Elaine Byrne: Lowry & O'Brien -- the story that won't go away
Doncaster Rovers football club is to come under the legal spotlight, writes Elaine Byrne
The definition of coincidence is "the occurrence of events that happen at the same time by accident but seem to have some connection".
Two coincidental events happened last week -- one in the Seanad and one in the Supreme Court.
Together, they may have profound financial implications for this State and the very integrity that this country rests upon.
Event number one: last Tuesday, the Supreme Court ruled that two of the unsuccessful bidders for the State's second mobile phone licence have the right to proceed with legal actions challenging the manner in which the licence was allocated in 1996 to Denis O'Brien's Esat Digifone.
The Moriarty tribunal is not going away.
The Persona consortium, now owned by Tony Boyle and Michael McGinley, came second in the competition. They are seeking damages from the State for the alleged fraud, conspiracy, deceit and misfeasance that occurred in public office in relation to the mobile licence award.
If Persona proves that corruption happened then the State is liable for aggravated damages -- the money that Persona would have made if Michael Lowry had not awarded the licence to Esat.
If Persona wins, the State must pay.
The taxpayer will potentially have to fork out hundreds of millions if corruption is proven. That's money that could solve the €281m deficit in the HSE budget. Nine of our hospitals are struggling to maintain frontline services in the face of crippling deficits.
Denis O'Brien sold Esat to British Telecom in 2000 for IR£2.3bn. He made nearly a quarter-of-a-billion and when he became a tax exile in Portugal he saved more than IR£50m in capital gains tax.
Judge Moriarty concluded that O'Brien donated almost IR£1m in "clandestine circumstances" to Lowry who, according to the tribunal, "not only influenced, but delivered" the licence.
Remember that too.
O'Brien and Lowry both "welcomed" the Supreme Court ruling. Pat Rabbitte said: "The State will fully defend any claim against the Exchequer and will contest any claim of liability to pay damages from public funds to these plaintiffs."
In plain English, the Communications Minister, in effect, has said that the State has adopted a different position from the tribunal findings.
On three occasions in the Dail last Wednesday, Micheal Martin asked Enda Kenny if he accepted the findings of the Moriarty tribunal. The leader of Fine Gael replied, "the findings are very clear". In the eight times that this direct question has been put to him, the Taoiseach has yet to say that he accepts the findings.
The Taoiseach even described the Supreme Court decision as a "private matter".
The senior counsel representing the State told the Supreme Court that the case taken by the unsuccessful bidders was not in the "public interest".
The five-judge Supreme Court took a dim view of this logic put forward by the State. They did not agree that allegations of corruption by a government minister were not in the public interest.
It is the unelected judiciary, not the directly elected government, who are standing up for the public interest.
In their new court action, Persona has to prove that corruption occurred. Ideally, they require new evidence that has not come into the public domain after 14 years of exhaustive tribunal investigation.
When Lowry, O'Brien and Rabbitte issued their press releases after the Supreme Court decision last Tuesday, they were not to know what would happen on Thursday.
This brings us neatly along to event number two.
Senator Diarmuid Wilson ever so causally dropped a bombshell in the Seanad last Thursday morning.
"I wish to advise the House that I have received new information," the Cavan Monaghan senator said, which "refers to the acquisition of Doncaster Rovers Football Club and records that the member attended well in excess of 50 meetings relating to this acquisition."
Is this a smoking gun?
The member is Michael Lowry. A key figure involved in that Doncaster transaction was the Omagh-based businessman Kevin Phelan. The property agent never testified to the tribunal and could not be legally compelled to as he lived outside the jurisdiction.
Phelan is the common link between O'Brien, Lowry and the UK property transactions. Phelan has never given his version of events regarding O'Brien's £4.3m purchase of the English Football League club in 1998, two years after Lowry awarded the licence to Esat Digifone.
The tribunal said it could only ever make limited findings on the Doncaster deal because of the "suppression" of evidence.
Lowry "did have an involvement in the Doncaster Rovers transaction", according to the tribunal. This was intended to "entail a payment to, or the conferral of a pecuniary advantage" to Lowry by O'Brien.
However, the tribunal was "unable to determine the precise nature" of Lowry's interest in Doncaster and the "extent to which it was intended that he would benefit from it".
If Wilson has new evidence on Doncaster, it potentially blows everything wide open. The last time Doncaster had the tribunal treatment it was mired in allegations of blackmail, payoffs and falsified evidence. Someone needs to write a movie script about it.
So, here's what we know.
No 1: Kevin Phelan first met Lowry in Monaghan in late 1997 to discuss possible investments in UK properties. Around the same time, a company called Westferry Limited was incorporated, a trust controlled by O'Brien. Lowry gave evidence to the tribunal that he was unaware of Phelan's association with O'Brien. It was just a coincidence.
No 2: The tribunal concluded its hearings in 2001 regarding any financial links between Lowry and O'Brien into UK property transactions at Mansfield and Cheadle. Lowry "had no connection" with Doncaster and the acquisition was "solely" O'Brien's, the tribunal was told.
No 3: Phelan's relationship with O'Brien soured in 2002. O'Brien's father made a blackmail complaint to the London Metropolitan Police about an incident which occurred during mediation proceedings in litigation relating to the Doncaster acquisition. "Kevin Phelan was in possession of information" the tribunal noted "which could be damaging, principally to Mr Denis O'Brien and Mr Michael Lowry, were it to come to the attention of the tribunal".
No 4: Further information came to light in 2003 when journalist Colm Keena furnished the tribunal with documentation which included a letter dated September 25, 1998, from Christopher Vaughan who acted as solicitor to both Lowry and O'Brien in their UK property transactions.
No 5: The letter was explosive. Vaughan's letter, addressed to Lowry, referred to the former minister's "total involvement" in the Doncaster transaction. It suggested that Lowry had lied to the tribunal.
No 6: Phelan was given payments amounting to Stg£215,000 in 2002, including Stg£150,000 from O'Brien and Stg£65,000 by Vineacre, a property company in which Lowry held a stake. According to the tribunal, the payments were "primarily intended to ensure" that Phelan kept his mouth shut and that he "would not further undermine the false version of Mr Lowry's involvement in the UK properties already tendered in evidence to the tribunal in 2001".
No 7: When the tribunal sought to reinvestigate the Doncaster transaction in 2004, O'Brien commenced judicial review proceedings. Both the High Court and the Supreme Court threw them out in 2006.
When the tribunal finally heard this new evidence on Doncaster in 2007 and 2009, it found that the Vaughan letters supplied to the tribunal back in 2001 had been deliberately falsified.
Reference to Lowry's involvement in the Doncaster deal had been removed. Phelan had known all along that the Vaughan letter was doctored.
What will the new evidence reveal? Will the Taoiseach still refuse to accept the findings? Will the State persist in contesting the tribunal findings by challenging the High Court actions of the unsuccessful bidders?
One more thing.
British Telecom told its shareholders in 2001 that there was no guarantee that it could retain the licence sold to it by Esat. BT's public disclosure document warned that the "proceedings of the Moriarty tribunal" and "suggestions of corruption" may have a" direct or indirect effect" on its operations.
This raises a very important question. If BT acknowledged that there was a financial risk to the sale of the licence because of a future finding of corruption, then surely Esat must have too.
Apparently it is standard practice in a corporate business sale transaction that the vendor would provide a warranty or indemnity to the purchaser with regard to material adverse issues. Does such a warranty exist between Esat and BT?
Is someone else, other than the State, liable for the aggravated damages that Persona is seeking?
Just a thought.
Dr Elaine Byrne, TCD, is the author of 'Political Corruption in Ireland 1922-2010, A Crooked Harp?' (Manchester University Press, 2012)