Desmond firm wrote to Department about Esat's licence bid

Esat Digifone may have been "in breach of good faith" with the Department of Transport, Energy and Communications when it sent it a letter in September 1995, a Dublin solicitor told one of the Digifone shareholders, Telenor.

In September 1995, Mr Dermot Desmond's IIU Ltd sent a letter to the department stating that IIU was underwriting the involvement of Mr Denis O'Brien's company Communicorp in the Digifone bid.

IIU also said it was to place a minority shareholding in the consortium with financial institutions.

However, the Department was not told that in a side letter to an agreement signed on the day the letter was sent, it was agreed that Bottin (International) Investments Ltd, a company which holds assets for Mr Desmond, would take up the minority shareholding. In the event the letter was returned by the department and its contents were not disclosed to the committee which was evaluating bids for the second mobile phone licence.

Mr Per Simmonsen of Telenor briefed a Dublin solicitor, Mr Arthur Moran, of Matheson Ormsby Prentice, as to the Digifone bid on October 9th, 1995.

Mr John Coughlan SC, for the tribunal, said it seemed that Mr Moran did not know at the time that the IIU letter had been returned to Mr O'Brien by the department.

In Mr Moran's note of his meeting with Mr Simmonsen he wrote "Communicorp" and opposite it, "political contacts".

He also noted Mr Simmonsen saying the competition for the licence would be over in two to three weeks. Mr Coughlan said the tribunal would be examining how Mr Simmonsen could have known this at the time.

Three days later Mr Moran wrote to Mr Simmonsen. In that letter he said the letter sent to the department on September 29th was a "breach of good faith with the department".

However "because it was not strictly illegal, I do not think you can object to it on legal grounds", Mr Moran said. He said Telenor could object on grounds of good faith.

Mr Coughlan said the topic at issue at the time was the fact that the department had not been informed of the "true nature of the relationship" between IIU and Esat Digifone.

Mr Coughlan also said that on October 12th, 1995, Telenor had written to IIU seeking information about Bottin International including its balance at June 30th, 1995, and annual reports for the previous three years.