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Dáil Éireann debate -
Tuesday, 16 Apr 1996

Vol. 463 No. 8

Adjourment Debate. - ESAT Digifone Licence.

Deputy Molloy gave notice that he wished to ask the Minister for Transport, Energy and Communications if the reason for the delay in signing the GSM licence for ESAT Digifone relates to concerns expressed by other applicants about the circumstances surrounding the awarding of this licence. I understand the Deputy wishes to share time.

Yes, with Deputy O'Rourke. The matter I tabled for this debate continues: particularly in relation to US corporations' continued interest in investing in the Irish economy, and if he will give details of representations made in this matter by the US Government, US corporations and the IDA, and if he will make a statement on the matter. That was the full text of my question.

The awarding of Ireland's second mobile telephone licence is a bizarre affair. At the time of the award, the Irish public and my own party welcomed the success of the seeming Irish consortium which was named as the successful tenderer. However, it has since transpired that the entire process which resulted in this decision is being shrouded in secrecy to conceal the fact that the Government has sold the family silver at bargain basement prices in this case. It is now commonly accepted that the market value of this licence would have been worth £50 million to £110 million had free market forces been allowed to operate. Instead, the Minister for Transport, Energy and Communications, Deputy Lowry, announced that he is selling the licence for £15 million to Norwegian Telecom and 25 per cent to unnamed investors who have not yet disclosed the source of their funds. Is Dermot Desmond an investor in yet another Telecom Éireann venture? The public has a right to know the identity of the investors involved.

In selling the licence, the Minister placed a cap of £15 million on the price anybody could pay. Contrary to his statements, the European Union did not require this £15 million cap. What role did Pádraigh Ó hÚiginn, former secretary to the Taoiseach, play in the decision to impose the cap? Is he a member of the successful consortium? The public has a right to know. When the PR hype is put aside. Irish taxpayers will be aghast to discover that they are being short-changed in this deal by at least £35 million and, had free bidding been allowed — as is in any normal sale or auction — by as much as £75 million. This is the most astonishing deal ever completed by an Irish Minister. It is the biggest betrayal of the Irish taxpayer that I have witnessed during my time in this House and this includes the Goodman and other beef scandals.

To put the value of this licence in context, the House should be aware that in a similar situation in Austria — another EU member state with a population of 7 million — the mobile telephone licence fetched the Irish equivalent, in GDP terms, of IR£110 million. The actual price was £270 million. The massive loss of revenue in this case to the Irish taxpayer is only one aspect of this deal. A number of major US corporations in the telecommunications field submitted bids for this licence. They were astonished that the Irish Government gave it away for a song and are completely mystified with regard to how the situation arose. These corporations have been refused an explanation by the Minister and no information has been forthcoming with regard to how each application was evaluated.

Astonishingly, the Minister announced the award of the licence to ESAT four to five weeks ahead of the publicly stated date for such an announcement. Why was this done? Why did the full Cabinet not get papers in good time to allow for full discussion and subsequent decision? What stroke was being pulled by the Minister and for what reason? How could a Minister in his position deal in such a cavalier fashion with such an important source of massive revenue to the State? Taxpayers have good reason to be angry. They have been done out of tens of millions of pounds and have never been told how or why this was done. The other companies which tendered are angry.

My information is that there is a view among US businessmen that this affair would have been handled better in a banana republic and that they would think twice before they or those they influence would consider investing in this economy in future. The Minister and the Taoiseach know that there have already been adverse effects and in one case a potential investment which would have created 400 jobs in the southern region was transferred to another country because of our Mickey Mouse carry on over this licence.

The Deputy is exaggerating.

I do not exaggerate. This afternoon Mr. Dennis Sandberg of the US Embassy wrote to Mr. Loughrey, Secretary of the Department, protesting on behalf of AT & T, Southwestern Bell, Comcast and Motorola at the nondisclosure of the evaluation process and the lack of justification for a cap of £15 million. This affair is a scandal and needs to be explained or exposed.

My party demands full disclosure of all the facts appertaining to the award of this licence. We are embarked on the new adventure of the break up of monopolies and it is important domestically and for our reputation in Europe and throughout the world that this business is carried out in an open, transparent and accountable way, for those who were awarded the licence and those who were not. We must ensure that the miasma is cleared and that questions which need to be answered are done so openly. Any necessary disclosure should be made quickly and instantly. The understandable disquiet which has been expressed publicly and in the media must be cleared once and for all. It is not good enough that the Minister changes the agenda, the criteria and the facts which need to be addressed. My party wishes to see the matter cleared up forthwith.

The GSM licence is a milestone document and it is of critical importance that it be well drafted. The only — and I emphasise the word "only"— reason for delay in issuing the licence is the time needed to draft this complex document correctly. While an indicative draft was available at the time of the competition it could only be finalised and put into legal form as soon as a decision was made. Much of its detailed content is based on the winning tender. I am determined that the licence be issued as soon as possible. We must not make haste at the expense of accuracy. The content of the licence is agreed between my Department and ESAT Digifone and it is now with the Attorney General's Office for legal clearance.

In circumstances where there were six professional, costly and competitive applications, it is entirely understandable that there are disappointed applicants; there was only one prize. That this disappointment should manifest itself in the type of innuendo and comments we have heard from Deputy Molloy is entirely unacceptable. I want to emphasise, one more time, that the selection process was thoroughly carried out by a team of officials and consultants without interference of any kind from me or anybody else. They carried out their evaluation by reference to the selection criteria which were well known to all applicants in advance and they specifically respected the priority order indicated. The departmental team and the international independent consultants separately and collectively recommended one winner and the Government approved that result.

Collectively.

The separate question of whether to give feedback in relation to their applications to individual applicants has been under consideration for some time. The format of such feedback, whether oral or written, is being considered and the details of this approach are being settled in discussion with the consultants and the Attorney General's Office. There is no question of comparative feedback with the winning applicant or with other applications; the confidentiality rules would not allow it. Please remember that somebody came last as well as first and they may not wish that fact to be trumpeted. Within that constraint, the intention is to be reasonably forthcoming.

There have been formal requests from a number of applicants, informal approaches by the US Embassy and some contact by the IDA on the matter. This country enjoys a high reputation among US corporations for probity and honesty in its business dealings with them. I cannot imagine that failure to win a single licence in a clean competitive process would damage that reputation.

The Minister should not bet on that.

The Deputy would not know a lot about that. He is the master of that art.

This affair stinks to high heaven.

I am anxious to facilitate requests for information but can only do so within the legal constraints of the competition.

The Minister should answer the question.

What I most definitely cannot do is change the result of the competition which was open and fair. Equal opportunity was afforded to all participants under an established and agreed procedure.

The Minister even reneged on a commitment to the US Embassy.

Deputy Séamus Brennan was selected by me to raise a matter on the Adjournment. However, as he has been suspended from the service of the House the matter may not proceed.

The Dáil adjourned at 9.10 p.m. until 10.30 a.m. on Wednesday, 17 April 1996.

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