IIU got #2.7m for pre-licence share

Mr Dermot Desmond was paid approximately £2.7 million for 5 per cent of Esat Digifone before the consortium was issued with the State's second mobile phone licence.

Mr Desmond's company IIU Ltd was given 25 per cent of the consortium before Digifone won the licence competition in October 1995, in return for making certain financial commitments. Subsequent to the competition but before the licence was handed over, the then minister, Mr Michael Lowry, insisted that the shareholding configuration outlined in the Digifone bid for the licence be put in place before the licence was actually awarded. This meant that Mr Desmond had to sell 5 per cent of his shareholding, in equal amounts, back to his two partners, Norwegian company Telenor, and Mr Denis O'Brien's Communicorp, so they would each own 40 per cent.

"The licence was being traded in before it was even granted," said Mr Jerry Healy SC, for the tribunal. "It looks like that," said Mr Martin Brennan, the civil servant who chaired the team which selected Digifone as the winner of the licence.

The tribunal was shown a note written by Mr O'Brien prior to the press conference held at the time the licence was issued containing the words "don't discuss 5 per cent".

Mr Brennan told Mr Healy that at the time the licence was being issued the department was not aware that Mr O'Brien was unable to fund his part of the £15 million licence fee and had to borrow from his consortium partners. At the time Mr O'Brien was seeking to raise funds in the US.

Yesterday was Mr Brennan's 16th day in the witness box. The tribunal adjourned until Tuesday, when Mr Brennan is expected to be cross-examined.