Pat Rabbitte (Dublin South West, Labour)

I am pleased to have the opportunity to contribute to this very important debate. The Moriarty report presents an unedifying picture of politics and public affairs in Ireland. One of the foremost challenges facing Dáil Éireann is to respond to the report's findings in a forthright and honest way and implement the recommendations for reform. The Government is determined to give a lead, not merely by referring the report for investigation by the Garda and whatever action the Director of Public Prosecutions considers necessary on foot of a Garda investigation, but also by giving prominence to implementing the far-reaching reforms set out in the programme for Government and enunciated by the Taoiseach during yesterday's debate.

The tribunal attaches no blame to the Government of 16 years ago but commentators have made the point that the current Government will be judged by the reforms it makes in the report's wake. I agree with that, which is why the Government is committed to the reform programme.

As I said last week, the report's findings are of the utmost gravity regarding the then Minister for Transport, Energy and Communications. It is for this reason that I, on behalf of the Government, have referred the report to the Revenue Commissioners, the Garda Commissioner and the Director of Public Prosecutions. I have no doubt these institutions will urgently follow up on their examination of the report's findings.

I welcome the publication of the report. It is a comprehensive and exhaustive treatment of very complex matters. Mr. Justice Moriarty deserves to be commended on producing a report which, while very lengthy, is clear and well-structured.

Two of the unsuccessful consortia in the second mobile phone competition issued proceedings against the State in 2001. In 2007, pursuant to an application by the State, these proceedings were struck out by the High Court for want of prosecution on the grounds of delay. These matters are under appeal by the unsuccessful bidders to the Supreme Court. I am advised they are likely to be heard in the not too distant future. Deputies, therefore, will understand my ability to comment in this debate on the GSM 2 award process is of necessity somewhat restricted. I must, however, place on the record of the House that the report made no finding that the result of the second mobile phone competition was incorrect.

I want to give the House some context to the report and set out the involvement of the State, mainly in the form of my Department, in the proceedings of the tribunal.

The tribunal's terms of reference, as passed by resolutions of Dáil Éireann and Seanad Éireann on 11 September 1997 and 18 September 1997, respectively, provided that the tribunal was required to inquire urgently into and report to the Clerk of the Dáil and to make such findings and recommendations as it saw fit concerning the specific factual matters of urgent public importance relating to alleged payments to Charles J. Haughey and Michael Lowry. Although the terms of reference made no mention of the second GSM licence, after certain private investigations, the sole member determined to have public sittings concerning Deputy Lowry and the GSM competition.

It would be useful if I gave the House some brief background to the second GSM competition. This is dealt with in considerable detail in the report. The then Government announced on 2 March 1995 an open competitive bidding process with a view to the granting of a GSM licence to a second cellular phone operator. The competition was to be overseen by the then Department of Transport, Energy and Communications. A request for proposals, RFP, for licence applicants was also announced. The RFP was the grounding document for the GSM competition, setting out the criteria to be used to select the winner. Winning the competition entitled the winning applicant to the exclusive right only to negotiate for the licence. It did not necessarily mean that the licence would issue to the applicant. Further negotiations were required for that. The competition was dictated by EU law to break a monopoly.

A project group, formed by the then Department of Transport, Energy and Communications and including representation from the Department of Finance, was set up to oversee the competition. The competition documentation was provided to the European Commission to ensure it complied with EU competition rules. The Commission raised objections about the cash bid element for the licence, suggesting it could act as a barrier to market entry. Informal negotiations between members of the project group and the Commission led to a compromise whereby an open-ended auction style fee for the licence was replaced with a fee to be determined by the applicants but subject to a maximum of £15 million. Accordingly, following discussions and correspondence, the approach of using a maximum fee for the licence was accepted by the Commission. This ensured the Commission's requirement that no unfair burden be placed on new market entrants was satisfied. The Commission otherwise endorsed the parameters of the competition.

The then Department of Transport, Energy and Communications engaged, by way of competitive tender, Andersen Management International, AMI, leading GSM consultants and experts to assist with the process. The project team was thus made up of the members of the Departments of Transport, Energy and Communications and of Finance, as well as AMI. This group ran the competition. Esat Digifone Limited, Esat, was announced as the winner by the then Minister for Transport, Energy and Communications on 25 October 1995. After successful licence negotiations, the GSM licence issued to Esat on 16 May 1996.

After an extensive private investigative phase, involving officials from both Departments and including a meeting with officials from the Attorney General's Office, the tribunal decided to conduct public hearings in the matter. These public hearings commenced on 3 December 2002. The last day of public hearings of the tribunal was 5 November 2010. Over those eight years, the tribunal held some 163 public hearing days in batches. Some 20 witnesses gave evidence on behalf of the State. These comprised officials and secondees to the then Department of Transport, Energy and Communications and the Department of Finance, the Office of the Attorney General, and also Mr. Richard Nesbitt, SC, counsel to the Department. Professor Michael Andersen, lead AMI consultant to the process, also gave evidence. Accordingly, a total of 94 days of evidence was given by officials of the State and supporting experts out of a total of 163 days of the GSM module sittings.

In addition, the State side through the Office of the Chief State Solicitor engaged in voluminous correspondence with the tribunal over the period. This included lengthy and detailed legal submissions on various issues arising, as well as extensive exchange of letters on many issues arising. The cost of the tribunal to date incurred by my Department, including legal costs, is approximately €3.3 million. This is additional to the direct costs of the tribunal itself.

The House will expect me to deal with the report as it relates to civil servants involved in the process. It is not my task to conceal the shortcomings identified in the report but, on the substantive issues, it is very clear. For example, the report acknowledges that the officials with whom Mr. Lowry interacted had "no means of knowing that Mr. Lowry was conveying information to Mr. O'Brien, or any other interested party, and had no reason to suspect Mr. Lowry's motives". The report referring to the two officials most directly involved in the project group stated, "the commitment and engagement of those officials could not be faulted". Also, the sole member observed:

It is undoubtedly the case that the tribunal's investigations were personally and professionally discomforting for those officials, who, through no fault of their own found themselves at the intersection of an irregular and improper relationship between politics and business, in the persons of Mr. Michael Lowry and Mr. Denis O' Brien, of which they had no knowledge at any time.

The sole member added, "It is Mr. Lowry and Mr. O'Brien who were at fault, and had either of them seen fit to respond to the tribunal enquiries openly and honestly, those officials would have been spared the spectre of public scrutiny of their actions".

In this context the report finds that the then Secretary General advised the Minister at the outset of the process to be cautious in dealing with interested parties. The report is critical of some aspects of the process. In view of the court proceedings to which I referred earlier, I do not intend to comment on the sole member's observations in this area which may be an important part of any future court proceedings where the State will be defending its position. I note, however, in passing that in some instances where the sole member was critical of the execution of the process he remarked that some actions were made "unwittingly" and that the implementation of the process by some officials was "no doubt actuated by a desire for a decisive, efficient and productive process, and one that would secure the policy objective of delivering a second operator".

Elsewhere, the tribunal remarks that it "does not believe that the evaluators ever consciously intended to approach the evaluation otherwise than fairly and with open minds". This is not to deny these criticisms by the tribunal of the administration of the process by the Department. In this regard, the tribunal suggests greater precautions should have been taken to segregate those conducting the evaluation from the Minister. This must, however, also be read in the context of the tribunal statement that the officials in question had no means of knowing Mr. Lowry was conveying information to one of the bidders.

It is neither possible nor desirable to end interaction between Minister and civil servants on material issues; however, if a process is agreed that is intended to ring-fence a particular issue, great care should be taken to ensure that it happens. There is much to ponder arising from the report in regard to the relationship between Ministers and civil servants. There is a commitment in the programme for Government to address this issue. The Government's commitment is to legislate for a reformulated code of laws that will spell out the legal relationship between Ministers and their civil servants, identifying the true decision makers and indicating their accountability for decisions taken. The powers and responsibilities of Secretaries General will be strengthened so as to assist them, if needs be, in standing up to political masters who are less attentive to the requirements of due process and sound administration.

What we have suggested is that the Secretary General will have statutory authority to ensure that the Department and its officers perform their functions in a non-political and impartial manner, in accordance with law and with the highest ethical standards of conduct and integrity and with any prescribed code of conduct. In this scenario the Secretary General would be required to ensure that risk management and other internal controls are in place so that public funds are safeguarded; functions are performed effectively, efficiently and economically; laws, regulations and approved policies are complied with; records and reports are adequate, reliable and accurate. The independent statutory responsibilities of a Secretary General will extend to taking the necessary steps to safeguard that all persons concerned -Ministers, advisors and civil servants - perform their functions in a way that avoids the unlawful or irregular use of public funds or resources, or that are otherwise contrary to fair and sound administration.

In line with its remit, the report makes a number of recommendations set out under the headings of political funding, company law, revenue matters, regulation, and tribunals of inquiry. I will presently address these matters, especially those relating to the intersection of politics and business. First, I wish to deal with the issue of regulation in so far as the area of communications is concerned. In this context, I note that the tribunal has made no recommendation on the future conduct of competitions in the telecommunications sector. In fact, the position in this regard has changed fundamentally from that which obtained at the time of the competition for the second GSM licence.

ComReg is now the statutory body responsible for the regulation of the electronic communications and the postal sectors in accordance with Irish and EU Law. It was established in December 2002, under the Communications Regulation Act 2002. ComReg has a range of statutory functions and objectives with regard to the provision of electronic communications networks and services. One of their key functions is to ensure efficient management and use of the radio frequency spectrum, which encompasses the award of spectrum for mobile telephone licences.

Section 11 of the Communications Regulation Act provides that ComReg shall be independent in the exercise of its functions, although in certain circumstances ComReg is required to comply with policy directions issued to it by the Minister for Communications, Energy and Natural Resources. ComReg's licensing of use of the radio spectrum under national legislation is subject to the EU regulatory framework for electronic communications. The framework requires that ComReg ensure that the allocation and assignment of such radio frequencies is based on objective, transparent, non-discriminatory and proportionate criteria. It also requires that ComReg establish open, transparent and non-discriminatory procedures for the grant of licences and cause any such procedures to be made publicly available. Additionally, the framework requires that, where ComReg decides to use competitive or comparative selection procedures for the grant of a limited number of licences, such procedures are fair, reasonable, open and transparent to all interested parties.

Finally, as regards member state involvement, the framework requires that member states guarantee the independence of national regulatory authorities by ensuring they are legally distinct and functionally independent of all organisations providing networks and services. Member states have to ensure that their national regulatory authorities exercise their powers impartially, transparently and in a timely manner. In summary, the current arrangements for the licensing of spectrum are administered by an independent regulator who is free from political or ministerial interference.

In the areas of energy and broadcasting, which are also part of my ministerial portfolio, independent regulators are also in place in the form of the Broadcasting Authority of Ireland and the Commission for Energy Regulation. These regulators are also statutorily independent from the Minister of the day in the performance of their duties. More generally, there are lessons to be learned for the conduct of public administration. Public procurement processes have evolved since the competition for the State's second GSM licence. I have already outlined the significant changes with the introduction of independent regulators in my own area. We need to examine whether there are further changes in procurement that should be made following this tribunal's investigations.

I would like to comment on the report from the point of view of, as the report puts it, "the intersection of the worlds of politics and business". The members of this House and the general public find themselves, according to the report of the tribunal, contemplating an incident in which a senior office holder has betrayed public trust. The fact that a Minister's actions while in office had been described as venal and disgraceful after 14 years of investigation has now been well aired in political, media and public discussion. The problem lies at one single place in Irish life - the point at which business and politics meet. We in this House and in particular those of us in Government regularly make decisions that affect the fortunes of corporate interests. We are entrusted by the people to make those decisions in the public interest. In broad terms, good public policy decisions will also create a healthy environment in which businesses operate but the decisions we make may also regularly benefit or hinder particular businesses to a very large degree. Politicians, as a by-product of particular decisions we make, in passing can enrich particular businesses and individuals. It is this fact that requires us to be particularly vigilant, stringent and transparent about how we police that point where we interact with the commercial world.

It is now clear to everyone in this House that we have failed to do this adequately. No Government has a monopoly on poor standards in this area, as we see from Mr Justice Moriarty's reports. We must now as a House resolve to deal with this matter once and for all. The Taoiseach set out that agenda yesterday. As well as the struggle to restore our country's finances, the Government must also rebuild the reputation of Irish politics. To this end I hope we will now have the full support of this House for a number of important measures that will further regulate the relationship between business and politics. First, we intend finally to introduce legislation to ban corporate donations to individual candidates, politicians and political parties. This is not to say that all such donations in the past have been made for improper motives but it is reasonable for the public always to be sceptical of the reasons why businesses choose to fund politicians and their parties. For this reason alone, the practice must end.

We plan to regulate lobbyists and lobbying. Businesses, industry groups and individuals make representations and arguments to Government and individual Departments and Ministers every day. It is important for those making the case to ensure they can get a hearing and for those making decisions who need to hear from those with expertise and interests in the area. This lobbying must be open and transparent. It is important for the Government to know precisely what interests are represented by anyone making a case to it. It is important also for the public to know who is making representations, to what end, and to whom. We will therefore propose a register of lobbyists and other regulation of how lobbying is conducted. We will also introduce protection for whistleblowers who expose wrongdoing in the public and private sectors.

I will turn briefly to the length of time that has elapsed since this House first decided to have these matters examined. I do not think there is a better example of our current inability to examine matters of public importance and reach conclusions quickly than the length of time the Moriarty tribunal took to report. In saying that, I do not criticise the tribunal or its chairman. The sole member deals with the reasons for the delay in his report. However, we must find a way to deal with issues such as this quickly and effectively. The Government has pledged to hold a referendum to amend the Constitution to give Dáil committees full powers of investigation. The Abbeylara Supreme Court decision currently limits the ability of Dáil committees to hold investigations into crucial issues of public concern, such as the banking crisis. That is an issue we intend to address.

In addition, in the case of criminal investigations, my colleague, the Minister for Justice and Law Reform, has already announced work on a package of reforms to enhance the powers of the Garda Síochána in the investigation of white-collar crime. More generally, one must ensure that the law and regulation prescribe that there is a healthy and arms-length relationship between business and politics. If money changes hands, it will be illegal. If business people exercise their right to lobby and make representations, let it be open and transparent.

In dealing with Mr. Justice Moriarty's account of this grave and frankly depressing episode involving Ireland's business and political life, I will make a positive point about the partnership between business and politics. It is business and politics, working together, that will lead this country out of the severe economic difficulties that it is facing. Each element of society has much to learn from the other, and our country and society have much to gain from working together. Today, let us in this House resolve that in future that relationship will be conducted openly and in an atmosphere in which the public can be confident that it is free from any impropriety, or suspicion of impropriety.

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