THE TRIBUNAL RESUMED AS FOLLOWS ON THURSDAY, 14TH JUNE 2001 AT 2.10PM:
MR. HEALY: You will recall, Sir, that you mentioned, I
think yesterday, that the Tribunal would make a further
Opening Statement today in connection with some of the
material which has come to hand over the past few days,
and which may to some extent alter or at least expand
the focus of the Tribunal's work over the next
remaining part of these sittings.
You will recall that the last Opening Statement was
mainly in two parts. The first part dealt with the
Terms of Reference which concerned Mr. Charles Haughey.
The second part concerned Mr. Michael Lowry. This
additional Opening Statement is effectively
supplemental to the second part of the last Opening
Statement which concerned Mr. Michael Lowry almost
In that earlier Opening Statement the Tribunal focused
on four items. Firstly, the $50,000 US Telenor/ESAT
payment. Secondly, the £147,000 payment into an Isle
of Man account in the name of Michael Lowry, which was
described in that Opening Statement as the Carysfort
Avenue/David Austin payment. Thirdly, the Mansfield
transaction. And fourthly, the Cheadle transaction.
Each of those two transactions were property
In that Opening Statement, Mr. Coughlan set out the
information then available in something approximating
to historical chronological order concerning those four
matters, that is to say, concerning the circumstances
in which payments were made in each of those four
cases. The Tribunal indicated that it was its
intention to examine both the circumstances surrounding
each of these items individually and the various
overlapping relationships between the persons who
appear to have been involved in them, namely,
Mr. Lowry, Mr. O'Brien, the late Mr. Austin, and
Mr. Aidan Phelan who then appeared to play a subsidiary
role in relation to some, but a more central role in
relation to others, of those matters.
Since that Opening Statement was made, a significant
amount of further material has become available to the
Tribunal. There were two things which prompted the
Tribunal to seek access to this additional material.
Firstly, there was the Tribunal's continuing
examination of the Telenor/ESAT $50,000 payment. This
payment was, as it now seems, the subject of much
discussion at the time of the Initial Public Offering
of shares in ESAT Telecom, a company which controlled
nearly 50% of ESAT Digifone. This Initial Public
Offering was made in November of 1997. In the
preparation of the Prospectus, a significant degree of
attention was paid to the circumstances surrounding the
$50,000 payment. There were extensive discussions
between the various individuals and different entities
involved in the IPO concerning this payment, and those
discussions generated an amount of paperwork. The
Tribunal has been seeking access to this paperwork and
has now managed to overcome a number of legal
difficulties, with the result that some, though as yet
not all, of this material is now available. As of
this moment, the Tribunal believes that it has probably
accumulated sufficient material to enable it to provide
a reasonably accurate outline picture of what occurred.
I hasten to add that these difficulties arose due to a
number of technical points relied on by some of the
entities holding these documents. It is important to
bear in mind that these technical arguments would, if
accepted, be perfectly valid and the Tribunal is not
anxious to become embroiled in technical arguments
where privilege or confidentiality attaches to
documents where it believes it can otherwise gain
access to the relevant material. At the same time, I
think it's important to bear in mind that in the case
of both the Fine Gael Party and Mr. Denis O'Brien, the
Tribunal has now been afforded access to all material
of any kind, whether covered by any claim to
confidentiality, privilege or otherwise.
In addition to the work the Tribunal has been doing in
seeking to gain access to this material, the Tribunal
acquired further information concerning another matter
which exercised the minds of the various entities
involved in the IPO in 1997. This additional matter
concerned events which occurred in 1996. These
events, effectively one event, were brought to the
attention of the Tribunal by Mr. Barry Maloney, the
former joint Chief Executive Officer of ESAT Digifone,
and latterly the sole Chief Executive Officer of ESAT
Digifone. I think Mr. Maloney has now moved on to a
non-executive position with the company. Mr. Maloney
was recruited to a senior executive position with ESAT
Digifone some time after the announcement of the
decision to grant the second GSM licence to that
company. It appears that he had done some limited
work in connection with the competition, but did not
become really active with the company until around
1996. Mr. Maloney informed the Tribunal that sometime
in or around September or October of 1996 he had a
discussion with Mr. Denis O'Brien concerning payments
which, as Chief Executive Officer, he was obliged to
sanction in connection with the work done in the
competition for the second GSM licence. These
payments were mainly in the nature of what has been
called or what have been called success payments, that
is payments due to consultants and others engaged by
ESAT Digifone solely for the purpose of promoting its
competition bid, and which payments were contingent or
presumably partly contingent on the success of that
Mr. Maloney wished to clarify the obligations of the
company with regard to those payments and had
complained to Mr. O'Brien about the lack of invoices to
vouch the claims of the various consultants or others
to whom success payments appeared to be due.
Mr. Denis O'Brien was anxious that Mr. Maloney should
sanction the payments so to ensure the people entitled
to them were paid and to avoid delay in meeting these
obligations. I think the way Mr. Maloney understood
it, Mr. O'Brien wanted Mr. Maloney to get on with
making the payments.
In response to Mr. Maloney's complaints concerning the
lack of paperwork to enable him to process these
payments, Mr. O'Brien remarked that he himself had had
to make two payments of £100,000, one of which was to
Michael Lowry. Mr. Maloney has informed the Tribunal
that this discussion took place in the offices of ESAT
Digifone. Mr. Maloney's response to these remarks of
Mr. O'Brien was to say that he didn't want to know any
more about them, that they concerned a period when he
wasn't an executive of the company, and as far as he
was concerned, that was the end of the discussion at
that time about them.
This discussion, together with further related
discussions, became the focus of attention at the time
of the Initial Public Offering and the preparation of
the Prospectus in relation to the Offering in 1997. In
fact, it was only after the matter of these two
payments was raised in the context of the preparation
for the IPO, that the further matter of the US $50,000
ESAT/Telenor payment arose. Having acquired this
additional information from Mr. Maloney, the Tribunal
recognised that the requirement to examine the
documentation generated in the course of various
discussions concerning the Prospectus in 1997 had
become more urgent. It was for this reason that, in
the course of examination of Mr. Arve Johansen to date,
and the examination to date of Mr. O'Brien, that
certain matters could not be scrutinised in detail or
could not be scrutinised as completely as it will now
be necessary to examine them.
It is clear from the documentation which has now been
made available that the Tribunal will have to make a
much more wide-ranging inquiry into the events
surrounding the preparation with the Initial Public
Offering in November of 1997.
To the four items warranting inquiry and which were
mentioned at the Tribunal's last Opening Statement will
now have to be added a fifth item as well, namely,
whether there was in fact a payment by Mr. O'Brien to
Mr. Lowry at some time prior to September or October of
1996. In addition, in the examination of the
overlapping relationships between the various
individuals in connection with the four items mentioned
at the Tribunal's last Opening Statement, this further
matter will assume considerable significance.
From the information which has now been made available
to the Tribunal, it would appear that there are a
number of different versions of what transpired between
Mr. Maloney and Mr. O'Brien in 1996. There are also a
number of different versions as to what transpired in
the course of the IPO discussions in 1997 which
concerned that 1996 conversation and other related
conversations between Mr. O'Brien and Mr. Maloney.
Most of the documentary material concerning the matters
to which I now intend to refer has been made available
to the Tribunal by ESAT Digifone, ESAT Telecom, by
Mr. Barry Maloney, and by Mr. Denis O'Brien. The
Tribunal is in the process of endeavouring to obtain
further documentation from Telenor and IIU, and it
anticipates that this further documentation will be to
hand within the next few days.
I think at this point it might be useful if I were to
say a word or two about the relationship between ESAT
Digifone and the other ESAT affiliates or ESAT
The second GSM licence was awarded to ESAT Digifone
Limited. That was the vehicle used by the successful
consortium for the award of the licence. As of the
date of the award of the licence, that is to say the
16th May, 1996, and not the date of the announcement of
the winner of the competition, the shares in ESAT
Digifone appear to have been held as to 40% by ESAT
Telecom, which was Mr. Denis O'Brien's corporate
vehicle; as to 40% by Telenor; and as to 20% by IIU
Nominees Limited. It would appear that the shares in
IIU Nominees were beneficially held for Mr. Dermot
As of November of 1997, that is at the time of the
ESAT Telecom Initial Public Offering, ESAT Telecom and
Telenor had each acquired a further 5% interest from
IIU Nominees, so that at that time the shares in ESAT
Digifone were held as to 45% by ESAT Telecom, if you
like, Mr. O'Brien's vehicle; as to 45% by Telenor; and
as to 10% by IIU Nominees Limited.
Subsequent to the ESAT Telecom IPO, both ESAT Telecom
and Telenor again increased their respective
shareholdings by each acquiring a further 4.5% interest
from IIU Nominees, so that the shareholding in ESAT
Digifone was by then held as to 49.5% by ESAT Telecom;
49.5% by Telenor; and 1% by IIU Nominees Limited.
As at this time, the shares in ESAT Telecom and in ESAT
Digifone have been acquired by British Telecom, so that
BT, as it is known, now owns both ESAT Telecom and ESAT
Digifone in their entirety.
From the information recently provided to the Tribunal
and from the documentation to which I have just
referred, it would appear that in late 1997 there were
a number of discussions between Mr. Barry Maloney and
Mr. O'Brien concerning the remarks which had been made
by Mr. O'Brien earlier, that is to say in 1996.
Mr. O'Brien, as I will indicate, denies that he ever
paid £100,000 to Michael Lowry, or a second £100,000
success fee to another party. Mr. Michael Lowry,
denies that he ever received £100,000 from Mr. Denis
O'Brien. However, Mr. O'Brien has not denied either
to Mr. Barry Maloney or to any other of the individuals
involved in the IPO that he made these remarks,
although he does deny that he ever stated that he ever
made a payment to Michael Lowry. In other words, he
does not deny that he made a reference to two payments
of £100,000 in connection with the granting of the
At the time of the IPO, the questions which were
exercising the mind of Mr. Maloney and the minds of
a number of other individuals were as follows. This is
a summary of a much wider canvass in which these
questions were being considered: whether these
statements of Mr. O'Brien had in fact been made.
Secondly, whether, if made, these statements were true,
whether, in other words, Mr. O'Brien had in fact made
two payments of £100,000 to two different individuals,
one of whom was Mr. Michael Lowry. If true, obviously
there were huge implications for the IPO, in particular
if there were a connection or an apparent connection
between a payment of £100,000 to Mr. Michael Lowry and
the granting of the second GSM licence. It was also a
question whether the remarks were true or not, and
whether or not the truth or falsity of the remarks
could be established in advance of the issue of the
Prospectus. In addition, it was a question as to what
extent these remarks ought to be disclosed, either in
the Prospectus or to other interested parties involved
in the IPO.
There was also, of course, the question around this
time, and as we know, for some time afterwards, whether
these statements, true or not, or whether the truth or
not of them could be established, should be disclosed
to the Moriarty Tribunal which had been set up in the
course of the preparation of the IPO.
The vast bulk of the material to which I have now
referred, or to which I will now refer, was provided by
ESAT Digifone and came from the custody of Messrs.
William Fry solicitors. The documentation was
generated mainly by Mr. Owen O'Connell and Mr. Gerard
Halpenny, then both partners in William Fry solicitors
in connection with the dealings between the various
interested parties in the IPO in 1997. Mr. O'Connell,
who is now the managing partner of William Fry
solicitors, has provided the Tribunal with an account
of the circumstances in which this documentation came
into being. He has informed the Tribunal that he
acted as solicitor to ESAT Telecom at or around the
time of and for some years prior to the time of the
IPO. As Mr. O'Connell has informed the Tribunal, as
is now fairly well-known, Digifone had won the
competition for the granting of the licence on the 25th
October, 1995, and thereafter embarked on the process
of rolling out or creating the mobile phone licence
network. The launching of this mobile phone network
occurred in March of 1997. Sometime after the launch,
Mr. O'Connell was informed by Mr. O'Brien of Mr.
O'Brien's intention of proceeding with a public
offering of shares in ESAT Telecom, and he set the
Autumn of 1997 as the time at which this would occur.
ESAT Telecom's shareholding in ESAT Digifone formed a
large portion of ESAT Telecom's overall value and was
probably the main attraction for investors in ESAT
Telecom at that time. Mr. O'Connell has informed the
Tribunal that for that reason some degree of
cooperation from ESAT Digifone was required for the
ESAT Telecom flotation.
The first document I want to refer to of the documents
provided by Mr. O'Connell is a memorandum of a meeting
on the 22nd October, 1997, at the offices of William
Fry solicitors. Mr. Denis O'Brien and Mr. Aidan
Phelan, an associate of Mr. O'Brien's, called to see
Mr. O'Connell, and they told him that Mr. Barry Maloney
had asserted that a statement had been made to him by
Denis O'Brien to the effect that he, Denis O'Brien, had
made payments to two individuals, one of whom was
Mr. Michael Lowry, in connection with the ESAT Digifone
bid for the second GSM licence. Mr. O'Brien insisted,
in the course of the meeting, that there was nothing in
the allegation; as he put it, it was destructive and
that spreading it would be damaging to all, especially
the company, that it was akin to starting a fire in a
cinema, and that it was neither responsible nor
necessary to inform the board of ESAT Telecom. In
particular, he stated, according to
Mr. O'Connell's note, that he had made no payment and
that he could refute any assertion of Barry Maloney to
that effect in the box, meaning, presumably, in the
witness-box; that he could, in other words, swear to
Now, the Tribunal has been provided with photocopies of
these memoranda, but has also very helpfully been
provided with typewritten transcriptions, if you like,
of these by Messrs. William Fry solicitors. It won't
be necessary to go into the detail of all of these
documents at this stage, but as this is the one in
which it would appear this matter was first brought to
Mr. O'Connell's attention, I should perhaps go through
It's a note to file dated 22nd October of 1997, the
client is ESAT. And the matter is IPO. Underneath
that you have the initials "DOB," Denis O'Brien, "A
Phelan," meaning that Mr. O'Brien and Mr. Phelan were
at a meeting in Mr. O'Connell's office. Next note is
"Discussion re Barry Maloney allegations. ML"
-- Michael Lowry -- "per run payment." The reference
to the word "run" is a reference, as will appear later
on, to Mr. O'Brien's account of where and how the
discussions he had with Mr. Maloney arose.
Mr. O'Brien says that they arose not in the course of a
discussion in Mr. Maloney's office, but rather while
they were having a run in the Wicklow mountains. "ML"
refers to Michael Lowry. The note goes on: "Digifone
board discussions and pending meeting. Likelihood of
Barry Maloney being called and repeating allegation
(50/50: 90/10)" in other words, this was an assessment
of the likelihood of him being called to discuss those
allegations and obviously of his repeating them.
Next note is "Possible consequences discussed," and
then, "Denis O'Brien to refute etc." The next portion
of the note has been deleted, I hasten to add not by
Mr. O'Connell on behalf of Mr. O'Brien, but rather by
ESAT Digifone, who technically have the dominion over
these documents at this time. Messrs. McCann
Fitzgerald, acting for ESAT Digifone, have directed
that this portion of the document be obscured on the
grounds that it contains information protected by legal
Next there is the initials "DOB," which is presumably a
reference to Mr. O'Connell's note of what Mr. O'Brien
was saying. "Not relevant." "Not" underlined.
"Nothing in allegation. No payment to Michael Lowry.
Allegation very destructive. Spreading it damaging to
all, especially company. Starting fire in cinema.
Not responsible to inform board, nor necessary. No
board meeting with ESAT Telecom imminent. Calling one
would create crisis air. "Registration statement not
misleading. Denis O'Brien can refute Barry Maloney in
box. No payment made."
Next we have a privileged deletion again. Next a
statement apparently attributed to Denis O'Brien.
"No need for concern, assurance nothing in it."
Signed at the bottom by Mr. Owen O'Connell.
Now, that meeting took place on the 22nd October of
1997. From other information made available to the
Tribunal by ESAT Digifone, and in particular by
Mr. Barry Maloney, the Tribunal has been provided with
an amount of documentary material relating to the
period from in or about the 8th October, 1997, onwards,
but in particular material relating to the period prior
to the meeting between Mr. O'Brien, Mr. Phelan, and
Mr. O'Brien's adviser, Mr. O'Connell. From these
documents provided by Mr. Barry Maloney, it would
appear that Mr. Maloney had become concerned about the
statements made by Mr. Denis O'Brien, and about the
question as to whether they were true or false or
otherwise needed to be resolved.
Over a period of time in early to mid-October,
Mr. Maloney was concerned that he might have
obligations to disclose this conversation he had had
with Mr. O'Brien in the context of the IPO, and that in
any case he had obligations to disclose it to his
directors and, perhaps, wider obligations of
disclosure. He was also concerned that he might have,
or that the company of which he was Chief Executive
Officer, ESAT Digifone, might have a liability in the
context of the IPO if the statements were not disclosed
or if representations were made in the course of the
IPO to which these statements might be relevant.
He had a number of meetings with Mr. Denis O'Brien with
a view to seeking to persuade Mr. O'Brien to postpone
the IPO. He has informed the Tribunal that in or
around the 8th October, 1997, he had a meeting with
Mr. O'Brien in Mr. O'Brien's office in the Malt House,
and also, I think, in a street near the Malt House or
at the side of the building, in which he pleaded with
Mr. O'Brien to postpone the IPO until after the
Moriarty Tribunal. He made a similar request on the
13th October, when they discussed the matter both in
Mr. Maloney's office and over coffee in a nearby public
house. He was unsuccessful in seeking to persuade
Mr. O'Brien to postpone the IPO in both those meetings,
and obviously, as we know, was unsuccessful in all his
other efforts to persuade him to postpone it. But in
any case, it would appear from the information provided
by Mr. Maloney, that on the same day that he had a
discussion with Mr. O'Brien over coffee in a public
house near his office on the 13th October, he had a
further meeting attended by himself, Mr. O'Brien, and
Mr. Michael Walsh of IIU, that is to say the company
representing Mr. Dermot Desmond's shareholding in ESAT
Digifone. The purpose of that meeting was to bring
these matters to the attention of not only Mr. O'Brien,
but also now another shareholder in IIU, with a view to
seeing whether Mr. Maloney's concerns could be allayed.
It would appear also that by this time Mr. Maloney may
have brought the matter to the attention of ESAT
Digifone's legal advisers and that he was in receipt of
advice from Messrs. McCann Fitzgerald, from Mr. Fergus
Armstrong, solicitor of that firm, concerning the
In any case, notwithstanding the intervention, if I can
put it that way, of Mr. Michael Walsh of IIU,
Mr. Maloney's concerns were not allayed, and what is
more, he failed to persuade Mr. O'Brien to postpone the
IPO. He had a further meeting with Mr. O'Brien on the
14th October, in which he again failed in his attempt
to convince Mr. O'Brien to postpone the IPO. It would
seem that in addition to Mr. Michael Walsh, Mr. Dermot
Desmond also became involved in the matter at this
time, and in the course of a telephone conversation
between Mr. Dermot Desmond and Mr. Maloney on the 14th
October, 1997, Mr. Maloney informed Mr. Desmond of what
had transpired between himself and Mr. O'Brien.
Mr. Desmond informed Mr. Maloney that as far as he was
concerned, they, meaning ESAT Digifone, didn't know
that anything had been done by Denis O'Brien, or that
anything Denis O'Brien may have done had anything to do
with ESAT Digifone and that it could have had to do
with ESAT Telecom business. He directed Mr. Maloney
that it was his job to make sure that ESAT Digifone was
fully protected, that is to say, fully protected in the
context of any statements made in the IPO
Around this time, and for sometime afterwards,
Mr. Maloney was endeavouring to promote the drafting or
crafting of a disclaimer to be inserted in the
Prospectus in such a way as to protect ESAT Digifone,
its employees, and directors from any liability which
might ultimately follow in the event of the statements
made by Mr. O'Brien proving to be true, or in the event
of there being any liability for failing to disclose
those statements, whether true or false, or in the
event of there being any liability for failing to take
any steps in relation to establishing the truth or
falsity of those statements.
There was a lot of, if I can put it this way, to-ing
and fro-ing between Mr. O'Brien and Mr. Maloney, all,
it would appear, to no avail, for as Mr. O'Connell's
file shows, by the time that Mr. O'Brien and Mr. Phelan
went to discuss the matter in William Fry solicitors,
it had become clear that Mr. Maloney was still anxious
to discharge what he believed to be his obligation to
disclose these matters to the other directors of ESAT
Digifone and to its other shareholder, that is to say,
to the directors representing Telenor and to Telenor
itself as the other shareholder. A question which was
arising at that stage and which was no doubt exercising
the minds of those directors of ESAT Telecom who were
aware of this, was as to the extent to which the other
directors of ESAT Telecom had a right to be fully
informed of these matters.
It would appear that by the 30th October of 1997, the
issue, together with other questions concerning the
$50,000 payment to Fine Gael, had become issues for
ESAT Telecom and for its directors. In other words,
these two matters had become issues for the company
which was making the public offering.
On the 30th October of 1997, Mr. John Callaghan and
Mr. Leslie Buckley, both directors of ESAT Telecom, and
once again Mr. Aidan Phelan, called to see
Mr. O'Connell concerning Mr. Maloney's statements
regarding the remarks made by Mr. O'Brien.
Now, once again, we have Mr. O'Connell's note of that
meeting and his very helpful transcription. The
memorandum is headed "A note or a memo to file from
Mr. O'Connell," client is ESAT, and the matter is the
IPO, and it's dated 30th October 1997. The attendance
is "JC," meaning Mr. John Callaghan; "LB," meaning
Mr. Leslie Buckley; "AP" meaning Mr. Aidan Phelan; and
"OC" meaning Mr. Owen O'Connell at the offices of
William Fry solicitors.
There was a discussion between the four people at the
meeting, and it would seem that the items discussed
"1. Asking questions (possibly before communicating
formally to ESAT Telecom Board and underwriters)"
that is to say the underwriters connected with the
Initial Public Offering.
"Next Tuesday, Dublin, Denis O'Brien by
videoconference. Inquisitor from McCann Fitzgerald -
no comment, opinion or judgement (not Fergus Armstrong
Next item says "KD," which I think is a reference to
Knut Digerund, an executive of Telenor -- "consumed
with rage, pull IPO over and over." As Mr. Digerund
was not at the meeting, I presume this is a reference
by somebody at the meeting to the views Mr. Digerund
had been expressing in connection with the matter.
"2. Letter from ESAT Digifone Board to Chairman of
ESAT Telecom re concerns on Prospectus."
This is a reference to a matter which is of purely
technical reference and needn't concern us at the
"3. Payments, Denis O'Brien/Barry Maloney discussion
and FG" -- in other words, that identifies the two
items, the first set of payments relating to the Denis
O'Brien/Barry Maloney discussion, and the second set
concerned with the $50,000 payment to Fine Gael.
The next word is "intermediary," and I'll come to the
significance of that word in a moment.
The next word is "Woodchester?" Then you have "other
£100,000?" - presumably a reference to the other
£100,000 payment. Then "payments stuck," and I will
come to the significance of highlighting those words in
that way in a moment. "Etc. per FA," meaning the
Fergus Armstrong letter.
It goes on then, "Arve checking re FG money," meaning
Arve Johansen, presumably, checking re the Fine Gael
Next, "Inquiry of DFTA," - David FT Austin? Next item
"JC, Telenor insisted and John Callaghan/Leslie Buckley
agreed to consult WF" -- William Fry.
Next it says, "per Fergus Armstrong, "common"
directors." While this may require some
clarification, I think it refers to the common
directors of ESAT Digifone and ESAT Telecom.
Then it goes on, "Statement from Woodchester definitely
needed." Again I'll explain the significance of that
in a moment.
"Payment made and getting stuck." Underneath that,
"Denis reference in board meeting to Woodchester as
intermediary." After that, "Had thought about making
payment but chose not to make it. This per John
Next, "ML," -- meaning Michael Lowry -- "No expectation
of payment. Never any discussion."
Underneath that, "second 100,000" with no further
details. Underneath that "Process of further
Then underneath that, a note that the Prospectus was
being issued on the following Tuesday week, printed on
the following Monday week. "Owen O'Connell letter held
till Monday. Owen O'Connell to consider the matter
Friday. Consult Chairman Saturday. Write to the board
Monday. JC notifications quote from two by
statements," which I think is reference to statements,
whether formal statements or not, from Barry Maloney
and Denis O'Brien concerning these matters, and then
there is two phone numbers.
Now, it would appear that at that meeting Mr. O'Connell
had received a document described as "Draft Statement
of Denis O'Brien to McCann Fitzgerald," and this was
one statement made by Mr. O'Brien concerning these
matters, and I think I should read it at this point so
as to be able to make some sense of the references in
the notes of Mr. O'Connell.
It says: "Early on Saturday morning (8am) in October
'96, I was running up in Roundwood, County Wicklow,
with Barry Maloney. Barry was complaining about the
invoices received by ESAT Digifone from consultants and
lobbyists in relation to the bid. I wanted him to pay
them because they were from people I had recruited.
This was twelve months after the bid had succeeded and
many of them had still not been paid. I indicated
that if the company reneged, I was honour bound to make
the payments, and I added (falsely) that, 'If you think
you have got problems, I have already paid 200 grand to
The second paragraph goes on: "These runs with Barry
Maloney were almost weekly events. Frankly, we
spoofed a lot. Barry and I had been friends for 20
years and often talked about sport, business,
money-making schemes, women, and other things with
fantasy and reality equally mixed. At least half of
what we said was bravado."
Third paragraph: "I did not pay any money to Michael
Lowry for ESAT Digifone's licence. When the Moriarty
Tribunal was mooted in July, '97, Barry sought, and I
gave reassurance, that the company had nothing to worry
about. Barry did not mention the October '96 comment
at this time, and it has only been raised by him in the
last couple of weeks."
Fourth paragraph: "I deeply regret the anxiety caused
to Barry and the trouble created for Board members by
this matter. However, I am concerned that a casual and
untrue remark made in a social context should not be
blown into something which will have consequences out
of all proportion to its significance. On the basis of
this explanation, and my assurances that the payment
was not made, I hope the issue will be concluded."
Now, it would appear that by that date the 30th
October, 1997, Mr. O'Brien had made other statements
concerning the £100,000 payment to Mr. Michael Lowry,
and had, in particular, suggested that at one point he
had an intention of making a payment of £100,000 to
Mr. Lowry; that what had prompted him to do this was
the fact that Mr. Lowry was being assailed in the
press; that he also had some financial problems in
connection with his company, Streamline; that he,
Mr. O'Brien, had gone so far as to earmark funds, a sum
of £100,000 for transmission to Mr. Lowry; that these
funds had been placed with an intermediary, or that
they had in some way got stuck with an intermediary
either before or at the time when Mr. O'Brien thought
better of his intention to benefit Mr. Lowry in this
way; that he did not go ahead with the transmission of
any money to Mr. Lowry, and that he never paid
Mr. Lowry the money in question either in that way or
in any other way.
Apparently at one point he indicated that the funds had
been earmarked in Woodchester Bank, and that this was
the intermediary to which he had referred and with
which the payments had got stuck.
Now, it's in the context, I think, of those other
statements concerning this matter, that Mr. O'Connell
noted the words "intermediary," "Woodchester," "Payment
stuck," and so on in his note. And it is in the
context, I think, of those notes, and presumably those
other statements, that Mr. O'Connell noted a statement
from Woodchester is definitely needed, and in the
context of which he made the note roughly in the centre
of the overhead projector, "Payment made and getting
Now, in addition, as the notes made by Mr. O'Connell
made clear, one of the propositions being canvassed at
that time, on the 30th October, 1997, was the conduct
of an inquisition by a member of the firm of McCann
Fitzgerald with a view to endeavouring to elicit the
facts from either Mr. O'Brien and/or Mr. Maloney. It
was envisaged that this inquisition or examination
would deal not only with the question of a £100,000
payment to Mr. Michael Lowry, any other £100,000
payment to a party, but also the payment of $50,000 to
Fine Gael. Mr. O'Connell made preparations in
anticipation of being instructed to take part in such
an investigation. He has produced a note of
conversations he had with Mr. Michael Walsh of IIU and
Mr. Denis O'Brien on the 31st October, in which, once
again, some of the matters under review were being
It may be that in this discussion Mr. O'Connell was
recalling solely what transpired at a meeting or
conversation between himself and Mr. Michael Walsh,
although it would appear that Mr. Michael Walsh may
have been relating to Mr. O'Connell details of what he
had learned in the course of meetings with Mr. Barry
Maloney and Mr. Denis O'Brien.
It's again a William Fry file note. It's not dated,
with the result that Mr. O'Connell has had some
difficulty in placing it precisely in terms of the
latter end of October of 1997.
It says "MW," meaning Michael Walsh. "No denial of
existence of intermediary and suggestion it was
Wood" -- short for Woodchester. "Jarred a bit, but
people prepared to accept it. BM" -- which is
presumably a reference to what was stated by Mr. Barry
Maloney -- "Didn't Denis say money had been moved to an
intermediary and got stuck." Michael Walsh responded
to that, but apparently had no recollection of his
response. It goes on to note: "Intermediary
statements coming from Barry Maloney, Denis O'Brien
talking about Woodchester - didn't deny existence of
Next line: "No real discussion of second £100,000."
"Monday, 13th October 1997," - a reference to the first
meeting between Barry Maloney, Michael Walsh, and Denis
O'Brien. That was part of the series of meetings I
referred to earlier in this Opening Statement.
The first meeting Fergus Armstrong not present, Malt
House, 30 minutes, sandwiches, made discussion.
Another meeting on the 23rd October, Barry Maloney
referring impression money had gone to third person,
out of Denis O'Brien's control. Michael Walsh did not
support this. Barry Maloney expressing an
interpretation of what Denis O'Brien had said."
Underneath that there is a reference to John Callaghan.
Underneath that another reference to what had been said
by Mr. Maloney. "BM had said in his document stuck in
intermediary. Denis O'Brien was asked who intermediary
was and said Wood" -- meaning Woodchester.
On the 1st November of 1997, Mr. O'Connell travelled to
Boston to meet with Mr. Denis O'Brien. Mr. O'Brien
was, by this time, in the US promoting the public
offering of shares in ESAT Telecom. He was working on
the west coast, it would appear, and as Mr. O'Connell
had to travel from Ireland, it was agreed that they
would meet in Boston. In preparation for this
meeting, Mr. O'Connell analysed the issues in the
course of his plane journey. He reduced his analysis
to a number of handwritten notes and in these notes
raised a number of queries. It would appear that at
sometime in the course of his discussions with
Mr. O'Brien, he received responses which related to
these queries, and these responses are noted on his
handwritten notes. Because they raise many of the
issues with which the Tribunal will be concerned, and
because they identify many of the issues of fact which
any lawyer will have identified as pertinent, they can
be usefully referred to at this stage.
It's on William Fry notepaper. It says, "Plane,
1/11/1997." Underneath that a memorandum from
Mr. O'Connell to himself to get a chronology. Then
what follows appears to be a form of analysis.
"A) what was said," an obvious question.
I hope that Mr. O'Connell will correct me if I am wrong
in any of these as I go along.
Underneath that a number of sub headings.
"How subject arose.
Who said what.
And further references since."
And in relation to those queries or that analysis of
the issue, Mr. O'Connell has noted that the subject
arose in the context of discussion about invoices, and
that presumably would appear to suggest that there is
some common ground between Mr. Maloney and Mr. O'Brien
as to what prompted the discussion.
In relation to further references, it would appear that
it was mentioned in the context of the establishment or
the Terms of Reference of this Tribunal.
Next, "QC, what is the BM version.
Agree this version or disagree it," as the case may be.
"Explain disagreements. Corroborating" I think
is what's intended -- "Corroborating evidence either
way." And to the right hand of that is a note which
says, "The only corroborating evidence either way is
On the next page, "Why reasonable for directors to
accept comments of such a potentially serious nature
made in jocose," then quote "Bravado."
Presumably a reference to what the directors of ESAT
Telecom should make of these comments. Was it
reasonable for them to accept that comments of such a
potentially serious nature would have been made in a
jocose way or by way of bravado?
Then analysing that, Mr. O'Connell goes on: "He
identifies issues relating to context, social and
sporting" -- a reference to Mr. O'Brien's account.
Underneath that, "old friendship," and underneath that,
Next section of the analysis deals with "Where" --
where did the discussion take place? Where were the
remarks made? And in brackets "disagreement" I think
I'll have to go over that again, because I may have
been right in my initial instinct. What this deals
with is where the discussion took place, and is there a
disagreement as to where the discussion took place, and
there is an analysis of this disagreement. "Where does
Barry Maloney allege?" And there is a note, "Denis
O'Brien's office." Underneath that, "runs regular?"
And then to the right-hand side, "Purpose of the runs:
Business/social?" These appear to be responses of
some kind. Underneath that, "Any triggering event
causing remembrance." Then there is a note, "ankle
sprain," and as will appear in the course of the
evidence, this was suggested as a potential triggering
point of one or the other, Mr. Maloney or Mr. O'Brien,
to date the discussion.
Underneath that, "Diary. Weekends away. Sick, etc.
Barry Maloney ditto." Underneath that, "Barry Maloney
says October/November, versus Denis O'Brien says
October. 4 to 6 weekends versus 11" -- being the
range of weekends over which it could have occurred.
"(One either end of month)" underneath that, "Check
Sally Ann, re diary," a reference to Mr. O'Brien's
personal assistant, I think.
Next item is item number 4, "Second payment reference."
This is the reference to Mr. O'Brien having paid to or
made two payments of £100,000. The subanalysis is
"Relevance of question if the first denied?" Next
point is, "No obvious suspect." Obviously that meant
no obvious suspect for the second payment, or was
there? Underneath that, "Who would come to mind," in
Denis O'Brien's mind? There is an answer, "Mitchell"
and then "no, consultant." And I think this is a
reference to the fact that Mr. Jim Mitchell was, in
fact, I think I can put it this way, an ordinary
consultant and not a success fee paid consultant of
Underneath that, "Exaggeration," then "Re invoices?"
Underneath that, "ML" -- Michael Lowry -- "involved?"
And "Can't recall" is the answer, meaning, I presume,
that Mr. O'Brien couldn't recall whether he definitely
mentioned whether Michael Lowry was mentioned in the
course of the discussion. Just to clarify that, the
note reads "ML mentioned?" not "ML involved?"
Now, item number 5, "DOB statement of the 23rd October
of 1997." This is a statement which the Tribunal does
not have, but which from other documentation made
available to the Tribunal appears to involve some of
the explanations which I have already canvassed in this
The first item mentioned is "Stuck with intermediary."
That's the expression that has already been mentioned
in other notes of Mr. O'Connell.
Underneath that, "Critical issue" -- is this "an
attempt, conspiracy etc.?" Underneath that, an
analysis of the Woodchester reference. "NB. John
Callaghan call, confirmed Michael Walsh." This is
presumably a reference to some differences between
Mr. Callaghan, Mr. Walsh, Mr. O'Brien, and Mr. Maloney,
as to whether or not there were references to
Underneath that is a reference to another expression
which seems to have been used by Mr. O'Brien in
describing his response or in responding to the
discussion that he had made these statements, and he
said, "Had thought about making a payment but chose not
to do it." Then underneath that there is a heading,
"Further/supplementary," matters requiring attention.
Firstly, "Intention" -- was there an intention to make
Underneath that, "Contacts with Michael Lowry." Then
in brackets "(Catherine related?)" -- I think there is
a suggestion for which there is no foundation, or some
relationship or some relation between Mr. O'Brien's
wife and Mr. Lowry and there is no such relationship.
Underneath that, "Attempt/conspiracy issue."
This is revisiting some of the earlier ground, and
that's subdivided into "Acts designed to make or
facilitate a payment," which of course could constitute
either an attempt or abandoned or failed conspiracy.
Underneath that, "Acts/discussions by/with others."
Underneath that, the other item which is cropping up
again, "identity of intermediary," and related to that
the phrase "stuck with intermediary" and "quite
striking, addressed specifically."
And then we have some specific attention directed to
that expression, and the first issue which
Mr. O'Connell identified is what did stuck mean? And
his note is "How 'stuck'" and his question -- after
that he has, "What actually happened?" Then he has a
note just above that which seems to contain a response
to the effect that what this expression meant was that
the payment was "just left in bank."
Next part of the analysis is, "If statement
acknowledged and not adequately explained, serious
effects re Tribunal, price, politics, share values."
Underneath that, again a further analysis or revisiting
of the analysis of what prompted the payment, "desire,
intention, or attempt."
Then some further notes, "What was Michael Lowry's
situation at the time? How likely a payment?"
Underneath that, "When, where and to whom was 23rd
October, 1997, statement made?" It appears that this
may have been a verbal statement. "Any notes
available?" Then in brackets, "(Negative, not proven
Underneath that, a further memorandum or note, "Address
exact circumstances in which statement made," and then
it suggests special attention to the phrase "stuck with
intermediary." It says, "Phrase 'stuck with
intermediary' has recurred often. Very thorough
Then Mr. O'Connell goes on to analyse the matter under
two headings: "If the statement was made/not made."
If the statement is not made, he identifies an issue as
to whether the board should still be told, "Still tell
board, underwriters? (Board obligation, so advise, if
matter material misleading etc. GFH)" -- Gerry Halpenny
is an associate of Mr. O'Connell. Underneath that,
then, "Telenor, ad in paper?" Which seems to be a
reference to some proposed form of disclosure.
Underneath that, "FA" meaning Fergus
Armstrong -- "Communicate underwriters directly? Has
he done so?" That analysis is followed by an analysis
on the assumption that if the statement was made, and
it's broken down as follows:
"Indication of intent or attempt." Then in brackets,
"(critical difference)." Underneath that, "Whether
other(s) involved?" Underneath that, once again,
"Intermediary -- Woodchester or another (with an
account in Woodchester?)" in brackets.
On the next line, "Why 'Stuck'? How could a payment
get stuck. Modern banks can easily make payments.
Did another intermediary keep (steal) the money, if so,
why no action taken?"
It seems to go on then to another section of the
analysis. "Why made?" Then hyphen " - presumably
after the licence.
Then there is a section obscured. Again, as I hasten
to add, not by Mr. O'Connell or Mr. O'Brien's
instructions, but on the instructions of ESAT Digifone.
CHAIRMAN: I suppose, Mr. Healy, for non-lawyers
present, it could be indicated that in general terms
one must presume the deletions have taken place on a
basis that the records purport to be legal advice to
clients rather than recording what took place or what
was said at specific occasions.
MR. HEALY: Yes, I think I said that at the outset,
that the Tribunal doesn't necessarily agree that any of
these exclusions or excisions are valid, but on the
assumption that they do refer to real professional
advice, then they would be valid. But hopefully they
do not interfere with the Tribunal's analysis of these
Then it continues - "BM apparently accepts no payment
made. (Worth of this belief? -irrelevant)" Then
there is a reference to "NB paragraph 6, intend not
attempt." Underneath that, "Conversation/contacts
with minister" presumably.
Then underneath that, "Lots per Telecom Eireann
disputes." Then a reference to "DDI's auto diallers
etc." -- the type of disputes that ESAT Digifone would
have had with Telecom Eireann following the launch or
in the course of the launch of its cellphone network.
Then "Licence discussed? (NB" -- and this is
presumably a reference to the licence -- "Independent
procedure X 2. Firstly, Andersen" -- AA is a
reference to Andersen Consultants - "AA and civil
servants - ability of minister anyway."
Presumably a reference to what ability the minister
anyway had to interfere in this two part independent
Underneath that, "Any commitments even understandings,
even implicit? (This is a key issue)."
Underneath that a reference again to the involvement of
the civil servants. "Why were civil servants confident
enough to break precedent and go to press conference if
they felt minister could have influenced - civil
servants don't usually trust ministers."
Six is, I think, devoted mainly to the reference to
Woodchester as an intermediary. "Reference to
Woodchester as 'Intermediary.' Consistent with Barry
Maloney account of the 13th October. If not, which to
On the next line, "What is Barry Maloney's account of
13th October -- written down? Anyone else there?"
Underneath that, "Implication that Wood" -- meaning
Woodchester -- "as intermediary not consistent.
Then the most puzzling question. What lies behind it?
Is the suggestion that there is another intermediary
instead of or as well as Wood?" Meaning Woodchester.
"Does 13th October mean 13th October 1996?" Then
after that, "Hardly." "If DOB and BM statements are
inconsistent, how to resolve (written statements don't
seem to be inconsistent)."
Item 7. "Verification or documentary evidence re
relevant account at Woodchester, payments to or from
account holder." This is a reference to a possible way
of verifying movements on Woodchester accounts
connected with Mr. Denis O'Brien.
Underneath that, "Catherine, any accounts? Others (AP,
PC etc.)?" presumably others. Underneath that, "ESAT
Telecom" Mr. O'Brien's own vehicle. "Communicorp,"
another company which he is associated. And beside
that, "presumably audited."
Underneath that there seems to be some kind of a list
of steps that might usefully be taken under the heading
"DOB's accounts." Firstly, "List;" secondly "all
withdrawals over (say) 50K on in '95, '96, '97;"
thirdly "withdrawals under 50K, all to same
payee/destination;" fourthly "offshore payment."
Mr. O'Connell then posing the question, "How to verify
a negative? How to produce documents to prove the
nonexistence of other documents. Denis O'Brien access
and control of other Woodchester accounts.
It goes on, "Track lodgements by DOB to others accounts
and get payments out of them (probably not possible if
unconnected to him)." This was Mr. O'Connell
presumably canvassing how far or how extensive his
inquiries of Woodchester could be.
Next, "Where was 100K supposed to have been paid?
If any general view, maybe get all statements of
period? Maybe even get all payments out of Woodchester
in period on all accounts of 150K. Impractical."
Then there is an analysis which seems to be confined to
what's called the "contribution transaction," meaning,
presumably, the $50,000 payment. Firstly, the first
note is "Mainly for Telenor." Underneath that what
should appear is "DOB 'Recommendation'? -- whether
true? Any other involvement? Reimbursement -- how
done -- ED, [ESAT Digifone], or ET? -- [ESAT Telecom]"
Then any "documents/receipts, (e.g., Fine
Gael -- presumably not.)"
I think next it says, "Bruton. What did he know?
That Telenor had paid re lunch (licence decision only
couple of months back) who attended lunch?
Not much to go on here even for drafting questions."
Then under the heading miscellaneous, "MISC":
"DOB statement only 'draft' Finalise
draft ET directors letter (conform McCann letter if
possible, collaborative investigation etc.)
BM statement does not describe conversation.
Board disclosure - underwriter - Prospectus (market)?
ED insistence to acquire personal and corporate
protection? Get 16th October letter Fergus Armstrong
Then a privileged portion. And the same on most of the
next page. And then at the end of the next page, "ML"
-- Michael Lowry -- "Carysfort Avenue house -- anything
Re funding, any involvement?"
I think Mr. O'Connell may have included that additional
reference to Carysfort because he may have seen it or
references to it in the newspaper at the time.
It would appear that around this time Mr. Fergus
Armstrong, solicitor of McCann Fitzgerald, will also
identify a number of issues which I believed required
clarification. In addition to dealing with his own
analysis of the situation, Mr. O'Connell, when he
arrived in Boston, also dealt with Mr. O'Brien's
responses to six questions raised by Mr. Fergus
Armstrong. These questions, having been posed by a
lawyer, once again focus on some of the issues to which
the Tribunal will be devoting a considerable amount of
attention, and for that reason it may be useful once
again if I refer to them at this point.
They are divided up into five or six questions, and
they are relatively short.
Question 1 is: "Whether DOB explanation of the
conversation in October/November is in accordance with
Barry Maloney impression."
Then what looks like, what I gather is Mr. O'Brien's
response or draft response: "My recollection of the
conversation is that it was non-serious, i.e. two very
old pals bullshitting about business, sport and out on
a run one Sunday morning."
Question 2: "Whether it's reasonable that comments of
such a serious nature would have been made out of
Answer: "Yes, anyone who knows me knows that I will
laugh about anything. I just do not take myself or
life in general too seriously. I have known Barry for
22 years, we had the most extraordinary experiences.
Nothing is sacred between us and there was nothing that
could not be joked about."
Question 3: "Where the conversation took place."
Response: "I remember the conversation taking place
while running in the Wicklow mountains near Roundwood
in October last year. On the day in question I
remember badly twisting my ankle. I have checked my
diary --" and then it trails off. At the bottom it
says, "We agree to differ on this point."
Query 4: "Significance of the second £100,000."
"There was no first payment nor any second payment. I
said I had paid out two amounts of £100,000 each out of
bravado to persuade Barry to get the finger out and the
bonuses to PJ Mara, Eddie Kelly, and Stephen Cloonan.
If payments had been made, most people would assume one
of them would have been made to Michael Lowry, but
there is no one else who could be assumed reasonably to
have got a payment of that scale. There was nothing
in the mind of either of us as to who a second (£100K)
person might be. As I've said, the whole thing was
The next query in my set of notes, it's between 4 and
5, I don't have a number for it, and it's headed, "The
conversation --" In any case, it would seem to be in
the same handwriting as the other documents, and
presumably some of it was prepared by Mr. O'Brien. No
doubt he will be able to be more specific about it.
It's headed "The conversation October/November."
"My recollection is that the conversation took place
while running out in a mountain near Roundwood.
However, it's over a year ago. I can't be absolutely
sure," and so on.
Next heading "Characterisation/context," followed by a
paragraph - "I had repeatedly asked Barry Maloney to
pay out the bonuses to all the people who worked on the
bid on a contract basis. These included PJ Mara,
Stephen Cloonan, Eddie Kelly and Enda Hardiman. BM
was dragging his feet in particular with PJ Mara and
Stephen Cloonan. Every time I would meet Barry
Maloney I would again ask him to pay them. It was
getting embarrassing for me and the people concerned.
This was the context of our conversation."
Query number 5 deals with the expression "Payment got
stuck with an intermediary."
"In October of '96, I had a couple of million pounds in
cash from property and share deals (IFSC and sale of
shares to US investors) and things were going very well
for me. Meanwhile, Michael Lowry was under attack
politically and in the media and someone told me his
company was" -- I am not sure what the next word means.
"I felt and still feel that Michael Lowry had always
been above board and fair with ESAT both as regards the
licence and our disputes with Telecom Eireann -- T E.
I decided that I would help him out with his company by
giving him £100,000. I earmarked £100K of deposits
with Woodchester for that purpose. All of this was on
my mind at the time of my conversation with Barry on
the mountainside. I pretended that I had already made
the payment and I doubled for effect. However,
shortly afterwards I realised that the payment, if I
made it, would be misunderstood. Thank God I saw
sense and did nothing about it. Whether or not I used
the phrase stuck with an intermediary, I meant that the
earmarked amount was left in Woodchester. For the
record, I frequently had discussions with Michael Lowry
concerning ESAT Telecom's warfare with Telecom Eireann,
and wouldn't deny that I would discuss the auto dialler
issue. However, no promises or understanding of any
kind were ever sought or given by the minister in
relation to the licence."
The last question is question 6. "13th October, Barry
Maloney versus 23rd October meeting re intermediary."
Mr. O'Brien's response, "I don't remember saying
anything at the 13th October meeting which was only for
half an hour which would lead to a conclusion that the
so-called intermediary was anyone other than
Woodchester. Anyway, I don't see the importance of
this since Woodchester would only have been used to
transfer money if I had made the payment. They would
have been an intermediary only in the sense of making
the payment. I think there might have been a
misunderstanding here between me and Barry [Michael
you were at the meeting, what do you think]"
Mr. O'Connell had his meeting in the States, and at
that stage the clock was ticking away towards the
planned publication date for the Prospectus. The
various steps which ought to be taken or which it was
felt ought to be taken to clarify these various issues
were beginning to crystallise in the first few days of
November, 1997. It had become clear that in order to
satisfy, even to a reasonable degree, anyone with a
proper interest in these matters that such payments had
not been made, it would be necessary to examine
Mr. O'Brien's bank accounts. It was also becoming
clear that in order to establish that a $50,000 payment
had actually gone to Fine Gael, some attempt would have
to be made to track the payment from the time it left
Telenor. Mr. O'Connell, I think as his analysis
indicates, he intended to put in train inquiries with
Woodchester Bank with a view to establishing what
accounts were held by Mr. O'Brien in that bank in the
previous two years, that is to say between November of
'95 and November of 1997. It was not envisaged that
every transaction on those accounts would be examined,
but only substantial transactions, i.e. those in excess
of £25,000, or any transactions involving payments of
smaller amounts to one single person where in the
aggregate those smaller amounts came to £25,000. So
that between the time of his note on the plane and
actually taking these steps, Mr. O'Connell had lowered
the threshold for this examination.
An examination of the Woodchester accounts showed that
there were no such payments. In order to extend this
inquiry, it would appear that Mr. O'Connell, following
some discussions with American lawyers involved in the
Prospectus, and in addition, having regard to some of
the analysis we know he made in the course of his plane
journey, made contact with Mr. Aidan Phelan to inquire,
were there any other significant accounts operated by
Mr. O'Brien? Mr. Phelan's response was that there
were no such accounts. In fact, as I think would now
appear from other information made available to the
Tribunal, Mr. Phelan appears to have been involved in
July of 1996 in arranging for two substantial transfers
of £100,000 and £50,000 respectively on Mr. O'Brien's
behalf from offshore accounts in the Channel Islands
and the Isle of Man. These payments of £100,000 and
£50,000 were made to David Austin and appear, as the
Tribunal has already indicated in an earlier Opening
Statement, to be connected with a subsequent payment by
Mr. Austin to an account in the Isle of Man in the name
of Mr. Michael Lowry in the sum of £147,000.
Now I come to the inquisition or questioning of the
various individuals involved in these payments. This
occurred on the 4th November of 1997 in the offices of
IIU in the Financial Services Centre. Mr. O'Connell
was present by phone. Also present were Mr. Fergus
Armstrong and Mr. Michael Kealey of McCann Fitzgerald
solicitors. Mr. Arve Johansen, it appears by
conference call, and Mr. Knut Digerund of Telenor, who
were also directors of ESAT Digifone. Mr. Barry
Maloney, Mr. John Fortune, Mr. John Callaghan and
Mr. Leslie Buckley, all directors of ESAT Digifone.
Mr. Callaghan, Mr. Buckley were also directors of ESAT
Telecom. Mr. Gerry Halpenny, solicitor of William
Fry, was also present, as was Mr. Kevin O'Brien,
solicitor of Kilroy solicitors. Mr. Denis O'Brien was
present by phone from the United States. Both
Mr. O'Connell and Mr. Halpenny took notes of a
discussion, and these notes had been provided to the
Mr. O'Brien was examined by Mr. Michael Kealey of
McCann Fitzgerald, and it would appear that Mr. Kealey
had had no previous and indeed no subsequent
involvement with any of the matters under discussion.
For the same reasons as I have mentioned before, and
because these discussions sought in a forensic way to
identify some of the issues involved, it might be
useful if I refer to parts of them, or at least the
part which contained the main examination.
Once again, as is the case of some of the earlier
notes, I think, Sir, you should have
Mr. O'Connell's typescript transcription of what
William Fry file note dated 4th November of 1997. A
note from Mr. O'Connell to his file. Client is ESAT
and the matter is the IPO.
It starts off with the names of those present, "Michael
Kealey, Denis O'Brien, Arve Johansen, Knut Digerund,
John Fortune, John Callaghan, Leslie Buckley, also
Fergus Armstrong, Gerry Halpenny, Owen O'Connell, Ken
It starts off, and these seem to be Mr. Kealey
questioning and Mr. O'Brien answering. And what you
have is Mr. O'Connell's notes of the questioning by
Mr. Kealey and of the answers by Mr. O'Brien. And
this was to enable Mr. O'Connell to provide himself or
arm himself with further information in relation to
some of the issues he had identified on the plane, and
so that he could take the matter further in advice he
gave or any steps he advised the directors of ESAT
Telecom to take in connection with this matter.
"Nature of DOB/BM relationship. Long-standing, could
joke about anything. MK - "what said precisely," DOB
(hesitant) trying to get BM to pay, trying to
"MK -- 100,000 to Michael Lowry. "DOB no, didn't
mention name. BM said don't want to know. One
payment or two?
DOB: Believes two. 100K to you know who. 100K to
two people. How would BM have known one was to ML?
Maybe assumption easy to make but second totally
exaggeration. A throw away remark to get BM to pay
the other people.
What was BM response? DOB: Don't want to know.
MK: Why didn't you say it's only a joke?"
Obviously a reference to the fact that subsequently
Mr. O'Brien had stated that these remarks on his part
were merely bravado. So Mr. Kealey is asking him, why
didn't he say at the relevant time it's only a joke?
"DOB, not a serious conversation. Social context.
One trying to outdo the other.
Michael Kealey: Public controversy at the time of the
licence. Was that the reason for assumption?
Michael Lowry house of cards started to collapse 29th
November. DOB: Everybody knew Michael Lowry business
in difficulty. Close in time to discussion, did 29th
November information give pause for thought. I had no
idea of problems. Don't know Michael Lowry well
enough for him to share a problem with me."
Then, "Barry Maloney error 1st September '97
conversation. (DOB married 29th August)" In
quotation marks, "'I didn't actually do it, thank God.
I know you must be concerned.'" Then what looks like
Mr. O'Brien, "Gave answer re helping out Michael Lowry.
Deciding to make payment but never did so. 'Saw
sense.' frequent conversations with Michael Lowry but
no promise or understanding re licence. Michael
Kealey - in mind." I am not sure what that means.
Then "Michael Kealey, summary." Presumably Michael
Kealey attempted to summarise the course of the
questioning of Mr. O'Brien.
Then Mr. Johansen deals with what appears to be some
questions concerning his role in the $50,000 payment.
"Denis O'Brien and Barry Maloney came to Oslo before
Christmas '95. Topic Barry Maloney contract. Hectic
morning. Came from Stockholm, leave early pm. Denis
O'Brien took Arve Johansen and (maybe Knut Digerund
too) Knut was there partly involved. Mentioned a
dinner, just that the feeling was as good corporate
citizens, should show appreciation. Give signal were
satisfied with performance. Only as a gratuity. No
promises or buying favours. Just good thing to do.
Fundraising for party. 25K per company - ESAT and
Telenor. AJ said okay if DOB thinks right thing to
do, will take at face value. K O B" -- a reference to
Mr. O'Brien, meaning ESAT Digifone, "good corporate
citizens." When I say "KOB," meaning
Mr. O'Brien, I mean Kevin O'Brien, solicitor of
Mr. Johansen went on: "That was context, our only
involvement in Ireland associated with Digifone. In
business because of good decision by politicians. No
connection to licence - after award (good while).
Atmosphere, we are very happy and should share it.
Kevin O'Brien: If essentially ESAT gratitude, why
didn't they do it?
Arve Johansen: Because ESAT had made contributions,
5,000 here and there, and there had been a big fuss,
better to come Norway. Gave DFTA name and phone
number. 11th December, Denis O'Brien called and asked
him to call DFTA that day. Phone number in Dublin.
Arve Johansen going to Budapest. (Called Monday 3-4
(on post-it) or 4.25. Thrust was very open. Not any
feeling of sensitive or difficult matter. Very
straightforward. DFTA - good thing to do.
Appreciated by party. Fairly standard. Can't recall
reference to discussion, was general understanding.
Mechanisms of payment then discussed. On AJ note that
reference to conversation J Bruton, Denis O'Brien
(Michael Lowry name mentioned) by way of explanation,
recognised a general contribution (i.e. into Party
fund). DFTA gave account number. Arve Johansen
problems paying out without invoice. DFTA offered
invoice for 'Consultancy fees'. Arve Johansen - okay.
DFTA gave impression this very standard. Meeting
Barry and Denis Friday, 8th December. Arve Johansen
found entry. Knut" -- this seems to be an
interjection by Knut Digerund -- "Suggestion could
arrange meeting John Bruton.
Arve Johansen: Yes, by way of being clear that money
went to party."
"Then invoice arrived, handled normally in Telenor
system. Several attempts to expedite payment -
(Telenor late) and was chased through Denis. Bank of
Ireland Jersey Limited. DFTA complained to Denis
O'Brien, who rang Telenor. Letter then after payment
from DFTA apologising for chasing. Per Denis O'Brien
and Barry Maloney conversation 8th December, no
discussion re reimbursement." Then it says, "Barry
Maloney" - I am not sure if he was present at the
meeting. This is an interjection by him, "I there re
employment - no discussion.
Arve Johansen: Yes."
"Re reimbursement, still 8th December. DOB offered it
as 'right' for Telenor and ESAT to bear payment
equally. No discussion of Digifone involvement. Per
Simonsen involved in the mechanisms. Seems agreement
to settle a startup cost for Digifone. Knut -- Denis
arranged Peter O'Donoghue to reimburse. Arve Johansen
understands put into lump sum for start-up. Entire
amount reimbursed as "consultancy fees."
All letterheads were DFTA, not Fine Gael.
No reference to Fine Gael. Letter should be on Knut
file. If not, doesn't know where to look, but will
Fine Gael not mentioned in correspondence."
Interjection: "John Callaghan: Money could have gone
to Michael Lowry."
Arve Johansen: "We didn't think too much about this.
Recent concern that we were the 'intermediary.'
Barry Maloney: DFTA and Michael Lowry are close
Arve Johansen: Yes, this could be put in a bad light.
Owen O'Connell: Any contact with DFTA after letter
Then continuing with Arve Johansen: "Number on Arve
Johansen note is Jefferson Smurfit Group.
Agreement in subsequent discussion that any participant
in meeting who was questioned in a general way at the
Tribunal would have to reveal £50,000 contribution.
DFTA letter refers invoice for consultancy work in 1995
'As agreed with Denis O'Brien.' Account number 66064,
Bank of Ireland Jersey, NB, 1995 year which licence was
John Fortune interjecting. "As political
contribution, it doesn't look right -- even if it
flowed back into Fine Gael.
Seek evidence from DFTA of payment to FG.
Knut Digerund concerned to see 'The Americans' have
full information." This is actually an interjection
by Knut Digerund when he says, "Concerned to see that
the Americans have full information."
Then Mr. Johansen again: "Seeking payment by Telenor to
possible promise of payment by DOB, i.e. if money went
to Michael Lowry. John Callaghan reminder that DOB
gave assurance no promise made but remarked that
appearance would be very damaging."
Mr. John Fortune interjecting: "Situation needs further
investigation including direct contact with DFTA. How
likely before Thursday?"
Response by Knut Digerund: "Yes, then assurances by FG.
Even then might not be satisfied.
Michael Kealey interjects, "Whether Barry Maloney wants
to add anything to Denis O'Brien responses."
Barry Maloney: "Re date of meeting on honeymoon.
Meetings were two months before he went away.
Discussions beginning October 8 to October 23 (five
separate discussions). Always third party
intermediary, 23rd October was first mention of
Woodchester. Barry Maloney still uneasy as a result."
Michael Walsh interjecting, "No recollection of
intermediary reference on 13th October."
Barry Maloney: "Location of meeting, DOB was frustrated
with me for not paying money. BM seeking invoices
He continues, "Did run most Sundays and shot the
breeze, but very clear this was not one of those
discussions. Had regular meetings. First reference
to two by 100K payments was in context of complaints
about payments per bid. Would not have occurred in
context of run.
Clear two by 100K payments mentioned, one to ML, other
'Third party intermediary' consistently used.
Woodchester, first referred to 23rd October.
Knut Digerund: What happened re ESAT?"
John Callaghan and Leslie Buckley interjecting: "All
go ahead, letter has gone to Denis.
John Fortune interjecting, "Won't have concluded
investigations by Thursday, e.g. DFTA, he needing to
retrieve records etc. Will take time. Telenor
directors won't have concluded before next week."
Michael Walsh interjects: Telenor directors unlikely
ever to finalise position re Barry Maloney G to, B
Kevin O'Brien interjecting: Yes, but will decide on
other situations (next week)
First matter is for directors generally.
Second is for Telenor."
Michael Walsh interjection: No, second matter is for
full board. Michael Walsh nervous about Telenor
talking alone to DFTA as DOB talked to collectively so
Then there is a privileged deletion and a new line,
"Apparently Arve Johansen and Knut Digerund have made
documents available to Kilroy's re 50,000. Owen
O'Connell - should make available to board as well."
Then there is a privileged deletion.
Now, by this time there were discussions between
various individuals involved in the IPO with a view to
endeavouring to decide how matters should be resolved,
whether the IPO should be abandoned, should be
postponed, or whether statements should be inserted in
the Prospectus to take account of the concerns of
Mr. Maloney and a number of other individuals, as
Mr. O'Connell's notes of that examination shows.
By the 5th November of 1997, a board meeting of ESAT
Telecom was convened for the purpose of resolving how
the company should proceed. That meeting was
addressed by Mr. O'Connell, who endeavoured to identify
the various issues which had to be considered by the
directors. It would appear that following that
meeting and subject to certain steps being taken, the
board decided that they would proceed with the IPO.
It would appear that it was resolved that in relation
to the Fine Gael contribution, a letter would be
obtained initially, it would seem, from Fine Gael, but
subsequently from David Austin confirming the
transmission of the payment to Fine Gael. In relation
to the other issues, the two payments of £100,000, the
Board had a decision to make as to whether they would
accept Mr. O'Brien's version, and this, it appears,
they did subject to the provision by Mr. O'Brien of an
affidavit, the affidavit, which has already been
referred to in these sittings, in which Mr. O'Brien
confirmed that he had never made the payment for the
purpose of securing the licence.
Part of the information made available to the directors
appears to have included the confirmation from
Mr. Aidan Phelan that apart from the Woodchester
accounts, and one or two other accounts which were
satisfactorily explained, there were no other
significant relevant accounts.
The further dealings of the directors of ESAT Telecom
between themselves and the dealings between the various
shareholders in ESAT Digifone concerning the
resolutions of these issues may be of some assistance
to the Tribunal, but I do not intend to refer to them
in any detail at this point.
The fact that these issues were resolved or partly
resolved by the directors of ESAT Telecom, and the way
in which they did so is not of course conclusive where
the resolution of these issues in the context of the
work of this Tribunal is concerned. What this Tribunal
has to determine is whether there were any payments to
Michael Lowry and whether those payments were made in
circumstances of the kind referred to in the Tribunal's
Terms of Reference, whether, in other words, those sums
of money were paid in circumstances giving rise to a
reasonable inference that the motive for making the
payment or payments was connected with any public
office held by Mr. Lowry, or had the potential to
influence the discharge of such office, or whether, in
more concrete terms, Mr. Lowry made any decision, in
this case a decision connected with the granting of the
second GSM licence, or any other decision, in return
for or otherwise in connection with any such payment.