Communicorp, as to 37.5% by Telenor, and as to 25% by IIU

20 Nominees Limited. Whilst their respective shareholdings

21 would increase prior to the award of the licence, that

22 increase would be pro rata, and would not impact on their

23 relative shareholdings.

24

25 As regards the 25% of the shares in Esat Digifone Limited

26 held by IIU Nominees Limited, Mr. O'Connell informed the

27 Department that these represented the institutional and

28 investor shareholding, as he described it, of 20%, together

29 with a further 5% arising from the dilution of the holdings

30 of Communicorp and Telenor.

 

 

 

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1

2 That letter was sent by Mr. O'Connell to Ms. Regina Finn,

3 who, as I have already stated, was an Assistant Principal

4 Officer and who had joined the Telecommunications Section

5 of the Regulatory Division in late February or early March

6 1996, and who had commenced working with Mr. Sean McMahon

7 on coordinating the drafting of the licence. Ms. Finn had

8 no previous involvement whatsoever with the second GSM

9 process. She had telephoned Mr. O'Connell on the previous

10 day, which was the 16th April, 1996, to inquire about the

11 ownership of Esat Digifone in the context of preparing the

12 draft licence. Ms. Finn recorded the information which

13 Mr. O'Connell conveyed to her in a memorandum which she

14 forwarded to Mr. Martin Brennan and Mr. Fintan Towey, and

15 she, likewise, forwarded a copy of the letter of the 17th

16 April, 1995, to Mr. Towey on receipt of it.

17

18 I refer you, sir, also to that fax and enclosed memorandum.

19

20 It's to Martin Brennan/Fintan Towey, Communications

21 Division, from Regina Finn, Department of Transport, Energy

22 and Communications, dated 16th April, 1996, and the

23 comments are:

24

25 "Martin, Fintan, attached is the latest information to come

26 to light about the shareholdings in Esat Digifone. Owen

27 O'Connell is to provide further detail in writing. You may

28 wish to pursue further."

29

30 And then we go over the page. I am going to deal with just

 

 

 

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1 the narrative that Ms. Finn made, first of all, and then

2 refer back to the diagram. She stated in her memorandum

3 and recorded:

4

5 "Owen O'Connell, William Fry Solicitors, provided the

6 following information on behalf of Esat Digifone Limited.

7

8 "At present, Communicorp is the vehicle whereby Denis

9 O'Brien holds shares in Esat Digifone. Communicorp also

10 has ownership of Esat Telecom and the radio interests of

11 Denis O'Brien. The objective is to uncouple the

12 telecommunications and the radio elements of Communicorp

13 because they are incompatible from the point of view of

14 investors. With this in mind, Communicorp will retain the

15 radio interests and slide out of the current picture in

16 relation to telecommunications."

17

18 There is then a subheading: "Esat Telecommunications

19 Holdings Limited has been incorporated to take over the

20 telecommunications interests of Communicorp. Ownership

21 comprises:

22

23 "Denis O'Brien: 57%;

24 Advent: 31%;

25 Miscellaneous: 12%;

26 Denis O'Brien: 6%;

27 Employees of Esat: 6%.

28

29 "A flotation is currently underway by First Boston Bank

30 which involves the placing of shares in Esat

 

 

 

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1 Telecommunications Holdings Limited. It is not yet known

2 what percentage of the company will finally be owned by

3 American investors.

4 Esat Telecommunications Holdings Limited, in turn, owns

5 Esat Telecommunications Limited: 100%;

6 Esat Digifone Limited: 37.5%."

7

8 So that portion of her memorandum related primarily, sir,

9 or entirely, sir, to the restructuring of Mr. Denis

10 O'Brien's interests through Communicorp.

11

12 She then has a heading: "Telenor Invest AS owns 37.5% of

13 Esat Digifone Limited".

14

15 "IIU (a Dermot Desmond company) currently holds 20% of Esat

16 Digifone which it intends placing with institutional

17 investors. It also has the right to acquire a further 5%

18 (by means of the 12% of Esat Holdings Limited which is held

19 by miscellaneous?)" And she puts a question mark. Owen

20 O'Connell is to provide further information in writing,

21 including deadlines for this change of ownership."

22

23 And, above that, she had prepared a diagram in which she

24 represented that same information which appeared in her

25 narrative. And you see at the foot of that diagram, sir,

26 she has "Esat Digifone Limited" and above that she has

27 37.5% allocated to Esat Telecom, which was the --

28 effectively represented Communicorp. On the left, she has

29 Telenor Invest AS holding 37.5%, and on the right she has

30 "IIU (Dermot Desmond)" with a line down, 20%, and I think

 

 

 

23

 

 

1 that's plus 5%.

2

3 Now, in their evidence to the Tribunal, Mr. Loughrey,

4 Mr. Brennan and Mr. Towey agreed that the ownership

5 information contained in Ms. Finn's memorandum and

6 Mr. O'Connell's letter was new information and represented

7 a departure from the ownership details furnished in the

8 course of the licensing process in two respects.

9

10 First, the share configuration had changed from a 40:40:20

11 configuration with Communicorp and Telenor each holding a

12 40% shareholding, to a 37.5:37.5:25 configuration with a

13 Communicorp and Telenor shareholding diluted to 37.5% each.

14

15 And secondly, the financial institutions' shareholding was

16 not to be placed by Davy Stockbrokers with Allied Irish

17 Bank, Investment Bank of Ireland, Standard Life Ireland or

18 Advent International, but had, instead, been taken up by

19 IIU Limited on behalf of Mr. Dermot Desmond.

20

21 Mr. John Loughrey, who was then Secretary General of the

22 Department, in his evidence to the Tribunal, on day 188,

23 testified that he was very surprised when he received those

24 documents and that he was not best pleased.

25

26 Mr. Brennan testified, on day 178, that the information

27 triggered two responses: First, that the Department had to

28 check who IIU was, and whether they were 'good for it', as

29 he put it; and secondly, that they had to seek legal advice

30 on where stood the application. In other words, the

 

 

 

24

 

 

1 Department had to determine whether IIU Limited had the

2 financial capacity to fund its shareholding and whether the

3 ownership of the proposed licencee company was permissible,

4 having regard to the competition.

5

6 On the 22nd April, 1996, Mr. Fintan Towey and Ms. Regina

7 Finn consulted with Mr. Denis McFadden and Mr. John Gormley

8 of the Attorney General's Office. Mr. Towey and Ms. Finn

9 have already given evidence concerning that meeting. Two

10 days later, on the 24th April, 1996, Mr. Towey prepared a

11 note of the meeting, and that document has already been led

12 in evidence, and inquiries pursued by the Tribunal with Mr.

13 Towey and Ms. Finn and indeed with a number of other

14 witnesses in relation to its contents.

15

16 Now, that note recorded as follows:

17

18 It's headed "Note of Meeting" and it's in five numbered

19 paragraphs, and if we just look over the page, it's signed

20 by Mr. Towey, and if we just move it up a little, it's

21 dated the 24th April, and it's been cc'ed to Mr. Brennan,

22 Mr. McMahon and Ms. Finn.

23

24 Paragraph 1:

25

26 "Ms. R. Finn and the undersigned met with Mr. D. McFadden,

27 Mr. J. Gormley and Mr. L. Bacon, Office of the Attorney

28 General, on the 22 April, 1996. The purpose of the meeting

29 was to discuss:

30

 

 

 

25

 

 

1 "(a) the disclosure of information to unsuccessful

2 applicants for the GSM licence and

3

4 "(b) the transposition of Directive 96/2 and its impact on

5 the award of the GSM licence to Esat Digifone.

6

7 "2. Mr. McFadden indicated that the Attorney General would

8 approve the draft letter inviting unsuccessful applicants

9 to debriefing sessions by the following day. The

10 Department agreed to provide a brief for senior counsel on

11 the procedure to be followed at the sessions.

12

13 "3. With regard to the transposition of Commission

14 Directive 96/2, the Attorney General Offices was

15 particularly concerned about the applicability of the

16 appeal procedures of the Directive to the GSM competition

17 if the GSM licence is awarded pursuant to a Statutory

18 Instrument to transpose the Directive. It may be possible

19 to provide in the SI that applications received prior to

20 the adoption of the Directive are not subject to the appeal

21 procedures. Alternatively, the licence could be granted

22 under Section 111 (1) and (2) of the 1983 Act and the SI

23 could provide that it is deemed to be awarded under the

24 proposed new legal base for mobile licences. The

25 Department expressed a preference for the award of the

26 licence pursuant to a SI transposing the Directive, but

27 would not press this course if the AG's Office advised

28 against on the grounds of increased exposure to legal

29 action. The fact that it would be preferable to licence

30 Esat Digifone and Eircell on the same legal basis was also

 

 

 

26

 

 

1 pointed out. It was agreed that these questions should be

2 addressed to senior counsel. In the meantime, the AG's

3 Office agreed to provide a first draft of the Regulations

4 to the Department the following day.

5

6 "4. The Department agreed to provide the following to the

7 Office of the Attorney General in order to facilitate

8 further consideration of licence award.

9

10 " -- a report on the compatibility of the conditions of the

11 draft GSM licence with Directive 96/2.

12

13 " -- a consolidated text for Section 111 of the 1983 Act,

14 as amended by SI 45 of 1992 and including proposed

15 amendments pursuant to Directive 96/2.

16

17 " -- the Department's view on consulting with the

18 Commission on the impact of Directive 96/2 on the award of

19 the GSM licence and on the compatibility of the conditions

20 with the Directive.

21

22 "5. The Department also gave to the Office of the Attorney

23 General a copy of an extract from Esat Digifone's

24 application outlining the ownership of the company,

25 together with an internal departmental document and a

26 letter from William Fry & Co., Solicitors, concerning

27 restructuring of the Esat element. The Department

28 indicated that clarification would be necessary of any

29 change in the ownership structure of Esat Digifone relative

30 to that outlined in the application."

 

 

 

27

 

 

1

2 And that was Mr. Towey's note made on the 24th April of the

3 meeting which he attended in the Attorney General's Office

4 and with officials of the Attorney General's Office on the

5 22nd April.

6

7 On the same day, the 24th April, 1996, Mr. Towey wrote to

8 Mr. McFadden and Mr. Gormley of the Attorney General's

9 Office, enclosing some additional material, making a number

10 of points regarding other aspects of the legal advice

11 sought and confirming the Department's requirement for a

12 legal opinion on the restructuring of the ownership of Esat

13 Digifone Limited. That letter, which has likewise already

14 been led in evidence and on which inquiries have been made,

15 was in the following terms:

16

17 It's dated the 24th April, 1996.

18 It's addressed to Mr. D. McFadden/Mr. J. Gormley,

19 Office of the Attorney General.

20

21 "Dear Mr. McFadden/Mr. Gormley,

22

23 "Further to our meetings on 22nd and 23rd April, I enclose

24 the following:

25

26 " -- a report on the Department's assessment of the

27 compatibility of the conditions of the draft GSM licence

28 with Directive 96/2 and

29

30 " -- a consolidated text of Section 111 of the Post and

 

 

 

28

 

 

1 Telecommunications Services Act, 1983, incorporating

2 amendments contained in SI 45 of 1992 and amendments

3 proposed in the transposition of Commission Directive 96/2.

4

5 "I have also, as requested, consulted internally on the

6 question of consulting the European Commission in relation

7 to the terms of the licence. The Department is of the view

8 that, apart from the time constraints, it may not be

9 prudent to invite the Commission's scrutiny at this point.

10 The question of compliance with the provisions of Directive

11 96/2 will no doubt fall to be examined in detail by the

12 licencee in due course, possibly in consultation with the

13 Commission.

14

15 "I would also like to reiterate our requirement for a legal

16 opinion on the restructuring of the ownership of Esat

17 Digifone (relevant papers provided at our meeting on the

18 22nd April). In particular, the question of whether recent

19 correspondence suggests any change in the identity of the

20 beneficial owners of the company which could be considered

21 incompatible with the ownership proposals outlined in the

22 company's application, must be addressed. Before the

23 ultimate award of the licence, it is now considered that it

24 would be preferable to seek warranties in relation both to

25 the beneficial ownership of Esat Digifone and the financing

26 package for the project. This is considered prudent, given

27 the nature of the concession being given to the company.

28 Perhaps you would advise, however, whether such a

29 requirement could be challenged by Esat Digifone as an

30 imposition not envisaged in the competition process or

 

 

 

29

 

 

1 otherwise unreasonable on legal grounds.

2

3 "Finally, I will provide a brief for counsel on the

4 proposed disclosure procedure as soon as possible, but

5 would, as discussed, appreciate your early opinion on the

6 question of whether debriefing sessions should proceed in

7 the shadow of a complaint to the Commission regarding the

8 process."

9

10 And it's signed "Fintan Towey".

11

12 It is clear from the contents of Mr. Towey's note, dated

13 24th April, 1996, and the contents of his letter of the

14 same date, that the Department was seeking legal advice in

15 relation to four separate matters.

16

17 First, the transposition of Counsel Directive 96/2 into

18 Irish law, and whether the second GSM licence should be

19 issued under the framework provided by that directive, or

20 under Section 111 of the Postal and Telecommunications Act,

21 1983, bearing in mind that the process which would lead to

22 the grant of the second GSM licence had commenced prior to

23 the coming into force of that directive early in 1996.

24

25 Second, the draft terms of the licence to be issued by the

26 Minister, and, in particular, the extent to which the

27 Minister could restrict the transfer of shares in the

28 licensed company.

29

30 Thirdly, the legal implications of the Department meeting

 

 

 

30

 

 

1 with unsuccessful applicants.

2

3 And fourthly, the ownership conformity issue.

4

5 It was this fourth and final aspect of the legal advice

6 sought which was, and is, of interest to the Tribunal, and

7 was, and is, material to the Tribunal's inquiries.

8

9 Both Mr. Towey's note of the 24th April, 1996, and his

10 letter of the same date referred to papers which had been

11 provided by Mr. Towey at the meeting of the 22nd April,

12 1996, relevant to the ownership conformity issue. In his

13 note of the meeting, Mr. Towey had described those

14 documents, it will be recalled, as comprising "copy of an

15 extract from Esat Digifone's application outlining the

16 ownership of the company, together with an internal

17 Department docket and a letter from William Fry & Co.,

18 Solicitors, concerning restructuring of the Esat element."

19

20 The Tribunal took up inquiries with Mr. Towey in relation

21 to those documents which he had provided to the Attorney

22 General's Office, in the course of his evidence on the 20th

23 May, 2003, which was day 220 of the Tribunal's public

24 sittings, and the transcript for that date records the

25 following exchange, and, in fact, a copy of the transcript

26 is on the monitor, sir.

27

28 "Question 180, question: Can you -- I know it was a long

29 time ago -- can you remember what documents were given to

30 the Attorney General's Office at that stage about the

 

 

 

31

 

 

1 portion of the application outlined in the ownership?

2 Answer: I thought I had seen a copy of this in the papers.

3 Question: Right.

4 Answer: And what I -- I think the papers bear out that

5 what I gave was an extract from the Esat Digifone

6 application.

7 Question: Right.

8 Answer: Copy of the letter from William Fry's and a copy

9 of the chart produced.

10 Question: The Regina Finn chart?

11 Answer: Yes."

12

13 Now, the Tribunal has received documentation from the

14 Attorney General's Office which had not previously been led

15 in evidence and which seemed to confirm that Mr. Towey's

16 recollection of the documents which he provided was

17 correct. That documentation was provided, it seems, to the

18 Attorney General's Office, or duplicate copies of it, on

19 the 24th April by Mr. Towey, and the letter which he

20 forwarded, or the fax which he forwarded to the Attorney

21 General's Office is, in fact, stamped the 25th April, and

22 it appears that those duplicate copies were received on

23 that date, and I'll just turn those up now, sir. Copies of

24 those can be found at book 85, which is the book that the

25 Tribunal has circulated for the purposes of these public

26 sittings, at Divider G -- sorry, it's Divider E of that

27 book. And we can just get those on the monitor now, sir.

28

29 You will see it's a handwritten fax copy sheet. It's

30 "To: Denis McFadden.

 

 

 

32

 

 

1 From: Fintan Towey."

2 The fax number is there, and, below that, "7 pages," and

3 you will see from the stamp on the right-hand side above

4 "copy" that it was received by the Office of the Attorney

5 General on the 25th April, 1996. And what that included

6 was, firstly, the extract from the management section of

7 the application of Esat Digifone which I read out earlier.

8 Subsection 2.1. It included the section of the page, which

9 was the diagram that I also referred to. And then further

10 material from that section relating to the principal

11 shareholders, the management and decision-making structure.

12

13 Secondly, the documentation included a copy, as Mr. Towey

14 had indicated in his evidence, a copy of the letter dated

15 the 17th April, 1996, from Mr. O'Connell to Ms. Regina

16 Finn.

17

18 And thirdly, a copy of Ms. Finn's note, headed

19 "Departmental Note," in which she had recorded, both

20 diagrammatically and in the narrative below her diagram,

21 the information which Mr. O'Connell had furnished to her

22 regarding ownership matters on the 16th April.

23

24 Now, it seems that these documents, together with

25 Mr. Towey's fax cover sheet stamped by the Attorney

26 General's Office as having been received on the 25th April,

27 were furnished ultimately to senior counsel under cover of

28 a letter which, although dated the 24th April, 1996, was

29 probably, it seems, not actually sent until the 25th April

30 of 1996, and I can refer you to a copy of that letter.

 

 

 

33

 

 

1

2 It's a letter from the Office of the Attorney General, it's

3 dated the 24th April, 1996. It's addressed to senior

4 counsel. It's headed "Urgent".

5

6 "re: Proposal of the Minister for Transport, Energy and

7 Communications to grant a licence to Esat Digifone Limited

8 to be the second provider and operator of a GSM mobile

9 telephony service in Ireland and Commission Directive

10 96/2/EC amending Commission Directive 90/388/EEC and minute

11 of the Department of Transport, Energy and Communications

12 dated 24th April, 1996."

13

14 And it states:

15

16 "Dear Richard,

17

18 "With reference to the above matters and yesterday's

19 consultation, please find attached a copy of the above

20 minute received from the Department and its enclosures.

21 The "consolidated text" of Section 111 is not enclosed as

22 it does not incorporate the more recent draft of the

23 proposed amendments thereto.

24

25 "A copy of the 'relevant papers' referred to in the third

26 paragraph of the Department's minute is also enclosed,

27 together with a new draft Article 8 of the proposed licence

28 which is relevant, and your opinion on the issues set out

29 in that paragraph would be appreciated."

30

 

 

 

34

 

 

1 And over the page at the top of the second page:

2

3 "If you require any additional information or consider that

4 a consultation would be desirable, please let us know."

5 And it's signed "John Gormley" and "Denis McFadden".

6

7 Now, I should add that the Article 8 referred to in the

8 second paragraph of that letter was a draft of an Article

9 to be included in the proposed licence which would govern

10 the entitlement of shareholders of the licensed company to

11 transfer or dispose of their shares after the licence was

12 issued. It seems that the final terms of that article were

13 agreed at a very late stage prior to the 16th of May of

14 1996, and were subject to the terms of a side letter from

15 Mr. Lowry, as Minister, to Mr. Knut Digerud, the Chief

16 Executive of Esat Digifone.

17

18 Now, from the documentation available to the Tribunal and

19 the evidence already heard, it appears that no further

20 instructions were furnished to senior counsel or to the

21 Attorney General's Office relating to the ownership

22 conformity issue in advance of the furnishing of senior

23 Council's opinion dated the 9th of May of 1996.

24

25 In response to those instructions of the 24th April, 1996,

26 senior counsel, in fact, furnished two opinions to the

27 Office of the Attorney General. The first was dated the

28 25th April, 1996, and the second was the opinion in

29 question, dated the 9th of May of 1996. The State's waiver

30 of privilege extends only to the second opinion of 9th May,

 

 

 

35

 

 

1 1996. Senior counsel forwarded his opinion to the Office

2 of the Attorney General under cover of a letter of the 9th

3 of May of 1996.

4

5 And I now propose, sir, to open and read both the covering

6 letter from senior counsel dated the 9th of May of 1996,

7 and the opinion of the same date.

8

9 I should add, sir, that in the course of cross-examination

10 of Mr. John Loughrey and of Mr. Owen O'Connell, Mr. John

11 Loughrey in 2003 and I think Mr. Owen O'Connell later in

12 the year of 2003, some short passages were opened from this

13 covering letter and from the opinion by counsel for

14 Mr. O'Brien, but the entire of the letter and the entire of

15 the opinion have never been opened previously.

16

17 CHAIRMAN: And I think you will come back to those at a

18 later --

19

20 MS. O'BRIEN: Absolutely, sir, yes, indeed, I will.

21 Now, the letter is the 9th of May of 1996. It's addressed

22 to the "Office of the Attorney General,

23 Government Buildings,

24 Upper Merrion Street,

25

26 "re licensing mobile telephones:

27

28 "Dear John,

29

30 "I enclose my suggested amendments to the Esat licence, my

 

 

 

36

 

 

1 suggested amendments to the Statutory Instrument given to

2 me and some general advices.

3

4 "I am sending my views on the complaint made to the

5 Commission under separate cover. However, I remain of the

6 view that the Minister should not drag his feet in issuing

7 the licence. If there was to be litigation, so be it, but

8 delaying does not achieve any end. Before issuing the

9 licence, you should make it clear to Persona's solicitors

10 that he is not holding his hand on the issue of the

11 licence. The form of draft letter has already been

12 discussed with you. My reasoning in this regard is that

13 the Minister is committed to grant a licence. He is now in

14 between two competing interests: One, Esat, who say that

15 they are entitled to the licence; and the other, Persona,

16 who are indicating that the licence should not issue.

17 Delaying issuing the licence will clearly damage Esat. If

18 Persona wish to stop Esat getting the licence, they should

19 be required to take appropriate legal action to restrain

20 the issue. They will then be required to give undertakings

21 to the parties affected, particularly Esat. This will

22 concentrate their minds, particularly in circumstances

23 where the Commission are likely to be making unsympathetic

24 noises in relation to their complaint.

25

26 "There is one final matter that is important. It occurred

27 to me that the Minister may wish to impose, on the persons

28 backing Esat Digifone, an obligation to stay with their

29 commitment to back Esat Digifone for a given period, say 3

30 to 5 years. It could be possible to include in the licence

 

 

 

37

 

 

1 a condition that the licence shall not be actioned until an

2 appropriately worded commitment is to hand. I do not know

3 enough about the terms of the application to know what sort

4 of commitment you could seek or from whom. However, it is

5 a matter worth considering and, in my opinion, a

6 sustainable condition to attach to the granting of a

7 licence to carry on an activity which, by definition, means

8 that somebody else will be deprived of the opportunity to

9 carry on that activity.

10

11 "Yours sincerely,"

12 and it's signed there by senior counsel.

13

14 Then the opinion itself, sir. It's headed "Advices

15 Querist: The Minister for Transport, Energy and

16 Communications and the Department of Transport, Energy and

17 Communications.

18

19 "re: The Esat Digifone (GSM) mobile telephony licence."

20

21 And it states: "I have now had the opportunity of

22 considering the complicated issues which arise relating to

23 the introduction of a Statutory Instrument to take into

24 account the effects of Commission Directive 96/2/EC and to

25 settling the terms of the draft 'Esat Digifone

26 telecommunications licence' which the Minister wishes to

27 issue." Then there is a subheading "The Draft Licence".

28

29 "I have dealt with the draft licence by taking the draft of

30 the 2nd May, 1996, and indicating where I think there

 

 

 

38

 

 

1 should be amendments. The balance of the document can

2 remain in its current form. Attached to these advices are

3 the amendments I suggest. You should also include in the

4 licence the subheadings that exist in the articles. I did

5 not trouble to repeat them in the amendments that I have

6 suggested.

7

8 "The terms of the amendments I have suggested to Article 1,

9 2, 4 and 5 should be self-explanatory.

10

11 "The amendments I have suggested to Article 8 are more

12 substantial. Article 8 imposes conditions material to the

13 ownership of the licence and the management of the licence

14 service, most particularly the ownership of shares in the

15 licencee company. I view these matters as being

16 particularly sensitive and an area where the Minister's

17 hand is substantially tied. The Minister agreed to give

18 the licence in question prior to the introduction of

19 Commission Directive 96/2/EC. However, as a matter of law,

20 I am forced to conclude that if the licence document

21 includes terms and conditions which are not sustainable

22 under the Directive, and licencee, in my opinion, is free

23 to apply to the courts to have such non-conforming

24 provisions struck down.

25

26 "If one analyses why the Minister is concerned about the

27 ownership of shares in the licencee, the only legitimate

28 concern he can have is that if there is a change of

29 ownership, the service that has to be provided will in some

30 way be compromised. I do not think it is tenable to

 

 

 

39

 

 

1 suggest that the licencee has been awarded the licence

2 because of the parties who own the licencee; rather, the

3 licencee has been awarded the licence because its plans and

4 proposals were the most meritorious and it provided a

5 funding plan which looked feasible. There is no reason why

6 any of these matters have to be compromised by a change in

7 ownership. However, I do accept that there is a

8 possibility that this might occur. It is also a real issue

9 in the mind of the public.

10

11 "In the circumstances, I have proposed changing Article 8

12 quite fundamentally. What I have proposed is that the

13 licence continue to be personal to Esat Digifone, the

14 restrictions on transfers and assignments of interest in

15 the licence and assets remain and that the Minister include

16 in the licence provisions which will allow him add

17 additional conditions to the licence should Esat Digifone

18 wish to issue shares to the public or by private placing

19 and give to the Minister the right to veto any proposal to

20 issue shares or transfer the ownership of existing shares.

21 However, the right must be prescribed, and I have done this

22 by only allowing the Minister to act if he forms the

23 opinion that the proposals will be to the detriment or will

24 compromise all or any of the matters which the directive

25 indicates are proper concerns for the Minister when issuing

26 licences. I find it difficult to imagine circumstances

27 where the Minister will see a proposed issuing of shares

28 and/or change of ownership which justifies saying he will

29 not consent to it. However, I think it is prudent to try

30 and maintain such right. It will certainly allow the

 

 

 

40

 

 

1 Minister to say that he has taken appropriate steps to

2 protect the public interest in this regard.

3

4 "I am dubious as to whether or not the Minister can demand

5 that the administration and management of the business be

6 carried on in premises in the State. However, I can

7 understand why this has been included.

8

9 "In relation to Article 15, I have suggested an amendment.

10 It is largely cosmetic.

11

12 "Article 17 holds the licencee to the provision of a

13 service which develops in accordance with the promises he

14 made in his submission at competition stage. I am

15 concerned that the penalties that are imposed on failure to

16 deliver as promised are likely to be subject to attack

17 falling outside what the Minister can do, given the recent

18 Commission Directive. However, I understand why they are

19 being imposed and simply flag these as provisions in the

20 licence which could be subject to attack.

21

22 "As I have already stated, I am gravely concerned about the

23 terms of Article 18. I am aware that Mr. O'Brien promised

24 such a windfall gains provision in his submission and

25 should be held to his promise, but I am equally satisfied

26 that such an arrangement falls well outside what's

27 permitted under the recent Commission Directive. I have

28 left it in terms as drafted, but, again, point out that, if

29 challenged, it will be in difficulty.

30

 

 

 

41

 

 

1 "In respect of the proposed Statutory Instrument, I have

2 caused this to be retyped and where I have made amendments

3 I have over-lined the sections in question. Essentially,

4 since the implementation of Commission Directive 96/2/EC,

5 which amends directive 90/3/88/EC, the State is obliged to

6 offer available radio frequencies to prospective

7 communications service providers. The frequencies are to

8 be licensed by open, non-discriminatory and transparent

9 procedures.

10

11 "The proposed Statutory Instrument amends Section 111 of

12 the act by inserting two new subsections, (2B) and (2C),

13 for the provision of mobile and personal communications

14 services, and mobile and personal communications systems is

15 subject to licence by the Minister. What the Statutory

16 Instrument does not do is to provide a mechanism by which

17 the Minister will alert people to the available frequencies

18 or provide the practical arrangements which need to be put

19 in place for the processing of applications by persons who

20 want to operate such services or systems. It would be

21 prudent for the Department to consider how this is to be

22 done, because otherwise there will be complaints by persons

23 who would like to operate such a scheme that are not being

24 advised as to the availability of frequencies and have not

25 been provided with a procedure whereby applications can be

26 submitted. This will not stop people making applications,

27 but it does call into question how open, non-discriminatory

28 and transparent the procedures really are. Frankly, I do

29 not know enough about the availability of frequencies to

30 make any sensible suggestions at this stage. However, it

 

 

 

42

 

 

1 is something that needs to be considered urgently and be

2 the subject matter of a set of regulations.

3

4 "The ability of the State to limit the number of licences

5 for mobile and personal communication systems is restricted

6 to certain specified non-economic reasons in the public

7 interest and the lack of availability of frequency

8 spectrum. Restrictions have to be proportionate to the aim

9 to be achieved. It is also clear that the directive seeks

10 to outlaw restrictions on operators in respect of the

11 establishment of their own infrastructure, the use of

12 infrastructure provided by third parties and the sharing of

13 infrastructure and other facilities and sites.

14 Interconnection must be permitted and restrictions on

15 interconnection lifted. Finally, access to the public

16 network must be guaranteed. Obviously, interconnection

17 requires conditions, but these must be based on objective

18 criteria which are transparent, non-discriminatory and

19 compatible with the principle of proportionality. Clearly,

20 the Department should think about setting out a set of

21 interconnection conditions of general application to allow

22 prospective licence applicants know what lies in store for

23 them. Rather than repeat the amendments I have made to the

24 Statutory Instrument, I suggest you take time to consider

25 the draft I return and I can deal with any questions that

26 arise.

27

28 "Nothing further occurs at present."

29

30 Signed by senior counsel, dated 9th May, 1996.

 

 

 

43

 

 

1

2 The State has now also waived legal professional privilege

3 over a letter dated the 13th May, 1996, under cover of

4 which senior counsel's covering letter and opinion were

5 formally provided by the Attorney General to the

6 Department. It seems, however, from other documentation

7 available to the Tribunal, that advance copies of the

8 material provided by senior counsel may have been furnished

9 informally to the Department the previous Friday, 10th May,

10 1996, and this is a matter which the Tribunal will explore

11 in the course of evidence.

12

13 And I'll just refer to that letter of the 13th May, 1996.

14 It's from the Office of the Attorney General. It's dated

15 the 13th May, 1996. It's addressed to the Secretary,

16 Department of Transport, Energy and Communications.

17

18 "Attention: Fintan Towey,

19 Communications (Development and Corporate Affairs)

20 Division.

21

22 "re: 1. Proposal of the Minister for Transport, Energy

23 and Communications to grant a licence to Esat Digifone

24 Limited to be the second provider and operator of a GSM

25 mobile telephony service in Ireland and

26

27 "2. Stamped draft of regulations entitled 'European

28 Communities (Mobile and Personal Communications)

29 Regulations, 1996' to give effect to Commission Directive

30 Number 90/388/EEC of 28 June, 1990, and Commission

 

 

 

44

 

 

1 Directive 96/2/EC of 16 January, 1996, and

2

3 "3. Stamped draft of licence to be granted under

4 subsection (2) of Section 111 of the Postal and

5 Telecommunications Act, 1983, as amended by the

6 above-mentioned regulations when made."

7

8 And it states:

9

10 "With reference to previous correspondence, we have been

11 directed by the Attorney General to forward to you the

12 above-mentioned draft regulations and draft licence which

13 have been prepared in the office of the parliamentary

14 draftsman by Mr. Bacon, together with the advices of

15 Richard Law Nesbitt, Esquire, SC, dated 9 May, 1996,

16 concerning same."

17

18 "Commission Directive 96/2/EC, which was first brought to

19 the attention of this office last month, further

20 complicates the already legally complex proposal to licence

21 a second provider and operator of a GSM mobile telephony

22 service in Ireland. A very large number of issues could be

23 raised in relation to the exact meaning of that directive

24 and Directive Number 90/388/EEC of 28 June, 1990, which it

25 amends. These issues have not been explored with the

26 Commission and most likely will arise in the future and

27 perhaps be the subject of litigation, the outcome of which

28 cannot be predicted with any certainty. In this regard, it

29 is to be noted that the Commission have not had sight of

30 drafts of either the proposed regulations or licence to

 

 

 

45

 

 

1 date.

2

3 "The preparation of the draft regulations and licence

4 within the time-frame allowed has been an extremely

5 difficult task, particularly because of the opaqueness of

6 the directives.

7

8 "The Attorney General has asked that it be pointed out

9 that, in view of these factors, there is the possibility

10 that some of the terms of the licence proposed to be

11 granted could be successfully challenged. Mr. Law Nesbitt,

12 in his advices, has highlighted some terms which he

13 considers could be subject to attack.

14

15 "The drafts now furnished represent, in our view, the best

16 available solutions, bearing in mind the various

17 constraints which applied.

18

19 "Finally, we would ask you to note that the regulations

20 should be made prior to the licence being granted, and if

21 both are made and granted on the same day, the time of the

22 making and granting should be recorded to prove that the

23 regulations were made prior to the granting of the

24 licence."

25

26 And it's signed by Mr. Gormley and Mr. McFadden.

27

28 Now, in the course of its inquiries at public sittings in

29 2003, the Tribunal was unable to refer to the contents of

30 that letter dated the 9th May, 1996, or of the enclosed

 

 

 

46

 

 

1 opinion, or indeed of the letter dated 13th May, 1996.

2 However, having seen the letter and the opinion of 9th May,

3 1996, the Tribunal's working view, for the purposes of its

4 inquiries, was that the focus of the opinion was on the

5 draft licence and on the technical issue of the statutory

6 framework under which the licence should be issued, and

7 that the ownership issue was addressed solely within the

8 context of Article 8 of the proposed licence, that is the

9 restrictions to be imposed on the transferability of shares

10 after the licence had issued.

11

12 In other words, it was the Tribunal's working impression,

13 for the purpose of pursuing its inquiries, that the opinion

14 did not address whether the ownership information notified

15 in the letter of 17th April, 1996, and as recorded in

16 Ms. Finn's note of 16th April, 1996, was in conformity with

17 the details of ownership of the proposed licencee furnished

18 in the application and evaluated in the course of the

19 process, and, if not, what legal consequences flowed from

20 that change.

21

22 The Tribunal raised that issue with the departmental

23 witnesses from whom it heard evidence, and, most

24 significantly, with Mr. Loughrey, who was then Secretary

25 General of the Department, and who testified that, on

26 receipt of a letter of 17th April, 1996 - that's the letter

27 from Mr. Owen O'Connell of William Fry - he took overall

28 responsibility for dealing with the issues which had arisen

29 from the information notified to the Department.

30 Mr. Loughrey was examined by counsel for the Tribunal on

 

 

 

47

 

 

1 the 21st February, 2003 (day 188).

2

3 Having referred Mr. Loughrey to the third paragraph of

4 Mr. Towey's letter to Mr. McFadden and Mr. Gormley dated

5 the 24th April, 1996, the transcript records as follows,

6 and I am starting on question 214 on page 99 of the

7 transcript for that date.

8

9 "Question: And I suppose that's the answer -- on the 24th

10 April, 1996, Mr. Towey wrote to the officials in the

11 Attorney General's Office. And he refers to the meeting,

12 their meetings, and he enclosed a report on the

13 Department's assessment of the compatibility of the

14 conditions of the draft GSM licence with Directive 96/2,

15 and a consolidated text of Section 111 of the PTSA 1983,

16 incorporating amendments contained in Section 145 of the

17 1992 and amendments proposed in the transposition of

18 Commission Directive 96/2.

19

20 "I have also, as requested, consulted internally on the

21 question of consulting the European Commission in relation

22 to the terms of the licence. The Department is of the view

23 that, apart from the time constraints, it may not be

24 prudent to invite the Commission's scrutiny at this point.

25 The question of compliance with the provisions of the

26 Directive 96/2 will no doubt fall to be examined in detail

27 by the licence in due course, possibly in consultation with

28 the Commission."

29

30 And then counsel referred to the third paragraph in the

 

 

 

48

 

 

1 letter of the 24th April, in which it was stated:

2

3 "I would also like to reiterate our requirement for a legal

4 opinion on the restructuring of the ownership of Esat

5 Digifone (relevant papers were provided at our meeting on

6 the 22nd April.) In particular, the question of whether

7 recent correspondence suggests any change in the identity

8 of the beneficial owners of the company which could be

9 considered incompatible with the ownership proposals

10 outlined in the company's application, must be addressed.

11 Before the ultimate award of the licence, it is now

12 considered that it would be preferable to seek warranties

13 in relation both to the beneficial ownership of Esat

14 Digifone and the financing package for the project. This

15 is considered prudent, given the nature of the concessions

16 being given to the company. Perhaps you would advise,

17 however, whether such a requirement could be challenged by

18 Esat Digifone as an imposition not envisaged in the

19 competition process or otherwise unreasonable on legal

20 grounds."

21

22 And counsel commented: "This is the relevant portion of

23 the letter."

24

25 "Answer" -- this is Mr. Loughrey -- "once again, is, I

26 don't believe I have ever seen this letter. As I say, in

27 the last two weeks or so I was informed, obviously, that in

28 tackling this problem, obviously that would be an intrinsic

29 part of it, to make sure our lines were cleared legally, so

30 to speak.

 

 

 

49

 

 

1 Question: Yes. Now, that particular issue was not

2 addressed in any legal advice which was furnished to the

3 Department?

4 Answer: It is clear, in perusal of the papers, actually,

5 that that appears to be the case, Mr. Coughlan. However,

6 at the time we took - or, personally, I took the decision,

7 I was not so aware. Let me put it this way: Nobody had

8 informed me that there was any problem on the legal side.

9 I assumed, therefore, that I would have been -- let's say

10 if a problem had arisen, I would have been informed. So I

11 am now aware, clearly, from the papers here, that I don't

12 see any evidence of that, actually, so that must be the

13 case.

14 Question: Yes.

15 Answer: But having said that --

16 Question: And I can assure you it is because the Attorney

17 General himself has informed the Tribunal so?

18 Answer: Of course I would accept that."

19

20 And that's the end of the relevant portion from the

21 transcript.

22

23 The letter to which reference was made by counsel for the

24 Tribunal was a letter received by the Tribunal from the

25 Attorney General dated 20th December, 2002, which the

26 Tribunal understood to confirm that advice on the ownership

27 conformity issue had not been given.

28

29 The letter and opinion of the 9th May, 1996, was taken up

30 in cross-examination of Mr. Loughrey by counsel for

 

 

 

50

 

 

1 Mr. Denis O'Brien on the 27th February, 2003, day 191, when

2 extracts from the letter dated the 9th May and passages

3 from the opinion of senior counsel were opened and read by

4 counsel for Mr. O'Brien, expressly without objection from

5 counsel for the State. The relevant portion of the

6 evidence commences on page 25, question 70 of the

7 transcript, and concludes on page 31, question 77 of that

8 transcript.

9

10 Question 70:

11 "Question: The other matter I just want to draw to your

12 attention to, because it seems to me to be relevant as a

13 line of inquiry, is the advices which were given to the

14 Department, the Office of the Attorney General by Richard

15 Nesbitt, who is counsel for the Department, I know, but he

16 was advising the Department at this time.

17 Answer: Correct.

18 Question: I don't know if you have a copy of it, it is

19 dated the 9th May, 1996.

20 Answer: I've had sight of that very recently, but I don't

21 have a copy in front of me right now, but if a copy could

22 be provided.

23 Question: Certainly.

24 Answer: There is one thing, Mr. Chairman, I just -- in

25 case there is -- just in case there is in a very, very

26 outside chance there is -- I am quite happy to assist the

27 Tribunal in any way, but, in fact, as Mr. Nesbitt is a very

28 valued member of the State's team and, by extension, right

29 now, a member of my team, there is nothing untoward in

30 expressing an opinion.

 

 

 

51

 

 

1

2 "Chairman: It is my understanding that Mr. McGonigal may

3 have mentioned this to the other counsel in the case and

4 would I be correct in surmising that although it may not be

5 an aspect over which you enthuse, that you accept that

6 Mr. McGonigal is entitled to broach the matter?

7

8 "Mr. O'Donnell: Mr. McGonigal raised this with me before.

9 I don't think Mr. Loughrey will be able to add very much,

10 but certainly I am not objecting to the opinion --

11

12 "Chairman: I don't think you should feel inhibited,

13 Mr. Loughrey.

14

15 "Mr. McGonigal: Sorry, in fairness to Mr. Loughrey,

16 My Lord, Mr. Chairman, I am not in the least bit trying to

17 infiltrate in relation to Mr. Nesbitt's opinion or question

18 it in any way. The document speaks for itself. But what I

19 am suggesting is that there are aspects of the document

20 which open lines of inquiry for the Tribunal, more so than

21 Mr. Loughrey, but they give a flavour, insofar as

22 Mr. Nesbitt was briefed, as to the concerns which were

23 happening in the Department at that time, and insofar as

24 that is relevant as a line of inquiry, it seems to me that

25 it should be brought to the Tribunal's attention in public

26 session. It is for no reason other than that.

27

28 "Chairman: Yes, I accept that Mr. McGonigal.

29

30 "Mr. McGonigal: I am not trying to have Mr. Nesbitt change

 

 

 

52

 

 

1 his seat for another seat or to leave us prematurely

2 either.

3

4 "Mr. Coughlan: I should perhaps just bring it to people's

5 attention. I have mentioned it on a number of occasions, I

6 think My Friend, Mr. Healy -- the Attorney General has

7 communicated directly with the Tribunal. It is a letter

8 from the Attorney General himself. It's a document which I

9 would suggest that the best way to handle it, sir, would

10 be, the first instance, that counsel involved for the

11 various interested parties before the Tribunal might have

12 sight of the particular information which the Attorney

13 General and the view the Attorney General has given to the

14 Tribunal.

15

16 "Chairman: Yes, and, if it arises, it is probably more

17 appropriate when Mr. Towey comes to give evidence. Very

18 good.

19

20 "Mr. McGonigal: Mr. Loughrey, the only bits that I want to

21 draw your attention to is the second paragraph of the

22 letter itself, where he explains aspects of what his

23 advices are concerned with, and he says: 'I am sending my

24 views on the complaint made to the Commission under

25 separate cover. However, I remain of the view that the

26 Minister should not drag his feet in issuing the licence.

27 If there was to be litigation, so be it, but delaying does

28 not achieve any end. Before issuing the licence, you

29 should make it clear to Persona's solicitors that he is not

30 holding his hand on the issue of the licence. A formal

 

 

 

53

 

 

1 draft letter has already been discussed with you. My

2 reasoning in this regard is that the Minister is committed

3 to grant the licence. He is now in between two competing

4 interests: One, Esat Digifone, they say they are entitled

5 to the licence, and the other, Persona, are indicating that

6 the licence should not issue. Delay in issuing the licence

7 would clearly damage Esat. If Persona wish to stop Esat

8 getting the licence, they should be required to take

9 appropriate legal action to restrain the issue. They will

10 then be required to give undertakings to the parties

11 affected, particularly Esat. This will concentrate their

12 minds, particularly in circumstances where the Commission

13 are likely to be making unsympathetic noises in relation to

14 their complaint.

15 Now, that encapsulates, Mr. Loughrey, I would suggest, the

16 concern in the Department in relation to the issues that

17 had arisen arising out of the Persona complaint.

18 Answer: Yes, Mr. McGonigal, I believe you are correct, but

19 just to state is, I believe I got the thrust of that advice

20 at the time, I don't believe that I actually saw

21 Mr. Nesbitt's letter or the accompanying advice at the

22 time, but I believe I was briefed on the thrust of the

23 advice at the time.

24 Question: The other bit I want to draw your attention to

25 is the advice itself. It is advices as opposed to an

26 opinion, I acknowledge that, and page 2, in particular, the

27 second paragraph there: 'If one analyses why the Minister

28 is concerned about the ownership of shares in the licencee,

29 the only legitimate concern he can have is that if there is

30 a change of ownership, a service that has to be provided

 

 

 

54

 

 

1 will in some way be compromised. I do not think that this

2 is tenable to suggest that the licencee has been awarded

3 the licence because of the parties who own the licencee;

4 rather, the licencee has been awarded the licence because

5 its plans and proposals were the most meritorious and

6 providing a funding plan which looked feasible. There is

7 no reason why any of these matters had to be compromised by

8 a change of ownership. However, I do accept that there is

9 a possibility that this might occur. It was also a real

10 issue in the mind of the public."

11

12 "In actual fact, I think that mirrors a lot of views that

13 you had yourself in relation to the licence and the

14 consortia?

15 Answer: Not quite, Mr. McGonigal. No, I -- I am afraid I

16 couldn't go along entirely with that paragraph, because, in

17 theory, it's possible to decouple the licence in the form

18 of the entity and of the so -- the business plan that the

19 entity had put forward. In practice it is not possible, I

20 think certainly not in my mind, to decouple ownership

21 entirely. Can I put it in a very practical way is, while I

22 was -- I think I made quite clear I was quite relaxed about

23 the ownership of the financial investors. I don't think

24 that that amounted to any -- made any serious impact on the

25 strategic or operational effect of rolling out competition

26 in this area. I would have been extraordinarily loath and

27 I wouldn't have found it acceptable that, if I may put it

28 this way, that the pioneering umph of Esat and the leading

29 edge in demonstrated capacity of Telenor would be assigned

30 elsewhere. It may well be that Esat Digifone, as an

 

 

 

55

 

 

1 entity, would adhere to the business plan, but if, for

2 instance, without being in any way derogatory, if, in fact,

3 is, Esat's 40 percent shareholding had been assigned, for

4 instance, to some traditional utility like France Telecom

5 or British Telecom, whose standing would not be in

6 question, I doubt if they would bring the same drive or

7 hunger as background promoters as Esat would have. So,

8 while I can agree, broadly speaking, with this paragraph,

9 and notably where it applies to financial or third-party

10 investors, I couldn't -- I think if I am reading

11 Mr. Nesbitt correctly, agree with the totality of the

12 paragraph.

13 Question: The next paragraph simply deals with the

14 exchanging of Article 8 which was, in fact, causing quite a

15 lot of difficulties.

16 Answer: Could you repeat that again, Mr. McGonigal?

17 Pardon?

18 Question: The next paragraph deals with a change in

19 Article 8 which related to ownership, I think?

20 Answer: Correct, yes.

21 Question: And that was causing significant difficulties in

22 relation to getting it right for different reasons?

23 Answer: Yes, it was."

24

25 It should be explained that whilst the letter and opinion

26 being privileged were not included within the public

27 sittings books circulated by the Tribunal in advance of the

28 commencement of its public sittings in December 2002, the

29 Tribunal had inadvertently included copies of those

30 documents with some advance documentation provided to

 

 

 

56

 

 

1 Mr. O'Brien's solicitors, and it was in those circumstances

2 that Mr. O'Brien's counsel was in a position to refer to

3 them in evidence. In fairness to Mr. O'Brien and to his

4 legal representatives, it must be acknowledged that even

5 though the letter and opinion had been excluded from the

6 public sittings books, they would not have known at that

7 time that the documents were subject to a subsisting claim

8 of legal professional privilege.

9

10 Counsel for Mr. Denis O'Brien again sought to introduce the

11 letter and opinion in the course of cross-examination of

12 Mr. Owen O'Connell of William Fry Solicitors, who had

13 represented Esat Digifone in the negotiations with the

14 Department which had commenced in November 1995 and which

15 concluded on the 16th May, 1996. The questions which

16 counsel for Mr. O'Brien put to Mr. O'Connell prompted an

17 exchange between counsel for Mr. O'Brien, counsel for the

18 Tribunal and the Sole Member of the Tribunal, and the

19 relevant transcript on day 247, which was the 4th November,

20 2003, records that questioning and those exchanges as

21 follows:

22

23 Question 82:

24 "Question: Now, the next document that I want to ask you

25 about is the last document, which is apparently an opinion

26 from counsel invited by the Attorney General to do one, and

27 I think you have that?

28 Answer: I have that, yes.

29 Question: And were you aware of this opinion?

30 Answer: I don't think I was aware of it at the time. I

 

 

 

57

 

 

1 became aware of it later.

2 Question: The bit that I want to draw your attention to is

3 on the second page.

4 Answer: Of the opinion or the covering letter?

5 Question: Yes, of the opinion.

6 Answer: Yes.

7 Question: And the following terms: 'If one analyses why

8 the Minister is concerned about the ownership of shares in

9 the licencee, the only legitimate concern he can have is if

10 there is a change of ownership. The service that has to be

11 provided will in some way'...

12

13 "Mr. Coughlan: As far as I am aware, this document has

14 never been opened by the Tribunal. I just want to be

15 careful about this now and how it is being presented here.

16 It would not be -- it may have been provided to people all

17 right, but it was for the Tribunal, in the first instance,

18 to consider whether it was appropriate to open the opinion

19 of counsel, an opinion furnished in the matter. I am just

20 unsure, and perhaps I'd like to discuss it with My Friend

21 before he proceeds with this particular question, just what

22 is -- what he seeks to elicit here. This hasn't been

23 brought to the attention of the Tribunal in this respect.

24

25 "Chairman: Well, it certainly hasn't been opened.

26

27 "Mr. Coughlan: Certainly not, certainly not.

28

29 "Mr. McGonigal: But this is a relevant document, Chairman.

30

 

 

 

58

 

 

1 "Mr. Coughlan: It's a matter perhaps that Mr. McGonigal

2 should discuss with me in the first instance. It is not

3 the practice of the Tribunal to open an opinion of counsel.

4

5 "Mr. McGonigal: It may not be, Mr. Chairman, and that's a

6 matter for Mr. Coughlan and his procedures.

7

8 "Mr. Coughlan: Precisely.

9

10 "Mr. McGonigal: This is a document which I understand may

11 be at book 44, document 203. It's a document which is

12 relevant to the issue of ownership and it is a document

13 which, therefore, should be debated in the Tribunal. As

14 to --

15

16 "Mr. Coughlan: Perhaps this is precisely the type of

17 dispute I wanted to avoid. The Tribunal sought the view of

18 the Attorney General himself on this particular matter, who

19 carried out various inquiries and furnished the Tribunal

20 with a response, which I read out at the Tribunal. This is

21 the stated view of the Attorney General on the matter.

22

23 "Mr. McGonigal: It might be the view of the Attorney

24 General, Mr. Chairman, but my view is this is a relevant

25 document to the issues which the Tribunal is considering,

26 particularly in relation to ownership, and it is important

27 that the document be brought to the attention of the

28 Tribunal in public, as is the appropriate way to deal with

29 it.

30

 

 

 

59

 

 

1 "What the Tribunal does, either as a matter of law or as a

2 matter of weight to be given to that document, is a

3 separate issue, but certainly there is absolutely no doubt

4 that this document is relevant to the issues which the

5 Tribunal is considering, and it would be wrong to exclude

6 it at this time.

7

8 "Chairman: I am certainly --

9

10 "Mr. Coughlan: The document has never been excluded. The

11 document has been furnished to the parties and to their

12 legal advisors in particular, and the position of the

13 Attorney General has been indicated to all of the parties.

14

15 "Mr. McGonigal: It's been excluded if it has been opened

16 to the public.

17

18 "Chairman: What I'll do is this, Mr. McGonigal: I accept

19 that if there is a material matter that merits from the

20 content of what may have been set out at this stage being

21 brought to the Tribunal's attention, it would certainly not

22 be my intention or wish to shut you out. I do have some

23 concern, in the first instance, about what obviously were

24 high-level confidential advices furnished, in the first

25 instance, by senior counsel to the Attorney General, being

26 opened, and I think I will defer, until after lunch, taking

27 a final view on this aspect. I'll permit, if you are

28 having a discussion with Mr. Coughlan over lunch, and, if

29 needs be, after lunch I'll rule on it. I accept if there

30 is a material matter -- and I have some familiarity with

 

 

 

60

 

 

1 the content of a document -- that wishes to be, that you

2 wish to uncover, that I should be extremely hesitant about

3 depriving you of that opportunity and I will have regard to

4 that in my ruling. But, just now, to have the entire of

5 the document opened when perhaps there has been no contact

6 made with the Attorney's successor, is something that I

7 would be very hesitant about.

8

9 "Mr. McGonigal: No, I understand what you are saying,

10 Mr. Chairman, and the paragraph that I want to draw to your

11 attention is on page 2. It is a paragraph that begins with

12 "if" and ends with "public" and I have no difficulty in the

13 Tribunal taking that paragraph -- if I am given an

14 assurance that the paragraph is being given consideration

15 as if it had been introduced as evidence, I have no

16 difficulty with that. But I would have difficulty if that

17 paragraph is not considered as part of the evidence,

18 because it is material and I will quote it on that basis.

19

20 "Chairman: I certainly have already acquainted myself with

21 that paragraph, Mr. McGonigal. I won't neglect it. I will

22 hold over a final ruling as to whether or not it

23 specifically goes in on the record because I am concerned

24 of the nature of the document in that context.

25

26 "Mr. McGonigal: If I understand that correctly, you are

27 going to have regard to it?

28 "Chairman: I will.

29

30 "Mr. McGonigal: Well, that solves my problem, I think,

 

 

 

61

 

 

1 then."

2

3 It is important to correct any misunderstanding that might

4 arise from references made by counsel in the course of that

5 extract. Neither senior counsel's letter nor his opinion

6 of 9th May, 1996, were ever included in any public-sittings

7 books circulated by the Tribunal, nor were those documents

8 made available to affected persons. No affected person,

9 other than Mr. Denis O'Brien, received copies of those

10 documents which, as already alluded to, were included in

11 his case inadvertently in advance documentation made

12 available to his solicitors.

13

14 It was following these exchanges that IIU Limited and

15 Mr. Dermot Desmond sought access to the entire of the

16 opinion and covering letter, as they wished to ascertain

17 for themselves what advice had been given regarding the

18 ownership of shares -- regarding their ownership of shares

19 in Esat Digifone Limited. The Tribunal had considerable

20 sympathy with their position and endeavoured to ascertain

21 whether the State, having regard to the fact that extracts

22 of and passages from those documents had already been

23 opened by Mr. O'Brien's counsel expressly without objection

24 by counsel for the State, would be agreeable to permitting

25 some limited form of access to affected persons. Whilst

26 the State was agreeable to the Tribunal circulating copies

27 of those extracts and passages which had been opened by

28 Mr. O'Brien's counsel at public sittings, it was not

29 agreeable to any form of further disclosure, even on a

30 confidential footing. The Tribunal was so informed by

 

 

 

62

 

 

1 letter dated the 6th December, 2005.

2

3 "re: Tribunal of Inquiry" -- it's from the Chief State

4 Solicitor's Office:

5

6 "Dear Mr. Brady,

7

8 "I refer to previous correspondence and in particular to

9 your letter of 19th September, 2005, wherein you requested

10 "Whether the State would be prepared to agree to restricted

11 disclosure of the opinion to IIU Limited, Mr. Dermot

12 Desmond, Mr. Denis O'Brien, Telenor and the Public

13 Interest, in the context of sittings of the Tribunal from

14 which, apart from those entities, the public would be

15 excluded under Section 2(A) of the 1921 Act."

16

17 "I note that the request specifically relates to an opinion

18 of Richard Nesbitt dated May 1996.

19 My client has considered the matter and is not prepared to

20 waive privilege in respect of the opinion. You will recall

21 that this is in line with the position adopted by my client

22 under cover of my letter dated 3rd October, 2003, to the

23 Tribunal. I also refer to my letter dated 4th March, 2002,

24 and to the terms contained therein which my client will

25 continue to rely upon."

26

27 IIU Limited and Mr. Desmond, as was their entitlement,

28 challenged the State's claim to legal professional

29 privilege over the letter and opinion on the grounds that

30 the disclosure made by counsel for Mr. O'Brien expressly,

 

 

 

63

 

 

1 without objection by counsel for the State, constituted a

2 waiver of privilege by the State. This was disputed by the

3 State, which contended that the disclosure which had

4 occurred at public sittings did not amount to or constitute

5 a waiver of privilege on its behalf.

6

7 In order to protect the interests of all persons concerned,

8 you, sir, instituted a fair procedure whereby you invited

9 IIU (Mr. Desmond) and the Department to furnish the

10 Tribunal with written submissions addressed to that issue.

11 Initial written submissions were received from IIU

12 (Mr. Desmond) on the 2nd March, 2006, and from the State on

13 the 12th June, 2006. Copies of the submissions of each of

14 those parties were, in turn, served on the other and on all

15 other affected persons, including the Public Interest, and

16 all were extended the facility of responding to them.

17 Submissions in response were received on behalf of

18 Mr. Denis O'Brien on the 18th January, 2008, and copies of

19 those responding submissions, having been provided to IIU

20 (Mr. Desmond), the Department and the Public Interest,

21 supplemental submissions were received from the Department

22 on the 1st February, 2008, and from the Attorney General,

23 on behalf of the Public Interest, on the 1st February,

24 2008.

25

26 Mr. O'Brien, having been served with the Public Interest

27 submissions, provided final submissions on the 20th

28 February, 2008. The Sole Member, having fully considered

29 all of the submissions which he had received, then ruled on

30 the 25th February, 2008, that the disclosure to which

 

 

 

64

 

 

1 reference had been made could not be visited on the State

2 and did not, in law, constitute a waiver of privilege by

3 the State.

4

5 There the matter rested until 13th March, 2009, when the

6 Tribunal, having notified the State of its provisional

7 finding on 18th November, 2008, received a letter from the

8 Chief State Solicitor in the following terms:

9 It's addressed to Mr. Stuart Brady.

10

11 "re Tribunals of Inquiry.

12 My client: Department of Communications, Energy and

13 Natural Resources.

14 My Client: Department of Finance.

15

16 "Dear Mr. Brady,

17

18 "After careful consideration, my clients have decided to

19 waive the legal professional privilege attaching to the

20 opinion of Richard Law Nesbitt, SC, of 9 May, 1996. This

21 was done pursuant to decision of Cabinet of 10th March,

22 2009.

23

24 "My clients take this course, at this stage, in the unique

25 and exceptional circumstances of (a) the adverse

26 provisional findings against them; (b) the fact that

27 passages of the opinion have been put up on screen during

28 the public hearings, are recorded in the transcripts of

29 evidence, and have been referred to extensively by counsel

30 and witnesses during the public sessions; and (c), that, in

 

 

 

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1 the light of provisional findings, it is clear that

2 assertion of the privilege has led to a position

3 disadvantageous to the Department.

4

5 "My clients believe that the opinion, in fact, deals with

6 the issue of identity of the consortium both pre- and

7 post-licence. My clients relied at the time, inter alia,

8 upon the opinion and surrounding correspondence and

9 consultations to conclude that there was no legal

10 impediment preventing the grant of the licence to the

11 consortium as constituted as 40% held by Telenor, 40% by

12 Esat and 20% by IIU. My clients note that Richard Nesbitt,

13 SC, is prepared to give evidence to prove the opinion as to

14 the circumstances in which he gave it.

15

16 "My clients are willing that the Tribunal discloses the

17 opinion to those parties who have a direct interest in its

18 contents. Because of the exceptional circumstances giving

19 rise to the waiver of privilege over the opinion, my

20 clients exhort the Tribunal to disclose the opinion only

21 insofar as is necessary to address the particular issue at

22 stake.

23

24 "Please inform me how you wish to proceed to circulate this

25 opinion so that it is put formally in evidence."

26

27 CHAIRMAN: Well, Ms. O'Brien, you are coming to the last

28 portion of your opening which primarily deals with a

29 summary of the intended evidence of Mr. Brennan, Mr. Towey

30 and Mr. Loughrey. I think, in the circumstances of the

 

 

 

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1 relatively long opening that you have given, it is probably

2 best deferred until five past two.

3

4 THE TRIBUNAL ADJOURNED FOR LUNCH.

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1 THE TRIBUNAL RESUMED AFTER LUNCH AS FOLLOWS:

2

3 MS. O'BRIEN: Sir, before proceeding, just to complete the

4 final statement. I just want to refer briefly to the

5 submissions made on behalf of the Department in connection

6 with the request made by IIU and Mr. Desmond that you

7 should treat the privilege attaching to the opinion and

8 letter of the 9th May as having been waived by reason of

9 references made to it in the course of the

10 cross-examination of Mr. Loughrey, expressly without

11 objection by counsel on behalf of the Department. I am not

12 going to refer to or quote from any of those submissions,

13 sir, but what I do want to say in connection with them is

14 that, as regards both sets of submissions furnished on

15 behalf of the Department, it was made abundantly clear that

16 the Department was resisting the contention that there had

17 been a waiver of privilege by reason of those matters and

18 it was further made abundantly clear that the Department

19 was continuing to invoke and maintain the full extent of

20 the legal professional privilege attaching to the

21 documentation, and as you know, sir, those submissions and

22 the other submissions, following consideration by you,

23 resulted in the ruling which you delivered on the 25th

24 February, 2008.

25

26 Senior counsel's letter and opinion of the 9th May, 1996,

27 is material to a relatively minor aspect of the lengthy

28 inquiries pursued by the Tribunal in public sittings,

29 principally in 2003 and early 2004. Those inquiries

30 spanned the entire of the second GSM process from the early

 

 

 

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1 development in 1993 of the policy to introduce competition

2 in the mobile telecommunications market to the comparative

3 evaluation process which commenced on the 2nd March, 1995,

4 and concluded on the 25th October, 1995, to the

5 post-announcement negotiations between the Department and

6 Esat Digifone. It is relevant only to the Tribunal's

7 inquiries into the steps taken by the Department to

8 investigate the information provided by Mr. Owen O'Connell

9 of William Fry on the 16th April, to Ms. Regina Finn, and

10 on the 17th April, 1996, in his letter also addressed to

11 Ms. Finn regarding the ownership of the proposed licencee

12 company, Esat Digifone Limited. Notwithstanding the

13 evidence which the Tribunal has already heard, the Tribunal

14 now wishes to hear further evidence from Mr. Loughrey,

15 Mr. Brennan and Mr. Towey as to their understanding as of

16 May 1996 of the legal advice which they had received on

17 this matter.

18

19 The Tribunal has been assisted by Mr. Towey, Mr. Brennan

20 and Mr. Loughrey by the provision of Memoranda of Intended

21 Evidence. In his memorandum, Mr. Towey has informed the

22 Tribunal that his recollection of the specifics of the

23 receipt of the advice or the consideration given to it is

24 somewhat limited. However, he does recall the following.

25

26 First, he recalls being of the view that senior counsel did

27 not believe that any wish which the Department may have had

28 to tightly control ownership changes could be sustained.

29 He cannot say whether this view arose from the opinion of

30 the 9th May or earlier or later meetings. He believes

 

 

 

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1 senior counsel also recalls meetings where this view was

2 put by him.

3

4 Secondly, he also recalls a discussion with Mr. Martin

5 Brennan in which Mr. Brennan expressed the view that senior

6 counsel's opinion confirmed that there was no legal reason

7 to have concerns about the restructuring of ownership being

8 undertaken in Esat Digifone.

9

10 Mr. Towey, in his memorandum, has further confirmed that he

11 had no questions in his mind as to what the position was

12 regarding the ownership conformity issue after considering

13 the opinion of 9th May, 1996. He was clear that even if

14 there had been a change in the makeup of the ownership of

15 the consortium between the entry into the competition and

16 the licensing stage, that had no impact on the entitlement

17 of the consortium to be awarded the licence and could not

18 prevent the Department from awarding the licence to the

19 consortium in question.

20

21 Mr. Brennan has informed the Tribunal in his Memorandum of

22 Intended Evidence that he does not accept that the opinion

23 on 9th May, 1996, falls to be considered in isolation from

24 the context which led to its creation, including, first,

25 that Mr. Towey undoubtedly asked the appropriate question

26 in his letter of 24th December, 1996; namely, I would also

27 like to reiterate our requirement for a legal opinion on

28 the restructuring of the ownership of Esat Digifone, in

29 particular the question of whether recent correspondence

30 suggests any change in the identity of the beneficial

 

 

 

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1 owners of the company which could be considered

2 incompatible with the ownership proposals outlined in the

3 company's application must be addressed.

4

5 Secondly, that the Attorney General's Office was the

6 conduit for seeking the opinion and returning it to the

7 Department.

8

9 Thirdly, that there were several consultations with counsel

10 during the relevant period.

11

12 And fourthly, that counsel was also advising on matters

13 relating to the licence itself and the statutory

14 regulations.

15

16 Mr. Brennan has informed the Tribunal that the net position

17 is, that the question whether the ownership then on the

18 table had any negative implications for the award of the

19 licence was raised. The opinion was furnished and then

20 discussed with senior counsel and the representatives of

21 the Attorney General's Office. Mr. Brennan formed the

22 clear view that this issue, namely the difference, if any,

23 between the ownership at the time of the competition and

24 the ownership at the time of the licensing presented no

25 obstacle to the issue of the licence. He believes that the

26 other people involved in this analysis and discussion were

27 of the same view. He had no question in his mind after

28 discussing the opinion with senior counsel and Fintan

29 Towey. He was clear that even if there had been a change

30 in the makeup of the ownership of the consortium between

 

 

 

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1 the entry into the competition and the licensing stage,

2 that had no impact on the entitlement of the consortium to

3 be awarded the licence and could not prevent the Department

4 from awarding the licence to the consortium in question.

5

6 Mr. Loughrey has informed the Tribunal in his Memorandum of

7 Intended Evidence that, in giving the evidence to the

8 Tribunal on day 188, he was less than fully informed, and

9 that it should be clear from his responses that they were,

10 at best, a limited reaction on his feet. Now that the

11 State has granted a waiver of privilege, and, having had an

12 opportunity to analyse the professional input of senior

13 counsel, it will be his evidence that senior counsel's

14 letter of the 9th May, 1996, was, in effect, a clear

15 approval of early signature on the basis of the then

16 consortium of 40% Telenor, 40% Esat and 20% IIU. Senior

17 counsel's letters and advices were forwarded to the

18 Department by the Office of the Attorney General with a

19 covering letter dated 13th May, 1996, and Mr. Loughrey has

20 informed the Tribunal that this letter, in referring to

21 senior counsel's advices, indicated no apparent

22 reservation, and, thus, clearly gave the institutional

23 approval of that office to those advices. Had Mr. Loughrey

24 had sight of this letter, he would have taken from senior

25 counsel's response a clear approval of the consortia makeup

26 before licence signature.

27

28 Mr. Loughrey has further informed the Tribunal that he

29 clearly recognises that the advice dated 9th May, 1996, was

30 addressing, for the most part, the Article 8 wording.

 

 

 

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1 However, he is firmly of the view that the first complete

2 paragraph on page 2 of the advice provides retrospective

3 cover for the general thrust of his own view of the

4 essential elements of the winning bid. Mr. Loughrey would

5 have regarded this as a clear green light on the makeup of

6 the consortium in general, and the participation of IIU in

7 particular. He also believes that he would have taken

8 sufficient comfort from the collateral cover on the

9 essential call of the winning bid and the central idea that

10 the Department retained a certain discretion on ownership

11 so long as the delivery of services would not be

12 compromised.

13

14 In the course of these short sittings, sir, the Tribunal

15 will pursue inquiries with all three of the witnesses in

16 relation to those matters.

17

18 And that, sir, completes the Opening Statement.

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