Legal and commercial advisers have told the Government there has been no change in the ownership and control of the company awarded the multi-billion euro contract to install broadband access, and that the funding arrangements are “in line with the contract”.
Minister of State Ossian Smyth last week said he asked for a review of aspects of the deal after reports that investors in National Broadband Ireland (NBI), the company set up to manage the project, extracted €50 million in fees and interest payments on loans provided to the company last year, the project's first full year of operation. There were also concerns about the amount of investment that had been provided to the company by way of high interest loans.
On Monday night a spokesman for the Department of Communications said the Ministers – Eamon Ryan and Ossian Smyth – had “received a note from departmental officials who have confirmed, based on an examination by the legal and commercial advisers for the NBP contract [William Fry and EY] that there has been no change in ownership or control of National Broadband Ireland since contract award and that the funding arrangements are in line with the contract”.
But there is growing political unease in Government about the broadband plan following recent revelations in the Currency and the Business Post about the funding structure of the multi-billion euro project and the amount of investment via loans in the company which won the contract.
Sources said there was some anxiety in Fianna Fáil and the Green Party as Fine Gael had pushed through the project in 2019 over the objections of senior civil servants. Senior officials in the Department of Public Expenditure, including then secretary general Robert Watt, issued unprecedented warnings against approving the project on several grounds.
Significant payments
Accounts for the companies involved show significant payments last year to David McCourt, the US businessman who leads the project.
According to accounts for Metallah Ltd, the parent company of NBI Infrastructure and NBI Deployment, the two companies which are running the project, it paid €32.7 million to NBI Bidco LLC, a US firm controlled by Mr McCourt.
Mr McCourt and his investment vehicle, Granahan McCourt, is the lead investor in the project.
The payment “related to costs incurred by the group’s investors over a period of a number of years in connection with the tender bid, negotiation and successful conclusion of the 25-year project”, the Metallah accounts said.
Metallah paid a further €3.4 million to Granahan McCourt Dublin LLC, another US company controlled by Mr McCourt, for “organisational readiness and network design activities” related to the project and €1.9 million to another entity known as NBI Management Limited.
NBI was awarded the State contract to roll out broadband to 540,000 homes and businesses in 2019 after Eir and ESB-Vodafone joint venture Siro withdrew from the competition.
It was forced to cut its target for the number of premises “passed” by the network this year from 115,000 to 60,000 as Covid-related delays hit the initial rollout.
The accounts filed with the Companies Registration Office (CRO) show Metallah received €98 million in loans from NBI investors, which, as well as Granahan McCourt include US hedge fund Oak Hill, which have been used to fund the initial phase of the project. It paid out €11.8 million in interest on these loans last year.
As part of the deal, NBI investors had promised an initial equity investment of €175 million plus €45 million in working capital but it has emerged that the €98 million in loans is part of this investment.
