Joint Committee on Public Enterprise and Transport.

Sub-Committee on the Mini-CTC Signalling Project.

Monday, 12 November 2001.

The Sub-Committee met at 2.30 p.m.

MEMBERS PRESENT:

DEPUTY S. DOHERTY IN THE CHAIR.

Chairman: I call Deputy Dukes.

The following witness was sworn in by the Clerk to the sub-committee:

Deputy Alan Dukes.

Chairman: Deputy Dukes, thank you for being here. We regret that you spent the whole morning waiting. We thought that we might get to you sooner.

Deputy Dukes: They also serve who only sit and wait.

Chairman: That is true. Deputy Martin Brady.

Deputy M. Brady: Thank you, Chairman. What was the period of your ministerial term covering the portfolio of transport, energy and communications?

Deputy Dukes: From the end of November 1996 to the third week in June 1997, a little over seven months.

Deputy M. Brady: Seven months. What was your experience of the relationship between CIE and the Department?

Deputy Dukes: Did I have any difficulties with it?

Deputy M. Brady: Yes - a general overview of the relationship?

Deputy Dukes: No, I didn't have any particular difficulty with the relationship. I suppose it probably helps that I knew both the Chairman and the Chief Executive from previous professional activities. The Chairman of CIE at the time I knew quite well from my involvement with agriculture down over the years and the Chief Executive I knew because he had been a principal officer in the Department of Finance during my time there, so I knew him quite well in that context. So I didn't have any difficulties, any personal relationship with those individuals. And another, I suppose, senior officer of CIE that I dealt with quite frequently over that period in connection with Luas was Mr. Ray Byrne whom I had known also from my time in Finance. I felt with those individuals at least there was the grounds of a reasonable understanding and working relationship.

Deputy M. Brady: What was your experience of the reporting by CIE to the Department?

Deputy Dukes: Over such a short period it is difficult to give you a comprehensive view, but I certainly didn't find that there was any difficulty from my point of view in getting information that I needed. Again, I suppose, if I needed to get information that only the Chairman could give there was no great difficulty in getting it. I didn't have the impression that officials of the Department had any particular difficulty. That is not to say that we weren't aware of a number of difficulties with CIE, but as far as I could establish, we knew what the parameters of the problems were.

Deputy M. Brady: Did you have a reporting line from Iarnród Éireann as Minister?

Deputy Dukes: A reporting line?

Deputy M. Brady: Yes.

Deputy Dukes: In the normal course of events, the reporting from Iarnród Éireann to the Minister would have been through the Department. I wasn't aware of there being any particular difficulty in that reporting line.

Deputy M. Brady: You found it satisfactory, did you?

Deputy Dukes: Yes.

Deputy M. Brady: In your opinion, what were the responsibilities of the CIE board?

Deputy Dukes: Generally, to oversee the proper running of the affairs of the company and of its constituent parts. It was, I suppose, a complicated enough structure in the sense that there was the CIE company which had also three operating companies. I have to say I wasn't there for long enough to form any very informed view of what the particular complications of that situation were but I can imagine there would be some difficulties in it.

Deputy M. Brady: Did you provide any policy direction to CIE during your term?

Deputy Dukes: Well, I wouldn't say I added anything new to the policy scenario there. I certainly had a number of discussions in some depth about issues that arose and Luas was one of them in particular. I had a number of extensive discussions with the chairman and with other officials of CIE and of the Department about the railway investment programme because that was something that was clearly a matter of particular interest, although I'd have to say that the greater part of those discussions had to do with the development of commuter rail services around Dublin. There was some discussion of issues elsewhere in the system but the one that occupied most of the attention that I gave it at that time was the Dublin situation.

Deputy M. Brady: What policy directions, if any, did you give in relation to the sweating of assets?

Deputy Dukes: About?

Deputy M. Brady: The sweating of assets

Deputy Dukes: The sweating of assets. I don't think I gave any directions about the sweating of assets.

Deputy M. Brady: Was there any policy in place at that time to enhance the revenue of CIE group?

Deputy Dukes: To enhance?

Deputy M. Brady: The revenue. You know - revenue generation to enhance that?

Deputy Dukes: We didn't discuss any issues of the fare increase that I can recollect. No, I think my main concern during that time was on the investment side.

Deputy M. Brady: What did you view your responsibility to be in your role as a shareholder in CIE?

Deputy Dukes: I took the view that it was a State owned company, it was, and is being supported to a very significant extent by Government. Our interest on behalf of the citizens was to get the best service we could from the assets that were there, and as far as it could be done, to provide rational investment that would improve the service to people travelling on the system.

Deputy M. Brady: What would CIE's responsibility be to you as a Minister, as a shareholder?

Deputy Dukes: To deliver on those things.

Deputy M. Brady: Did CIE or Iarnród Éireann seek to have any additional funding during your ministerial term?

Deputy Dukes: No, that wasn't an issue that arose. By the time I was appointed the expenditure estimates for 1997 had been fixed by Government and I had, regrettably, departed before a great deal of work was done on the expenditure estimates for 19.... what would it have been?...1998. The Estimates process would only be starting around June and we had an election that year.

Chairman: You had to live with it.

Deputy Dukes: I had to live with it, yes.

Deputy M. Brady: Did you ever have any discussions with them regarding their budgetary requirements?

Deputy Dukes: No. My discussions would have been really more about the quantum of investments and what we would actually do with it.

Deputy M. Brady: The heads of agreement were signed between CIE and Esat during your term, after the dissolution of the Dáil. Is that correct?

Deputy Dukes: I'm not sure exactly when those heads of agreement were signed. I think ... was it sometime during June 1997?

Deputy M. Brady: Yes.

Deputy Dukes: The only knowledge that I had at that stage of any consideration being given to this came from a conversation I'd had with Denis O'Brien, during the course of which he mentioned to me he was giving consideration to a proposal to use the Iarnród Éireann network as a spine for the roll-out of an optical fibre system. As far as I can establish, that conversation took place on 12 May 1997 and my impression of it was that it was an idea that was going around in his head at the time. My reaction to it was that that was certainly an interesting idea, that as far as I could tell, just as a first reaction, it would be necessary to look into the various legal and competition aspects of such a proposal. That was the end of it. I heard no more about it as an operational proposal until quite some time afterwards.

Deputy M. Brady: Did you have any discussions with members of the CIE board about it?

Deputy Dukes: No.

Deputy M. Brady: Did you have any discussions with CIE employees concerning the proposals regarding the disposal of the CIE property sales or leases or the sweating of the assets of the group?

Deputy Dukes: No, none whatsoever.

Deputy M. Brady: Did you issue any policies in these areas?

Deputy Dukes: In what areas?

Deputy M. Brady: In relation to sales of property or the sweating of assets.

Deputy Dukes: To the best of my recollection, no.

Deputy Higgins (Mayo): Deputy Dukes, this morning you would have heard Deputy Lowry in giving evidence say that he was advised by the then Secretary General of the Department of Transport, Energy and Communications, Mr. John Loughrey, that there was a lack of management expertise evident within CIE-Iarnród Éireann. You inherited the new administration which was introduced during Mr. Lowry's regime. How did you find the management structures and the general level of competence and delivery and so on?

Deputy Dukes: My dealings with CIE were at the level of the chairman, the chief executive and some very senior people, and in so far as they dealt with a forward look at investment I found that there was a good level of comprehension of what our objectives would be. I was aware at that time that there were a number of other problems in CIE and it was an area which I would have got much more deeply involved in had one been there for longer. There was the requirement on CIE to achieve a certain level of savings within its own operation to support the investment programme and that requirement had been there for some time before I arrived, in fact from the previous year. There was virtually no progress on getting the kind of savings in staff and operational costs that were required in order to make the CIE in-house contribution to the investment programme. It was clear to me that there were some serious difficulties to be overcome there but I hadn't come to any conclusions about what the reason for those specific difficulties might have been.

Deputy Higgins (Mayo): You mentioned other problems. Are these the difficulties you are talking about?

Deputy Dukes: Yes, Bus Éireann and Iarnród Éireann were in a situation where as part of the investment programme for CIE they were to contribute a certain amount to the investment programme by internal savings, particularly on the staffing side. By the time I arrived discussions had been going on for quite some time about those issues but no progress had been made, but, as I say, I wasn't there for long enough to be able to come to definitive conclusions about what the reasons for the lack of progress might have been.

Deputy Higgins (Mayo): You would have heard Deputy Lowry this morning strongly defend the roles and reputation of former chairman, Mr. Brian Joyce, and former chief executive, the late Mr. Michael McDonnell. What was your evaluation of their performance?

Deputy Dukes: The late Mr. McDonnell was somebody who had worked in the Department of Finance when I was there and I found him, during that period, to be, as indeed Deputy Lowry said this morning, extremely dedicated, very hard working, imaginative and very effective in anything that he undertook. I was very pleased to find him in that kind of position in CIE. Mr. Joyce, as I said, I had known before through involvement in agriculture. Although I had never worked very closely with him previously, I have a reasonably good personal relationship with him and he seemed to me to be the kind of person who was capable of using the talents of the late Mr. McDonnell in a constructive way.

Deputy Higgins (Mayo): Deputy Brady touched on the heads of the agreement which were signed in the interregnum before the new Government took office in June 1997. Thinking back on the heads of agreement which were central to this entire saga, have you any observations to make? Do you have any regrets, for example, that you might or should have perused the heads of agreement more acutely?

Deputy Dukes: I didn't see the heads of agreement. The idea was floated to me around mid-May of that year by Denis O'Brien. As far as I can make it - I may not be right about that - but I find in my diary a meeting with him on that occasion. I think that I recollect the occasion and the circumstances of the meeting, and if I am right that was where he floated the idea, so it's very conditional, I haven't been able to confirm that any further than that.

The heads of the agreement as I understand it were signed some time in June. The first documentary evidence I can find was in the documents that the committee has provided. The first written reference to that idea that I find in the Department's files dates from September of that year and that document which is in the files is M6F1 295-298. That refers to a proposed CIE-Esat agreement. That's on 12 September 1997. I hadn't seen any heads of agreement before that and of course at that stage on 12 September '97, I wasn't privy to documents that were available in the Department. It's on the next page - page 296 - I would think is the beginning of the document. Yes, "the proposed licensee are engaged in negotiations with a view to signing a licence agreement". As far as I can tell, Chairman, that's the first documentary reference to that agreement in the papers discovered to the committee.

Deputy Higgins (Mayo) : Did you have just one encounter with Mr. Denis O'Brien?

Deputy Dukes: No, but it was only on that occasion that any reference was made to the idea. The idea was in terms of using the rail network as a distribution spin, so to speak, for an optic fibre network. I'm reluctant to go very far into that because I'm relying purely on recollection, but I think I responded in a way of indicating that that would seem to me to be, in principle, a good idea and that it would be necessary to look at the legalities and the competition aspect of it.

Looking at much of the discussion that has followed, people sometimes overlook the natural interest of somebody who has an asset and who finds an offer being made for some use of that asset. It is difficult to conceive of an absolute principle that says he should suggest to other people that they should make offers too, but that is a matter for the competition lawyers.

Deputy Higgins (Mayo): How many meetings would you have had with Mr. O'Brien?

Deputy Dukes: Not very many. From my diary I can tell that there are two diaried visits to my office, one in February '97 and it's noted as a courtesy call. I have no recollection of that. One in May '97. I know that I did meet him more often than that. We had the launch of the Esat Digifone service in March of that year and I am sure I would have met him on other occasions, but they are the only ones that I can document.

Deputy Higgins (Mayo): You would have heard Deputy Lowry say in evidence to the committee today that the perception in the Department was that, because of his persistence, he was regarded as a bit of a pest, I think was the phrase used. Did you find him very persistent in terms of-----

Deputy Dukes: Yes.

Deputy Higgins (Mayo): Yes?

Deputy Dukes: And other operators. I can confirm what Deputy Lowry said about other operators. Personally, I was always inclined to find reasons to do the things that the other operators wanted to do because I was concerned to get ahead quickly with liberalisation. I suppose - spurred on by the fact that, totally contrary to my expectations, when I arrived in the office at the end of November - that was then in the Irish presidency - I felt that I was lucky to have escaped the presidency but then found myself having three councils in the month of December, including a telecoms council. I was rather anxious to press ahead with liberalisation. My reaction, generally, to Denis O'Brien and other operators who were looking for interpretations, was to find reasons why rather than reasons why not to do the things that they were seeking, again, just to press ahead with liberalisation.

Deputy Higgins (Mayo): At that stage you were also the regulator, as well as directing policy?

Deputy Dukes: Yes and that was a clear difficulty. It was one of the things that I discussed from time to time with senior officials in the Department. It was extremely difficult to act as the regulator and the policy-making agency. It was difficult also because one was dealing with Telecom which tended to insist on the letter of the law and, as you know, no monopoly ever gives up without a fight.

Deputy Higgins (Mayo): When you were a Minister, can you recall a Bill floating around the Department in relation to the sharing of infrastructure?

Deputy Dukes: There was a good deal of discussion about that. In fact, I was dealing with that in a different way because this same problem was coming up in several contexts within the remit of the Department. We were dealing with telecoms liberalisation, with energy sector liberalisation, with transport sector liberalisation. During my time, although we hadn't gone very far with it, we were trying to develop a general or consistent approach to the place of regulation and how the policy-making function related to regulation. We were looking at a new model that we had to develop then. Of course, we had very little experience of having the kind of structures in place that would deal with a liberalised situation.

Deputy Higgins (Mayo): That Bill was floating around there at the time and it seemed to make good sense but it has never found its way onto paper, and certainly not into the Houses of the Oireachtas. Can you recall what exactly happened to it?

Deputy Dukes: No. I think what happened was that, partly by force of circumstance, it became necessary to have specific legislation on a sectoral basis, rather than a generic piece of legislation that would be applied to each sector. We had legislation for the regulation of telecoms, we had legislation for the regulation of power supplies, and I am sure we'll have more.

Deputy Higgins (Mayo): Did you ever meet with Mr. Leslie Buckley?

Deputy Dukes: Not to my knowledge. Now, I may have but it certainly didn't make any impression on me. I didn't know of his function and I wasn't aware that there was a person doing those kind of things.

Deputy Higgins (Mayo): Apart from Mr. O'Brien, would any other members of the Esat company have been making contact with you?

Deputy Dukes: I certainly would have spoken to Barry O'Shea and I'm sure that I met one or two other people in that company.

Deputy Higgins (Mayo): In what context would they have been meeting with you?

Deputy Dukes: Certainly, at the launch of the Esat Digifone operation. There's a meeting recorded in my diary with Barry O'Shea and I may have met other people from the company up and down at other functions connected with telecoms generally.

Deputy Higgins (Mayo): Would you have met with Pádraig Ó hUigínn?

Deputy Dukes: I'm not sure if I met him during-----

Deputy Higgins (Mayo): I'm talking about wearing his Esat hat.

Deputy Dukes: No, I don't think so, although I knew Pádraig Ó hUigínn very well. But I don't think I ever met him with an Esat hat on.

Deputy Higgins (Mayo): You knew Dr. Ed Byrne from his time in Finance?

Deputy Dukes: Yes.

Deputy Higgins (Mayo): Would you have met Dr. Byrne as head of projects at CIE?

Deputy Dukes: Yes but in connection with Luas.

Deputy Higgins (Mayo): In connection with Luas but not in connection with-----

Deputy Dukes: Not in connection with this operation, no.

Deputy Higgins (Mayo): Deputy Dukes, when did you become aware of the mini-CTC project?

Deputy Dukes: I think that project would have been in the railway investment programme that was there when I arrived into the ministry.

Deputy Higgins (Mayo): Was there an ongoing discussion in the Department in relation to the funding requirement for the mini-CTC, either Exchequer funding or EU funding?

Deputy Dukes: I would have had a series of discussions with Department officials and with people from CIE about the overall investment programme and that was certainly a part of it. To the best of my recollection I would have been looking for a re-assessment of the priorities in the investment programme from time to time.

Deputy Higgins (Mayo): Were you aware of the joint venture that was being proposed in relation to Newco, the new company, where there would have been a 25% stake by CIE and a 75% stake by Esat?

Deputy Dukes: No.

Deputy Higgins (Mayo): You were not aware of that ?

Deputy Dukes: No. As I say, to the best of my recollection my only knowledge of that was as an idea floated to me in the course of a conversation about something quite different by Denis O'Brien. I am not sure, I think I would probably have mentioned that to officials in the Department afterwards pretty much on the same basis that it was said to me. That conversation, as I say, was about something entirely different and this came in at a late stage in the conversation.

Deputy Higgins (Mayo): As you know there is a school of thought that says that a joint venture would have been the preferable course to adopt as against the licence agreement which eventually was the deal that was done. Would you like to offer the committee any assessment in relation to what your own preference would have been?

Deputy Dukes: No, I haven't given that any great thought. I wouldn't like to give an opinion without giving it some consideration.

Deputy Higgins (Mayo): Thank you, Deputy Dukes. Thank you, Chairman.

Deputy O'Flynn: Just to be clear, Deputy Dukes, when you met Mr. O'Brien on 14 May-----

Deputy Dukes: 12 May.

Deputy O'Flynn: 12 May. Did you say that you may or may not have discussed that part of the conversation in relation to the fibre optic network with officials in your Department?

Deputy Dukes: I might have, I can't be sure. It certainly didn't seem to me from that conversation that it was an actual operational proposal so I wouldn't have thought it very important so I might have mentioned it in the same kind of rather offhand way in which it was put to me.

Deputy O'Flynn: Can you specifically recall whether you mentioned it to Mr. Loughrey-----

Deputy Dukes: I can't really, no.

Deputy O'Flynn: -----your Secretary General?

Deputy Dukes: If I had mentioned it to anybody it would have been to Mr. Loughrey or somebody else at assistant secretary level.

Deputy O'Flynn: You do not recall mentioning it ?

Deputy Dukes: No, I don't.

Deputy O'Flynn: With reference to the signing of the heads of agreement-----

Deputy Dukes: I certainly didn't write anything down about it.

Deputy O'Flynn: On the signing of the heads of agreement on 16 June, are you aware of the evidence given by the Department officials to the committee that they were kept completely in the dark?

Deputy Dukes: Yes, I've read that.

Deputy O'Flynn: From your own experience of being a Minister what is your view on that? Would it be normal for a semi-State body to keep the Department completely in the dark?

Deputy Dukes: I would have thought that would not be normal for a project of that kind. I would have expected that for something as important as that clearly was, that both CIE and Esat, because of the nature of their relationships with the Department, would have made it clear to the Department what was going on. I won't say "would have" but certainly it would seem to me that in a proper relationship they should have. Certainly CIE should have raised it with the Department. In any case they knew they would have to because there was the question of the statutory provisions that had to be made.

Deputy O'Flynn: While you were still Minister did you see the press statement about the signing of the heads of agreement and the photograph?

Deputy Dukes: I may have but if you are correct about the date I probably had other concerns at the time.

Deputy O'Flynn: You would have seen it?

Deputy Dukes: I may have seen it-----

Deputy O'Flynn: Or it would have been brought to your attention. Were you Minister or acting Minister at that time?

Deputy Dukes: Minister. We were electioneering at the time.

Deputy O'Flynn: No, the election was over. The election was 6 June.

Deputy Dukes: 6 June, yes.

Deputy O'Flynn: You were the acting Minister?

Deputy Dukes: No. In fact one is the Minister.

Deputy O'Flynn: There was a bit of confusion over that a few years ago.

Deputy Dukes: There was. That was at a higher level, I think.

Deputy O'Flynn: When the photograph appeared in the newspapers on 16 June or 17 June and there was statement on heads of agreement, was that brought to your attention or did you discuss it with your officials at that stage?

Deputy Dukes: I honestly can't recollect. I have a vague recollection of being a bit surprised to find that the thing had gone that far, having been mentioned to me about a month previously in a rather offhand way as just an idea that was being considered.

Deputy O'Flynn: Did you take any action as a result of that?

Deputy Dukes: Not that I can recollect, no.

Deputy O'Flynn: Did you mention that you had a very good relationship with the chairman of CIE, similar to the relationship Deputy Lowry had with him?

Deputy Dukes: Yes, I did.

Deputy O'Flynn: Did you call him up and ask him-----

Deputy Dukes: No, I don't think I had been in contact with the chairman of CIE? Sorry?

Deputy O'Flynn: Did you call him and ask him why you were not in the photograph or anything?

Deputy Dukes: No, I am not one of the people who likes to attend the opening of an envelope, you know.

Deputy O'Flynn: So you did not call him------

Deputy Dukes: I don't get upset about these things.

Deputy O'Flynn: Did you call him at all and ask him about-----?

Deputy Dukes: No, I don't think that I would have had any conversation with the chairman of CIE after the election.

Deputy O'Flynn: Thank you.

Chairman: You met Mr. O'Brien on 12 May 1997.

Deputy Dukes: Yes.

Chairman: You talked about the joint venture with him on that occasion.

Deputy Dukes: No, I met him in connection... if my recollection is right, Chairman, and I think this was the occasion...I met him in connection with a fine of £1 million that was being applied to Esat for having missed one of the target deadlines in the roll out of their service. He came to talk to me about it. He wasn't particularly happy about it and I confirmed that the fine was being applied. I think, for the sake of completeness, if my memory serves me correctly, I told him that there would be another fine of £1 million if they missed the next deadline because I was very anxious to make sure that the liberalisation process in telecoms went properly and the roll out of the Esat service was important in all of that. I suppose that wasn't a very propitious start to the conversation, but I explained to him why I was anxious about the roll out working and he was, of course, himself, anxious that the roll out should continue. After an inauspicious start the conversation got around to a more constructive view. It was at the end of the conversation and very much by the way that he mentioned the fibre optic idea to me.

Chairman: That was heads of the agreement-----

Deputy Dukes: No.

Chairman: None of the ongoing discussions that were taking place-----

Deputy Dukes: No, as I say, it was mentioned to me very much as an idea that was going around in his head. I certainly didn't have the impression that anything like heads of agreement were being prepared.

Chairman: On 15 May, a few days later, another director of Esat, Mr. Leslie Buckley, whom you have said you never met, wrote to Dr. A. Byrne. Perhaps we should put up the correspondence on screen. It is M3.F2.290. It is an Esat discovered document. Publish. That was just three days after that and it was signed by Mr. Leslie Buckley, director of Esat. He wrote to Dr. A. Byrne and I understand that the aim in the second paragraph.... the aim of both parties is to agree and sign heads of agreement document, subject to approval of the respective boards in time for the CIE board meeting scheduled for 4 June 1997. Esat Telecom goes on that based on this commitment by Esat CIE will immediately cease any further negotiations with other interested parties and that these parties are informed of the position forthwith, and it goes on. None of the contents of that letter was discussed with you during the course of the meeting with Denis O'Brien?

Deputy Dukes: No.

Chairman: Did you feel it necessary to communicate any of the contents of the discussion you had to the Department or to officials in the Department?

Deputy Dukes: Certainly nothing of that kind. As I say, my recollection is that the thing was conveyed to me very much as an idea that was going around in Denis O'Brien's head. I may have mentioned it on that same basis to senior officials in the Department, but I can't honestly recollect whether I did or not, but I'd be surprised if I hadn't quite honestly, but if I did, it would have been very much in the same kind of context. It was certainly nothing as definite or as direct-----

Chairman: As focused as that.

Deputy Dukes: No.

Chairman: Are there any minutes of the meeting you had with him or is there was any record of what went on or was anybody else present?

Deputy Dukes: No, there was nobody else present.

Chairman: So it was just a meeting about the issue you say he came in about?

Deputy Dukes: Yes.

Chairman: Did you find him a persistent person? I think you said already that you did.

Deputy Dukes: He was certainly persistent in trying to expand the envelope of his telecommunications interests and activities, as indeed other people were who were also providing services.

Chairman: Would that persistence be with attempts to have meetings with you or with what was related to you from the experience of officials in the Department?

Deputy Dukes: In his case, it wasn't so much in terms of meetings with myself. It would have been in terms of contact between either himself or other people in the company and people in the Department as a result of which the Department would report to me that a request had been made, you know, to get involved in some particular activity and they would advise on whether or not they thought it was in keeping with what could be done within the legislation as it was then.

Chairman: Is there anything specific that would be or was hotly pursued by Mr. O'Brien?

Deputy Dukes: I am afraid I can't be specific but I know that he was certainly trying to expand the envelope of the services that he was providing, as indeed other people were. There were frequent occasions when it was necessary to parse and analyse the then existing state of the legislation to decide whether what they were proposing to do could properly be included or whether what they were proposing was trespassing on the rights that were left to Telecom to be the sole provider of services.

Chairman: Would Mr. Joyce, the Chairman, meet you on a regular basis or would he meet you as issues arose that needed to be communicated?

Deputy Dukes: We wouldn't have met on a regular basis. It would have been on the basis that he felt something was important enough to come and talk to me about it or that I felt something was important enough to ask him to come to see me.

Chairman: During your short term in office, did he come to you about anything in particular?

Deputy Dukes: I can't think of anything specific. There was at least one occasion when we met so that he could give me a general briefing on the situation in CIE as he saw it and what they were planning to do at that time.

Chairman: Did you find him an effective chairman?

Deputy Dukes: It seemed to me that he, as I say, was the kind of person who could use the capacities of the late Mr. McDonnell effectively but I didn't have a great deal of day to day contact with Mr. Joyce.

Chairman: Were you aware that he was or was not a hands on chairman?

Deputy Dukes: I would have been aware from, I think, the late Mr. McDonnell that Mr. Joyce was the kind of chairman who liked to-----

Chairman: Chair the meeting and that was it?

Deputy Dukes: To chair the meeting and to fix the strategy and then rely on other people to put pressure on other people to bring it about.

Chairman: During your short term as Minister was there any political pressure or other types of pressure brought to bear upon you or was it attempted to influence the interests of Esat?

Deputy Dukes: No.

Chairman: That did not happen at any time.

Deputy Dukes: No.

Chairman: Were you aware of any politicisation within the company of CIE, as it was described this morning in a speculative way by Deputy Lowry?

Deputy Dukes: I was aware of that history and I was aware of the view that Deputy Lowry took of all that when he was a Minister. I was aware of certain other, if you like, undercurrents of political interest but I didn't meet any of them in my time.

Chairman: Do you have any questions, Deputy Rabbitte?

Deputy Rabbitte: Deputy Dukes, would it be fair to say that during your time as Minister, CIE was not at the top of your agenda?

Deputy Dukes: No. At various times it was.

Deputy Rabbitte: Was it?

Deputy Dukes: Yes. One of the things that I spent a good deal of time on was Luas and I was very much involved with CIE. For a time I was very involved, as I said earlier on, in looking at the investment programme, particularly on the railway side, because I was concerned with the direction that was taking.

Deputy Rabbitte: I am intrigued by the notion that you were talking to Denis O'Brien on 12 May, when he told you that an idea was going around in his head, as you put it.

Deputy Dukes: Those are my words, not his.

Deputy Rabbitte: I know, but your interpretation was that the idea of using the spine of the rail network to roll out an alternative fibre optic system was going round in his head. Obviously, the heads of agreement were signed within days. It seems odd that Mr. O'Brien would convey his thoughts in what you called an offhand fashion at a time when his right hand man was finessing the heads of agreement.

Deputy Dukes: It does indeed, yes.

Deputy Rabbitte: Other than that, you just agree with me that it was odd.

Deputy Dukes: It seems odd that that would have been the case and it seems odd also that, at that stage, CIE had given no information to the Department about what it was undertaking, particularly since it was going to need a statutory action of some kind to bring it to a conclusion.

Deputy Rabbitte: You know, I presume, that this extraordinarily short period of time happened to coincide with the Taoiseach of the day calling a general election and a new Government taking office. During the short interregnum, virtually everything happened. The heads of agreement were concluded and signed, notwithstanding the fact that as a Minister on the campaign trail, you did not know that it was to happen.

Deputy Dukes: Yes.

Deputy Rabbitte: Is that not odd?

Deputy Dukes: It is, yes.

Deputy Rabbitte: It is odd that there was such a flurry of activity in the period when there was nobody minding the shop. You were concerned about getting back into the Dáil, as all other Deputies were. The new Minister was not yet in office and all of these things were put together with a flurry of activity.

Deputy Dukes: It may seem odd. I am not sure how much one could or should read into it. I think it's fair to say though that at that time, if there was an expectation that there would be a change in Government, I think it would have been fair to say that people might have expected an alternative Government to be less keen on liberalisation of telecoms than the outgoing one was. Certainly, the impression that I had as Minister was that the Opposition of the day was rather resistant to the idea of liberalisation in the telecoms sector. Now you and I both know they can change their views rather quickly, but, you know, certainly the impression one got from them at the time was that they were rather opposed to liberalisation of any shape.

Deputy Rabbitte: I thank Deputy Dukes. I have no further questions.

Deputy Currie: Deputy Dukes has told the sub-committee that he favoured liberalisation, which was being freely discussed at this time, and that he would have driven it on had he been given the opportunity. Did it occur to you that under the aegis of your Department you had certain assets which were important and valuable, like CIE's permanent line, Bord Gáis and the ESB? Did it occur to you that there were assets there that might be valuable?

Deputy Dukes: In a general way it would, although I would not have classified them quite in the way you have. As far as Iarnród Éireann was concerned, quite clearly one regards that as an asset. I would not have regarded it as an asset that would be realised because, looking at the experience of liberalisation of rail transport in the UK it seemed to me that they had taken a very wrong road there and the experience seems to have indicated that. On the other hand, where the ESB was concerned, it seemed to me that one could take a very different view about how the assets would be used. Another one of my concerns about liberalisation was in road transport where, of course, the situation is again quite different. There wasn't a single view that you would take on the assets in the various parts of the system that were then still in the public sector.

Deputy Currie: We have heard evidence - I wonder whether you heard it or noticed that 'first mover' advantage, as it was called, was a very considerable one in relation to Esat. In financial terms it turned out to be very important. Were you aware at any stage of this potentiality?

Deputy Dukes: Yes. I would think 'first mover' advantage is a necessary and dynamic part of the economic system.

Deputy Currie: But in the context of-----

Deputy Dukes: It is like the way, one American general says you win wars, "ye git there fustest with the mostest". That's the principle of enterprise, I would have thought.

Deputy Currie: In the context of liberalisation and recognition of the potential, did you inquire of your officials as to whether they had done any work in terms of assessing the value of these assets?

Deputy Dukes: Yes. As I said earlier on, we were engaged in quite a lengthy and thoroughgoing discussion of the process of liberalisation itself and looking at what we would do to construct a regulatory system and how we would go about the use of assets that were already in place, like the distribution network, the transmission network of the ESB and other assets of that kind that were there. Without having come to any conclusions, I don't think there's any one principle that you can apply indiscriminately to all of these assets. I think they have to be treated in different ways.

Deputy Currie: Did you hear the evidence which we heard from Esat that if they had had difficulty in relation to the permanent way that they would have sought access to the roads and the canals? Did you hear that evidence?

Deputy Dukes: I read it, yes.

Deputy Currie: Would you agree that that would have been very much secondary to the value of having such access on the railways?

Deputy Dukes: I don't know. From the evidence that was given, I don't think that they carried out any very deep analysis of what the economics of operations would have been on the canals or on the roads. It seemed to me that they felt in approaching Iarnród Éireann that they could help to kill two birds with the one stone, for example. They knew that Iarnród Éireann needed a lot of work done on its signalling and it seems that that would fit in quite well with the kind of work that would be done for the optic fibre cable. In the event, it was not managed that way with the results that we have seen so far which haven't been all that brilliant in terms of planning and operation.

Deputy Rabbitte: In regard to the £1 million fine, what was that for?

Deputy Dukes: It was part of the contract that went with the mobile telephony license.

Deputy Rabbitte: So it related to the Digifone side of the business?

Deputy Dukes: Yes, it had a roll-out schedule and there were penalty clauses in the contract if they failed to meet that schedule.

Deputy Rabbitte: Were the networks we are talking about here of relevance in that context?

Deputy Dukes: No. The network that was involved here-----

Deputy Rabbitte: That was largely a radio wireless system.

Deputy Dukes: It was, yes, and it was the one where we had lengthy discussions about Garda station masts and so on and so forth.

Chairman: Deputy Dukes, thank you. You are excused.

The witness withdrew.

Chairman: I call Deputy O'Rourke.

The following witness was sworn in by the Clerk to the sub-committee:

Deputy Mary O'Rourke, Minister for Public Enterprise.

Chairman: You are welcome, Minister. We have been longer at our business than we thought; we thought we might have had you before lunch.

Minister, you took up the office of Minister for Public Enterprise on what date in 97?

Deputy O'Rourke: 26 June 1997.

Chairman: On coming into office, or shortly afterwards, were you aware of the importance of rail safety and the impact that probably an inadequate safety was having on railway transportation?

Deputy O'Rourke: Very quickly I went to.....I don't mean I'm going to speak very quickly. I mean, very quickly after coming into office I went to a meeting of the board of CIE. I decided that I would visit, firstly, each of the semi-States and I went to a meeting of the board of CIE. At that meeting, very quickly, it was brought to my attention that the lines, the track of CIE, the permanent way, was in a very, very bad condition and that Iarnród Éireann intended to conduct, or had already, I think, done some preliminary studies but intended to conduct a major study on the safety of the rails throughout Ireland, and they made it very clear to me that there was a need for a quite massive investment in the safety procedures - well, mostly in the track. They talked a lot about the track on that day, yes.

Chairman: I take it this was a matter of some urgency.

Deputy O'Rourke: Yes. I took it very urgently because I think if you're involved in transport, public transport, and if you have the honour to be a Minister for that, safety must be the very first consideration that you have.

Chairman: At the meeting of the board of CIE which you attended, did they raise with you the mini-CTC project?

Deputy O'Rourke: No, never.

Chairman: It was not disclosed to you at that meeting, which obviously was held shortly after you became Minister, that heads of agreement had been signed and certain arrangements had been put into place.

Deputy O'Rourke: No, absolutely not. The board was concerned, at the meeting with me ... Well I suppose, in fairness, they would be dealing with me for the first occasion perhaps, 'though I had met the board, I think, just before that, some of them, with regard to an imminent bus strike. But meeting the full board and all of the members of it, it would be my first meeting with them and they with me, and I suppose there would be a certain amount of...well... 'sizing up' done during the course of that meeting, but I do know very clearly, and can remember very clearly, that they talked about the need for massive investment in CIE, or in Iarnród Éireann and most of our discussions were about Iarnród Éireann, and also that they were going to.... had either conducted part studies or were going to have more studies done on the extent and need to revitalise and refurbish the track, the permanent way.

Chairman: The fact that the heads of agreement had been signed at that time, that the mini-CTC contained a considerable safety element, in fact it was a core issue in the safety requirements, did not form part of what was being planned or of the ongoing development?

Deputy O'Rourke: Not to my recollection. The recollection I have of that meeting is for the need of massive amounts of money and I remember thinking wryly to myself "I'm only in and there is already [and I didn't doubt their word of it] being put to me the need for massive investment in Iarnród Éireann".

Chairman: You had been in Government a short time before that. You may have heard the evidence of Deputy Alan Dukes.

Deputy O'Rourke: I did.

Chairman: He was of the view, in response to a question by Deputy Rabbitte, that many things happened during the interregnum period when - as Deputy Rabbitte said - there was nobody minding the shop.

Deputy O'Rourke: I don't think, in fairness to Deputy Rabbitte, he really meant that because he and I and everybody would know that you are a Minister until the day - I mean in the change of Government - until the day the newly elected Taoiseach stands up and announces the name of the new Minister for the job you had. So, in fact, there isn't, there is an interregnum in the correct meaning of the word, that it is in between the finishing of one Government and the formation of another, but there is no interregnum in stewardship terms. You are the Minister until the day the new Minister comes in with his or her bags and papers and says "I am the new Minister".

Chairman: He was probably referring to the fact that there were some weighty decisions taken in the closing days of the Government, before the general election.

Deputy O'Rourke: I was outside in the waiting room.

Chairman: Deputy Dukes gave evidence that there were concerns that, in the Opposition, there was opposition to liberalisation and that if it did not happen - and I do not want to misrepresent him - there might not be the same positive response to the liberalisation process.

Deputy O'Rourke: If I listened to Deputy Dukes, when I was outside in the room, and I myself, I mean, we were looking, every one of us are looking back now in hindsight at events which happened then, but bearing in mind that the general election was 6 June 1997 and that 4 June, apparently between 4 June and 16 June it does seem to me that there was a quite unseemly haste to get matters concluded, i.e. the heads of agreement. I hasten to add that that is in looking back. Obviously, I didn't know then, but it did seem that.... I note the words Deputy Dukes used were "a flurry" of activity and I certainly would echo that. There appeared to be, looking back, a flurry of activity between openly conceiving of the matter and to reaching the signed heads of agreement and now I think how quickly it was all done, when usually these things take a lot of time.

Chairman: At that time did you have the opportunity to speak with the then chief executive of CIE, the late Mr. McDonnell?

Deputy O'Rourke: When I came into office?

Chairman: Yes.

Deputy O'Rourke: No, there was within two weeks of I coming into office there was the threat of a Bus Átha Cliath strike and we consulted with the Labour Relations Commission with Mr. Kieran Mulvey who was endeavouring to ensure that it might not happen and endeavouring to come to some terms of agreement with the trade unions concerned and his advice to both myself and the Department that evening was that the time was very short and that they wouldn't, they weren't able to reach full conclusion and that perhaps the strike should be called off and there should be further talks. We conveyed that, I conveyed it, well the Department conveyed it to the board of CIE and following that, within about maybe two or three days, I wouldn't be quite sure, but very shortly, perhaps the day after, the chairman and the chief executive and some of the main executives of Iarnród Éireann came to see me, of CIE, excuse me, came to see me.

Chairman: When they came to see you, was this a meeting by arrangement? They sought the meeting with you.

Deputy O'Rourke: It was an appointed meeting.

Chairman: It was an appointed meeting. Was it a briefing meeting or a meeting that could be described as bringing you up to date on the activities, level of activity, plans and looking forward by the company?

Deputy O'Rourke: No, I think the later meeting - the meeting which I went to to the board to meet them - was a meeting such as that. This meeting was concerned, in the main, with the proposed or now put to one side strike by Bus Átha Cliath employees. It was concerned, in the main, with that.

Chairman: Had you any subsequent meeting after that with Mr. Joyce, the Chairman, on his own reporting to you in the normal way that chairmen, in accordance with the governance procedure, would report to the Minister?

Deputy O'Rourke: Yes, I asked in the Department and we looked through the diary. I think I had five such meetings, perhaps six, and each of them would be-----

Chairman: Would this be about the time he resigned?

Deputy O'Rourke: Yes, I am talking of that period. Maybe four, five - of that number - and we went for two meals together to Buswells hotel - nothing exotic, Chairman - and we were enabled, I thought, in fact, by the time we had been a few months before his resignation, I had thought we had reached a greater compatibility one with another.

Chairman: That was the time of his resignation.

Deputy O'Rourke: Yes.

Chairman: In the course of your earlier meetings - three, four or whatever number it was - what subjects were discussed, or can you recall if there was anything of relevance to mini-CTC, Esat cabling, the Esat legacy or the Esat deal?

Deputy O'Rourke: No, I never had a conversation with the Chairman about Esat or mini-CTC except - I'll just go on to it in a moment----- In general, our discussions would be about, as I think he was right as Chairman, the need for investment, in particular capital investment in Iarnród Éireann, and in the beginning the need----- I think the very first meeting after, let's say, the Dublin Bus meeting and the general board meeting was when we, after the Knockcroghery incident, when I was quite determined that safety was going to be, and spending on safety, would be the main thrust of my time in public transport, and we talked about that at one of the meetings where he and I met.

Chairman: So, none of the discussions related in any way to mini-CTC or any of the matters that are the subject of this inquiry?

Deputy O'Rourke: Only in a - I'm just going on to that, Chairman - peripheral way on one such meeting. I said to him "Are there difficulties?" and he didn't give me any explicit information, but I did hear him and I did look at him when he was speaking here and he did say that he was aware from some remark I made that I was aware - was beginning to be aware - that there were some difficulties, but there was no conversation or debate between us about a matter such as that.

Chairman: When the matter was raised, even very briefly or scantily, was it raised by you?

Deputy O'Rourke: Yes, I said something to him about it.

Chairman: Around what time was that, Minister?

Deputy O'Rourke: I wouldn't have the date here but I am sure I can get it for you and give it to you.

Chairman: Yes, it might be a help if you can just put things in-----

Deputy O'Rourke: I would have to check it with the diary, but it was only----- It wasn't a thrust of the meeting or it wasn't the main subject of our meeting.

Chairman: It wasn't the major business dealt with, so to speak?

Deputy O'Rourke: No, I think that's the way, yes.

Chairman: Which of your officials in the Department would have been liaising with you and keeping you abreast of matters?

Deputy O'Rourke: It was Pat Mangan at that time.

Chairman: Did he, at any stage, raise what came to be subsequent and considerable concerns to the Department with you?

Deputy O'Rourke: About?

Chairman: About the delays, overruns and problems that seemed to be developing over a considerable period.

Deputy O'Rourke: No, I think the first.....I made out a calendar for myself because, listening to people speaking, the various people who came in, it struck me that lots of people had different information on it. But on 1 November 1999 - I did this myself, Chairman, so it's only a note from myself to myself, if you like - the Minister, that's me, received a note from a senior civil servant in her Department concerning "serious difficulties" with the mini-CTC. The memo stated: "It had been hoped that these difficulties would be overcome but it is now evident that this is not the case". The memo went on: "The potential for further significant time delays and cost increases gives cause for concern". I asked and.....first of all I wrote on the memo that I should be kept informed of this progress or lack of progress.

Chairman: That was November 1999.

Deputy O'Rourke: The first - 1 November.

Chairman: It was intended to have completed the work by 31 December 1999-----

Deputy O'Rourke: Yes, but-----

Chairman: -----to qualify for EU funding.

Deputy O'Rourke: Correct, and I must say, Chairman, that, in the previous month, at the very end of that month, I think it was the last Saturday of October - it was a constituency clinic; I have them on a Saturday - on that Saturday I received a telephone call in my constituency office which is in my home, from a person, a gentleman, telling me that I would be hearing of difficulties with the mini-CTC signalling system.

Chairman: I suppose things are easily picked up and commented on in hindsight but can you recall if it would have made a difference if you had known earlier or if it had been communicated to you earlier that the deadline would not be met? This is after providing the Statutory Instrument in the preceding year. There were considerable delays and overruns and safety was the kernel of all this. If you had known at the time, do you think that there was anything you might have done or did you consider afterwards that certain changes, re-analysis or re-examination would have taken place?

Deputy O'Rourke: You see, when it all progressed and when the finality was coming, if you like, with the signing of the agreement and the signing of the Statutory Instrument, and that was coming up now to early February, I think, or earlier February-----

Chairman: In 1998.

Deputy O'Rourke: Correct. I remember getting a memo, I think from John Fearon, at that period in which, you know, the idea of exclusivity with Esat was mooted in it and that this wouldn't adhere to competition rules then highly relevant. I wrote on the side of the document: "This must be adhered to". This is with regard to the non-exclusivity of the arrangement with Esat because, of course, it shouldn't be that there would be.....there would have to be an allowance for competing telecom companies who would wish to also use the backbone of the rail system. I remember being very exercised about that.

I also had in my head - nothing I could put my finger on - the idea that the moneys and the finance as put forward by CIE to which they hoped to attract through their liaison with Esat that somehow that wouldn't come through, that there wouldn't be.....that there was a very optimistic view taken - that might be the best way of putting it - that it seemed to me there was a very optimistic view being taken by CIE, by Iarnród Éireann - whichever - of the likely financial outcome of this liaison which, somehow, I didn't know would it be realised just in the quite massive figures they were putting to us.

Chairman: Do you recall the meeting of 11 February with Mr. Mangan, who arranged it, Dr. Ray Byrne and Mr. Jim Gahan of CIE in connection with the Statutory Instrument?

Deputy O'Rourke: I do, yes.

Chairman: Could you tell us what was represented to you? I take it that meeting was to encourage you to deal, as soon as possible, with the granting of the Statutory Instrument?

Deputy O'Rourke: It was, because I was worried about the exclusivity thing and I was also worried about the financial outcome of whatever would be the arrangement. I suppose I was reflecting on that myself and also reflecting on it to officials. It was suggested to me that I would meet with two of the principals, the principals in question being, I think, Dr. Ray Byrne and Mr. Gahan. So they came in to see me and we went through - it would be by nature of a memorandum - we went through the details of what they hoped to get out of it and what they hoped to----- I got this then from them the day before, at least the Department did. It came in to Pat Mangan from Dr. R. M. Byrne, head of programmes and projects.

Chairman: Was it a memo?

Deputy O'Rourke: Yes, it's a letter but it's enclosing a memorandum. It's called "8A".

Chairman: Have we discovered that?

Deputy O'Rourke: I see my signature on it. It was sent on the 10th. I see my signature is on it.

Chairman: Is there a number, Minister, on the bottom right-hand corner?

Deputy O'Rourke: Yes, 8A

Chairman: On the bottom right-hand corner?

Deputy O'Rourke: No. Page 1, page 2.

Chairman: That is not a discovered document, is it?

Deputy O'Rourke: I think so, yes, I heard other people talking about it.

Chairman: We might get it at the Minister's convenience.

Deputy O'Rourke: I heard somebody else referring to it so it must be. May I have it back, please?

Chairman: We can give it back if it has been discovered. Did anybody at that time indicate to you or was it revealed to you - by body language or otherwise - that there was a certain urgency about obtaining the Statutory Instrument?

Deputy O'Rourke: No, well ... I don't know much about body language. I got it on the 10th and it was marked on the 12th when I read it. It came in, I think, that particular day, but this is the memorandum anyway that was put to me. Before they came in I had read it and I said ... I see my notes now, which would be the notes of 12 February 1998. I see on top of page 3 I've written here "How will it be ploughed in?" and then I see the next one I wrote "The ploughing which will be undertaken for Esat will also enable CIE to make separate arrangements which will generate additional annual savings of up to £0.3 million", and I wrote "How?". And then I see how often "CIE has negotiated free of charge capacity in respect of six fibre optic pairs on Esat's telecommunications network. Each fibre pair is estimated to have a commercial annual value of up to £0.5 million or £3.3 million in total.", and I said "How often?" So they're just comments. I underlined something here and something----- These are my marks, I know, yes.

Then we went through that when Dr. Byrne and Mr. Gahan came in. We talked through ... I think Pat Mangan and maybe somebody else - certainly Pat Mangan was there with me - and we talked through all of these points and they would have been, I'm sure, if I recollect, reasonably replied to by them. Then there was the last, on page 5 ... because I remember saying to CIE "But how do you know anything about telecommunications? I mean, your brief is not telecommunications, your brief is public transport." They told me, and it's written here "Throughout the negotiations with Esat, CIE were independently advised by Norcontel, the International Telecommunications Consultancy, who endorsed the final deal as a very good one for CIE."

Now I noted, and there's just one thing I wanted to say, it was that I noted in Dr. Byrne's evidence - and I didn't see all the evidence, Chairman, I saw as much as I could - but I noticed that he said I congratulated the representatives on what I said was a very good deal. I did not congratulate the representatives.

Chairman: Before we get to that part of the discussion you had, did the representatives of CIE there, Mr. Gahon and Dr. Byrne, indicate any urgency associated with the necessity to have a Statutory Instrument approved?

Deputy O'Rourke: I think they may not have said it at the meeting, but I think they must have had because the arrangements for meeting them were put into place very quickly once they looked for it, you know. It was between the 10th and the 12th and sending the memorandum and meeting me and going through it. That was all done pretty smartly.

Chairman: Were you aware then, shortly afterwards or before the meeting of, to use the words of Deputy Dukes, a "flurry of activity" with letters to people in CIE to make sure the Statutory Instrument was obtained and the fact that there was what has been described here in evidence as an experimental cable laying exercise being undertaken? You did not hear any of that, did you?

Deputy O'Rourke: No, I didn't. What I know of that and sometimes when we're involved in an exercise such as this, you mix up what you knew then with what you know now; it's difficult to separate it in your head. But, I don't recollect any pressure upon me to come to a quick decision, except as I say those two to three days which seem quite compressed in time, but I don't remember any talk of an experimental digging, which I later found out about. I'd put it into my head as a sort of a pilot project as distinct from an experimental digging and I heard an explanation given here which said it wasn't lit up. The fibre optic cable was put in, but not lit up. That was prior to me agreeing and signing the Statutory Instrument. I think I'm right in what I heard on your committee's hearings.

Chairman: Were you aware, Minister, that CIE, the company, might very well have been exposed to some risks unless this experimental exercise was undertaken? In other words, the laying of the cable was described as being made in the context of an experiment, until such time as the statutory instrument was granted. Were you aware of any such risk?

Deputy O'Rourke: No, I'm now aware of it and I'm also aware that it would have been what I would have thought would have been not quite the way to go about your business, that until the statutory..... until the legal framework was given to the work to be done that the work to be done should remain work to be done until that legal framework was complete.

Chairman: Would you have expected that the cable would be laid in accordance with practices and standards that would not put CIE, the company, at risk?

Deputy O'Rourke: Yes, it shouldn't expose the company to any commercial-----

Chairman: State company.

Deputy O'Rourke: ----- State company to any commercial fine or any commercial retribution or "punishment" is the wrong word, but retribution of any kind of a financial nature or of a legal nature until, in fact, the legal framework would be in place.

Chairman: Did you know or check if the request for a Statutory Instrument had gone to the board for approval or had been approved by the board of CIE?

Deputy O'Rourke: Well, you see..... I just at this point can't recollect that conversation, but you would be of the opinion that all those matters would be done correctly. There was a chair; there was a board; there was a system for doing business and there were people employed at various managerial levels within the company to do the business and one would expect that the business would have been done correctly with regard to reportage to a board.

Chairman: You read out the quote from Norcontel, which stated: "Norcontel endorsed the final deal as a very good one for CIE". That was represented to you at the meeting, is that correct?

Deputy O'Rourke: I remember the conversation about it very distinctly. It was kind of the coup de grace really in the whole exchange in that we were going through the various points of the memorandum one by one and then the icing on the cake was the one that Norcontel who were and are very respected international telecommunications consultancy that they in fact had as I understood it. Now I know that is not so now because I understand and I have received a copy of evidence to Commissioner Christopher Meehan, transcript of proceedings on 5 and 6 October, which I didn't know of until this week, but this was given to me, but it was represented to me that they had kept a watching brief and that they had looked at it in all of its aspects and that the final deal, and I thought that was very telling, who endorsed the final deal as a very good one for CIE.

Chairman: To take some of the matters you mentioned, you were not told whether it had or had not gone to the board. You were not told that the laying of cable was on an experimental basis. You were told that Norcontel endorsed the final deal as a very good one for CIE and now you have discovered that was not a correct representation of the situation.

Deputy O'Rourke: On page 180 of this evidence to Commissioner Christopher Meehan, which evidence was the testimony of a Padraic Casey and Jarlath Burke. I think the one I'm going to read is Padraic Casey, and that was on 5-6 October 2001, and there's quite a bit in it, but they say here, "What I'm saying is" and this is Padraic Casey speaking, "What I'm saying is that we never described the deal as being a good deal."

Chairman: The fact that it was represented in that way was very important from your point of view. Is that the situation?

Deputy O'Rourke: You mean what I'm reading now?

Chairman: What was represented to you-----

Deputy O'Rourke: Yes.

Chairman: -----that Norcontel endorsed the final deal as a very good deal for CIE. Is that what was represented to you?

Deputy O'Rourke: Well, it is here on the memorandum which came into me.

Chairman: Yes.

Deputy O'Rourke: And then we talked through the memorandum point by point and I think - again now this is only my recollection of the meeting but I am sure there would have been minutes of it - as I understood it the meeting started off with telling me about Norcontel and the meeting ended with telling me about Norcontel.

Chairman: Yes. The fact that is not what Norcontel said-----

Deputy O'Rourke: Well so the evidence here on oath says.

Chairman: Yes. Do you consider that to be a very serious situation as it was represented to you?

Deputy O'Rourke: Well, Chairman, you and your committee members are the deciders of that when you come to make your report. I can only tell you what happened. I can only tell you of the meeting I had and what was said to me. I can only tell you of the sworn evidence which I have read which went to a commissioner and that's all I can do. The deciding of it as to .... the elucidation of it and the determination of it is for you and your members and I know you understand that, but I remember vividly the meeting with Dr. Byrne and Mr. Gahan and I have read just in the last few days this sworn evidence.

Chairman: Did your Department communicate the representation made to you in support of the approval of the Statutory Instrument to the Minister for Finance who had a role to play in this as well?

Deputy O'Rourke: I don't know if you asked the Secretary to the Department of Finance who was here this morning - the Secretary General or the Assistant Secretary General about that - maybe he is one of the Secretaries General. I presume all relevant matters that the Minister would require to know would be conveyed to his Department and they in turn to the Minister for Finance.

Chairman: Yes. Page M3F3.354.

Deputy O'Rourke: Will that come up here?

Chairman: It will, Minister. Publish. This is a minute of the meeting.

Deputy O'Rourke: Yes.

Chairman: It says the Minister accompanied by Mr. Pat Mangan, Mr. Ray Byrne and Jim Gahan of CIE, and it goes on: "the meeting reviewed the paper which had been submitted by CIE on 10 February. In conclusion the Minister gave the go-ahead for a submission to the Office of the Attorney General of a request for drafting of a statutory instrument to extend CIE functions to facilitate entry into an agreement of the type proposed. Note that the proposed agreement with Esat reserves the right for CIE to enter into agreements with other operators."

Beyond the fact that it recounts the meeting and a few other little aspects, the core issue - which is the statutory instrument - does not seemed to be referred to at all. It is short or brief in what it represents-----

Deputy O'Rourke: Yes, I suppose-----

Chairman: One would not know if one read that minute in isolation to our discussion-----

Deputy O'Rourke: Do you see there "the Minister gave the go-ahead for the submission to the Office of the AG of a request for the drafting of a statutory instrument"?

Chairman: Yes, but it is a very short, brief account. It does not contain what was represented or-----

Deputy O'Rourke: Pat Mangan is not given to a lot of words. I don't mean to be-----

Chairman: I know, I have met him in Public Accounts on several occasions and I would subscribe to the same view. But I am not allowed to have a view here.

Deputy O'Rourke: I see.

Chairman: You did not check if the Norcontel statement, as given at that meeting, was correct or true? Did you accept the validity of what was said on trust?

Deputy O'Rourke: Yes, I did. It was given to me as Minister, Pat Mangan, assistant secretary, Dr. Byrne and Mr. Gahan who were in the top echelon of management within CIE, and I accepted their word, yes, that what they said about Norcontel because not alone was it said to me, but it was in print in a memorandum as well. So, it would have seemed most incorrect to query both the details of the oral submission and of the written submission. And Norcontel were and are a very well recognised company of probity and standing. So, why should I say they weren't right?

Chairman: You had no reason to think it was not?

Deputy O'Rourke: No, I had no reason to think they were incorrect.

Chairman: Mr. Mangan did not at any time subsequent to that meeting come back and correct the position or explain to you what the actual position was?

Deputy O'Rourke: No. As I say when I read this during the week, this is the first intimation that I had which was the evidence - I didn't read it all out, there is a page of it, all of it, I marked - which they seem to say they just knew about it in the beginning but not in the end. So that is the first recognition I had that the evidence on page five of the memorandum, as submitted to me, was incorrect. The incorrect evidence was given there but it's sworn here.

Chairman: So as to be sure that I correctly represented a particular point that I made to you earlier on, CIE was not at risk once the experiment, as described, in the laying of the cable was put in place. Once the cable laying was described as an experiment, the risk passed at that stage from CIE to Esat.

Deputy O'Rourke: I don't know enough about the technicalities.

Chairman: Just in case I misrepresented it to you I wanted to make sure-----

Deputy O'Rourke: I don't know enough of the technicalities, or the legalities, of that as to whether it was correct or incorrect to do so. I could only have my own personal instincts.

Chairman: But it was never communicated to you one way or the other?

Deputy O'Rourke: No, it wasn't.

Chairman: You stated that you started out on what you believed was a good relationship with Mr. Joyce.

Deputy O'Rourke: No, I think in the beginning we might have been a bit quiet with one another.

Chairman: Periods of silence when you sat together.

Deputy O'Rourke: No, not lengths of silence, but a bit dancing around one another. I thought ... that's why I got such a surprise genuinely when he resigned, because I thought our relationship had improved. I thought that we had a good working chairman-to-Minister relationship and in fact that we, as time went on, understood one another.

Chairman: You were genuinely surprised at his-----

Deputy O'Rourke: I don't think, in my public life, I have ever got such a surprise. I don't want any comments about how I heard it or where I was at the------

Chairman: I was not thinking like that.

Deputy O'Rourke: Chairman, I know you weren't and I only say it because it has surfaced so often. "Surfaced" is the wrong word but it has come about so often. I got a very real surprise and shock. I heard it at 7 a.m. on "Morning Ireland".

Chairman: Do not say any more, Minister, because you will remind them. I cannot be fully satisfied that I can control them in the absolute. With regard to the breakdown, for want of a better word, with Mr. Joyce, can you think of anything that happened which resulted in such an unannounced decision? Did you meet Mr. Joyce the previous evening or were you to meet him that day?

Deputy O'Rourke: That weekend I had taken back to Athlone the first IRMS study of rail safety. As you know, it was a five-year itemised expenditure plan. Which track would be done when and all of that was laid out. We proceeded to get the money from Cabinet and the decision making. I know you have all of those documents but I brought home that weekend the report and in that report it said very clearly that the...This is "A Review of Railway Safety in Ireland - Implementation Review". This is the first IRMS document.

When the Government undertook to spend £490 million on the track - and it has gone much higher than that now - for the first tranche of five years we built into that, not in the Government decision but in discussion, that there would be a yearly review of the efficacy of the spending of the money, was it complying with the laid out criteria and all of that. So we arranged that with IRMS and they brought in the first one. In that on page 36, 6.3.2.4, embankments and cutting slopes under heading, the second last paragraph says: "The damage caused by laying the Esat cable identified in the report will require a large amount of work to rectify and is the subject of a wider discussion about how to take this issue forward within Iarnród Éireann". Then the last sentence of that paragraph... there is talk about jeopardising of the stability and all of other remarks. Then the last paragraph says: "The likely impact is costly remedial works over the forthcoming years as problems occur".

Carl Bro, another report by CIE, also identified, contemporaneous with that, that same amount. Anyway when I read that on Sunday at home I came up the next morning and I said to the Secretary, to Brendan Tuohy - I was bringing that to Cabinet on Tuesday - and I said I think we should meet the Chairman and talk it over with him before I bring the report to Cabinet because of the safety implications. Chairman, I was and I remain very obsessed about safety on the rail and it goes back over years. We lived in Gentex, Athlone right beside the rail head. We are all very vividly interested in railways. The Knockcroghery crash had a huge effect upon me. Nobody was even seriously injured, thank God, but there could have been well over 100 lives lost only for where the train rested on a track which went back over 100 years and the rivets and the fish plates and all the rest of it. I remember going out that day to see it and saying to myself we have to have a full, independent study of the track of Ireland. But anyway when I read that alarm bells rang. I said to the Secretary General "will you ring the Chairman and ask him to come in in the morning?" and he did on the Monday. Very kindly Mr. Joyce said he would be in the following morning and that we would discuss this, the Secretary General, the Chairman and myself and then I would bring it to Cabinet and then I would make it public. I thought it was the correct way to do my work. So I went home and the first I knew then was the following morning that he had resigned. So you asked me did I have any idea why he resigned and it's along that...by the way I did not get it until the next morning. It was in the newspapers the next morning, but it was after the Department was - there would be someone on duty, but I mustn't have been in the Department. It must have been after hours. Mr. Joyce just gives various reasons. I'm sure you have that letter.

Chairman: That letter was not discovered to the committee by the Department.

Deputy O'Rourke: I am sorry.

Chairman: With your permission we could get a copy of the letter and return it to you. I have one final question for you, Minister, and we can get back to that later. Do you accept Dr. Lynch's assertion that the mini-CTC was a disaster/debacle?

Deputy O'Rourke: In his evidence last Friday?

Chairman: In his evidence, yes. I saw that on the television at home. I had just come home. Certainly cost and management wise if we can all learn lessons from it, if there can be a reprise of what happened and the reasons it happened and get at why it happened and vow to do matters differently, then some good would have come out of it. However, financially and management wise, yes it would appear-----

Chairman: And the delays that resulted.

Deputy O'Rourke: Yes, the delays. It is again going back to safety. Iarnród Éireann has had to take extraordinary care now to see that the work that wasn't or isn't done is conducted according to safe standards.

Deputy Currie: Minister, the Chairman has covered a fair amount of ground with you, but I would like to elaborate on a couple of matters. Can I come to the very important meeting regarding the Statutory Instrument and the information you were given about Norcontel. You said you vividly remember the meeting and that it started off and finished with Norcontel. Am I right in assuming that Norcontel was a very important part of that meeting?

Deputy O'Rourke: Yes, it was, but it was also like the seal of approval - like a quality seal you would give to a product you were purchasing or agreeing or a service you were agreeing. It was, as I said before, the icing on the cake.

Deputy Currie: Could we say that the statement that Norcontel endorsed the deal as a very good one for CIE had considerable influence on you?

Deputy O'Rourke: Who endorsed the "final" deal. That is the word in the memorandum put to me as a very good one for CIE. Yes, it had an impact.

Deputy Currie: It had an influence on you, probably more than anything else in the submission. Presumably it was designed to have that influence on you.

Deputy O'Rourke: That is up to the committee to decide as to what it was designed to do. I am only saying to you that in the reading and telling of it I certainly was more enthusiastic about the arrangement than I would have been if it hadn't been there.

Deputy Currie: So to put it bluntly, those who took a decision to spin you this yarn - and as it turned out it appears to be a yarn - knew what they were doing and knew, or believed, it would have a considerable influence on you. Is that correct?

Deputy O'Rourke: You'd have to ask those people. I cannot represent the view of the two people who came to see me. I can only represent my own point of view and it certainly made me more enthusiastic about the arrangement than I would heretofore have been with, as I said, that final quality, if you like, seal of approval which was discussed in brief at the beginning and then came at the end.

Deputy Currie: Would your decision have been more difficult without this information?

Deputy O'Rourke: I cannot at this remove say that. All I can say again is that to me, bearing in mind Norcontel's position as a very well thought of institution and company, and the fact that they regarded the final deal as one which would be very good for CIE, that, yes, that certainly made me more enthusiastic.

Deputy Currie: Can we look at another piece of evidence given regarding a sentiment you expressed? You said this was what occurred to you retrospectively. This relates to "the flurry of activity" as one person described it, or as you described it, "the unseemly haste to conclude the heads of agreement". Looking at it, as you obviously have, from a retrospective point of view, have you come to any conclusion as to why things happened in such haste at that particular time?

Deputy O'Rourke: Yes. I heard Deputy Dukes saying that he wasn't aware of it at all, anyway, one way or another, but that he would be of the opinion that there was a prevailing belief that if Fianna Fáil came into Government that, in fact, they would not be as in favour of liberalisation as - well, what he was implying, I think, was - the previous Government. In effect, we were about twice as quick in dealing with liberalisation as heretofore, but he seemed to be of the opinion that... it was his opinion that, to use his own words, "the flurry of activity" could be based on the fact that, if an incoming Government was not in favour of liberalisation, it would be good business to get these heads - now, I'm not exactly saying what he said, but I am intimating what he said - of agreement put into place prior to this backward-looking Government which might come along, which might not be interested in liberalisation. I jest when I say "backward looking". In fact, we turned out to be very forward looking with regard to liberalisation.

Deputy Currie: You understand that I can't comment on that.

Deputy O'Rourke: I do understand.

Deputy Currie: You may and I hear what you say.

Deputy O'Rourke: Yes, of course.

Deputy Currie: Would you agree that, for whatever reason-----

Deputy O'Rourke: I wouldn't be in agreement with that, with his summation of why he felt there was a flurry.

Deputy Currie: You have told us that safety was the subject that obsessed you. You said, "safety must be our very first consideration". Did you hear the evidence that was given to this sub-committee by the railway inspectorate?

Deputy O'Rourke: No, I didn't hear that.

Deputy Currie: You didn't hear the evidence that was given by the Iarnród Éireann person responsible for railway safety?

Deputy O'Rourke: Ted Dalton?

Deputy Currie: Yes.

Deputy O'Rourke: I heard a bit of his, but I didn't hear John Wesley.

Deputy Currie: Could I advise you maybe to read that? I can't make a comment but I'm surprised it hasn't been brought to your attention. Will you take my word for it that the evidence that was given by a member of the railway inspectorate was that despite continued representations by them to Iarnród Éireann in relation to matters of railway safety-----

Deputy O'Rourke: I know that. Sorry, I didn't know what evidence-----

Deputy Currie: -----it was Ted Corcoran, I think - they didn't even deign to reply?

Deputy O'Rourke: Pardon me. Ted Dalton has passed away. He was the ESB man.

Deputy Currie: It was Ted Corcoran. They didn't even deign to reply to the letters of concern.

Deputy O'Rourke: Yes. I do know that on one occasion there were either four or five letters sent. I did not know to which particular point you were referring. That was brought to my attention, yes.

Deputy Currie: Minister, this happened on your watch. As you say, you were rightly concerned and obsessed with railway safety. How come this sort of thing was happening?

Deputy O'Rourke: Did you want me to reply to the letters?

Deputy Currie: No. I want to hear from you what your attitude is to the information that was given to the tribunal.

Deputy O'Rourke: When I was told about it I asked, I think either the Secretary-General or Pat Mangan, or whoever was then dealing with it, to say to Iarnród Éireann/CIE that we wanted replies and we wanted them in full and in detail. But if you are saying to me, "Why wasn't the letter replied to?", you have to ask the person who didn't reply to the letter.

Deputy Currie: I am not just talking about one letter.

Deputy O'Rourke: There were four of them went in a row. Maybe there were five.

Deputy Currie: There was evidence given to this committee which rather shocked us.

Deputy O'Rourke: It would shock me too, and it did.

Deputy Currie: Would you accept that it ought to shock you?

Deputy O'Rourke: Yes.

Deputy Currie: Because you are the Minister and this is something that is happening on your watch.

Deputy O'Rourke: Do you mean that the letters weren't replied to?

Deputy Currie: No, that the attitude-----

Deputy O'Rourke: Because I can't possibly reply to letters-----

Deputy Currie: No, of course. That the attitude displayed in relation to rail safety was one that certainly shocked me and I assume-----

Deputy O'Rourke: It shocked me too.

Deputy Currie: -----would shock you. Are you aware of the evidence brought before this inquiry that CIE spent over £4 million on consultants since the time of the signing of the mini-CTC contract in 1997?

Deputy O'Rourke: Yes.

Deputy Currie: Are you satisfied that this represents good value for the taxpayer?

Deputy O'Rourke: Well the content or the terms of reference for each of those studies would need to be gone through in detail. Clearly what CIE were endeavouring to do was to get the fullest of information from whomsoever they commissioned the study, but I often think that studies and consultative work are easy cock shots - I don't mean for you, Deputy, indeed - but in my own time too I often would have felt that one could ballyrag - that might be the best way - consultancies or studies but I think in this particular case perhaps they were trying to see what had happened or what had gone wrong but I think to do it correctly we would have to go through each study, terms of reference, people employed, what they were the outcomes, rather than deal with them in a blanket fashion.

Deputy Currie: I do not think we were dealing with them in a blanket fashion. Will you agree that on the face of it in relation to the mini-CTC project that an amount greater than £4 million would seem to be a bit excessive?

Deputy O'Rourke: It is costly. They were costly. I think one would have to look at the outcome of the studies to see did they fit into the overall picture and has it given you as members of the committee and me as the relevant Minister, has it shone light on what was a very difficult and clouded period?

Deputy Currie: It may have shed light on the approach of CIE to these matters, would you agree? Minister, the sub-committee has heard CIE had what was described as a risk adverse policy. Would this have been your policy?

Deputy O'Rourke: Well I read that too and I heard it. I suppose a policy such as that is not applicable. It may be applicable in the generality but not in every specific case. It would require the application of that generality to each particular case as it came up as to whether it was or was not in that particular case.

Deputy Currie: So those who have said to us, without qualification, that the policy was a risk adverse policy, would not be in line with your thinking on the subject?

Deputy O'Rourke: Well no, you see you view each situation as it comes up. I think a generalisation such as that whilst it would be well merited in the main would then remain to be tested out in individual cases as we have actually seen.

Deputy Currie: There did not seem to be a risk adverse policy in relation to the other State bodies. Why CIE?

Deputy O'Rourke: Well you see Iarnród Éireann or CIE is, I think, the only company of all of the semi-States which gets a State subvention, both in the operation of its activities on a yearly basis and because it is public transport, it's for the people, for the public, and all countries operate a public transport policy which subvention is given in order to ensure public transport is available. They also increasingly now - CIE is getting very very large amounts of public money for its capital projects and so therefore of all of the semi-States it is the only one which is receiving tranches of money, of public taxpayers' money.

Deputy Currie: I take it from that you would not have looked on a joint venture negatively on the basis that you had a risk adverse policy?

Deputy O'Rourke: The joint venture had been put to one side by the time I got into it.

Deputy Currie: By the time you got into it?

Deputy O'Rourke: Well, by the time we received ... As it went on, the original belief by Iarnród Éireann way back in 1996, by CIE way back in 1996, was that it would be a joint venture, which clearly-----

Deputy Currie: The reason I am asking you the question is we were told that one of the reasons you were not in favour of a joint venture-----

Deputy O'Rourke: That I was not in favour?

Deputy Currie: Yes.

Deputy O'Rourke: Go on.

Deputy Currie: Or the Department was not in favour of it was because of this risk adverse attitude.

Deputy O'Rourke: The very term "joint venture" means that if the outcome is not satisfactory financially, it will fall on both heads. It will not fall just on one head.

Deputy Currie: More gains, greater potential loss.

Deputy O'Rourke: It depends on how it turns out. I can remember Deputy Rabbitte querying some of the officials when they were here saying, "would you not encourage - I think it was to Pat Mangan - an entrepreneurial spirit, would you not be in favour of a derring-do, or an entrepreneurial spirit"? It is entrepreneurial spirit if you were in a situation where in fact you were making the money or turning over the money. By its very nature public transport cannot be a profit making organisation because the public are entitled to public transport. All European countries subvent public transport to a greater or lesser degree so by its very nature it cannot be making money.

Deputy Currie: In this instance we are departing from a purely transport organisation with a purely transport role. Wasn't that one of the big decisions that had to be taken, whether CIE was going into this new thing?

Deputy O'Rourke: I have asked for this fact to be checked and it is correct. Most public transport companies, well certainly throughout Europe, have used their network of lines as the backbone, as they call it, of the system to engage in telecommunications work, to engage with telcoms, they have done that. In that regard, it did not seem a huge departure from what was current thinking in public transport.

Deputy Currie: What was your attitude to a joint venture?

Deputy O'Rourke: I thought joint venture carried risks, commercial risks.

Deputy Currie: Unacceptable risks?

Deputy O'Rourke: Well, commercial risks. If I was going to look, which I was, and continue ... for large amounts of money for public transport, I wanted to ensure that whatever was happening would have a favourable outcome. That was why the report of IRMS, their first report, the implementation review, as I said, struck a huge chord with me. What they said was that potentially in years to come, the way it happened would ... the likely impact is costly remedial works over the forthcoming years as problems occur. As I said, I went to the Dáil that day with it. Well it is in the Dáil books as to how Deputies treated the matter.

Deputy Currie: Could we turn briefly to the future and look forward, you would have heard the Chairman speculating as to the future role for CIE-----

Deputy O'Rourke: The present Chairman?

Deputy Currie: Yes. How do you see that?

Deputy O'Rourke: Yes, I heard that. I didn't hear him in detail, but I heard what was on RTE at 6.15 p.m. on Friday evening. He said that, well more or less, that CIE would be broken into its component parts in a much more stark way, or words to that effect. Yes, on 12 March 2000, I announced that. It subsequently became part of our strategy in our document - it's the red book, the regulatory document, and legislation. I'm sure it will take a while, but it is beginning to be drafted. You see, I think Deputy Mitchell in 1986, I have to be fair, did a good job in bringing about more separation of the three boards, Iarnród Éireann ... Up to that it was an amorphous CIE and then he brought about three boards, Iarnród Éireann, Bus Atha Cliath and Bus Éireann, into three separate boards, but there was and is this very heavy umbrella group called "the CIE board", which is at the head of all that. But he certainly went along the road to doing what, he went half way, if you like, and I'm sure in the bringing forward of the legislation perhaps he meant it to be starker, but he certainly went that road.

Now, what we'll be doing is the, bearing in mind that the employees are members of the board or are employed by CIE board and that will be a legality that will have to be worked out properly for the employees, but our intention as a Government is that the boards of the three separate constituent companies would become much more free standing, much more an expanded board with people of relevant expertise and diminution of the importance, if you like, or of the overarching responsibilities of the main board. To that end the Rail Infrastructure Bill which is ready to come to this committee, Chairman, and all of you have so much on your plate, I will be having an amendment to it to give the main thrust of that for the constituent boards. It is important that the boards have expertise, that they have a reliance on their own confidence and competence to run the constituent boards. I think what happened was, and I'm sure through no mal intent, but I think what happened was that the overall board drew to itself more and more responsibilities and decision making and all of those activities and the constituent boards felt that they weren't getting the responsibilities.

Deputy Currie: When did you make up your mind in relation to this?

Deputy O'Rourke: In March of 2000.

Deputy Currie: So CIE as we have known it will effectively cease to exist?

Deputy O'Rourke: No, there will have to be, if you like, a shell board, so to speak.

Deputy Currie: You will be careful not to throw the baby out with the bathwater.

Deputy O'Rourke: What do you mean? I don't know about that. It will be divested of much of its - I think that just gathered onto itself, it was just a sort of natural way it grew and grew and the constituent boards had less and less responsibilities. And they are very good.

Chairman: Do you hope to take any report that may emanate from this committee into account?

Deputy O'Rourke: In the final - yes, I would, very much so. I would hope, and I had hoped to have a chance to say it at the end but I'll say it now - I would hope and I am sure that the determination of this committee in its final report to me and to the Dáil - is it to me?

Chairman: To the Dáil.

Deputy O'Rourke: Yes, that that will give us a ground, the base for what we intend to do after this.

Deputy Currie: We hope our efforts are productive. Thank you very much.

Deputy O'Rourke: I do, very much.

Deputy Rabbitte: Would it not be fair to say that Deputy Dukes was only taking a shot in the dark when he was attempting to explain the flurry of meetings?

Deputy O'Rourke: Yes, of course.

Deputy Rabbitte: It would not be likely, would it, that the alternative Government at the time would be less hasty about liberalisation than the outgoing one? You and I would agree on that, would we not?

Deputy O'Rourke: I would agree but I was struck by the belief that what was coming in might be backward in that regard.

Deputy Rabbitte: I do not think Deputy Dukes said "backward" but I would not like to have tempted him on it. I do not think he said that.

Deputy O'Rourke: Well, less inclined to liberalisation.

Deputy Rabbitte: Yes. The early meeting you had about safety and so forth with the board-----

Deputy O'Rourke: Well, a general meeting but it turned onto safety.

Deputy Rabbitte: Yes. Is it not odd that they did not tell you about the mini CTC project?

Deputy O'Rourke: Well, yes. They could well en passant have said it but not in any precise way that I can remember. I suppose they were of the opinion that they were moving along on that and that it was a good project and why, well, as they would have felt when the main thrust of the meeting was looking for money, looking for finance.

Deputy Rabbitte: Given that you were obsessed with safety and would have had an interest in the Mullingar line, from a constituency TD's point of view, one would think they would have said that they had contracted for a spanking new system and that it would improve safety among other things.

Deputy O'Rourke: As I say, en passant they could have mentioned it but it wasn't the thrust of the meeting, at all. The thrust of the meeting was, we want a lot of money from you and from your Government. And I am not being crude when I put it that way. I remember coming away from the meeting and thinking, well, you wouldn't fault me, Deputy Rabbitte, for saying why---

Deputy Rabbitte: I would never fault you, Minister, as you well know.

Deputy O'Rourke: I don't know about that but I remember thinking, well, imagine, they're landing this on me now and they had two and a half years of a previous Government and did they say the same, but now I know they did because this arose this morning. Chairman, if I could, with Deputy---

Chairman: Deputy Rabbitte agrees with you, Minister.

Deputy O'Rourke: Yes, excuse me. It is important. Deputy Lowry said it was going through, as he put it himself, he had a very felicitous phrase, it was "I want to put everything in context". Well anyway, in the putting of things in context, he went back to a man I don't know, Eamon Walsh, who was the Chairman of CIE for a period and he quoted a letter and I wondered about the letter, Chairman, when I heard him and I asked for the letter then at lunch time when you broke and the letter was from Eamon Walsh to Michael Lowry and it is dated 9 July 1995. There are many, many matters referred to in it but on the second page Eamon Walsh says it is time that our new management faces up to daunting tasks and the first of those is inadequate safety standards in Iarnród Éireann are very serious. Now this was July 1995 and when I would have had that meeting with the board it would be July, August or whatever 1997, which was two years---

Deputy Rabbitte: Did you know anything about the description of the managerial state of the company and the general politicisation that Deputy Lowry spoke of this morning?

Deputy O'Rourke: Through, as you know, Deputy Séamus Brennan was the Opposition spokesperson at the.... Chairman, do I address you or is it all right if I address the Deputies asking the questions?

Chairman: It is presumed that it is through me.

Deputy O'Rourke: Through you, all right, but through you.

Chairman: Do not allow yourself to be disturbed by that. Answers to questions may be addressed to Deputy Rabbitte.

Deputy O'Rourke: Deputy Séamus Brennan was the Opposition spokesperson on transport, energy and communications. I would have been aware through Dáil debates, through front bench meetings and all of that and I had a reasonably lively interest in transport.

Deputy Rabbitte: Were you aware explicitly of the supposed politicisation of the company, both board and management?

Deputy O'Rourke: I was aware of it through Dáil debates and obviously in a Dáil debate you take your guy's side rather than the premise put forward by the Minister.

Deputy Rabbitte: Yes. It was not mentioned at your first meeting with the board. You received a note from your official on 1 November 1999, I think you said, telling you there were difficulties with it.

Deputy O'Rourke: Yes, I read that out, that's right.

Deputy Rabbitte: I do not think that was discovered to us, Minister - probably there is not a great deal in it that we do not already know but that was the first you heard about it.

Deputy O'Rourke: Yes, except that in late October, as I said, at my constituency clinic on the last Saturday in October, there was, I got a telephone call from a gentleman, from a person, a man, saying that there were difficulties and did I know that there were difficulties with the mini-CTC signalling system.

Deputy Rabbitte: Did you know the informant?

Deputy O'Rourke: No. He didn't give a name and, as you know, you often get calls of various natures at a clinic. Some, many, well not many of them, but on some occasions they would be, they wouldn't give a name, but you would hear them out.

Deputy Rabbitte: Did the note given to you on 1 November come as a result of your requesting it? You got a telephone call on the last Saturday in October. Did that mean you came back up to the Department on Monday and said: "will you tell me what is after going on here, I am after getting a 'phone call"?

Deputy O'Rourke: No, I think the two things were nearly contemporary in the way they happened. I might have been about to say it or do it, but in any event anyway I got the note on 1 November.

Deputy Rabbitte: I am curious about that, because you answered questions to my colleague, Deputy Higgins, in the House on 19 October.

Deputy O'Rourke: On 19 October of what year?

Deputy Rabbitte: Of 2000. You said: "I was made aware of this matter by outside sources. That was how it came to my attention." Did that refer to this fellow who rang you in your clinic?

Deputy O'Rourke: No. There were two telephone calls, Deputy Rabbitte. There was the one in October of 1999 which said: "do you know there are going to be difficulties, or there are difficulties - [I think, are difficulties] - with the mini-CTC signalling system", and in the summer of 2000 the same person - well the same voice - telephoned me and told me that there were now serious financial difficulties. The earlier one referred to time overruns rather than money overruns.

Deputy Rabbitte: Are you seriously telling this committee, Minister, that the brunt of your information on this came from an anonymous telephone caller?

Deputy O'Rourke: No, absolutely not, because on 1 November, and I will read it out, Chairman, to Deputy Rabbitte - I received a note - I read the detail of that note earlier I think into the record - in her Department concerning "serious difficulties" and those words are in inverted commas, so they must be the words in the statement. The memo stated "it had been hoped that these difficulties would be overcome". Then, the following month - that was November - and then in December John Fearon in the Department, he stopped the payment of money for the work and I was informed of that.

Deputy Rabbitte: Could we stay with the point when you knew about it? You knew about it on 1 November 1999 from your official and on the last Saturday of October through an anonymous informant. Is that the position?

Deputy O'Rourke: That is correct, yes.

Deputy Rabbitte: You went on then to tell the Dáil that you were first made aware of this by "an outside source".

Deputy O'Rourke: I presumed it is an outside source. I don't know.

Deputy Rabbitte: You said the nature of the contract as it was drawn up was very unsatisfactory. What did you mean by that?

Deputy O'Rourke: I was told by the Department that the nature of it was that what was tendered or put out for tender did not resemble what later came to be done or needed to be done on the signalling system.

Deputy Rabbitte: Who told you that?

Deputy O'Rourke: Within the Department?

Deputy Rabbitte: Within the Department.

Deputy O'Rourke: Yes.

Deputy Rabbitte: You said in the House that the contract documentation was not tight enough. What did that mean?

Deputy O'Rourke: The contract documentation - that was a Dáil answer isn't it?

Deputy Rabbitte: Yes - 19 October.

Deputy O'Rourke: Yes. That is correct. The contract documentation did not prove to be eventually the contract which was needed to do the work i.e. therefore, it was not, as I read that answer, it was not tied down in its ramifications ... its specifications first and then in how it would eventually work out i.e. its ramifications.

Deputy Rabbitte: Clearly we are talking about the mini-CTC contract, and it was the Department that would have advised you that it was not the type-----

Deputy O'Rourke: Well the Dáil answer - obviously the Dáil answer-----

Deputy Rabbitte: You are extemporising at this stage.

Deputy O'Rourke: Yes, but there would be background stuff, as you know to a Dáil answer. There is always the answer, and then there is the background information.

Deputy Rabbitte: That would have come from your Department?

Deputy O'Rourke: That would have come from the Department, yes.

Deputy Rabbitte: You had appointed a chairman to the company at this stage. Is that not right?

Deputy O'Rourke: Dr. John Lynch, yes.

Deputy Rabbitte: When was he appointed?

Deputy O'Rourke: Whenever ... the morning that-----

Deputy Rabbitte: I think it was 29 March.

Deputy O'Rourke: No ... well, perhaps that was when everything was signed up, but I know I telephoned Dr. Lynch that day after I heard from Brian Joyce, yes.

Deputy Rabbitte: You are now in the House on 19 October relying on information apparently from your Department and from an anonymous informant. Had he already furnished you with-----

Deputy O'Rourke: No, sorry-----

Deputy Rabbitte: Had you met the new Chairman about mini-CTC at this stage?

Deputy O'Rourke: Yes, I had, because some time in late September, maybe 20, 21, 22, one of those days anyway, contemporaneously or in tandem with receiving a copy of a Pricewaterhouse - it now transpires it was not the full report, I think it was a kind of an interim report, summary report, that is the word - the Chairman came to see me about that report as well.

Deputy Rabbitte: When would that have been, Minister?

Deputy O'Rourke: I think it's either 21, 22 or 23 September.

Deputy Rabbitte: I do not know if you had an opportunity to watch the opening day of these hearings, but Dr. Lynch could not remember whether-----

Deputy O'Rourke: Yes, but you subsequently asked him and he did remember.

Deputy Rabbitte: Yes, I was pleased that he managed to remember later on, but on that day he did not remember. He said also on that day that he had got a copy of what turned out to be the draft report in May. When did you get around to getting a copy of the draft report?

Deputy O'Rourke: If you mean when did I get around to getting it-----

Deputy Rabbitte: No, no. Dr. Lynch stated: "May, as far as I know. Yes. "May". The questioner then stated: "In May?", and he said "Yes". He got the draft report in May and you are saying he told you on 21 September.

Deputy O'Rourke: Well, into the Department the copy came on 20 September.

Deputy Rabbitte: I think that was a different report, Minister.

Deputy O'Rourke: No.

Deputy Rabbitte: That was what was known as the summary report.

Deputy O'Rourke: There was only one-----

Chairman: There was the longer report, and there was the summary report.

Deputy O'Rourke: Well, we received a copy in the Department of whatever report it is - I'm not sure whether it's a summary or full - on 21 September.

Deputy Rabbitte: That is a subsequent and summary report. This was the draft report which, coincidentally, was given probably to the company solicitor in CIE on the day before or the day after Dr. Lynch took over as chairman on 28 March. Is it not remarkable, Minister, that the chairman did not advise you of a very grave situation like this until 21 September?

Deputy O'Rourke: Well, I suppose a draft report - I am only presuming now - is distinct and different from a summary report. A draft is a first draft. A summary, I would believe, would be a summary of what would be contained if there was going to be a final report, but I do understand there wasn't a final report. Is that right, Chairman?

Chairman: If I can assist Deputy Rabbitte, from my recollection, in whatever way it came into existence, a draft report was referred to by the Joint Committee when we met last October or November and I do not know if any of us had access to it. I do not think we had, but it was referred to at that time. Then there was a summary report which we got much later. That is probably what you got.

Deputy O'Rourke: That's the one I got, yes. I presume it is.

Deputy Rabbitte: We are probing the effectiveness of corporate governance in the company, Minister, and the chairman has said there was a draft report delivered on 28 March.

Deputy O'Rourke: Well, I didn't see that.

Deputy Rabbitte: I accept that, Minister, and that is my point. Surely the matter ought to have been brought to your attention before 21 September.

Deputy O'Rourke: Well, I can only make a supposition that if it was a draft report, a draft report is what it says it is and then you await the final report before you would submit it to what would be deemed to be a higher authority.

Deputy Rabbitte: But the meter was running all of this time. You had appointed a chairman, presumably to keep you informed when there were icebergs ahead, but between 28 March and 21 September you knew nothing from the company, and specifically from the chairman, about this issue?

Deputy O'Rourke: No, but I knew that there was a report going to be furnished. That much I knew, that there was going to be-----

Deputy Rabbitte: When did you know that?

Deputy O'Rourke: It must be through the Department.

Deputy Rabbitte: But at what stage of that period?

Deputy O'Rourke: It would be during that summer. I knew a report had been commissioned. That's the best way - I knew there had been a report commissioned and I was awaiting what I now regard to be a summary of the final report, though there appears not to be a final report, but a summary of what I can only conclude would have been the summary of the final report. I often notice that no Minister ever publishes a draft report. They publish a final one ---

Deputy Rabbitte: I am not talking about publishing, Minister.

Deputy O'Rourke:-----or even gets it.

Deputy Rabbitte: I am talking about you in the sense that you have told my colleagues, and I, for one and I am sure they, accept it, of your obsession with safety. You heard about this in the summer and it is a wonder that you did not make a 'phone call to the Chairman you had recently appointed to ask "What is this I hear? Is it true that there are these problems coming down the line"?

Deputy O'Rourke: Well, you see already in December of '99 John Fearon, quite rightly, in our Department had stopped the payment for the mini-CTC so to my mind he had taken the correct stewardship role in that he had said " Oh, oh. There's a potential here for more significant time delays and the first thing I am going to do is stop the money".

Deputy Rabbitte: Was it not reasonable for you to assume that would stop the work as well? After all, you would want the work to have been finished.

Deputy O'Rourke: But I would not want the work to have gone on and got finished in any circumstances which... I would want safety and I made that very clear, but I would not want the work to be done at all costs if there was not a complete outline of how it could be done, or what had happened to have brought it to this point where, quite correctly, the official in the Department decided that payment should stop. That was in December '99.

Deputy Rabbitte: You do not think that your anonymous informant to Athlone was the cause of the note that you received a couple of days later?

Deputy O'Rourke: No, because there was too much in tandem with it and, furthermore, there were a lot of events followed after that. There was an update note on 7 February 2000, the same senior servant, now I don't know if that was Pat Mangan or John Fearon, but I think it was John Fearon.

Deputy Rabbitte: This anonymous informant came back to you a second time.

Deputy O'Rourke: Yes.

Deputy Rabbitte: Could you tell us about that again?

Deputy O'Rourke: Yes. During the summer of 2000, I received a telephone call from the same voice saying that the report, that there was a report, which I'd known, commissioned by CIE and that this report would come out shortly, or words to that effect.

Deputy Rabbitte: He was the one who told you there was a draft report in existence?

Deputy O'Rourke: No, no. Absolutely not.

Deputy Rabbitte: What did he tell you?

Deputy O'Rourke: He said did I know that there was a report. I said "yes" because I had known PricewaterhouseCooper had been commissioned by CIE to do a report and then that report came out, which I got on 21 September.

Deputy Rabbitte: Has he come back to you since?

Deputy O'Rourke: No.

Deputy Rabbitte: Deputy Higgins-----

Deputy O'Rourke: His job was done.

Deputy Rabbitte: Right. Deputy Higgins pursued the question:

Four of the main people who were involved in the decision making had gone to the company, [meaning the contractor] which will add £25 million more to taxpayers' money.

In your reply you said: "The Deputy is quite right to raise it because to my mind it is one of the most dreadful matters I have had to deal with". Does that unfairly represent you? Perhaps you referring to the overall situation.

Deputy O'Rourke: Yes, but I did also think and somehow, was it Deputy Lowry or Deputy Dukes, Deputy Dukes it was who said, this afternoon, that he would regard that and I cannot know the words he said, but that he would regard that as very odd. It wasn't "odd" now, but whatever word he used, he said that he would regard the movement of people from one - or perhaps it was the Secretary General of Finance - from one company to another in such a short space of time as being very unusual.

Chairman: It was Mr. Doyle.

Deputy O'Rourke: Was it? Yes, that's what I thought. I know I heard it today.

Deputy Rabbitte: When you took the decision to appoint a chairman did you consider appointing a chief executive?

Deputy O'Rourke: No, because a Minister doesn't appoint a chief executive. A chief executive is appointed by the board.

Deputy Rabbitte: Let me rephrase the question. Did you consider having a chief executive appointed by the board?

Deputy O'Rourke: That would be a matter for the board. When I came into the Department I decided, quite clearly, that my relationship - as other Ministers have done - would be between the chair and the Minister. It would not be a matter, there never should be matters between a chief executive and a Minister because the line of reportage is chair to Minister.

Deputy Rabbitte: We heard evidence today that two of your predecessors, Deputies Lowry and Cowen, seemed to intervene and take advice from their Department that the managerial situation was such that a chief executive was required. Minister Cowen put in place a committee of three at the time to select a chief executive and Minister Lowry felt that one of the most serious situations he inherited in terms of how it applied to CIE, not to Minister Cowen, was that it had not been done and that there was an acting chief executive there for ten months. They seemed to think a chief executive was important.

Deputy O'Rourke: A chief executive of any company is an important person, but in a semi-State the chief executive is appointed by the chair and the board and the fact of his or her appointment is conveyed to the Minister of the day. I have never, in my four and a half years, had any intervention with regard to the appointment of any chief executive or any manager in any company. I don't think it's my job.

Deputy Rabbitte: What is your view on it now, with the benefit of what you have managed to snatch from these hearings in recent times? Do you think a chief executive ought to be appointed?

Deputy O'Rourke: I haven't managed to snatch, Deputy Rabbitte. I have paid very great attention to the doings of your committee - of the Chairman's committee - very clear attention to it. I haven't managed to snatch anything from it.

Deputy Rabbitte: I merely did not want to presume that you had nothing else to do but watch these hearings, but if you want to put it that way, that is fine. All I want to know from you is whether you now think there ought to be a chief executive appointed.

Deputy O'Rourke: As I understand it, the chairman and his committee and also the three wise men - that is Bill Attley, Kevin Bonner and John Dunne - whom we asked to do a very in depth look at what had gone wrong and how it could be put right, the way forward, they have made very strong recommendations which the chairman has said he is going to implement. For us, they have recommendations as well, which is shareholders have nothing to do with the running of it, more or less, but they also have gone in very strongly into the role of management, the role of unions, and they have had very great effect indeed within the company already, and they have laid out how the managerial aspect of CIE is to be attended to and I find that report - and I am sure you have all read it - I find that report very worthy and I hope that the chairman and I believe that the chairman----- Already one of the central points of that is an internal industrial relations committee like the JLC. They are going to have that-----

Deputy Rabbitte: Do you think the fact that no chief executive has been appointed relates more to what Dr. Lynch announced to the committee last week to the effect that CIE is being abolished, as he put it?

Deputy O'Rourke: I went through that, the abolition of it or the need to diminish its overall role and to strengthen the role of the constituent bodies. Therefore, the chief executive of each of the constituent bodies will obviously have more responsibility than heretofore.

Deputy Rabbitte: You confirm what Dr. Lynch said. CIE is being abolished, is it?

Deputy O'Rourke: No.

Deputy Rabbitte: No.

Deputy O'Rourke: What I am saying is the role, there will have to remain in place purely for legal purposes a shell overall role. I'll put it in that word - I don't know what other way to put it.

Deputy Rabbitte: What would the role of the shell be?

Deputy O'Rourke: For instance, every employee in the three companies is an employee of CIE. Clearly, the legalities of that would have to be worked out very carefully because people have a right to their tenancy of employment as laid out and therefore, at least until all of that is worked through, they would have to be that type of a company in place, which would oversee, if necessary, the legalities of employment.

Deputy Rabbitte: Do you think that will take legislation in due course?

Deputy O'Rourke: Oh yes, it certainly will take legislation.

Deputy Rabbitte: Is it a priority on your own legislative agenda?

Deputy O'Rourke: Yes, well, the rail safety is the next one, as you know, and that will be out before Christmas, and then----- Yes, it would be after that. That would be the next piece of CIE legislation.

Deputy Rabbitte: Minister, can we look at the memo you received on 10 February 1998? This was the memo, you remember, from Dr. Ray Byrne to Pat Mangan for your advice concerning the Statutory Instrument. When did you know-----

Chairman: Could we have a reference, Deputy please?

Deputy Rabbitte: I am sorry, Chairman. It is M3F3-213.

Deputy O'Rourke: I think that was opened up earlier.

Deputy Rabbitte: When did you know that a Statutory Instrument was to be required?

Deputy O'Rourke: Well, obviously, before this, before 10 February 1998, so it clearly was either the autumn or late autumn or early spring.....early after Christmas of.....there was only a few months in it. I mean, I came in in June 1997, so it was between that time and, clearly, this time.

Deputy Rabbitte: Yes, that is very probable, but could you be any more precise about when someone in your Department told you? There was nobody ringing you from outside here. It was someone in your Department. When would they have told you?

Deputy O'Rourke: Well, it was sometime, as I said between that and that. I don't have the exact date, but that may well have come up in documents already. I'm not-----

Deputy Rabbitte: No, no. It is not a leading question.

Deputy O'Rourke: No, no. I don't exactly know.

Deputy Rabbitte: I do not know the answer.

Deputy O'Rourke: I don't either, but I can find out. It's sometime in between that and that when it was decided that.....and there had to be the subsequent liaison with the AG and all of that.

Deputy Rabbitte: You cannot tell us when anybody, either in CIE or your Department, said to you that what was afoot in CIE required your statutory authority.

Deputy O'Rourke: Nobody in CIE would have said it to me, no - neither the chairman nor any of the executives, no. It would have come internally within the Department to me.

Deputy Rabbitte: Normally when that happens in a Department, there is a date on it, is there not?

Deputy O'Rourke: Yes, or there could have been----- You see, the date would have been.....which subsequently came about, which was 10 or 12 or whatever it is of February, but prior to that there would be ongoing discussion. I found that public transport took up - well, certainly at this period and still does - an amazing amount of time in my day or in my week or whatever. So, it would have developed, I'd say, in conversation. I can't know if there was a huge dramatic announcement: "We need a statutory instrument", but I do know that there was a general awareness.....that I had a general awareness this would be needed.

Deputy Rabbitte: Let me put it this way. I think the Chairman opened to you a note from Pat Mangan. I think it was the day after this. I am sure somebody will find it there.

Deputy O'Rourke: There it is - 10 February.

Deputy Rabbitte: No, that is the Ray Byrne note.

Deputy O'Rourke: Yes, sorry.

Deputy Rabbitte: If you do have a note prior to Pat Mangan's note-----

Deputy O'Rourke: There would be-----

Deputy Rabbitte: -----you might be kind enough to-----

Deputy O'Rourke: Yes. I would have known of it prior to that. I mean, the-----

Deputy Rabbitte: If there is a note prior to that, you might be kind enough to discover it to the sub-committee-----

Deputy O'Rourke: Yes, all right.

Deputy Rabbitte: -----because it would be odd if you did not know about it until you were-----

Deputy O'Rourke: No, I certainly was aware of it prior to the meeting with Ray Byrne, but it wouldn't have been-----

Deputy Rabbitte: Were you aware that a view was being represented - I think it may have a proponent in your own Department in terms of Ms Deirdre de Brún who gave authoritative evidence to the sub-committee - that primary legislation might be necessary if you were to confer this benefit on a private company?

Deputy O'Rourke: But that was later. I think that was her earlier opinion and then, I think, she clarified it, either with the AG's office or with some, perhaps, external source, I don't know-----

Deputy Rabbitte: You were aware anyway, as the terrible phrase in here has it, that it was in the ether.

Deputy O'Rourke: I was aware that there was discussion as to whether the----- Now.....but again, Chairman, can I say, I am very conscious that, when you listen to people, and I saw Ms de Brún giving her evidence, I am aware that sometimes what you knew then is coloured by what you now know from what people say at the table. It's quite difficult to differentiate in your mind as to.....but, reading, or listening to what she said, she was quite clear that her earlier belief that there would be a need for primary legislation, or was that related to the "joint venture affair" which was to be the first choice, shall we say, but which was subsequently dropped, and I think that joint venture arrangement would have certainly required primary legislation.

Deputy Rabbitte: What did you know about the view represented from the CIE solicitor, that if primary legislation was required it would be unlikely that the agreement would proceed? Do you remember that note?

Deputy O'Rourke: No. Again, I heard some of what he said. That was his legal opinion ... primary legislation would take time.

Deputy Rabbitte: I do not know if it was a legal opinion, Minister, it looked more like his assessment of the situation, that if it turned out that primary legislation had been necessary, there would not be an agreement.

Deputy O'Rourke: Perhaps that was based on the fact that if primary legislation was necessary the time to prepare that legislation - the time to get it drafted, get it cleared by Cabinet, get it on the agenda for the Dáil - might have worked against the speedy implementation.

Deputy Rabbitte: All right. If we look at the memorandum that Dr. Byrne sent to you, Minister, I cannot find the notes. You made reference to notes that you took on 12 February.

Deputy O'Rourke: No, notes I made on the side of the memorandum.

Deputy Rabbitte: On the side of the memorandum? They are not on my copy of it, but I am sure that is not important. You went through it paragraph by paragraph and I just want to try to get some context for this. Were you familiar with the European development adverted to in paragraph 1 about telecommunications operators being able to run cable on the tracks of European railways?

Deputy O'Rourke: I think where I would have heard it was at one of the Council of Transport Ministers meetings. There was a sort of a discussion about it.

Deputy Rabbitte: So it was not a blindingly new idea?

Deputy O'Rourke: No.

Deputy Rabbitte: All right. You had been aware it happened elsewhere.

Deputy O'Rourke: I just knew that in Europe. I know that at a luncheon of the Council of Ministers of Transport that there was, desultory enough, but it wasn't a point of ... any point or anything like that, but there was a conversation about how public transport companies were opening up their network or their backbone to fibre optic cable.

Deputy Rabbitte: With regard to paragraph 5, which has come up time and again - somebody made reference to it a few times today - what do you understand to be this question of the company's policy to "sweat its assets"?

Deputy O'Rourke: What I understood it to mean was the company would use whatever assets it had and use them intensively to generate income, which would then subsequently be used for public transport.

Deputy Rabbitte: Do you know of any other example of the company sweating its assets?

Deputy O'Rourke: I think you would look at railway stations where in some of them they have rented out cafeterias or cafes or shops selling newspapers or having more intensive or "posher" restaurants. I think you'd call that sweating the assets of platforms, which are there, and I see it back in Athlone and I see it in Heuston. In many stations where you go they're using the asset of the platform or the environs of the platform to get rentage from people who would run a shop or run a restaurant.

Deputy Rabbitte: Did paragraph 8 weigh heavily with you in deciding whether to sign a Statutory Instrument or to give directions that it ought to be prepared?

Deputy O'Rourke: This is paragraph 8:

On the other hand Esat were the only other operator interested in committing to the development of a national network utilising our rail system, which was compatible with the installation of CIE's mini-CTC programme. In addition, the element of risk to CIE on the Esat proposal is minimal.

I took that last sentence to mean, because it was no longer to be a joint venture ... yes, it was to be the arrangement which was subsequently entered into and, therefore, the financial risk would be minimal.

Deputy Rabbitte: Yes, but did you probe the statement that Esat was the only operator interested?

Deputy O'Rourke: I did because earlier - and I think you have this document - I expressed to Robin McKay that the..... because I think it was a European dimension and also I was very keen that the competitive advantage would be shared if there were competitors who wished to use the backbone of the rail line and I put a note on a letter - I don't have it, I thought I had it - but I put a note on a letter saying this must be adhered to.

Deputy Rabbitte: Did you think there might have been rival companies out there?

Deputy O'Rourke: Yes, I did. At that time-----

Deputy Rabbitte: Did the CIE people satisfy you that there were not and that Esat was the only operator, as it says, committed to this development?

Deputy O'Rourke: No, when I said on the note..... when Robin McKay wrote the letter to CIE, he made a very firm statement in it to the effect that I was determined that the non-exclusivity would be adhered to and that there would be an allowance for competition. As I understand it then the terms of the Statutory Instrument were altered to embrace that.

Deputy Rabbitte: You were aware of the possibilities of competition, you were aware of the value of what you had to sell, so to speak, but you were assured that Esat was the only operator interested in committing to the development of a national-----

Deputy O'Rourke: As of then, now, but that was because it was at the beginning of what we had all hoped would be a great flowering of competition, so there was every hope that there would be another company that would wish to enter into whether it would be a subset of Esat or another arrangement with CIE, I don't know, but I suppose that's what the hope had been.

Deputy Rabbitte: Even after you had signed this agreement.

Deputy O'Rourke: Yes, well, we had in our letter stated that we wanted a non-exclusivity enshrined - I suppose that might be too big a word - but inserted in the terms and I was assured that that would find its way in the terms or find a vein in the terms.

Deputy Rabbitte: Are you saying that at the stage you signed off on the Statutory Instrument, you still thought that competition using the railway spine might be feasible?

Deputy O'Rourke: Yes.

Deputy Rabbitte: That was your understanding.

Deputy O'Rourke: Yes. It was because it had gone in a letter from our Department to CIE in which the note I had made - and I thought I had the document with me - on an earlier matter, I wrote this should..... this must be adhered to or something like that.

Deputy Rabbitte: Essentially, you know now that this was shutting out any realistic prospect of another performer.

Deputy O'Rourke: Well, no one else came forward.

Deputy Rabbitte: Do you think they could come forward in a situation where the Statutory Instrument had been signed?

Deputy O'Rourke: This would be a matter that would have to be legally probed.

Deputy Rabbitte: Yes, but do you think that anybody would undertake the commercial risk of coming into a scene where this instrument had been signed off?

Deputy O'Rourke: Well, I don't know anything about the..... I mean I'm not referring to would they come in when the instrument was signed, because it is my belief that the instruction we gave as per the letter from Robin McKay to CIE said very clearly that there was to be no element of exclusivity. The next question would be whether another telecommunications company would now seek to enter into the backbone and to use it, I think in a world in which the telecommunications companies have really stopped major investment, it would be decidedly unsure whether now anyway, whatever about in the future, there would be a company willing to invest money.

Deputy Rabbitte: Minister, I had intended to ask your Secretary General whether he was quoted accurately in the newspapers last week when he appeared before the Public Accounts Committee to the effect that something over 50% of the broadband being rolled out is not utilised.

Deputy O'Rourke: Underutilised.

Deputy Rabbitte: Do you know about that yourself?

Deputy O'Rourke: Yes, because, you see we went out to tender as you know we're on our third bid now and much of what was taken up by various telecoms companies that they would do, they then didn't do because of the decline in income, because of the low which had been reached by the telecommunications companies, but we hope that that will improve and that there will be an uplift if the telecommunications companies begin to assert themselves again.

Deputy Rabbitte: For example, is it true that there is a competition going on in the Shannon Development area to roll out broadband at a cost of something like £43 million-----

Deputy O'Rourke: I wouldn't know individually.

Deputy Rabbitte: From Shannon to Dublin.

Deputy O'Rourke: What we are involved at the moment is - 19 October was the closing date for a bid, a series of bids, which are presently being assessed by an outside company, and it involves county councils as well as groups like Shannon Development and outside groups.

Deputy Rabbitte: You do not know off the top of your head if-----

Deputy O'Rourke: No, because I haven't got the results of that.

Deputy Rabbitte: -----if the competition I am referring to in Shannon Development to roll it out from there to Dublin or Dublin to-----

Deputy O'Rourke: We haven't got the results of the competition as yet.

Deputy Rabbitte: Yes. Would that not be on the Esat network?

Deputy O'Rourke: It would be for whatever they put forward but we haven't ... 19 October was the closing date and we haven't got the assessment and the appraisal of those yet.

Deputy Rabbitte: In any event, over 50% of the existing capacity is underutilised to your knowledge.

Deputy O'Rourke: Well, it ... yes.

Deputy Rabbitte: We will finish this memo, Minister. Is it fair to ask you about the kicker arrangement? How much focus did you bring to bear on that?

Deputy O'Rourke: Well ... the kicker arrangement-----

Deputy Rabbitte: On the bottom of page 2.

Deputy O'Rourke: Yes, I know about it and I know when it was said ... I didn't know whether it would ever come to pass, the kicker arrangement or what moneys could be got out of it. On page 3 you'll find where Esat were to make guaranteed minimum payments to CIE as follows - £1 million, £1.4, £1.6, £1.75 and then, under a kicker arrangement, in addition "Esat will be required to make additional payments based on the total market for leased lines and switched data where that market exceeds £1.85 million per annum and Esat achieves an overall market share of 8%." It seemed a complicated formula to me. "The expectation is that this element of business could grow to over £300 million in future years." Well I mean, Chairman, can I say that was like live horse and get grass. "And that on this basis the kicker arrangement could generate further payments from Esat of between £1.5 to £2 million per year."

Deputy Rabbitte: Did you think it was sufficiently "live horse and you will get grass" to warrant your getting advice in terms of validating it as being of value to the State?

Deputy O'Rourke: But it was validated, as I thought, by the outside Norcontel who very firmly, as I thought-----

Deputy Rabbitte: You put a lot of weight on that?

Deputy O'Rourke: Well I did because they were, and are, a company of probity and very great standing-----

Deputy Rabbitte: As a matter of curiosity, because I never heard of them before this inquiry, how you know so much about them?

Deputy O'Rourke: Well I do because they were very involved in various bids and setting up branches of their company and employing people and in the nature of communications I would have been very aware of the activities of Norcontel. It's the same as when you were in business, you would have been in your job as a Minister ... you would have been very aware of small firms and what they were doing. Well, I was very aware of telecommunications firms-----

Deputy Rabbitte: You put a lot of weight on their advice?

Deputy O'Rourke: I did, yes, and it was stated so emphatically.

Deputy Rabbitte: What do you say now about apparently being misled?

Deputy O'Rourke: Well, I say that's a matter for your Chairman and your members, including your good self, to give ... a summation of when you make you final report.

Deputy Rabbitte: It is a hugely important issue, is it not?

Deputy O'Rourke: It is.

Deputy Rabbitte: Did you bring the Statutory Instrument to Cabinet?

Deputy O'Rourke: That went from us to Finance and was signed and agreed. ... I will come back to you. ... No, it didn't go to Cabinet as far as I remember, but I would need to check that, Deputy Rabbitte. I wouldn't like to be definitive on it, but I will come back to the Chairman on it.

Deputy Rabbitte: Is not something as serious as amending the statutory objects of the company sufficiently important to warrant it going to Government? Do not less important matters go to Government, if only for noting?

Deputy O'Rourke: But, look at it this way. You may say so, but if the whole signing of the heads of agreement weren't even known to the Minister of the day, or so he tells us - and I am quite sure he is telling the truth. Absolutely. If the signing between 4 and 16 June 1997 of the heads of an agreement which to my mind were just much more than a brick in the wall, to my mind they were the heads of agreement which enabled the bringing around of the whole deal on the Nasdaq. No, not the Nasdaq, but visiting potential investors in the US and saying this is what we have achieved ...it was also in documentation which I read, "we have achieved." It was called a letter of intent. Now I know you all cleared that up - well I don't know if you cleared it up - but subsequently it was said here that that, in fact, was the heads of the agreement, the letters of intent, but, be that as it may, the heads of agreement, to my mind, they were agreed in 14 days in extreme haste and photographed in newspapers and nobody seemed to know about it.

Deputy Rabbitte: Chairman, the Minister handed in a letter of Brian Joyce's resignation some time ago. I wonder if I could see a copy of it, please.

Chairman: That particular letter was dated 6 March, is that right?

Deputy O'Rourke: Yes, 2000.

Chairman: Is it agreed to publish it?

Deputy O'Rourke: Sorry.

Chairman: We are agreeing to publish it.

Deputy O'Rourke: Yes, sure. I think that was public at the time, there wasn't any big secret about it.

Chairman: I think you are probably correct, I just cannot be sure.

Deputy Rabbitte: Minister, in terms of this discussion, can I just get this out of the way? What I had scribbled down was that you had taken down notes of 12 February and I wrote, "How will it be ploughed in?" That was your note. Did I mishear you? Are you referring to annotations on the side of the memo or is there somewhere a separate memo where you took notes?

Deputy O'Rourke: No. When I got this to read ... I have a habit of writing, not always, but writing on some memoranda which I get if a question comes to my mind----- Those notes which you say you haven't got on your copy, but I certainly have on mine, they are in my writing and they were queries which came to my mind as I read it. Because subsequently when I got this IRMS report - this was dated 12 February or whatever it is----- Subsequently when I got this report and it talked about the damage done by the ploughing-in, it struck me very strongly then when I saw these documents that that was the remark that I had made at the time.

Deputy Rabbitte: All right. Where were we on the point of whether you agreed with me that amending the objects of the company would warrant going to Government? You are saying that it might have, in fact, gone to Government.

Deputy O'Rourke: I said I would come back to you on that, whether I did or didn't bring it, even for mention. I will come back to you on that.

Chairman: Minister, we will need to publish a copy of that letter, with your own notes on the side, too.

Deputy O'Rourke: Yes, of course, but it is the same that you have got, but my notes-----

Chairman: Yes, the notes that are-----

Deputy Rabbitte: I beg your pardon, Chairman, but, Minister, just on the question of Mr. Joyce, are you saying to the inquiry that you were talking to Mr. Joyce through the Secretary General of the Department on Monday about setting up a meeting for Tuesday morning and on Tuesday morning he was gone?

Deputy O'Rourke: We set it up for Tuesday morning at 8 a.m.

Deputy Rabbitte: What I am trying to get at is, did that come out of the blue.

Deputy O'Rourke: Yes, absolutely, out of the blue. I mean it most genuinely that I don't----- I said it before and I will say it again that both Brian Joyce and I, I had thought, had come to a more compatible arrangement and I was very surprised to get his letter. He's fully entitled to resign if he wishes to.

Deputy Rabbitte: Yes, of course he is, but it seems a precipitative thing to, do does it not?

Deputy O'Rourke: I thought it was very sudden - which is another word for precipitative.

Deputy Rabbitte: Right. If we look at the last paragraph on that letter-----

Deputy O'Rourke: On the first page?

Deputy Rabbitte: On the first page, yes, and I am reading this for the first time like yourself.

Deputy O'Rourke: No, no, I have read it.

Deputy Rabbitte: Sorry, well you have an advantage on me then.

Deputy O'Rourke: Well it was written to me.

Deputy Rabbitte: But of course. It is late in the evening, I am tired, I am sorry. The letter reads:

I made a very comprehensive statement to the Chartered Institute of Public Transport on the future of public transport in Ireland in November 1998. The paper outlined a number of items necessary to bring about a revitalisation public transport in Ireland with a specific emphasis on handing back the management of the CIE companies to the managers within them. Key issues addressed included public service contracts, freedom on fare box charges-----

Deputy O'Rourke: Yes, I think that's "charges" or it could be "changes".

Deputy Rabbitte: "and freedom from the involvement of the Department, the Minister and the Government in industrial relations matters. All of these are in the gift of the Government, yet remain an elusive pipe dream". That suggests Mr. Joyce had policy differences with you.

Deputy O'Rourke: Yes, that particular paragraph would.

Deputy Rabbitte: Is it true?

Deputy O'Rourke: Mr. Joyce believed, apart from my getting money for the company and receiving finance for the company in increasing amounts, which I needed to do because the company needed money, that should end my involvement in the company. It was exemplified, and when I say this, Chairman, I don't say it as in any adverse comment about Deputy Ivan Yates, with whom I had a very good relationship, but he said shortly after that to me in a debate in Dáil Éireann is: "All you need to be is the treasurer. Get the money and don't ask questions". It seemed to me one should have asked a lot of questions.

Deputy Rabbitte: Do you think Mr. Joyce's criticism was warranted?

Deputy O'Rourke: In some matters it may well have been but I do think his parting with me was most unusual in that the arrangement was made on a Monday to meet him on the Tuesday at 8 a.m. to discuss this safety report and that on Tuesday morning I heard on "Morning Ireland" that he was gone.

Deputy Rabbitte: Does the beginning of that letter give us any clue as to why he might have acted so precipitately? It states:

My attention has been drawn to an article in The Irish Times of Friday, 3 March, in which it was suggested that I was opposed to the Luas project. Correspondence between yourself and myself was cited as evidence of this. This is an inaccurate and mischievous interpretation of the letter that was written.

How did a letter that Mr. Joyce wrote to you get into The Irish Times?

Deputy O'Rourke: I don't know, Deputy Rabbitte. Many letters get into The Irish Times or the Irish Independent or The Examiner and how they get there is a matter for good reportage.

Deputy Rabbitte: I know but this letter was not written to me, as you pointed out earlier. Seeing as it was written to you, I thought you might be able to tell us how it got into the newspapers.

Deputy O'Rourke: I have no idea.

Deputy Rabbitte: No idea?

Deputy O'Rourke: Absolutely none.

Deputy Rabbitte: Did you have any feeling when you took over in the Department that Esat and Mr. Denis O'Brien had favoured status?

Deputy O'Rourke: In our Department?

Deputy Rabbitte: Yes.

Deputy O'Rourke: No, you mean favoured status about what?

Deputy Rabbitte: You heard us discuss the concept of first mover advantage. Do you understand that concept?

Deputy O'Rourke: It's a kind of a general commercial phrase which is used. Whoever gets there first. Long ago they'd say best dressed or best out or whatever. Yes, I do understand it.

Deputy Rabbitte: Was there not a good deal of controversy around this time in regard to Esat, Mr. Denis O'Brien and one of your predecessors, Deputy Lowry, and the suggestion that some favour might be conferred? Do you recall that? Did you investigate that when you took up office?

Deputy O'Rourke: Are you saying to me did I investigate the awarding of the second mobile phone licence? Is that what you're saying to me?

Deputy Rabbitte: I was going to come to that but if you wish to jump ahead, go ahead because it is late in the evening.

Deputy O'Rourke: When I came into the Department, as you know, that had been very current in the previous Government's time and I spoke at length about it to the then Department secretary - they were called "secretaries" then - John Loughrey, and he went through with me the process which led to the awarding of the second mobile phone licence. He went through the detail of it, how it came about.

Deputy Rabbitte: To your satisfaction?

Deputy O'Rourke: To my satisfaction at that time.

Deputy Rabbitte: Did you detect a disposition anywhere to confer advantage on Mr. O'Brien or his company?

Deputy O'Rourke: Within the Department, no. Do you mean in general terms?

Deputy Rabbitte: In general terms within the Department.

Deputy O'Rourke: No, I didn't

Deputy Rabbitte: I instanced before the example of Ryanair when it was getting off the ground as a competitor.

Deputy O'Rourke: You know what I think of Ryanair, so don't bring that in to me, please.

Deputy Rabbitte: There may be little difference between us, Minister, as it relates to the style of the principal, but the company provides a valuable service and so on.

Deputy O'Rourke: I have no doubt it does.

Deputy Rabbitte: I meant giving a leg up, so to speak.

Deputy O'Rourke: If you mean did I discern a bias in any way or a partisanship towards Esat or Denis O'Brien, no I didn't discern that within the Department.

Deputy Rabbitte: The irony is that no such claim was ever made against you, yet you are the Minister who signed the Statutory Instrument that conferred quite enormous benefit on the company.

Deputy O'Rourke: My dislike of poshness and corporate activity and all of that is well known.

Deputy Rabbitte: Thank you, Minister.

Deputy O'Flynn: Just a few short questions, Minister.

Deputy O'Rourke: Make them as long as you like.

Deputy O'Flynn: Can you take us back to the IRMS report and the damage to the track? Has the cost of rectifying the damage to the embankment and ballasts along the permanent way been quantified?

Deputy O'Rourke: Not as yet. There isn't a final reconciliation of the costings of that but clearly they would be considerable. It is laid out in black and white.

Deputy O'Flynn: Would it be considerable millions?

Deputy O'Rourke: I don't know because it hasn't been quantified, but it surely will be.

Deputy O'Flynn: Would it be as costly as the money CIE will get out of the Esat deal?

Deputy O'Rourke: We will wait and see what comes out of that.

Deputy O'Flynn: When you got the IRMS report and saw the damage done as a result of ploughing in cable etc., were you very concerned as a shareholder-----

Deputy O'Rourke: I was, yes.

Deputy O'Flynn: ----- that you were put at considerable risk by the board and the executive of the company?

Deputy O'Rourke: The money will come now I suppose, but I was more concerned at the safety risks and the ploughing underneath the line. Huge money was being spent on lines and now if they were being undermined because of the ploughing into them, sometimes it seemed in a haphazard way perhaps that would contribute to safety risks.

Deputy O'Flynn: Did you feel the board acted irresponsibly by allowing this work to be done?

Deputy O'Rourke: I felt the first thing I had to do was to bring it to the notice of the Chairman and then bring it to the Cabinet because it did relate to safety and I wanted to bring it to both. I thought the correct way to do it was to bring it to the notice of the Chairman.

Deputy O'Flynn: Did you say you will be getting a quantifiable figure for the damage done at some stage in the future?

Deputy O'Rourke: I presume in time that will emerge in figures from CIE.

Deputy O'Flynn: Are you familiar with the board paper of 4 June - M3F14.032039 - if we could publish that? Paragraph 28 stated----

Deputy O'Rourke: What year was that?

Deputy O'Flynn: 4 June 1997.

Chairman: That is published.

Deputy O'Flynn: Paragraph 28 states: "The Department of Transport, Energy and Communications have been advised informally of the discussions with Esat and have raised no objections to the proposed Joint Venture". I know you were not Minister at the time, but we have had evidence from officials in your Department. Are you familiar with Mr. Harper's evidence?

Deputy O'Rourke: I heard of his evidence, but I did not see him speaking.

Deputy O'Flynn: He, and other officials, Mr. Mangan and Ms de Brún, said they were not advised formally of this matter or had no evidence of it until they saw it in the press release of 1997 and the subsequent letter of 16 June, which probably arrived a day later or whatever. What is your view on an item like that being inserted into a board paper by senior executives in CIE, and written in such a way that is misleading to say the least, if we were to believe the sworn statements of the officials in the Department?

Deputy O'Rourke: Looking at paragraph 27, I didn't see this document.

Chairman: Sorry, Minister. Deputy, you said "misleading, to say the least". You might rephrase that.

Deputy O'Flynn: I was saying that Mr. Harper and others have said that there were no discussions with the Department of Transport, Energy and Communications. Dr. Ray Byrne, on the other hand, said the Department advised him informally of the discussions with Esat.

Deputy O'Rourke: In the second line of paragraph 27, it says, "given the commercial sensitivity of the project, the limited time opportunity and the very small number of operators who could be potential partners, it is not possible to follow our normal public tendering procedure". I certainly would question "the limited time opportunity". But, in fact, it bears out what I said. There seemed to be some reason why there was this unseemly haste and there it is written, "the limited time opportunity". I don't know why it was a limited time opportunity, except that there was a period of post-election and a new Government.

Deputy O'Flynn: In your own experience in Government, would it be normal for officials in Departments, and indeed in this particular Department, not to be advised formally of matters of importance in relation to the Esat deal, or matters that would require the approval of the Department at a subsequent date? Would it be normal for officials and Ministers to find out-----

Deputy O'Rourke: From the newspapers?

Deputy O'Flynn: -----by way of press release?

Deputy O'Rourke: I felt and - I wouldn't have really noticed it then, although I suppose I may well have glanced at the photograph - I feel now looking back on it, it was very strange that for 12 days there was, to use the polite word, this "flurry" of activity to get all of that done. I feel it was very strange and I don't think it can be put down to the perceived lack of a leaning to liberalisation in an incoming Government.

Deputy O'Flynn: Mr. Joyce informed the sub-committee that he didn't communicate with you very often.

Deputy O'Rourke: He did about four or five times, maybe and certainly coming towards the end of our relationship - it shows you how you can sometimes be mistaken, I suppose... well, I didn't know it was coming to an end, but coming before the resignation did, I had thought we had reached a measure, hardly of contentment, but of more compatibility with one another.

Deputy O'Flynn: Dr. Byrne advised us that he received a 'phone call from Deputy Lowry during his term as Minister. We did not get the detail of the 'phone call, but-----

Deputy O'Rourke: He said it was constituency related.

Deputy O'Flynn: That is what Deputy Lowry said.

Deputy O'Rourke: Yes.

Deputy O'Flynn: Dr. Byrne wasn't able to advise us what he discussed with him. In your role as Minister, in all the ministries you have held, would it be normal for you to telephone senior managers in CIE, for example?

Deputy O'Rourke: No.

Deputy O'Flynn: Is it your practice to telephone senior management?

Deputy O'Rourke: I don't because I decided when I came into the Department - and this is genuine, Chairman, and said with feeling - that the whole Department was a minefield where you could go wrong if you started on those kind of capers. I never, either constituency or non-constituency, I don't ring mangers or group executives or those group of people about anything.

Deputy O'Flynn: So would you follow corporate governance in your relationship as shareholder on behalf of the people by communicating directly with the Chairman?

Deputy O'Rourke: The Chairman is my point of contact, yes. Often if you went to a launch of something you would meet the chief executive at such a function but in the normal course of events it is chairman to Minister, Minister to chairman. In all of the companies that's the way it is. Within CIÉ because of the nature of the money and the huge amount of money that is now being put in to the company I suppose I could have been more hands-on maybe than was necessary but it seems to me as subsequent events have turned out, it's more hands-on I should have been. But you can't be - I mean last week in the Dáil just to cite an example, Chairman, I was asked to ensure that the windows of the trains are always opened on every train journey. Now there's no doubt I cannot be attending to the windows of the CIÉ trains as to whether they are opened or closed. I was also asked would I see to the menu of Bunratty Castle banqueting arrangements. Clearly I can't be attending to the menu of Bunratty Castle banqueting arrangements. But these were put to me as serious points in a Dáil debate of no confidence. Sorry, excuse me.

Deputy O'Flynn: Did you win that debate?

Deputy O' Rourke: Yes I did. Thanks to you and to you Martin, and to you, Deputy Doherty.

Deputy O'Flynn: I have just one final question. Would it be the practice of the Minister for Public Enterprise to be ringing executives in CIE?

Deputy O'Rourke: No, and I never rang an executive about any constituency matter or about any other matter.

Deputy O' Flynn: Thank you, Minister.

Deputy Higgins (Mayo): Just returning to this meeting with Dr. Ray Byrne, Pat Mangan and yourself in relation to the Statutory Instrument, you are disputing Dr. Byrne's version that you congratulated CIE?

Deputy O'Rourke: Yes.

Deputy Higgins (Mayo): Right.

Deputy O'Rourke: Because it's not my nature.

Deputy Higgins (Mayo): There were three elements that were particularly unsatisfactory. You had not been notified of the fact that experimental digging had been going on. Is that correct?

Deputy O'Rourke: Correct, yes.

Deputy Higgins (Mayo): Again you were not aware of the fact that this memo, the memo of 4 June - it is there on the screen - said that the Department had raised no objections. Is that correct?

Deputy O'Rourke: Well so it says.

Deputy Higgins (Mayo): The third element-----

Deputy O'Rourke: But that's disputed by Michael Harper.

Deputy Higgins (Mayo): Correct. I know that, yes. The third element is in relation to the Norcontel report on which you placed great store because of the reputation of the company with which you were totally au fait. You saw particularly the Norcontel report as providing in your own words "the seal of approval". Is that not correct?

Deputy O' Rourke: Yes.

Deputy Higgins (Mayo): Minister, had you been aware of those three elements, particularly the Norcontel one, would you have put the brakes on , would you have refused to sign the Statutory Instrument had you been aware of this?

Deputy O'Rourke: Well you see Deputy Higgins, it is a tempting question and it's tempting for me to give an answer which might be resounding. But if I were to do that I'm doing it in the knowledge that there is now a sworn rebuttal of what is said in the memo and your mind is influenced by a later intrusion in it which is - which I only received this week. So, it's up to the committee, could I venture to say, it's up to the committee to decide on the veracity but my belief is that the veracity lies with the sworn statement, because it is sworn.

Deputy Higgins (Mayo): We have discovered in our examination of what happened at that meeting - can I just say that Dr. Byrne said that you were extremely enthusiastic and that you were very supportive of the whole project, etc. Would that be true?

Deputy O'Rourke: Well I don't agree with that. I told you already I don't agree with it.

Deputy Higgins (Mayo): You do not agree with that either?

Deputy O'Rourke: No, it's not "either" . I said earlier today I didn't express enthusiasm and congratulations,....I may well have said: "Well, that's fine then" or something like that but I certainly didn't go congratulating people.

Deputy Higgins (Mayo): Basically he gave the impression that the atmosphere was very upbeat and that you were very supportive.

Deputy O'Rourke: By nature I suppose I am sort of upbeat but it wouldn't have extended to congratulating them, no.

Deputy Higgins (Mayo): Well in view of the fact that , as Deputy Rabbitte has already said, you would seem to have been misled in relation to certain facts that were put out at the meeting as being in support of this, you would have had reservations in relation, presumably, to the signing of the Statutory Instrument. Are you certain you would have put the brakes on to check further ?

Deputy O'Rourke: Well I can only say that I am more inclined to believe a sworn statement than I am now. But that is now. You know the song "If I knew then what I know now", we'd all be different people. We didn't know that then. I didn't know that then. I read and noted, throughout the negotiations, that Esat-CIE were independently advised by Norcontel, the international ... who stress, no sorry, who endorsed the final deal as a very good one for CIE.

Deputy Higgins (Mayo): This project was not conceived under your watch, but it was largely ongoing, being rolled out under-----

Deputy O'Rourke: Yes, you are right, but the heads of agreement were signed.

Deputy Higgins (Mayo): Correct.

Deputy O'Rourke: There's where I differ with some of your previous witnesses. I believe the heads of agreement were very strong and they were used in a good fashion, a proper fashion by the person, the proponent of the project. They were signed heads of agreement.

Deputy Higgins (Mayo): During the period 1997-----

Deputy O'Rourke: Who signed those now, I remember-----

Chairman: They were signed by Mr. McDonnell and Mr. O'Brien.

Deputy Higgins (Mayo): During the period 1997, 1998 and 1999, did you not get any information on the progress or lack of progress on the mini-CTC project?

Deputy O'Rourke: I knew that the cohesion fund - whatever they call themselves - monitoring committee, the cohesion fund monitoring committee, met twice yearly and reviewed ... it wouldn't be just us, they'd have the Environment, I'm sure Arts, Culture, wherever there was capital moneys given through the cohesion fund. I knew they met twice a year. It transpires it's twice a year. I knew it was regularly anyway because that was a condition that the EU imposed, if they gave you cohesion funding, that you had these monitoring committees. I suspect I was of the belief that the monitoring committee was attending to these matters in a proper fashion, which I'm sure they were.

Deputy Higgins (Mayo): The very first you knew about this was the mysterious phone call you got at your clinic in Athlone in October.

Deputy O'Rourke: No, there was nothing mysterious about it. You keep on calling it this.

Deputy Higgins (Mayo): Well, anonymous.

Deputy O'Rourke: It was actually a telephone call.

Deputy Higgins (Mayo): Yes.

Deputy O'Rourke: We all get telephone calls.

Deputy Higgins (Mayo): I know we do.

Deputy O'Rourke: There is nothing mysterious about them at all.

Deputy Higgins (Mayo): Immediately after you got that telephone call on that Saturday morning in October-----

Deputy O'Rourke: Saturday afternoon I do the clinic.

Deputy Higgins (Mayo): -----did you contact anybody immediately?

Deputy O'Rourke: No, because I think it was within a day or two I received a ... I don't tend to listen ... When I get a letter which is not signed, I tear it up. I don't actually read it because my father told me that if you get a letter which is anonymous, tear it up. There is no veracity in it, if they cannot put their name to it. Mostly ... telephone calls, I always say immediately "Who's speaking, please?" I listened to the phone call. It was very brief so I listened to it and yes, it stayed in my mind. I can't remember if in fact immediately on that I got the note from John Fearon, or whichever of them it was, or if it was contemporaneous, but certainly I noted it in my mind.

Deputy Higgins (Mayo): Was John Fearon's action on the termination of the finance not in December-----

Deputy O'Rourke: Yes, but he sent me a memo earlier on 1 November 1999. I got a note from ... that's either Pat Mangan or John Fearon, I don't know which of them, but I think it's John Fearon because he subsequently was the person in December who stopped the payment.

Deputy Higgins (Mayo): That was at the time that the contract was to have been completed. It was to have been completed in December 1999. Is that not correct?

Deputy O'Rourke: That was what was envisaged, but it is was in, I think, early December he stopped the payment. I asked him then on 1November on that memo he wrote me or sent up to me, I asked if I could be kept informed as to how it was progressing.

Deputy Higgins (Mayo): Minister, this committee was set up at your instigation. Is that not right?

Deputy O'Rourke: And yours as well.

Deputy Higgins (Mayo): As a result of our exchange on 19 October. In relation to the termination of the contract, as you know a decision was taken by the board of CIE to terminate the contract.

Deputy O'Rourke: They have now, haven't they?

Deputy Higgins (Mayo): Yes. At the time we were sitting here, our inquiries were------

Deputy O'Rourke: Ongoing.

Deputy Higgins (Mayo): Exactly. In relation to that, were you consulted about the termination or do you feel, by virtue of the fact that you are the political master in this case, that you should have been consulted in advance about the decision to terminate the contract?

Deputy O'Rourke: Well, you see, it goes back to the corporate governance. I mean, Brian Joyce essentially not fell out because I hope we haven't fallen out. Could I just, as an aside, say, Chairman, I would like to put it on the record, not for the matter of the report, but when my husband subsequently passed away in the Mater, he was of extreme great help and ... personal kindness to me. I do want to say that. The reason that Brian Joyce fell out with me, if you want fell out, was because he thought I was too interfering. So, this is what I cannot get my head around. If I'm to be keeping corporate governance divides - he was the Chairman of the board - divide between the Minister of the day and the board and the Chairman, you can't know everything. It's against corporate governance not alone not to know everything but not to mend everything either as well yourself. So if the Chairman and the board reached a conclusion that they were going to terminate the contract, that was their conclusion, and he was determined on it because he must have taken legal advice to that effect, I'm sure he did.

Chairman: That document-----

Deputy O'Rourke: Which document, Chairman?

Chairman: The one with your notes on the side. I want you to confirm on oath that the copy of the note entitled "note for the information of the Department of Public Enterprise, financial aspects of CIE-Esat telecommunications project" which has today been supplied to us at the sub-committee is correct. Is that correct?

Deputy O'Rourke: I swear that is correct, on oath.

Chairman: I request the sub-committee to publish the following documents which were displayed or admitted in evidence in the course of evidence taken and commissioned on 5 October 2001 - Norcontel.004, 487-557; Norcontel.006, 276-278, 280, 283, 285; Norcontel.009, 041, 075-078, 084, 093, 099, 101-108, 186-187, 197, 211, 219; M3F15. 075; M3F3. 005, 213-217; M3F9. 227-235; M3F10.153; M3F7.026; M1F19.117, 120-121; Casey.001, 001-004; Cullen.001.011; M3F1. 037, 125-126; Esat.009.124; M3F2.354; Document requested to be admitted in evidence by CIE - Licence Fee, 1998-2017. Is it agreed that all these documents be published? Agreed. I thank the Minister. She is now excused.

Deputy O'Rourke: Can I say, Chairman, to you and to the members, that I was very nervous coming in? I have never taken an oath in my life and I was nervous coming in because I wanted to be as accurate and as forthcoming and helpful as I hope I was. I was nervous and thank you and the members for the very explicit and open way you are going about your business.

The witness withdrew.

Chairman: I wish to draw attention again to the procedures of the sub-committee regarding cross- examination, in particular, paragraph 1, page 4 of the procedures in respect of evidence heard by the sub-committee on or since 6 November. The sub-committee will entertain applications from any interested party who seeks to cross-examine a witness on the basis of having an interest in the resolution of a conflict of evidence and any such application should be received by the sub-committee by Tuesday, 13 November. The sub-committee will also permit cross-examination where it is satisfied that such cross-examination is necessary in the interests of justice.

Application may also be made to the sub-committee to have any witness recalled to elaborate further on any matters. Such recall will also be granted where it is satisfied that the interests of justice so require. The sub-committee shall rule on all applications to cross-examine taking into account submissions of parties and, where relevant, the submissions of relevant witnesses on the legitimate interests which the party seeks to protect by such cross-examination. While there is no restriction in principle on the right to cross-examine, cross-examination may be limited, if necessary, in the interests of justice in the conflicts of evidence and the interests of the parties seeking to cross-examine. It is proposed at present to commence any cross-examination on Monday, 19 November.

The sub-committee adjourned at 5.50 p.m. until 10 a.m. on Monday, 19 November 2001.

Previous Page