On the morning of the 1997 general election, The Irish Independent published a front-page editorial titled “It’s Payback Time” which urged readers to vote Fianna Fáil and kick-out the incumbent Fine Gael, Labour & Democratic Left coalition government. Fianna Fáil duly got back into power, in coalition with the now defunct PDs.
It was alleged, but unsubstantiated, at the time that the stance of Independent Newspapers might have been influenced by the failure of the business interests of Sir Anthony O’Reilly to prevail in the awarding of mobile phone licenses by the 1994-97 coalition administration.
In 2000, Senator Shane Ross and his media best buddy Eamon Dunphy launched a sustained assault on the management and board of Eircom, organising a populist shareholder revolt. This was facilitated by a falling share price following the privatisation flotation a year earlier.
The end result, partially influenced by the Ross/Dunphy disruptive and sustained “bad publicity” blitz, was that Eircom’s legacy landline business was put on the auction block. (The mobile phone business had already been sold to Vodafone).
The two final bidders were Denis O’Brien’s eIsland and the Sir Anthony O’Reilly-led Valentia Consortium.
The Valentia bid, highly leveraged and with minimal capital input, was ultimately successful, in November 2001, and that outcome was facilitated by a change in tax law by FF Finance Minister Charlie McCreevy, specifically structured in order to allow the Employee Share Ownership Trust (ESOT) to vote in favour of the Valentia leveraged proposal, without having to cash in the trust’s shares and incur a significant capital gains liability.
NB: this tax change would not have been necessary if O’Brien’s bid had prevailed.
Could that tax change by Minister McCreevy have been “payback time”, a “thank you” from the FF-led coalition government to Sir Anthony for his support in winning the 1997 general election? If so, we’re unlikely to find the smoking gun.
But if one is inclined to view the 1997 support for FF as linked to the 2001 tax change to support Sir Anthony’s Valentia bid for Eircom, does Senator Shane Ross’s sustained 2000 campaign to undermine the management and board of Eircom take on a new significance?
Might it have been one of a series of orchestrated steps which resulted in significant profits for Sir Anthony when, as expected, Valentia offloaded Eircom less than 3 years later in a stock market reflotation exercise?
Will we ever know for sure?
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