The chairman of the Revenue Commissioners, Mr Dermot Quigley, has said it will pursue the banks for settlements if it emerges they gave incorrect information about DIRT obligations in the early 1990s.
Mr Quigley was speaking in the wake of allegations that AIB made a £14 million settlement in 1991 even though it believed it owed up to £100 million in DIRT tax in respect of bogus non-resident accounts. He said the Revenue had new information in relation to settlements made in the early 1990s with a number of financial institutions.
However, he would not discuss the specific case of AIB and it is not known how much DIRT the Revenue Commissioners believed was really owed by the bank when it made the £14 million payment.
Mr Quigley said the Revenue would never settle for £14 million in a case where it knew a financial institution owed £100 million. Interviewed on RTE News At One, he said the examination of the issue in relation to a number of financial institutions was "well advanced".
Revenue sources said that in cases where it discovered that companies had not been making full disclosures and new information came to light, settlements would be publicised in Iris Oifigiuil.
Mr Quigley said information published in the Sunday In- dependent in April concerning bogus non-resident accounts had not been known to the Revenue. The report stated that the bank believed it had 53,000 bogus nonresident accounts, containing nearly £600 million, in the early 1990s.
A spokeswoman for AIB has said that following an approach from the Revenue in February 1991, a review of all accounts not subjected to DIRT was undertaken. This led to additional DIRT payments of £9 million being paid by the bank for 1990/ 1991, and a further £5 million for 1991/1992. She said the bank then implemented revised procedures ensuring compliance in the area of non-resident accounts.
In April, the Bank of Ireland said it had addressed the issue after it arose in internal audits, and no settlement with the Revenue was ever made. Yesterday, a spokesman said only one settlement in relation to DIRT on nonresident accounts identified as bogus, had been made by the bank.
This had occurred in the early 1990s and involved a number of accounts in one branch. He would not disclose the amount involved. "In relation to a general settlement, there never was one by Bank of Ireland."
The latest edition of Magill magazine, published yesterday, quotes a letter dated April 5th, 1991, from Mr Anthony Spollen, then group internal auditor AIB, to the Group Audit Committee, in which he states: "The Group Taxation Department has informed me that an Amnesty cannot be given without legislation going through the Dail: the group therefore has a contingent liability of c.£100 million in respect of DIRT."
Mr Spollen retired from AIB in 1991, having worked as head of Group Internal Audit since 1986. But in response to the Sunday In- dependent report in April, he issued a statement saying the bank had a heavy emphasis on controls and internal audits. "In my time as head of Group Internal Audit, my reports and recommendations were always acted on by the group chief executive, Mr Jerry Scanlan, and the chairman of the audit committee, Mr Jim Culliton. The chairman, Mr Peter Sutherland, and the board were always informed of problem areas."
Mr Spollen now operates as an independent consultant. Since June he has worked with National Irish Bank.
A spokeswoman for the AIB said they would not be adding to their earlier statements. She would not comment on the remarks made by the Tanaiste, Ms Harney yesterday that in the early 1990s, banks were "facilitating tax evasion".
"Financial institutions across the board facilitated people in opening bogus non-resident accounts solely for the purpose of tax evasion," Ms Harney said. She described the reports concerning AIB as "very, very disturbing".
Ms Harney announced that she and the Minister for Finance, Mr McCreevy, would be bringing a joint memorandum to Government shortly for the creation of a new regulatory authority for the financial sector. She said the Central Bank had failed to provide the regulation needed. A spokesman for the bank would not respond to Ms Harney's comments. He also said he was precluded by law from discussing the affairs of an individual bank, such as AIB.
Ms Harney said the Revenue may have to be given powers which would allow it to "trawl" through the accounts held in banks. Such a power, if introduced, might allow the Revenue to identify the owners of the bogus non-resident accounts in existence in the late 1980s and early 1990s.
DIRT - Deposit Income Retention Tax - which was introduced in 1986, obliged financial institutions to retain a proportion of the interest due on all deposit accounts other than non-resident accounts. Against this background, it is now accepted that thousands of bogus non-resident accounts were set up to evade tax.
