Vol. 458 No. 6
5 Mr. Molloy asked the Minister for Transport, Energy and Communications if, in view of the need for openness and transparency in the award of public tenders, he will outline the reason the second GSM mobile phone licence was awarded to ESAT Digifone. [17521/95]
10 Mr. Browne (Wexford) asked the Minister for Transport, Energy and Communications the criteria used in the allocation of the second GSM mobile phone licence to ESAT Telecom recently; and if he will make a statement on the matter. [17414/95]
13 Mr. Aylward asked the Minister for Transport, Energy and Communications the role, if any, that consultants played in ensuring that ESAT Telenor was recently awarded the second GSM mobile phone licence by him; and if he will make a statement on the matter. [17408/95]
25 Mr. M. McDowell asked the Minister for Transport, Energy and Communications the procedures and requirements involved in the awarding of a licence for Ireland's second mobile telephone service. [17433/95]
29 Mr. Browne (Wexford) asked the Minister for Transport, Energy and Communications the date on which the Government took a decision to allocate Ireland's second GSM mobile phone licence; the conditions attaching to the Government decision; and if he will make a statement on the matter. [17411/95]
30 Miss Quill asked the Minister for Transport, Energy and Communications if he will inform those who were unsuccessful for Ireland's second mobile telephone service of the reasons their tenders were unsuccessful. [17434/95]
35 Mr. Cullen asked the Minister for Transport, Energy and Communications if he has satisfied himself that the proper value was attached to the recent GSM mobile licence application; if the State is losing out on the return on this vital national asset; and if he will make a statement on the matter. [17410/95]
39 Mr. Power asked the Minister for Transport, Energy and Communications the number of jobs to be created by ESAT Telenor as a result of being awarded the second GSM mobile phone licence; and if he will make a statement on the matter. [17405/95]
41 Mr. Hughes asked the Minister for Transport, Energy and Communications the reason he made a decision five weeks in advance of the official date in relation to the allocation of the second GSM mobile phone licence; and if he will make a statement on the matter. [17413/95]
42 Mr. O'Dea asked the Minister for Transport, Energy and Communications the number of applicants for Ireland's second GSM mobile phone licence; the dates on which submissions were received; the number of times he met principals, directors, consultants or representatives on behalf of any of the applicant companies; the dates on which he met with them; the locations where he met with them; and if he will make a statement on the matter. [17412/95]
43 Mr. Gallagher (Donegal South-West) asked the Minister for Transport, Energy and Communications the reason for giving a non-EU company special rights by allocating it a role in Ireland's second GSM mobile phone licence; if his attention has been drawn to the seriousness of the situation; and if he will make a statement on the matter. [17409/95]
44 Mr. Kenneally asked the Minister for Transport, Energy and Communications if his recent haste in allocating the second GSM mobile phone licence has cost Ireland certain benefits; if this decision will seriously affect further investment in the country; and if he will make a statement on the matter. [17406/95]
46 Mr. N. Treacy asked the Minister for Transport, Energy and Communications the number of companies who applied for the right to provide Ireland's second GSM mobile phone licence; if all of these companies had the technological and financial ability to deliver the service; the reason he awarded the licence to ESAT Telecom; and if he will make a statement on the matter. [17407/95]
84 Mr. Molloy asked the Minister for Transport, Energy and Communications if he took account of the overriding conditions on technical and financial capability outlined in paragraph 9 of the Bid Document for the second GSM mobile phone licence in addition to the criteria evaluated by the consultants at paragraph 19 of the document. [17523/95]
85 Mr. Molloy asked the Minister for Transport, Energy and Communications if article 3 of his Department's GSM competition licence documents were complied with in the awarding of the licence; and the identity and ultimate beneficial ownership of the institution investors who will own 20 per cent of the successful bidding company. [17524/95]
86 Mr. Molloy asked the Minister for Transport, Energy and Communications the basis for the Government's decision to assess the licence fee for the second GSM mobile licence at a level of £15 million. [17525/95]
87 Mr. Molloy asked the Minister for Transport, Energy and Communications if the tariffs proposed by ESAT represent the lowest tariffs of all the bidders for the second GSM mobile phone licence. [17526/95]
88 Mr. Molloy asked the Minister for Transport, Energy and Communications the reason the second GSM mobile phone licence was awarded to ESAT Digifone; and the reason each of the other applicants were rejected. [17527/95]
I propose to take Questions Nos. 5, 10, 13, 25, 29, 30, 35, 39, 41, 42, 43, 44, 46, 84, 85, 86, 87 and 88 together.
I am pleased that Deputies have put down questions on the GSM competition because it gives me an opportunity to detail what I believe was a landmark competition in terms of the process, its objectivity, its fairness and the speed with which it was carried out.
When I announced the competition for this second GSM licence last March, I was determined to put in place a selection process that, like the process for telecom's strategic partner, would be fair, impartial and objective. This was done. Clear selection criteria were set, published to the interested parties, and rigidly adhered to. International consultants with specialist experience were engaged to advise. An evaluation team, led by my Department was set up and included the consultants and officials from my Department and the Department of Finance.
The terms of the competition were specifically approved by the EU Commission. The selection criteria included demonstrated financial and technical capability; the credibility of the proposers' business plan and their approach to market development; their pricing policy, which had to be competitive; their timetable for achieving roll-out.
The contenders were each required to supply an immense amount of detailed information in regard to financial, technical and business development matters. All this material was examined exhaustively by the evaluation team, which worked intensively over a period of more than two months after the closing date. The consultants, and subsequently the full project team, came unanimously to a single result. I am very pleased with the way the process worked and am completely satisfied with its integrity.
No political or other considerations whatever entered into the selection, which was made totally on the basis of the objective criteria laid down in advance and made known to all. This exhaustive and patently fair process can now serve as a model for future decisions of a similar kind in other areas. It is an example of the standard of decision making that I wish to see become the norm across the spectrum of Irish public life.
The import of Deputy Kenneally's question is that I should have awarded the licence by reference to factors other than the selection criteria which were announced in advance and known to the applicants. I reject the import of that question. It was not open to me to follow such a course and I would have exposed myself and the Government to legal redress if I had done so. ESAT Digifone won because the project team determined, after meticulous comparative evaluation, that they had submitted the best application.
The decision to grant the licence and to whom is statutorily that of the Minister, with the consent of the Minister for Finance. In view of the importance of this decision I, and the Minister for Finance, discussed the result of the competition with the leaders of the parties in Government on 25 October. The matter was put before the full Cabinet for noting on the following morning. In a case as sensitive as this there is a great advantage in announcing the result as soon as possible thereby putting an end to speculation and media hype which grows around such matters, as was the case on this occasion. The formal decision makes it clear that the licence will be awarded to ESAT Digifone subject to satisfactory conclusion of discussion leading to a licence which incorporates as binding commitments the relevant contents of the application which led to its selection.
The Government agreed the detailed selection criteria and their order of priority in advance of the opening of the competition and agreed to the appointment of consultants to carry out the evaluation. It was clear to me, and to the Minister for Finance who was represented in the project team throughout the competition, that the thoroughness of the approach taken left no room for doubt as to the clear-cut result contained in the consultants' report. Bearing in mind the foregoing, the Government had no difficulty in agreeing to my recommendations in relation to the result.
There was no undue haste. In fact a flowchart diagram prepared by the consultants on 14 July in the context of the relaunch of the competition following consultations with the European Commission shows clearly that the final report was to be submitted in the week beginning 22 October. The consultants are to be congratulated on achieving this target. My commitment was to announce the result not later than the end of November. If I had not allowed some interval in case of slippage I would have been open to criticism for not meeting my deadline.
At an early stage in the competition four out of the six applicants requested and all were given assurances that the information in their bids would be kept confidential on a permanent basis. It would be impossible to have detailed disclosure of the comparative analysis without breaching this confidentiality. This dilemma is one of the reasons reputable independent consultants are engaged in competitions of this type. The consultants act as guarantors of objectivity.
The question of detailed feedback to applicants as to the reasons one applicant was successful and the others were not therefore presents me with a difficulty. Furthermore, disclosure by me at this time of significant elements of the winning application which would arise in any comparative feedback on public discussion of the outcome could be of considerable competitive advantage to the existing operator, Eircell. I would like to be as helpful as possible to understandably disappointed applicants but the constraints on me are severe. The involvement of reputable consultants was intended to be a guarantee of fair play at the outset and the clear-cut result from them was the one which I announced.
Deputy Gallagher refers in his question to "the seriousness of the situation" in reference to non-EU ownership of Telenor. Five of the six applications had significant participants which were not of EU origin but the origin of any of the participants had no place in the selection criteria. It was a competition open to all.
The Minister is aware that the Progressive Democrats welcomed the success of ESAT. We wish them well. However, the Minister is also aware that since he announced the awarding of the second mobile telephone licence concern has been expressed about certain aspects of the selection procedure and the awarding of the contract. My question asked if the Minister had an obligation to disclose the reason one tender was successful over and above the others. This could have been done in a way which would not have required the disclosure of confidential information. Does the Minister accept that a Government——
Precise questions, please Deputy. This question is long and cumbersome.
I have tabled seven or eight questions on this matter. Does the Minister accept that the Government's policy of openness and accountability is seen not to be fully fulfilled in this case? The Minister must see the contradiction between his reply and the Government's stated objective. Does the Minister accept that in common law he has an obligation, where a decision he makes is open to judicial review, to——
This is becoming a long interrogation rather than Question Time.
These are the questions I tabled to the Minister and he has an obligation to give the reasons for the decision.
That is adequate for the time being.
I have an obligation, responsibility and duty to adhere to the criteria which were established at the start of the competition and published and furnished to all interested applicants. At the preliminary stage of the competition four prospective applicants — it is important that this is understood — sought assurances about confidentiality. No doubt they saw this as being essential should they win the licence. The priority at that stage was to maximise participation in the contest and it would have been foolhardy not to respond to such widespread feeling. The people now seeking disclosure were among those seeking confidentiality guarantees six months ago.
There has been concern about this matter and Deputies have been in contact with me about it. I contacted the consultants who advised my Department and the Government on this issue and the following was their response.
In pursuance to your inquiry regarding the extent to which other European ministries have published the evaluation reports, we can give you the following information:
We [the consultants, Andersen Management International] have followed the GSM evaluation process in
Denmark, Holland, Germany, Norway, Spain, Italy, Sweden and France.
Not Belgium.
The letter continues.
We only know of one country, France, which has published parts of the evaluation documents. In the case of France two aspects should be mentioned: firstly, the ministerial evaluation report was modified for the public audience before it was released, secondly, prior consent was given by the bidders. To our knowledge, the evaluation reports used in the above mentioned countries — except for France — were kept secret in order to protect the bidders, who have provided the Government with information under the belief that it would be treated confidentially.
The information included in the applications for the Irish GSM2 licence is also marked confidential, and it cannot be disclosed in any form to the public, without breaching the expressed non-disclosure agreement. This would probably lead to a court case initiated by one of the losing applicants.
We therefore strongly recommend you to reconsider the question and the eventual consequences of an immediate publication.
I will call Deputy Molloy later. I now call Deputy Treacy who has ten questions tabled on this subject.
The Minister was asked specific questions which he has not addressed. I refer him particularly to Question No. 42 which he included in his response but did not answer. Will the Minister indicate the role played by his Department and the Government in agreeing with the European Union that a vital national asset such as this licence would be capped at £15 million when applicants competing for the licence believed it could be worth up to £100 million? Will he outline why agreement was reached on the cap?
If the Deputy read the Official Report, he would note that Deputy Brennan chided me about this matter on a regular basis. He said I should not allow it to go to public auction and that it should be capped in the interests of bringing competition into the sector. There is a change of heart on part of Deputies opposite.
I asked the Minister a specific question.
The Minister does not listen to anything I say.
Regarding the licence fee, when the competition was launched it included an auction element as the fourth selection criteria in descending order of priority, ranking below the tariff deal for customers and other important criteria. It is public knowledge that the European Union Commission raised legal arguments against this aspect and after taking the advice of the Attorney General's office my Department entered discussions with the Commission which led to modification of the rules of the competition. A cap of £15 million was put on the licence fee in the context that Eircell would also pay £10 million. That led to the approval in advance of the selection process by the Commission. It is speculative at this stage whether the Commission would have accepted a higher figure than £15 million, but it is clear that there would have to be a commensurate increase in the demand from Eircell. In the long run consumers should not be asked to pay a higher fee. I am satisfied we have struck the correct balance and that we will get what we are looking for, a high quality reliable and efficient service to compete with Eircell, that will bring competition into the sector which will in turn benefit the consumer by way of lower charges for handset equipment and lower tariff charges.
Question No. 85 in my name requests information regarding compliance with article 3 of the bid document which states that applicants must give full ownership details for proposed licensee. I asked if that had been complied with in awarding the licence and if the Minister would indicate the identity and ultimate beneficial ownership of the institution investors who will own 20 per cent of the successful bidding company. Were they known to the Minister when he made the decision bearing in mind that recent newspaper articles refer to the fact that a finance company in Dublin has been appointed to place 20 per cent of the consortium shares with institutions and other investors? If the investors were not identified, was article 3 complied with?
All aspects of the established criteria were scrupulously adhered to and monitored closely by my Department, the consultants and the project team. None of the six who submitted applications to the Department was rejected because of the absence of technical and financial ability to deliver the service. Examination of those aspects was an integral part of the evaluation process. Paragraph 3 of the bid document to which the Deputy referred relates to full disclosure of ownership. That was adequately dealt with in the evaluation of all applications including the successful one. The majority of the applications contained indications of probable changes in the ownership of minority interests by way of flotation, institutional investment, after licence award and the level of such proposed changes considered acceptable. The intentions of the willing applicant in this regard were fully disclosed.
Were the names of the investors disclosed?
The names of investors were not disclosed in respect of a number of applications, but that did not contravene the criteria set down.
The article states that full ownership details must be given.
Let us hear the Minister out.
A number of the investors stated that minority shareholdings would be available through various mechanisms such as by way of flotation or institutional investment. The winning applicant clearly stated that ESAT would have a 40 per cent ownership, Tellenor a 40 per cent ownership and the other 20 per cent would be available to institutional investors or other interest groups. That was clearly stated publicly as well as privately.
The Minister did not know who they would be.
It would be impossible for any of the applicants to determine who would buy the minority stakeholding until applications were processed and an applicant had received a commitment from the Department that its application was successful in securing the licence and therefore it had a minority interest to sell.
The Minister accepts that he has full responsibility for a large number of semi-State companies. The report of the task force on semi-State companies states that those companies must maximise their potential to make an economic contribution to this country. Given that a number of semi-State companies had pledged fixed assets as part of equity in respect of one of the applications ultimately rejected by the Minister, that represents a vote of no confidence by him in the semi-State companies for which he has political responsibility and which have a fundamental obligation to make an economic contribution to our country.
I presume the Deputy is saying we should have had an auction for that licence. I outlined the reasons it was capped at £15 million. I said the licence was the subject of discussions and negotiations with the European Commission under competition law. We adhere rigidly to that and have successfully brought this process to a conclusion. I look forward to a competitor to Eircell being up and running before the end of next year.
I am surprised the Minister does not understand the question I asked.
I have no reason to believe this decision was not properly made but the Minister must accept that because of the non-disclosure of the reasons upon which the decision was based, there were serious doubts initially among successful tenderers. One could say this was a case of sour grapes, but it goes beyond that. A large number of major international companies were involved. They went to the expense of submitting tenders. One applicant spent £5 million on its application which, I understand, included £1 million from the ESB. Where such an amount of money was invested by tenderers, surely the least to which they would be entitled in common law and justice, and in the interests of fair play, openness and accountability is that they should be told the reasons the tenders were unsuccessful. The reasons they were unsuccessful should be made public. I have a document——
That should be adequate. Let us hear the response.
It is very difficult to make one's point in such a short time. This matter should be referred to an Oireachtas committee for full examination.
The criteria and ground rules were clearly established at an early date. All participants in the competition were fully aware of the process into which they were entering.
I want to know the reasons for the decision.
The process included a confidentiality clause inserted at the request of the applicants. Some who requested that clause are now seeking open disclosure regarding the outcome. That would be totally unfair to the winning applicant. The process was carried out in a scrupulous way. We have rigorously adhered to the criteria established, with which applications were satisfied at the outset. I am aware that some people would like to have results published and I have gone out of my way to establish if that is feasible. I have read today the response I received from Andersen Management International Consultants which are experts in this area and specialise in it. They advised me not to publish the results because to do so would leave me open to legal challenge from other applicants and groups who participated in the process. That is the position. I would like to be in a position to publish the consultants' report but it is not practical or legally feasible.
The Minister asks us to accept that everything was done above board and I accept that but I ask him to recall that similar assurances given by members of the Government were upended by the Supreme Court less than a week ago. Will the Minister accept that his decision is open to judicial review? If that is so, will he accept that under the law he is obliged to give the reasons for the decision to enable parties who may be interested in seeking a judicial review to decide whether they should seek such a review? Will the Minister approach all the tenders and ask them to withdraw the confidentiality clause which they sought at the time the application was lodged to facilitate a statement being made with regard to how this decision was arrived at?
I have nothing to add to what I already stated. The relevant section in the letter, which I have received from Andersen Management International, emphatically states that the information included in the applications for the Irish GSM 2 licence is marked "confidential". It cannot be disclosed in any form to the public without breaching the expressed non-disclosure agreement. This would probably lead to a court case initiated by one of the losing applicants.
In that context, I cannot accede to the request. All applicants entered this competition in the full knowledge that the criteria were established, that it would be imposed in a strict manner and that there would be no deviation from it. I am satisfied with the integrity of that process. The manner in which this competition was held will stand up to any scrutiny, including legal scrutiny.
I understand this matter has received quite an airing and I want to get on to other Deputies' questions. I call Deputy Batt O'Keeffe who has been offering.
This issue of confidentiality is a double-edged sword. On the one hand, the Government is calling for openness. It is clear that many people are concerned about the manner in which the licence was granted. If a suggestion is being made that the successful applicants were the only people not to offer any benefits to this country other than the agreed EU cap of £15 million then, as Members, we are not in a position to check whether there is substance to such a claim. That issue must be of concern to the Minister. In line with what Deputy Molloy said, will the Minister ask the tenderers to withdraw the confidentiality clause so that we can have openness and transparency relative to all the matters put before his committee?
The question is overlong.
In respect of the decision to grant the licence, is the Minister aware that the Tánaiste, the day before the licence was issued, met one of the competitors, informed him that the tender was above board and that it would receive his support? He also informed the group that a decision would not be made for a further month. Yet, the following day the decision was made.
I am being asked the same question over and over and I cannot change the answer to suit the Deputy. The reality is that I have received advice in respect of what I can publish. I have even examined whether it is possible to publish some details of the report but I have been advised it is not because of the express wish of the applicants at the outset who wished to have a confidentiality clause imposed. Publication of the report would consist of detailed comparative analysis of the applicants. Obviously, the applicants do not want that now or in the future. Publication of part of the report which does not contain confidential information is not possible.
That is exactly what they want.
In a process such as this you cannot change the ground rules as you go along. The rules were clearly established. All the applicants knew exactly in a finite way what the process involved and all were happy with it. As in any competition there is a winner and losers and people react differently to the outcome.
Clause three was not complied with.
Let us hear the reply without interruption from any side of the House.
I will not comment on remarks that may or may not be accurate in respect of what the Tánaiste said inside or outside the House. I have nothing to indicate that the Tánaiste made any reference to this matter and the Deputy should raise that matter with him. In respect of the decision in regard to the GSM licence, the consultants made a clear recommendation. The project team made an unanimous recommendation. I accepted that recommendation and the Government accepted it unanimously. This was a clean hands off process. This is the manner in which any process of this matter should be handled by any Government.
I intend to proceed to Question Nos. 6 and 7.
Sixteen questions were taken together.
The questioning has been going on for almost half an hour. I intend to call the three Deputies offering if they will be brief, Deputies Creed, Brennan and Molloy. I will then proceed to Question No. 6.
I have a question down.
Will the Minister agree that this debate is fuelled largely by the unsuccessful applicants for the licence and that these same applicants agreed in advance the criteria on which they made their tender and are now seeking retrospectively to change the ground rules? Will the Minister further agree that to unilaterally make sensitive information available — which the tenderers insisted on keeping confidential — would possibly expose the taxpayer to liability in subsequent court proceedings?
Yes, I confirm that what the Deputy outlined is our approach to this matter which I clearly stated today. The Government, as stated, agreed the detailed rules of the competition and the selection criteria before it was launched. As long as these rules were respected and the result was a single clear-cut recommendation, there was no room for any flexibility. I assure the House that neither I, the officials of my Department nor any member of Government had any desire to massage the outcome or to change the result. We appointed consultants. We accepted the recommendation of professional experts in this area and implemented their recommendation by giving the second mobile licence to ESAT Telenor.
First, Fianna Fáil supports Deputy Molloy's request that a full explanation be given to those who did not succeed. Second, we wish the winners well. It is open to the Minister to tell the House who owns the 20 per cent to which Deputy Molloy refers?
Discussions are ongoing in respect of finalising the award of the licence to the successful applicant and I have no doubt that is part of the discussions. I have not been involved at any stage in the discussions regarding this process. No doubt that matter will be made public in due course but, I am not aware of its precise details at present.
Has the Minister not confirmed, in reply to supplementary questions, that the successful tenderer did not comply with Article 3 which required him to give disclosure of full ownership details of the proposed licensee? The Minister said they are not available and I accept that — I have no reason to suspect that anything wrong or improper was done — but I am asking for full disclosure, openness and accountability. Is the Minister familiar with the granting of the second licence in another EU member state, Belgium, which gave full disclosure on the method of selection? It was possible to do that without giving any confidential information.
Each of the applicants was assessed under three main headings: tariff, quality and franchise. Various scoring points were awarded accordingly and the applicant with the highest number of points was awarded the tender. That is what we are seeking and surely the Minister knows that under our system of administration of justice, there is the right to judicial review and that, in those circumstances, such judicial review would take precedence over confidentiality. If this matter were to go to court, the confidentiality cloak, similar to the sub judice cloak which is often hidden behind here, would not protect the Minister from seeking to refuse disclosure as to how the decision was arrived at. Will the Minister agree it would be more proper and correct to inform Parliament as to how he made this decision, the reason he made it and the various details——
That will be adequate, Deputy.
——rather than leaving this matter to be reviewed by the courts? Has the Minister heard the latest news——
The Deputy's question is over long.
——in regard to TV5? Richard Branson has succeeded in getting a judicial review in the United Kingdom of the way in which the UK allocated its TV5 licence?
Thank you, Deputy Molloy. The Minister to respond.
It seems to me that the Minister wants to force this issue into the courts.
The Deputy's question is over long and he knows that.
This is where the matter must be dealt with.
I confirmed that the successful applicant complied fully with all the clearly established criteria, including article 3. I have nothing further to add to the request to make this information public. I have clearly stated the reasons this is not possible. I indicated that this procedure was established initially when the process was put in place and all the applicants were aware of it. If they decided to publish information in Belgium it was done with the express consent, received at the initial phase of the competition, of those who participated.
There is no confidential information in this.
The rules cannot be changed after the game is completed and I have no intention of doing that.
The Minister has not specifically answered Question No. 46. In the interest of obvious openness, total transparency and absolute accountability, will the Minister lodge a copy of the consultants' report in the Oireachtas Library?
I have answered the question. I may not have answered it to the Deputy's liking but I have given a clear and precise response——
The Minister has not answered the specific question.
——to the question. I have no intention of answering it three or four times to satisfy the Deputy. I have given him the facts; I can only rely on the facts to put forward my case.
The Minister is fudging the issue.
