A former director of Esat Digifone has been giving evidence to the Moriarty Tribunal today. Michael Walsh has been telling the Tribunal what he knows of an investigation the company carried out in 1997 into whether or not the chairman Denis O'Brien had paid money to Michael Lowry. The Tribunal heard that as the investigation got underway, the businessman Dermot Desmond, whose company owned 10% of Esat Digifone, threatened to sue Denis O'Brien if any wrongdoing had occurred.
Even to think of making a payment to Michael Lowry in 1996 was, according to Michael Walsh, totally unacceptable. By 1997 the prospect that such a payment may have been made became of serious concern to the board of Esat Digifone. Esat Telecom, who owned 45% of Digifone, was about to float. Digifone directors were concerned enough to investigate the matter.
Today, Michael Walsh gave a flavour of that investigation. According to notes he took at that time the businessman Dermot Desmond was so upset that he said he would sue Denis O'Brien if it turned out Mr O'Brien was misleading them. But in the end, Dermot Desmond and Michael Walsh accepted Denis O'Brien's word that no payment had been made, or even initiated.
Michael Walsh accepted today that it was an examination of what they thought to be all of Denis O'Brien's relevant bank accounts that sealed their decision to believe their Chairman. He agreed that the board at that time was not given details of other banking transactions that might have altered that view.
Those transactions would have revealed a payment of £150,000 going from Denis O'Brien to David Austin, for the purchase of a house, according to Denis O'Brien. The bulk of that money made a further journey - from David Austin into an offshore account belonging to Michael Lowry.
Earlier, Mr Walsh said that there was no doubt in his mind that, in late 1997, Denis O'Brien had specifically mentioned the former Minister by name during a conversation he had had a year previously with Barry Maloney. This is something on which Mr O'Brien and Mr Maloney disagree.
Mr Walsh also told the Tribunal that Mr O'Brien first characterised his comments to Mr Maloney a year earlier as a "wind-up" at a meeting on 20 October. Mr O'Brien said, at the meeting, that he had told Mr Maloney that he had made two £100,000 payments because Mr Maloney was "giving him grief" over success payments that had to be made. Prior to this date, Mr O'Brien had not been giving this explanation, according to Mr Walsh.
The witness was asked whether the fact that a new explanation was now being given added to the concerns of the board. Mr Walsh said that it was like peeling away layers - the more time one spent investigating, the more information one received.
He said that the board regarded Mr O'Brien's "wind-up" explanation as plausible, but it did not really allay their concerns. Mr Walsh said that the Tribunal was in the background as the investigation into whether there had been any payment to Mr Lowry went ahead.
He said that the planned IPO of Esat Telecom was of more importance to the company. It was critical that Esat Digifone be protected in relation to the prospectus that was being prepared for the IPO.
