I have made several statements in this House and elsewhere about the competition for the GSM licence and answered questions in the House on a number of occasions.
Second Mobile Telephone Licence: Statement.
Does the Minister intend to circulate his statement?
That is not a matter for the Chair.
I do not have a problem with circulating the statement.
It is a special statement. Will it be circulated? Will the Minister give ade facto answer?
May we take it that it will be circulated shortly?
I presume so. I want to use this occasion to put on the record all that can be said about the issue. I ask your indulgence if it is necessary for this statement to be long in the interest of being comprehensive within the limits of confidentiality. I will answer any questions that arise at the end of the statement.
I saw an urgent need to put an end to the monopoly supply of mobile telephony in the interest of consumers.
Is the statement available?
I ask the Deputy not to interrupt so often. The Deputy has been assured that it will be circulated. Let us not erode further the precious time of any Member participating in the debate.
Will the Minister indicate whether it will be circulated? Why is the Minister holding it back? It is courtesy to circulate it.
Competition can only succeed where the playing field is level. We have already seen major reductions in handset costs and I want to see call prices drop too.
The question of confidentiality needs to be fully understood because it is relevant to various aspects of the matter. The way the competition was structured gave interested parties who had paid a deposit of £5,000 an opportunity in the first four weeks to ask questions in writing about the process. It was agreed at the outset that these questions would be addressed in a memorandum to all competitors a couple of weeks later.
Nine parties posed written questions. Of these, four who eventually became applicants raised the subject of confidentiality of information supplied in applications. It was clear that confidentiality was an important issue for interested parties. Indeed, it is somewhat ironic that Persona, which has been the most vociferous in relation to disclosure, was one of the consortia which originally sought a commitment to confidentiality. Failure to respond adequately to these questions on confidentiality carried the serious risk of frightening away consortia anxious to secure the licence.
The responding memorandum from my Department which was sent to all interested parties on 28 April 1995 stated:
All applications for the GSM licence, including data provided in electronic form and any data sought during the course of the evaluation of submissions will remain permanently confidential to the Department and its consultants, Andersen Management International.
This was not a clever device invented by me or my Department before or after the event as a block on transparency. It came, as I said, by way of widespread concern by potential applicants before submitting applications and a considered response from those managing the competition. It is understandable why confidentiality was necessary. Any competent application was certain to contain enormous detail on business strategy, marketing philosophy, pricing proposals, company ownership, financial standing, etc. Deputies can get some idea of the sheer volume of information when I tell the House that the applications ran to 350 pages plus appendices and supporting documentation.
I also want to make it clear that I have a duty to protect the confidentiality of the strategy of ESAT Digifone. To make such information available to Eircell would undermine the impact of the entry of the second operator to the market and run directly counter to the spirit of my intention to create a competitive market based on a level playing field.
There is a second angle to this which I want to mention briefly. Comparative bidding procedures for mobile licences did not start and finish in Ireland. Such procedures are now common worldwide. Many of the members of the consortia which applied in Ireland will be competing against each other elsewhere. If a Minister in any country was considering the outcome of a similar competition and he or she was aware that the apparently successful applicant had come last out of six in a recent competition in another country and that this was public knowledge, what would he or she think? That angle alone would have to give disappointed applicants cause for reflection. I am not saying this in any menacing way; I am just stating the obvious.
Putting together a detailed application for a mobile licence is an expensive business. The total cost of the six applications which we received was probably in the region of £10 to £15 million. That is a large sum of money leading to a lot of disappointment but it was always known that there could be only one winner. The disappointment is understandable but the way it is manifesting itself in terms of innuendo is a problem. This is something that the interested parties, and I do not exclude certain sections of the media, need to reflect on. How long will they keep this campaign going? What do they expect to gain? I again emphasise that I fully uphold the conduct and integrity of the public officials and consultants who conducted this exercise.
I now propose to recite at some length the history of the GSM competition. The Department of Transport, Energy and Communications has been working seriously on a GSM competition since late 1993. The preparatory phase included an "open door" consultation process with interested parties. This, to a large extent was a learning phase for the Department where various options in relation to the process as a whole were canvassed with consultants and interested parties. London-based consultants had a limited low-cost input in the design phase of the competition 1994. My predecessor as Minister will know all about this initial preparatory phase of the competition.
It fell to me as a newly appointed Minister to move the process forward. The style of the competition and the rules which applied were approved by the Government and made known following the announcement of the competition to all interested parties. All parties accepted the rules. This is important because it shows that it was the Government who set out the rules for the competition; the parameters are a political matter. Once that decision was taken and announced by me on 2 March 1995 the conduct of the operation of the competition within these parameters was carried out by the Civil Service, in other words, officials of my Department and the Department of Finance, with the aid of consultants.
My announcement of 2 March 1995 is interesting. I am sure copies of my statement are readily accessible for those who care to read them, but to assist those who are not apparently interested in following up the facts I will cite a few short quotations from it as follows:
I want to emphasise that this is not an auction where the biggest cheque will win the licence regardless.
My aim is to see real competition and a good deal for consumers.
The fee proposed must leave room...for a credible business plan to develop the market and provide effective competition for Eircell, choice of service and a good deal for consumers.
In view of the controversy which followed, I want to remind the House of this starting position with which I have been consistent ever since. At an early stage I became acutely aware that rumours were circulating within the industry that the outcome of the competition was a foregone conclusion. I have no idea whether this was true, but I and my officials moved to assure all interested parties that it would be a clean and open competition.
We set out at the beginning clear selection criteria which were fully known to all parties. Applications had to pass the first hurdle of demonstrated financial and technical capability. The criteria, which were clearly stated to be in descending order of priority, were as follows: credibility of business plan and approach to market development; quality and viability of technical approach; approach to tariffing which had to be competitive; and the licence fee. There followed a series of lower priority criteria, notably, timetable for achieving roll-out of the system, international roaming plans, performance guarantees and spectrum efficiency.
I have now made the full list of eight selection criteria publicly available, together with the weighting formula used. This clearly reflects the fact that market development, technical quality, call charges and monthly rentals were the principal deciding factors.
I will deal fully with the licence fee in due course, but I want to make it absolutely clear at this point that the fee never ranked higher than fourth in the order of priority in the selection criteria. The weightings fully reflected the descending priority order and are consistent with everything which went before.
I want to remind Deputies also that all the rhetoric is based on a few countries who charged high fees. The fact that the majority of European countries charged no fees or minor fees is constantly ignored. As far as we can establish, countries that charged no fees or insignificant administrative fees include Denmark, Finland, France, Germany, Norway, Netherlands, Portugal, Sweden and the United Kingdom.
It was clear from the outset that the process of evaluation of the applications would be complex, would require specialist expertise and would have to be carried out to a high degree of objectivity. An international competition was held to recruit appropriate consultancy advice. The contract was awarded to a Danish firm, Andersen Management International. Andersens had substantial relevant expertise in similar processes in Europe and demonstrated in its tender a highly developed approach to evaluation.
When I announced the competition for this second GSM licence, I was determined to put in place a selection process that would be fair, impartial and objective. An evaluation team, led by my Department, was set up which included the consultants and officials from my Department and the Department of Finance. This team was given responsibility for the conduct of the entire process and to make a recommendation regarding the award of the licence. The group incorporated special technical and financial and management expertise from the Civil Service as well as the expertise of the consultants.
It was also recognised that interested parties would require clarification of some aspects of the original tender documentation and to raise questions. Parties were allowed to pose questions both to the Department and Telecom Éireann which would be responded to in a composite memorandum issued to all interested parties. This was the same memorandum in which the confidentiality aspect was dealt with.
The Department and Telecom Éireann issued the memorandum on 28 April. The Department followed up with a further memorandum on 12 May with further points of clarification, guidance on assumptions for the preparation of applications and an initial draft of the licence. This information process was designed to ensure to the maximum extent possible the success of the competition would not be undermined by any needless deficiency of information; and to ensure absolute uniformity in the information available to all of the interested parties.
On this latter point, I would like to emphasise that following the launch of the competition the chairman of the project team set out ground rules for contacts with interested parties which would ensure that no consortium could gain any advantage in terms of information.
The competition documentation was made available to the European Commission as soon as it was announced. The original tender document envisaged that applicants would declare the amount that they were prepared to pay for the licence but that Eircell would not pay any fee. The closing date for receipt of applications was originally set as 23 June 1995. However, on 3 May I received a letter from Commissioner Van Miert dated 27 April wherein the Commissioner raised questions and in particular objected to the auction element of the licence fee.
The Commission's difficulty with the fee requirement was based on a legal argument stemming from the competition rules of the Treaty. The Commission considered that a high fee paid by the second GSM operator and not by Eircell would contravene the competition rules of the Treaty unless there were other compensatory measures. It was decided quickly that it was far too risky in terms of legal and financial exposure to complete the competition with the possibility of Commission action after the event. Imagine what would have happened and what Deputies would say if we had announced a winner, issued the licence and then had to change the ground rules, scrap the competition or pay out heavy compensation. Representatives of the project team and consultants had detailed discussions with the Commission on 2 June 1995 and explored ways of relaunching the competition on an agreed basis.
It is reasonable to speculate that we could have opted for a high fee approach and levied the same fee or something close to it on Eircell. This solution is being followed in some cases, although the Belgians have still not settled the fee for Belgacom and the company is threatening litigation against the Government and the EU. We opted for a moderate approach to the fee. It was, of course, consistent with my starting position. I was simply not prepared to impose a high tax on mobile phone users and I make no apology for protecting the interests of the consumer.
Following the discussion with the Commission, I wrote a five-page letter to Commissioner Van Miert dated 22 June. This letter effectively answered the concerns of the Commission in terms which reflected the discussions on 2 June. My letter stated:
Having reviewed the matter carefully I believe imposing a once off fee on Eircell in the sum of £10 million tied to a cap on the amount any prospective licensee can offer of say, £15 million guarantees, in concrete terms, that my desire not to penalise Eircell and at the same time charge a fair "once-off entry fee" to the new provider will be seen to be fair and proportionate to all parties' interests.
Commissioner Van Miert responded on 14 July. I wish to quote the relevant paragraphs relating to the fee and other points of clarification which I had provided:
In view of these circumstances and assuming these measures are effectively implemented, the Commission deems that the granting procedure followed by the Irish Government does not favour the extension of the current dominant position of its public telecommunications organisation, Bord Telecom Éireann, to the new GSM market, which would constitute an infringement to the Treaty competition rules.
For this reason, the Commission considers that it has no grounds for action under Article 90 (1) in conjunction with Article 86 in respect of the auction fee imposed on the second operator.
I am told the jargon for this is negative clearance. It could not, however, be any clearer that the Commission agreed to the revised free structure which I proposed. The Commissioner's letter also contained a series of other conditions which have now been complied with.
When it was clear that the discussions with the Commission could not be finalised and taken on board by applicants ahead of the original closing date, my Department wrote on 16 June to interested parties postponing the closing date.
There were no surprises in the Commission's letter of 14 July and we were able to relaunch the competition by letter on that date and set out the revised rules to all participants with a new closing date of 4 August. I want to state also that between 14 July and the closing date no interested party raised the slightest objection against the new fee basis and the cap on the licence fee.
Six applications were received by the closing date and details of the applicants and the consortia members have already been well publicised. The fact that six applications were received was in my view an endorsement of the success of the first phase of the process and of market confidence in the approach which had been taken. All six applications were from consortia which demonstrated the necessary financial and technical capability. In the event each applicant proposed the maximum fee of £15 million and, therefore, it did not impact on the comparative analysis.
As I said, each application contained 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.
I would like to dwell for a moment on the requirement that applicants provide full ownership details. The ownership structure of all of the applicant consortia was examined by the project team. Four others along with East Digifone, envisaged that the project would be financed, apart from debt financing, through equity participation going beyond the original consortia members. This wider equity participation involved unidentified stakeholders arising either through private placement or through a stock market flotation. The consultants and the project team saw nothing exceptional in this for a project of this size. Andersens had clearly been down this road before. It is impossible to accept that something envisaged by five of the six applications in some way damaged their applications.
These equity arrangements were not considered, and rightly so, to be a negative factor in relation to any application. Indeed, if the evaluation process had marked down any application on these grounds it would be impossible to defend, and I have already made it clear that this process can be fully defended.
In the case of Esat Digifone, the intention of the consortium partners to arrange a private placement with blue chip institutional investors was disclosed. Letters of commitment from the investors for specified amounts were submitted. In addition, strong expressions of interest in loan and equity participation in the consortium were available from other leading international institutions. Because of the confidentiality constraint I cannot name any of the institutions concerned. The situation would be no different if any other consortium had won. The project team established that all of the consortia were capable of funding the project.
The evaluation process is fully documented in the consultants' report. This report was approved by the project team which came unanimously to a single result based on the analysis. The following is clear from the report: the evaluators, including the consultants and the relevant officials, settled their approach to the evaluation, including the weighting to be applied to the criteria, in considerable detail well in advance of the closing date; the applications were examined meticulously by appropriate groups of people from the consultants and the home based project team — for example, technical aspects were examined by technical people and financial aspects by accountants, etc.; the tariff aspects were examined in a number of ways and with great care to take into account important aspects such as billing principles, discounts, etc.; the selection criteria were broken down into a series of detailed indicators against which the applications could be compared; all relevant aspects of the applications were graded by different groups and the results were then tabulated in various ways with a view to identifying a winner; the applications were carefully checked for internal consistency; the consultants, and subsequently the full project team, came to a single result which was the one I announced and which fully respected the priority order of the selection criteria and the weighting formula agreed in advance; it is clear that the applicants were treated in an even-handed manner throughout the competition, they all got exactly the same information and equal opportunity to communicate with the evaluators.
I can categorically state that the consultants' report is meticulous and was carried out in total good faith by the people concerned. In the course of the evaluation, and in accordance with the evaluation plan, each applicant was given a series of written questions for clarification of their bids on 24 August for reply by 4 September. Consortia were also each given three hour meetings with the entire project team which were conducted to a pre-set pattern and held consecutively between 11 and 14 September. Each meeting took the form of one hour presentations, one hour to respond to standard questions posed to all applicants and the final hour for a general discussion to the particular application.
The question has arisen as to whether the Esat Digifone tariffs were the lowest among the applicants. The tariffs analysis in the consultants' report is very thorough in this area. All of the applications had different approaches to segmentation of the market and a variety of pricing packages and different metering and billing principles. Their evaluation is quite complex. Confidentiality is a specific constraint in this area. I can say at this stage, however, that the application with the lowest tariffs was demonstrably weak in respect of other major selection criteria.
The evaluation did not take into account features which were extraneous to the competition. If it did, there would certainly be serious questions about its objectivity and its compliance with the rules. Jobs were not and could not be an issue. Regional location or endowments to universities for instance, could not be taken into account. I have to keep repeating that the evaluation was carried out in accordance with the rules known in advance and nothing else.
I did not interfere with the evaluation in any way. Neither did any other member of the Government. I wish to make it clear that the project team or the consultants were not influenced by any non-telecommunications factors. The consultants are specialists in advising in competitions of this kind, with a high reputation to protect.
Following the finalisation of the consultants' report, I discussed the outcome with the leaders of the Government parties and the Minister for Finance. The selection of Esat Digifone for the award of the licence was agreed on 25 October and I announced the result that evening.
In a case as sensitive as this there is great advantage in announcing the result as soon as possible to put an end to speculation which grows around such matters, as was the case on this occasion. There was no undue haste. The plan drawn up by the consultants in July shows clearly that the final report was to be submitted in the week beginning 22 October. The consultants are to be congratulated for 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.
No political or other extraneous considerations entered into the selection, which was made totally on the basis of the objective criteria laid down in advance and made known to all. Esat Digifone won the licence because the project team determined, after meticulous comparative evaluation, that it had submitted the best application.
I now want to turn to the question of disclosure of information to unsuccessful applicants. There are some general points I want to make absolutely clear. Under the terms of the GSM competition and the relevant legislation, I am legally advised that I am constrained by the confidentiality agreement inserted at the request of the applicants from giving certain information to applicants. At no point in the competition process or in the associated documentation did I give any commitment to detailed disclosure of the basis on which the successful applicant won. Furthermore, it is not generally the practice in other countries to publish evaluation reports or to provide disclosure of this kind. Arising from accusations made in this House, I raised this specific question with Andersen Management International some months ago. It responded as follows:
We have followed the GSM evaluation process in Denmark, Holland, Germany, Norway, Spain, Italy, Sweden and France. 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. First, the ministerial evaluation report was modified for the public audience before it was released; second, 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.
I am aware that the Austrian Government has a constitutional obligation to justify its decisions. I also know that disclosure is less relevant in cases where the size of the cheque determined the result.
I explained the confidentiality constraints at the beginning of this statement. I would like to be as helpful as possible to understandably disappointed applicants, but the constraints on me are severe. It is, therefore, proposed that individual briefing sessions will be held with the unsuccessful applicants where each will be given an outline of the evaluation process and the assessment of their own application.
The Minister should have done that months ago.
We will deal with the Deputy later.
Let us hear the Minister without any further interruptions.
We will give the Deputy a call later.
It will not be possible to provide any comparative details on the winning or any other application.
I have already spoken about jobs, but I now want to turn to specific suggestions as regards the loss of jobs in Ireland because of the GSM decision and, in particular, the reported loss of Motorola jobs in Cork. Procurement by the second GSM operator will be determined fully within the terms of the European Union procurement rules, which require that major contracts of this kind must be put to open tender. Motorola, or any other equipment supplier, will have an equivalent chance of winning any such contract, regardless of the membership of the successful consortium. I reject, therefore, the speculation that jobs might have been lost because the consortium of which Motorola was a member was unsuccessful in its bid for the GSM licence.
I am aware that the Persona consortium has announced its intention to lodge a complaint with the European Commission in relation to the GSM process. I have no problem with that. The bottom line is that I am convinced that the process and the decision will stand up to any scrutiny. I have no problem with an examination by a third party. I welcome it if it puts an end, as I am sure it will, to the damaging questioning of a fair competition. I read in one newspaper that the first line of complaint was to be about my failure to charge a high enough fee. In the context of what I have already said to date, there are no marks for guessing what the Commission would do with that.
The GSM licence is a milestone document and it is of critical importance that it is comprehensively and accurately drafted. Much of its detailed content is based on the winning tender. The substance of the licence has been agreed between my Department and Esat Digifone and it has been, in recent days, the subject of final legal clearance. I expect this clearance will be forthcoming shortly. This is somewhat behind our original schedule but I stress that the only reason for delay is due to the time needed to draft the highly complex document.
Those are the facts. It is clear that every aspect of this historic competition has been carried out in an exemplary manner — whether by me, the officials in my and other Departments or in the international consultants.
It is important, in view of the recent statements made in this House under privilege, to examine what the Opposition and, in particular Fianna Fáil, have said.
We would like to hear that.
They are a model of contradiction and inconsistenty. They profess a general concern for business and enterprise but seek to undermine the procedues of good government, designed to support business and consumers. They urge Government not to put barriers in the way of wealth creation and jobs, yet they demand that we take up to £100 million out of a vital sector. They argue for low taxes at a general level, but on this occasion they are calling for high fees, which are in effect taxes by another name. Such is the shallowness of their rhetoric and the lack of substance to their questions that the only victor is doubt and inconsistency.
That is in the statement.
Fianna Fáil no longer appears to be able to sing from the same song book. We always knew they were out of tune — now they cannot even remember the lyrics.
Do not start that now.
The truth hurts.
I have been listening to Deputy Bertie Ahern for months; he can listen to me now.
The Minister has not.
On 7 March 1995 Deputy Séamus Brennan forcefully argued against an auction fee because it was, he said, "a crude, law of the jungle approach which would have the effect of keeping charges to the consumer artificially high".
Not for £50 million.
By November Deputy Noel Treacy wanted to take the money and run, speaking of the licence being worth up to £100 million. By April Deputy Doherty at the Committee of Public Accounts said it was worth vast sums of money. Deputy Bertie Ahern must be seriously embarrassed by the contradictions and hypocrisy of three of his spokespersons. When Fianna Fáil finally make up its mind on this policy issue——
We would have got £50 million.
——which so impacts on the consumer, it can let me know. The contribution of Deputy Molloy — a former Minister and a very experienced Member of this House—
Who suggested the figure of £15 million?
——defies belief. He enthusiastically embraced the rhetoric of some disappointed applicants, quoting in the Dáil the view that Ireland is a "banana Republic". That is a fine sentiment from the self-styled party of business and enterprise. I question whether he is losing his critical faculties. He has become, with one leap, the champion of high licence fees which nearly everyone else, including Deputy Brennan, accepts as a recipe for high prices.
The record does not stand up.
Is he enunciating a brave new dawn for the Progressive Democrats in taking this anti-business line or has he tied up his spurs, dusted off his stetson and galloped into the sunset to rejoin the western wing of Fianna Fáil? If so, I hope he enjoys supping in the Last Chance Saloon with Deputies Treacy and Doherty. Instead of talking up the standards of Government and the successful business environment, he seems to be more comfortable supporting——
We have got the Minister to cave in and explain his decision for the first time.
——the peddles of unsubstantiated allegation and innuendo. The Progressive Democrats must be proud of his stalwart performance on this issue. I came into the House to put an end to speculation and misinformed unfounded comments.
Only because we begged the Minister.
It took months.
This artificial controversy is being constantly refuelled with deliberate misrepresentation. Documents and letters are being put forward as meaning or saying things they do not. Too many people inside and outside the House are allowing themselves to be used in a despicable campaign to undermine a robust competition process and damage business confidence. The conduct of this dishonest campaign has the potential to damage the public decision-making process which I and this Government are trying to strengthen.
On a point of order——
What would Seán Lemass think of it? When I saw the antics of the Fianna Fáil Party in recent months, it is the image of Seán Lemass that springs to mind. He was a man whom many believe was prepared to see the complete picture shunning the baseless cant of party political posturing when the needs of the nation demanded better. Sadly, his legacy holds no influence in Fianna Fáil because it is in opposition for opposition's sake. For Fianna Fáil, the national interest has been subsumed by self-interest. There is no better example of Fianna Fáil's abandonment of the Lemass legacy than its repeated shameful posturing in this House on awarding the second mobile telephone licence. The Opposition — and I include the Progressive Democrats — has threatened an increasingly vital and necessary tool of business and industry by their constant barracking about the award of the mobile telephone licence.
Allow the Minister to conclude his speech.
In addition, an innovative and vibrant young Irish company which took on the big players from around the world and won had its name linked in the public mind with controversy and doubt. It won fair and square and that should have been the end of it. What we have witnessed in recent weeks is a groundless campaign wasting our limited resources, sapping the confidence of a small Irish company and deliberately undermining the credibility of Ireland as a place where we can do business. Oppositions have to oppose, but to undermine a company, the Civil Service and a renowned international consultancy is a new low in Irish politics. Apparently, any irresponsible comment is now deemed by the Opposition to be acceptable regardless of the consequences.
Let there be no doubt in anyone's mind but that the second mobile telephone licence was awarded following a rigorous and independent evaluation of all six applicants. It should be a source of pride to this House that a small Irish company had the ability to put together a project good enough to beat the big players from around the world in an open and fair contest. Esat Digifone won the contest fairly. A stewards inquiry will not change the result.
Seán Lemass had a vision of Irish businesses and industry competing with the best in the world. Sadly, that belief that we are as good as our overseas rivals does not appear to be shared by his successor in this House.
That is not the issue.
On a point of order, the debate was to conclude at 6 p.m. Can I take it the Opposition has 20 minutes in which to put questions?
On a point of order and on a point of information, because of the innuendo, the accusations and the Minister's inability to answer questions I asked for this debate. It is despicable that the Minister should come in and try to twist that around. It was to protect his skin that we raised the issue because the Minister was not answering questions.
That is not a point of order.
Let us have some order please. The Minister will now take questions for a period not exceeding 20 minutes in accordance with the order of the House today.
We seem to have got some information from the Minister today in the form of two major disclosures. First, he referred to three letters dated 3 May, 22 June and 14 July in which it is clear that the first mention of the £15 million cap proposal came not from the EU but from the Minister in a letter to Commissioner Van Miert on 22 June. Will the Minister confirm to the House that the first formal mention of £15 million was in a letter from him to Commissioner Van Miert on 22 June and say why he set that figure? Did anybody discuss it with the Minister or suggest it to him?
The Deputy has deliberately ignored the fact that the Commission made its views known on the earlier terms of the competition when it stated it had an objection to the auction process. I have outlined in my reply today the step by step account of this. I sent the competition documents to the Commission so that it could assess them. In doing that I was concerned to ensure, because of speculation in other countries about the attitude of the Commission to auctions, that it would clearly understand——
Did the Minister decide on the figure of £15 million, yes or no?
Who decided on the figure of £15 million?
Let us hear the reply.
I have asked a straight question: was the Minister the first to suggest £15 million?
The Commission objected to the auction fee. At my request, my officials went to the Commission and had consultations and discussions with them and agreed a joint approach. That joint approach was to cap the fee at £15 million and for a £10 million fee to be levied on Eircell. We put those terms and conditions in writing to Commissioner Van Meirt and he responded, as I have stated, by giving clearance for the proposal by the Irish Government.
The Minister's officials said he had no hand act or part in it.
Please, let us hear the Minister's reply.
He responded by giving clearance for the proposal by the Department and said it was in compliance with competition rules and the Treaty rules.
This is the core of the matter. Will the Minister confirm, which he has virtually done, that the proposal that the figure be £15 million and not £50 million came from him?
I have clearly outlined the procedure. We had intended initially that there should be consideration of the auction principle. This principle was castigated by Deputy Brennan at one stage, but later Deputy Noel Treacy and Deputy Seán Doherty said we should have gone for an auction. There was an immediate contradiction in the Fianna Fáil position. The Government's position was clear. We sent our proposal to the Commission.
Who proposed £15 million?
The Commission objected to the auction element. We then entered into consultation with the Commission to get an agreed approach. It was agreed at the consultation and in writing that we should proceed along the lines of £15 million for the incoming operator and £10 million for the incumbent which was Eircell.
Does the Minister agree that much of the disquiet over the granting of this mobile telephone licence arose from the Minister's refusal to say why the unsuccessful applicants were not successful? Several months after announcing the successful bidder he announced today — when this debate was forced on him — that he is prepared to give individual briefings to the unsuccessful applicants. If he had done that initially much of the public disquiet, media comment and questioning in this House would not have been necessary. Opposition Members have a duty to ask questions on behalf of the public and this matter involves taxpayers' money.
Having decided not to accept the highest bid principle for this licence, should the Minister not have chosen the bid that would have given the lowest tariff so that the consumer might benefit? The Minister neither accepted the highest bid, which would have benefited the Exchequer, nor the lowest tariff, which would have benefited the consumer. Who will benefit? Will it be the Norwegian Government, a major part of the consortium? Does the Minister not see the contradiction in his method of choosing the successful bidder?
There is no contradiction in this. The process is crystal clear. Of course the Deputy has a duty to ask questions, but he also has a duty to be responsible——
Is the Minister talking about being responsible?
——in the manner in which he puts those questions so that he is not scaremongering or damaging the reputation of civil servants or consultants of an Irish company.
I have the right to ask questions.
The Deputy should listen.
I have listened for the past 50 minutes.
When I set out to provide a licence for a second mobile operator I had one objective in mind, namely, to ensure that by way of competition we would reduce the price of telephone hardware, reduce call charges for mobile operators and ensure real competition in the market. If I had done what the Deputy proposed when he told me outside the House that I was selling off the family silver to shore up public finances, we would not have lower prices on telephone hardware or lower tariff charges. The Deputy is arguing against the philosophy of the Progressive Democrats' Party.
It is obvious from what the Minister said that on 22 June he wrote to Commissioner Van Miert and proposed a figure of £15 million. He could have proposed £50 million, but he chose £15 million.
The Minister stated that letters were submitted and names given, in other words he got the information he sought about who owned shares in the company, but the names were not disclosed on 22 November.
Nor will they be.
Why were names not disclosed on 22 November when letters were submitted before the Minister made the award? Did he know who owned the 20 per cent before awarding the licence? Did he mislead the Dáil on this issue? Will he tell the House who are the beneficial owners of the remaining 20 per cent of the winning consortium?
Twenty-five per cent.
No. I will not do so because of the confidentiality clause. I will put the matter in context.
Selling public assets does not come under the confidentiality clause.
The Minister should not have sold them in the first place.
The Deputy is very liberal with his accusations about misleading the Dáil. It appears to be the only tune he can play in the House.
The Minister should answer the question.
The Deputy should listen.
Deputy Brennan's comments are negative and destructive. The Communicorp funding requirement was underwritten by a party acceptable to my Department. The intention of the consortium partners to arrange a private placement with what can only be described as blue chip institutional investors was disclosed by them to my Department. Stockbrokers were named and letters of commitment for specified amounts from the investors were submitted. In addition, strong expressions of interest in loan and equity participation in the consortium were available from other leading international financial institutions. That was the position when the decision was made.
The Minister is not telling us who the consortia were.
The Deputy should read the Minister's script.
Who owns the 20 per cent?
I reiterate that there was nothing ususual about the Esat Digifone application in this area compared with most of the other applicants. We are talking about an up-front capital investment of approximately £120 million. It is understandable that any business of that size would be financed by debt and equity and the normal ratio is 50 : 50. That is precisely what happened in this case.
Someone must own it.
That is how at least five of the bidders proposed to fund it.
Who owns it?
The man in the moon.
The principal function of my Department was to ensure that each of the six companies who sought the licence had the capability and the necessary funds in place to fund the project. We satisfied ourselves in that regard.
The Minister does not have the right to sign confidential agreements on behalf of the State. He cannot sell off State assets confidentially.
Who owns it?
There are confidentiality clauses——
The Minister should not have sold it.
Before the licence is signed it will become abundantly clear——
For whose benefit are those clauses in place? It is not for the taxpayers' benefit.
The company concerned is the only source from which information on the beneficial owners of the licence can emanate. We are granting the licence to Esat Digifone and before it is issued I will request the company to put on public record the composition of the consortium and from where the funding came.
I refer the Minister to the selection criteria weightings. He states that his decision was taken in the interest of consumers. Why did he allocate only 18 per cent on the approach to tariffing? In circulating revised criteria in July 1995, why did the Minister stipulate a minimum bid of £5 million and a maximum of £15 million and allow 11 per cent in the assessment when everyone knows he is disposing of a national asset worth £50 million? The Minister was ill advised in putting in that condition. In the interest of international investment in the country, will he appoint independent consultants to revaluate this process——
Were 59 pages not enough?
——and consult with those who bid for the licence?
Would we then have to appoint another set of consultants to examine the findings of those consultants?
I refer the Deputy to the statement I circulated which answered all those questions in detail.
It did not.
If the Deputy refuses to accept the detail of that statement, I have wasted my time and cannot assist him any further.
The Minister wasted taxpayers' money.
The Minister said that the weighting was decided up front. Was there a change in the weighting after the cap was imposed? If all the consortia were deemed to be capable of funding the project, why have funds not been forthcoming? Will the full ownership of the licence be disclosed before the Minister signs the licence?
As has been clearly stated in public on a number of occasions and confirmed by way of statement by the company involved, ESAT Digifone, the funds have been in place for a considerable period of time.
Does the Minister accept that and is he happy?
I accept that. I believe that when companies with a reputation such as that of ESAT Digifone make a public statement of that nature the onus is on all Deputies, unless they have information to the contrary, to accept and believe it.
What about Deputy O'Malley? Will he accept that?
That information should also be passed on to Deputy O'Malley. The ownership of the company is a matter for ESAT Digifone. Before the licence is signed, it will make full disclosure in respect of how it has put the funding in place, the ownership of the company and the stakeholders.
It is up to the Minister to dictate the terms.
It is obvious that the Minister gave a licence to people he does not know because he has not yet found out who owns it. Why was the timing of his announcement brought forward five weeks? Why did he bring it forward and rush it in an afternnoon with an hour's notice to the press?
In respect of the Deputy's snide comment that I gave a licence to people I did not know, if he understood the process——
I have gone to great lengths to try to inform him of it over the last six months but he is obviously not listening.
The Minister will not tell us to whom he sold it.
Five of the consortia decided that in one form or another, whether by placement, flotation or an input from a financial institution, we are placing 20 per cent aside for that particular purpose.
It is the Minister's duty to know.
The Deputy does not expect me to have a crystal ball——
We thought you had.
——to look into the future and decide, as a result of a public placement, who in fact would win it. That is not my business. My business in the Department was to ensure that the winning consortium was capable of funding the project which it was undertaking on behalf of the State. I have satisfied myself as to that and I am confident, without contradiction, that ESAT Digifone has the funding in place and will proceed on target to give us the roll out and competition with Eircell before the end of the year.
Why did the Minister bring forward the announcement?
The competition and the time span for the competition was clearly outlined. We made the announcement as soon as the consultants and the project team reported, no sooner. I was very happy that they met the deadlines set by them and I believe the consumers of Ireland are very happy that we brought forward this element of competition to mobile telephony at the earliest possible date.
Why, when the Tánaiste was having discussions with one of the groups the day before the announcement was made, did he indicate that this decision would not be announced for a month? Given the Taoiseach's espousal of openness and transparency and the fact that this was the sale of a public asset, why did he not insist that matters pertaining to ownership would be in the public view? Will the Minister accept that perhaps it was a mistake given that we now have press speculation that 20 per cent could be owned by people such as Mr. Desmond and others? The confidentially has now led to speculation throughout the press. Will the Minister make public the full ownership of ESAT Digifone before the licence is signed?
He said that.
I will not speculate on what the Tánaiste said.
It is safer.
The Deputy has missed the point. I stated clearly that all five of the participants in this competition had various ways and means of raising funds to fund the project. I will not speculate at this stage or cast aspersions on the credibility of others. The Deputy mentioned Mr. Desmond. If Mr. Desmond or any other company is in a position to fund this project and is acceptable to ESAT Digifone and if it means that this project is up and running, so be it — that is their business. It is not my business to determine who should participate in a consortium of this kind. My only priority is to ensure that the necessary funds are in place to fund the project and get it to roll out on time. It is very simple.
What is the whole process about?
What about the points system?
That concludes statements.
I did not get an answer to my question.