Dáil Éireann díospóireacht -
Thursday, 5 Dec 1996

Vol. 472 No. 5

Priority Questions. - Telecom Éireann Strategic Alliance.

Seamus Brennan

Ceist:

2 Mr. S. Brennan asked the Minister for Transport, Energy and Communications the plans, if any, he has to review any of the transactions which were undertaken by his immediate predecessor; his views on the 20 per cent sale of Telecom Éireann and the price achieved for the sale; if he will publish full details of this transaction; and if the EU decision in relation to the opening of the business sector to more telephone competition from July has implications for the agreement signed with KPN/Telia. [23618/96]

Robert Molloy

Ceist:

3 Mr. Molloy asked the Minister for Transport, Energy and Communications the effect, if any, of the EU Commission decision to refuse a request from Telecom Éireann for a derogation on alternative networks for business calls and international mobile call connections until 1999 and its decision to review Telecom Éireann's control of Cablelink; and if he will make a statement on the matter. [23510/96]

Mr. Dukes

I propose to take Questions Nos. 2 and 3 together.

One of my first tasks will be to ensure that the Telecom Éireann strategic alliance deal is brought to a successful conclusion in the near future. This deal represents an excellent outcome to the search for a partner for Telecom Éireann. It is good for the Irish consumer and Irish business and represents excellent value in terms of both the strategic benefits which Telecom Éireann will receive and in terms of cash value which, it is anticipated, will produce overall proceeds in excess of £500 million.

The principal features of the deal, in terms of its strategic and operational merit and the purchase price, were made public at the time of the signing of the deal in July, through numerous debates in this House and in the media. It is, therefore, not my intention to repeat them today. Deputy Brennan must accept, however, that certain aspects of this deal are commercially sensitive and must remain confidential.

In relation to the recent Commission decision on Ireland's derogation, this is a successful outcome and in line with the Government's strategic objective for the telecommunications sector. The decision strikes a balance between the needs of telecommunications consumers, who will soon start to see greater choice, higher quality and lower prices, and the need to secure a period of transition in which Telecom Éireann can make the necessary structural changes for successful operation in a competitive market.

The strategic alliance agreement includes a condition that a derogation be secured from the need to liberalise voice telephony and the supporting public infrastructure until 1 January 2000. The Commission decision enables the Government to fulfil this condition. Telecom Éireann's strategic partners accept the decision and are committed, in partnership with Telecom, to meeting the challenge of the earlier liberalisation date for alternative infrastructure which is now proposed.

This part of the Commission's decision does not change the existing situation in relation to business telecommunications traffic, contrary to what has been widely reported. The July 1997 date for liberalisation of alternative networks permits these networks to carry liberalised traffic only but not voice telephony traffic which is reserved for Telecom Éireann under the same derogation decision until 1 January 2000. The voice telephony reservation does not make any distinction between business calls and any other voice calls which are originated and delivered over switched networks open to the public.

Finally, it is to be expected that, as part of the review of large transactions of this type, the EU Commission will examine all aspects of the deal and this obviously includes issues arising from Telecom Éireann's majority ownership of Cablelink in the context of the alliance. This is standard procedure and I am confident that clearance for the deal will be received in due course.

Mr. S. Brennan

The Minister did not respond to the first part of my question which was if he had any plans to review the transactions which were undertaken by his predecessor. Perhaps he would respond to it. There are three areas which I thought he might review. The first is the Esat second mobile telephone licence. We still do not know the full list of investors in that project and, despite repeated questions, I could not prise the information from the previous Minister. Will the new Minister release the names of all the investors in Esat? To my knowledge, they have not been put before the House.

The second deal that might be reviewed is the £20 million deal to lease Moneypoint to Americans who would lease it back to the ESB. I asked the previous Minister about the deal. He said he brought the deal to Cabinet where it was approved. When I asked him who were the members of the consortium he said it was a US trust and that he was not privy to its membership. Will the Minister get information on the members of this US trust, which now has a hold on Moneypoint, and release it?

On the same theme of departmental secrecy, a contract was signed on 26 July to sell a stake in Telecom Éireann at what I and most independent commentators regard as a scandalously low price. Will the Minister release the documentation of 26 July, which includes the contract and other details of that deal, so Members can see exactly what is involved? The Minister should adopt a different attitude from that of his predecessor to the three deals I have mentioned. He should release the names of those involved in the Moneypoint deal, the names of those involved in Esat and the contract to sell 20 per cent of Telecom Éireann so the House can evaluate whether the deals are good or bad.

Mr. Dukes

If Deputy Brennan wished to ask a question about Esat and Moneypoint he should have said so. I have no intention of looking at all the decisions made by my predecessor and proceeding to unpick them. My very good friend, the late Deputy Frank Cluskey, once said to me when we were about to make a difficult decision and he wanted to be sure that the decision was necessary: "You would want to be sure about this because you do not go through hell just for practice". I have no intention of going through hell just for practice. If the Deputy thinks I will blaze into the Department of Transport, Energy and Communications, unpick everything I find and put it all back together in a way that pleases him, he is mistaken. If I did so, I would be making a terrible hash of this job. I invite the Deputy to put down specific questions about East and Moneypoint.

With regard to the publication of details, I am aware that the Deputy and my predecessor discussed this matter at length. My predecessor told the Deputy, as I reiterate today, that there are aspects of the deal which must remain confidential for good, solid commercial reasons. Agreements and understandings were reached with the partners, before the deal was completed, requiring such confidentiality. The Deputy is aware that if we went back on such undertakings it would set an extremely bad precedent and would be bad for the deal itself.

Mr. Molloy

Will the Minister agree it is proper, as a matter of principle, that when the State sells a national asset such as a second mobile telephone licence, the beneficial shareholders in that licence should be known to his Department, the Government and to the Oireachtas before a decision is made to approve the sale? Is the Minister aware that 20 per cent of the second mobile telephone licence was awarded to a consortium which contained a group under IIU Nominees Limited, a company owned by Mr. Dermot Desmond?

That company had not put its money in place at the time the contract was awarded, which meant it had a contract without having to advance any funds. It furnished a list of potential investors to the Department. The Secretary of the Department was quoted in the Irish Independent of 20 April 1996 as having said that the investors in the 20 per cent stake in that nominee company would be drawn from the list of potential investors furnished.

Does the Minister think it right and proper that the names of those investors should now be withheld from the public? Will he publish them? In view of recent events, when an alleged improper association between his predecessor and certain businessmen here — who, in other allegations, are said to have sought to have an opportunity to invest in this licence — was highlighted in the national papers, does the Minister not consider it would have been correct, at the outset, to have made the names of beneficial shareholders available to the public? Will he publish the list of potential investors which the Secretary of his Department said he had from which those investors will be drawn?

Mr. Dukes

While allegations on the last matter adverted to by Deputy Molloy have been flying around the last few days, it has been made very clear, certainly yesterday if not before, that there is absolutely no foundation for one of them. Deputy Molloy is just as capable of reading and understanding that as I am. I am astonished he would try to sidle crabwise into that old allegation knowing, as well as I do, that there is absolutely no truth in it.

In this case, of course I agree that as much information as possible should be made available to the public. The Government was acting as the stakeholder on behalf of the electorate and set out to get the best deal consistent with its objectives. In any commercial transaction, there will be a requirement for an element of confidentiality, which certainly exists in this case. My predecessor made the maximum possible amount of information available without trespassing on confidentiality in a manner that would have rendered the deal more difficult. Deputies will have to accept that assurance.

Mr. S. Brennan

Some confusion appears to have arisen here. We are talking about the mobile telephone licence and the fact that the Minister's predecessor was unable to give the House the list of investors; a major contract was awarded, yet the investors' names remain unknown. While fully appreciating that the Minister has been only a couple of days in his Department — and, to paraphrase him, he does not want to go through hell voluntarily — I am endeavouring to probe his attitude to his portfolio. Is it one of releasing basic information relating to investors in Esat, those in the Moneypoint deal, whom I understand were substantially Americans, although Cypriots were involved, and the Telecom Éireann contract, all of which are not commercially sensitive? Has he, as the new Minister, a different attitude from his predecessor to releasing this information? If his attitude is the same, that is fair enough, we shall have to deal with the matter on the floor of the House.

Mr. Dukes

My predecessor's attitude to these matters was perfectly justified, balanced and in accordance with the needs of the circumstances. I do not intend to take a different line.

Mr. Molloy

The Secretary of the Department at a press conference on 19 April last said that the list from which potential investors in the 20 per cent stake in the Dermot Desmond nominee company would be drawn was handed to and known by his Department. Subsequently a contract was awarded and, this week, the Secretary of his Department informed me that the 20 per cent stake in that IIU nominee company, owned by Dermot Desmond, was owned solely and exclusively by Dermot Desmond. Will the Minister explain that contradiction and why those names are being withheld? Surely he now recognises the importance of making their names known to testify that no improper associations existed?

Mr. Dukes

The name of a specific investor referred to by the Deputy was included in the list referred to earlier.

Mr. Molloy

He owns the company and was acting as proxy for investors.

Mr. Dukes

From my information he is the only investor in that company.

Mr. Molloy

According to my information, that is not correct.

Mr. Dukes

If the Deputy wishes to table another question at the appropriate time, I will deal with that specific issue. Certainly the investors in the 20 per cent stake in that company were, in every sense of the word, drawn from the list presented at that time.

Mr. S. Brennan

I am disappointed to hear the Minister stand over the decision of his predecessor, not to release the information on Esat, Moneypoint or the contract for the sale of 20 per cent of Telecom Éireann. I am disappointed that the Minister did not adopt the position that at least he would re-examine those matters. Within such a short time in office, I am disappointed he has taken the view that these three contracts or documents must remain secret.

In regard to the sale of 20 per cent of Telecom Éireann — since the initial contract was signed on 26 July last, and I am aware of the political toing and froing about price, the bottom line is that £183 million was paid by two foreign companies that will bring little to Telecom Éireann, in addition to their getting a 20 per cent share in Eircell and Cablelink, whereas proportionately other companies worldwide have been sold recently at nine or ten times the price obtained by Telecom Éireann — does the Minister agree that clearly it is a really bad deal? Even at this late stage will he re-examine the contract from a price and quality point of view and the fact that no Irish investor is allowed while Dutch and Swedish investors can do so? Is the Minister prepared to stand over that position, bearing in mind that the Dutch Stock Exchange can buy shares in Telecom Éireann while no Irish person can obtain a single share? Is the Minister really closing his mind to that now critical position since the contract will have been finalised within a few months?

Mr. Dukes

I am very much afraid Deputy Séamus Brennan and I are condemned to mutual disappointment; he is disappointed that I will not take a different position and I am really desolated that, in spite of everything said to him, he cannot find it in his heart to take a different position on the same old allegations he has been trotting out here for months. I should have thought he would have learned by now that this is an extremely good deal.

Mr. S. Brennan

No, it is a bad one.

Mr. Dukes

I should have thought he would know by now that its value will not emerge for some time because it will be influenced by several factors which I recalled in my original answer.

Mr. S. Brennan

Some deal, £183 million for 20 per cent.

Mr. Dukes

Finally, the Deputy does not seem to be prepared to recognise that we are talking about the sale of a part of the shareholding not comparable with any other transaction when one would be talking about a total sale.

Mr. S. Brennan

No Irish need apply.

An Leas-Cheann Comhairle

I will allow Deputy Molloy a concluding supplementary.

Mr. Molloy

In the hypothetical case of the sale of 20 per cent of Aer Lingus being the subject of discussion, 20 per cent of which sale was being funded through an underwriter's company which was not disclosing the names of the investors, would the Minister be satisfied to approve such a deal?

Mr. Dukes

I cannot hypothesise about such a position——

Mr. Molloy

I am referring to a hypothetical case.

Mr. Dukes

I am surprised at Deputy Molloy raising it because, not so long ago, I remember a colleague of his saying it was absolute nonsense to sell 95 per cent of the shares in any company——

Mr. Molloy

Will the Minister answer the straight question?

Mr. Dukes

If we are into the business of hypothesising, I can imagine circumstances arising in which an institutional investor might be found to be a suitable partner in a case in which the shareholders behind the institutional investment kept changing because of the nature of its business. There is no point of principle involved here.

Mr. Molloy

Will the Minister publish the list of potential investors which the Secretary of the Department stated he had on file at the news conference on 20 April last?

Mr. Dukes

The answer is in the negative.

Mr. S. Brennan

There is no change in policy?

Mr. Molloy

Why not?

An Ceann Comhairle

I acknowledge the importance of the question but it is also very important that I proceed to other Deputies' questions.

Mr. Molloy

We know what happened when a negative answer was given last week to a matter involving the former Minister and a certain businessman.

Mr. S. Brennan

There is a new Minister but the policies are the same.

Mr. Molloy

I want to know why the Minister replied "no" to my question.

Mr. Dukes

The reasons have been debated in great detail and at great length by the Deputy, Deputy Brennan and my predecessor and I do not intend to rehash the entire argument.

Mr. Molloy

The reasons have not been debated in detail. I am very disappointed at the Minister's efforts on his first day answering questions, to try to erect a stone wall——

An Leas-Cheann Comhairle

We will take the two remaining Priority Questions in the category of ordinary questions.

Mr. Molloy

How are the public supposed to know what is going on? There are serious implications in my questions but I have been refused answers.

Mr. Dukes

I am sorry Deputy Molloy is in such bad humour.

Mr. Molloy

We are all being blackened. I expected more from the Minister.

An Leas-Cheann Comhairle

Please, Deputy Molloy, let us proceed with questions.

Mr. Dukes

The demolition of one of the allegations which was floating around in recent days has taken Deputy Molloy's lollipop away from him. I am surprised he is allowing himself——

Mr. Molloy

I am absolutely astonished. We are not getting the truth here.

An Leas-Cheann Comhairle

Deputy Molloy, please resume your seat.

Mr. Molloy

Why is the Minister walking away from this? The information is on file and the public is entitled to answers. The information must be published so that we know the connections.

An Leas-Cheann Comhairle

I will not repeat myself ad nauseam.

Mr. Molloy

This is a very poor start by the Minister.

An Leas-Cheann Comhairle

Will the Deputy now resume his seat?

Mr. S. Brennan

We have a new Minister but the policies are the same.

Mr. Dukes

I am sorry Deputy Molloy is so dyspeptic that one of his lollipops has been taken away from him, but it might prevent him from rushing into making allegations again and trying to sidle crabwise into them the day after they have been demolished.

Mr. Molloy

I am not making allegations, I am asking the Minister to publish a list.