State-owned ACCBank has paid £17.9 million (€22.7 million) to the Revenue Commissioners in settlement of its DIRT liabilities, bringing the total amount of tax recouped from three of the 37 financial institutions being audited to £53 million.

The £17.9 million payment is substantially greater than ACC's own estimate of £1.5 million and will effectively wipe out the bank's profits for 2000. The settlement is based on an underlying DIRT liability of £7.5 million, with a further £10.4 million applied by the Revenue in interest and penalties.

It follows payments of £4.6 million by Ulster Bank and £30.5 million by Bank of Ireland as the Revenue continues to collect what is expected to amount to hundreds of millions of pounds in unpaid taxes arising out of the inquiry of the Dail Committee of Public Accounts (PAC).

The PAC chairman, Mr Jim Mitchell TD, yesterday welcomed ACC's settlement with the Revenue Commissioners and called on other banks to swiftly discharge their liabilities. Referring to ACC, Mr Mitchell said it was "outrageous" that a bank which is under the control of the Department of Finance was complicit in tax evasion.

He stressed that further investigation of the bank's operations and culture is now warranted. He said the bank's behaviour during the DIRT inquiry had left him with a "bad taste" and raised questions about the current culture there. "I will be writing to the chairman of the Finance and Public Service Committee asking him to take an in-depth look at the management and control of ACCBank," he said.

Announcing the settlement, ACC reported a £9.3 million loss in the six months to the end of June and forecast that, over 12 months, the bank could show an overall loss of between £2 million and £3 million. Chief executive Mr Colm Darling said he was delighted the settlement had been made. "It removes the cloud that has been hanging over the organisation, and we are now looking forward to the future."

ACC, together with AIB, was seen as one of the biggest offenders when it came to offering bogus non-resident accounts to customers in the 1980s and 1990s. In 1992, ACC's auditors, Ernst & Young, calculated that the bank had a DIRT tax liability of £17.5 million, which would at that time have threatened the solvency of the bank.

In evidence to the DIRT inquiry, Ernst & Young managing partner Mr John Hogan said the firm decided there was no need to take any further action as he believed the bank would never have to pay £17.5 million to the Revenue. The estimate was prepared while the firm was compiling a report which could be given to potential bidders if the bank was partly privatised. That figure was calculated following an inspection of eight ACC branches with the largest number of non-resident accounts in 1992. When the proposed sale was abandoned, the report was discarded and neither the chief executive, the bank's board of directors or the State was notified of the potential liability.

ACC has consistently denied suggestions that its DIRT liabilities could amount to £17.5 million, with chairman Mr Padraic O'Connor dismissing such estimates as "totally spurious".

Mr Darling said yesterday that the 1992 figure could not be compared with the £17.9 million settlement. He stressed that the underlying liability was £7.5 million. In line with the previous two settlements, around 60 per cent of the total payment related to interest and penalties.

Audits of the 37 deposit-taking financial institutions ordered by the PAC are close to completion and the Revenue is in negotiations with the various banks about how much they have to pay to discharge their liabilities. A report detailing tax demands for each institution is to be presented to the PAC in November.