The Attorney General's Office last year advised that undertakings given by Mr Ray Burke to Independent Newspapers plc in 1991 for the operation of exclusive MMDS licences by its associate, Princes Holdings Ltd, were "ultra vires and unlawful".
The advice was sought by the Department of Transport, Energy and Communications when the minister, Mr Alan Dukes, was preparing to announce on April 15th last year that he proposed to issue licences to the deflector systems in the UHF band.
The former attorney general, Mr Dermot Gleeson, was unable to give the advice because of a declared conflict of interest. He had acted for certain licence-holders in various controversies which were subsequently litigated in the High Court. Mr Paul Gallagher SC was commissioned to provide the Attorney General's Office with advice on the issue.
The Irish Times has confirmed that Mr Gallagher advised in writing that the undertakings given to MMDS investors in regard to the licensing of rebroadcasters was "ultra vires and unlawful".
These undertakings formed part of "written reassurances" given by Mr Burke in a letter of comfort to Mr Joe Hayes, then managing director of Independent Newspapers plc, on February 4th, 1991. Mr Burke agreed to most of the terms which Mr Hayes had sought for "planning, banking and investment reasons" in a memorandum dated October 8th, 1990.
It has already emerged that some of these reassurances departed from Civil Service advice.
Mr Gallagher was asked by the Attorney General's Office to advise on the undertakings given to MMDS investors, in particular those contained in the letter from Mr Burke to Mr Hayes. He was also asked about the status of the undertakings.
In his response to Mr James Hamilton, senior legal assistant in the Attorney General's Office on April 7th, 1997, Mr Gallagher stated: "The undertakings given to the MMDS investors in regard to the licensing of the rebroadcasters was ultavires and unlawful and, therefore, the Minister is not entitled to have regard to that undertaking when considering any application for licensing on the UHF spectrum."
Later, in his general advice on the options which were being put before the government for decision, Mr Gallagher suggested that there was a real risk that "the MMDS licensees will commence legal proceedings against the Minister. There is also a risk that the Minister may be held liable in that the court could hold that the Minister was negligent in not obtaining legal advice in regard to the matter".
Within a month of Mr Dukes's announcement of his intention to issue licences to deflectors, J.W. O'Donovan, solicitors for Independent Newspapers plc and Princes Holdings, warned the Minister: "Such is a clear contravention of the MMDS licences issued and the assurances furnished both directly and indirectly to our clients in reliance on which significant investments were made by them.
"We are accordingly instructed to write to you requesting you to confirm within 10 days that you do not intend to persist with your proposed scheme of licensing deflector systems. In default we are instructed to advise that our clients will institute proceedings against you seeking, inter alia, injunctive relief."
Princes Holdings has initiated legal proceedings against the State and is seeking compensation, reported to be about £100 million.
