Denis O’Brien and the “Little People”
Updating this article which was first published on November 22nd 2008 and reposting it after the publishing of the final report of the Moriarty Tribunal. I felt it was necessary to complete Denis O’Brien’s story as related here, particularly as this article is getting a bit of attention today due to google searches for the term “Denis O’Brien”.
In a letter to the Irish Times on the 16th of August written in response to Denis O’Brien’s opinion piece in that paper prescribing what the Irish government should do to rectify the downturn in the economy, Macdara Doyle of the Irish Congress of Trade Unions wrote the following:
“Madam, Not even the combined talents of Lewis Carroll and Jonathan Swift would have been capable of generating the high farce which The Irish Times delivered on Thursday: a billionaire businessman who refuses to contribute a cent towards running the country is given space in your pages to lecture the rest of us on how it should be done.
Mr. Denis O’Brien is worth more than €2 billion and chooses to absent himself from this country for the bulk of the year in order to avoid paying tax here.
Consequently, it is the view of Congress that he should not be afforded a public platform from which to lecture and hector those of us who do contribute.”
High farce indeed. Many of the absurdities in the piece have already been laughingly torn to shreds by Michael Taft in the ILR and on his own blog, but there are a couple of points mentioned by Macdara that are worth looking at further.
Firstly, his reference to Swift suggests viewing O’Brien in the light of one of the satirist’s most famous works, Gulliver’s Travels, in which the shipwrecked Gulliver finds himself as the saviour of the little people of Lilliput. This is especially apt considering that at the moment Dennis O’Brien is CEO of Digicel, which is making a fortune selling phones to poor people right across the Islands of the Caribbean: Jamaica, Haiti, Trinidad and Tobago, Fuji, Timor and Papa New Guinea.
The history of the rise of Digicel is summarized in a recent Forbes magazine article about O’Brien and his mobile phone business. His business dealings in Ireland are well known: the setting up of 98FM and Communicorp; his buying up of radio stations in Ireland and throughout Europe and his winning of the mobile phone license by making payments to then Minister of Communications Michael Lowry who the Moriarty Tribunal confirms in a report that took 14 years to conclude that Lowry not only influenced but “delivered” the result that led to Esat Digifone being licensed. This allowed him to establish Esat Telecom, with the help of that other Irish billionaire and advisor to various politicians and governments Dermot Desmond, who was brought in to the deal by O’Brien after Michael Lowry had revealed to him that “Esat Digifone was in pole position in the competition but warned him of concerns about the company’s financial footing“ . The subsequent selling of Esat to BT earned him a personal profit of €300 million. It is this money which Macdara is complaining about because, controversially, O’Brien chose to leave Ireland after that and was able to avoid the subsequent substantial tax bill he would have to pay if he remained resident in Ireland.
Having accumulated this whopping lump sum, O’Brien put part of it to use buying a mobile phone license in Jamaica. The attraction for O’Brien was that there was very little mobile phone ownership in the Caribbean country up to this point. As Forbes puts it:
“…the real pull was that this was a country where only the elite had access to phones. In a place like that, he could get the masses to love him.
He paid $48 million for a license and rolled out a battle plan he would use on other invasions: spend lavishly on the network (1,000 towers in Jamaica), build clean stores with cheery staff (a rarity in many developing countries) and lure customers by offering new services like per-second billing and big discounts from the competition (80% less for phones and 50% less for calls).”
Leaving aside, for the moment, the militaristic, colonialist and indeed imperialist language used to describe this entrepreneurial act (‘battle plan’, ‘invasions’) the business model seems to be: get as many customers who so far have not been able to afford mobile phones as possible by offering them cheap handsets and rapidly build new networks using borrowed funds so that they can use them. This has allowed Digicel to take the market share in each of these countries even when governments in some of them are doing everything they can to stop it.
And it is in this respect that O’Brien is like Gulliver, who on his arrival in a conflict-torn country is not attacked, but is championed by the little people. In the account provided by Forbes, the countries that O’Brien has moved into are considered some of the most dangerous on earth, yet his business manages to flourish.
“In an April riot in Port-au-Prince, Haiti, the mob not only spared Digicel stores from its burning and looting but even gathered in front of a few of them and cheered. Says a jubilant O’Brien, as he reads an e-mail on the news, “They’re calling us the Company of the People.”"
While in Fiji
“…Commodore Frank Bainimarama had just seized power and subjected Digicel’s chief there to a four-hour interrogation. Would the $20 million Digicel spent there go down the drain? No. A week after the coup O’Brien was sitting on a veranda with the new ruler, sipping tea. “Everyone was saying, ‘Don’t go. It’s unsafe,’” he says. “But that’s exactly the time to go in.”"
Is his audacity breathtaking, the entrepreneur as adventurer and hero, or should he be seen in another guise, as the colonial orientalist carving out the resources of a foreign land for personal profit? The difference is that unlike previous empire builders, the profits of his endeavor will never be repatriated. The Forbes relates an event during a whistle stop tour of four Islands which O’Brien commutes around in one day using his Lir jet. He is in Tonga and he has been told of plans to get the King of the Tongo to officially open a store. However, there is no time to dwell on the King, the Forbes’ piece says:
“O’Brien has to fly to three more countries today, and his next meeting is in Vanuatu, 3,200 miles away. “Every man for himself,” he yells to two dozen young staffers as they rush to vans heading to the airport.”
And this call seems to extend to his business philosophy.
There is another point made by Macdara that is worth highlighting in relation to the O’Brien’s business dealings, especially in Papa New Guinea. In his Irish Times piece O’Brien mentions “My own businesses overseas have benefited from the expertise of officials from the Department of Foreign Affairs“. Macdara responded by saying:
“Unfortunately, Mr O’Brien failed to furnish an address where we might forward the bill for the services of which he availed, at our expense.”
But it is not only the services of the Irish Department of Foreign Affairs that O’Brien is able to avail of, free of charge.
While discussing the development of his business interests in Papa New Guinea, a country with one of the highest murder rates in the world, and which is notoriously corrupt, the Forbes article mentions the problems that he has had to overcome:
“Government officials in Papua New Guinea weren’t so amenable at first. Soon after Digicel won a license in an auction in 2006, telecom minister Arthur Somare invalidated it on a hazy procedural ground. Lawsuits quickly followed, and O’Brien kept his license. (We should point out here that Somare is a son of the prime minister.) In any case Somare then submitted a bill to parliament to nationalize O’Brien’s operations. The fight got so bad that the man who oversaw the original auction, Thomas Abe, received anonymous threats against his family and had to move houses several times.
Digicel had a lot to lose. It had erected dozens of towers and poured concrete for dozens more. O’Brien used this to his advantage. He brought members of parliament into Digicel’s main office to show them a wall map of PNG with pushpins representing planned cell sites in villages that never had a landline connection. The plan to nationalize Digicel was defeated.
Somare wasn’t through. A few months later he decreed that Digicel could not beam microwave transmissions from its towers, potentially rendering them useless. O’Brien’s response: He launched his service on the sneak, selling phones for a heavily subsidized $6, one-fifth the state monopoly’s price. He gave away a chip that allowed state phones to run on Digicel’s network. He also gave away $6 prepaid phone cards–250,000 of them in only ten days.
Within five months Digicel had 350,000 customers, 200,000 more than the state firm, and letters began to pour into newspapers ridiculing the state for threatening a rival. “Childish and pathetic,” sniped one letter. An editorial called for competition to shake up the water and electricity monopolies, too. O’Brien contacted friends in foreign embassies to lobby the government to not touch the company. “The EU funds PNG. So do Australia and New Zealand. So we used diplomacy,” he says. A former PNG army commander was quoted ominously in a magazine saying governments that ignore the people’s will are often toppled by coups.”
On the surface, we can see that the story Forbes magazine is telling here (let us assume they are based on facts) is inevitably one told very much from the pro-Western, neo-liberal point of view. If PNG is a country that relies on money from different Western countries, including the economic might of the EU, it suggests that its attempts to prevent O’Brien’s business taking hold were based on national self-interest. If O’Brien was successful in acquiring a majority share of the market then over time the majority of the profits accrued from that market would leave PNG. Capitalist production has always required an ‘expanding’ market into which to sell. Control of the means of production in itself is not enough. It also has to ‘capture’ the markets and control them by using its greater financial power to keep out ‘foreign’ competitors.
What is worth highlighting here, however, is the access that O’Brien has within the diplomatic services of Australia, New Zealand and the EU. That an individual business man can bring pressure to bear on a government (which incidentally has a Minister who happens to be related to the nation’s leader - how banana republic is that?) by using the paymasters in these Western Governments is staggering.
What hope has a small Third World country in those circumstances? And again, it’s worth emphasizing, Denis O’Brien pays no tax in any of these Western jurisdictions. Instead he is encouraged by these countries to exploit the resources of a country that is fighting, perhaps by stretching the procedural legislative mechanisms available to it, and which, we should note, are often imposed by Western governments under the guise of the ‘normal Representative Democracy‘ required if aid is to be given in the first place, against that exploitation. And why are they fighting? To line their own pockets? Perhaps, but it seems more likely that they are merely resisting the significant economic power that the Irish tax payer, in part, has afforded Denis O’Brien, in their own national self-interest.
In the face of such pressure, however, it seems inevitably that some governments don’t even bother to resist. An Economist article from last year inform us about Digicel’s Haitian operation:
“Digicel’s critics say it has used underhand tactics, such as giving away free phones to journalists (though other firms do the same), and breaking industry rules by treating Haiti as part of Jamaica in order to offer cheap roaming. Haiti’s regulator, Conatel, found Digicel to be in violation of international standards, but was overruled by the government. Such rulings have also led to allegations that Digicel has undue political influence in some markets.”
“Undue political influence”; sounds familiar, doesn’t it? But that’s globalization for you. “Every man for himself and feck the begrudgers”. In the same article it is reports that:
“Mr O’Brien claims he has grown used to all the criticism, and suggests that jealous rival operators are behind it. “The problem with them is that they are too flat-footed,” he says.”
Denis O’Brien is perhaps not the tallest man in the world, but through his businesses in Ireland he has turned into a capitalist colossus. In the conclusion of his letter Macdara notes:
“…perhaps he really does believe that taxes are for “little people”.”
In Gulliver’s Travels the little people of Lilliput charged him with treason when he refused to help them; they attempted to tie him down, and ultimately, blind him. They failed. He broke his binds and skipped the country. There were other islands to conquer.
Discussion
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Comment by: simon
Aug 21st 2008 at 18:08
Mr. Denis O’Brien is worth more than €2 billion and chooses to absent himself from this country for the bulk of the year in order to avoid paying tax here.
Consequently, it is the view of Congress that he should not be afforded a public platform from which to lecture and hector those of us who do contribute.”
So if someone does not pay tax here they should not be allowed an op-ed in the Irish Times? So the same would go for Barack Obama I guess.?
http://www.irishtimes.com/newspaper/opinion/2007/0216/1171494162118.html
Comment by: Donagh
Aug 21st 2008 at 22:08
So Barack Obama and Denis O’Brien are the same? Has Obama ever been a citizen of Ireland? Has he done business here and made significant profits as a result? Has he, having made that money changed residency to avoid paying tax on those profits. Obama’s comments were only marginally about Ireland, and when they were it was mainly to do with Northern Ireland and the peace process. He didn’t, as a non resident and non tax payer, recommend that Ireland cut back the public service wage bill while also suggesting that public services be directed to help business.
Comment by: simon
Aug 22nd 2008 at 11:08
My point is does Dennis O’Brian’ non-tax paying status preclude him from having an opinion on the Irish state? Does it mean that ideas are only worthy of consideration if they come from people who fulfill certain criteria. And that people who don’t fill that criteria then we should not even listen to their ideas. That we should be closed to ideas that we don’t approve of the people who give them?
Comment by: Donagh
Aug 22nd 2008 at 12:08
That idea behind the series that the Irish Times put together was to see what the captains of industry would do. However, if one of them is talking about what should be done with public money when he doesn’t contribute towards it is surely a little bit hyprocritical. I actually don’t agree with Macdara Doyles point that he shouldn’t have been provided with a public platform by the Irish Times.
However, the IT is influential, but it is not the gate keeper of truth. The Irish Times is a private business and they can publish the opinion of who they wish, I certainly wouldn’t deny them the right, or the right of Denis O’Brien to express that opinion. I didn’t make reference to that point made by Macdara in my piece. It’s curious that you are quoting back to me something I didn’t discuss.
Comment by: Hugh Green
Aug 25th 2008 at 10:08
They asked him, O Lord, whom should we trust. And he replied, stroking his beard:
‘Whenever I am in doubt about whether I need a haircut or not, I always go to a barber’s and ask, as I am confident that the barber will give an answer that is in my best interest.
My friend, who is far sharper than me, goes to the barber and asks the barber to issue some recommendations on whether he needs a haircut or not, based on the assumption that the barber will give an answer that is in their mutual interest.
My brother, who is sharper still, goes to the barber and asks the barber to issue some recommendations on whether he needs a haircut or not, based on the assumption that the barber will give an answer that is in the barber’s own self-interest, but my brother says that this does not matter, since the barber’s self-interest and his own interest coincide anyway.
My colleague, who is ten times sharper than the rest of us put together, and reads the Irish Times to boot, goes to the barber and asks the barber to issue on whether he needs a haircut or not, based on the assumption that the barber will give an answer that is in the barber’s own self-interest, but my colleague says that this doesn’t matter, since the barber probably knows more about my colleague’s own interests than he does himself.’
And so they all went out and bought a copy of the Irish Times.
Comment by: Donagh
Aug 25th 2008 at 10:08
Well, the barber and the Irish Times are simply performing professional services, and when it comes to making difficult decisions its ‘always best to leave it to the professionals’, even when it comes to framing an opinion.
Which reminds me, this morning my wife told me that I needed a haircut. I wasn’t so sure
Thanks for that well-formed wisdom, Hugh.
Comment by: Patrick
Mar 12th 2009 at 23:03
I find it interesting that O’Brien decided to start operations in countries that have some of the highest corruption rates in the world, according to Transparency International.
You would think that what with the Esat allegations that he would…
…oh, wait a minute (as the penny drops).