THE amount of money missing as a result of the disappearance of investment adviser Mr Tony Taylor is now known to be at least £2.5 million, the Minister of State for Commerce, Science and Technology, Mr Pat Rabbitte, said yesterday.
Mr Rabbitte told the Select Committee on Enterprise and Economic Strategy that the final report from the authorised officer into the Taylor affair should be completed by the end of November. "But new leads keep opening up," he added.
He was speaking on the second day of the committee's inquiry into the Taylor affair.
The figure for investments not entered into Taylor company books was now known to be higher than first believed. The true figure was unknown as "by definition, if the names are not on the company's books, we don't know, how many clients there were".
Mr Rabbitte said it was "remarkable that people who have lost significant sums of money still are not willing to come forward and apprise the IBA (Irish Brokers' Association) or the Department of these losses".
Mr Eric Byrne TD said it was "very strange and weird" that two investors, who had lost £650,000, asked the Department for access to the earlier tax amnesty and that the taxpayer should indemnify them against any losses before they would divulge information about their loss.
"Would I be reading it rightly or wrongly to say we are talking about hot money?" Mr Byrne asked. "Should the Criminal Assets Bureau look at the situation pertaining where money was paid through Mr Taylor's company?"
Mr Rabbitte said that the two complainants being referred to by Mr Byrne had gone "on the record" after their requests to the Department had been turned down.
There was not any question that the two investors were laundering money "but I am not expressing a view as to whether the money had been exposed to taxation."
The authorised officer would be likely to express a view on the issue of "hot money" in his final report, the Minister said.
Mr Rabbitte said he was sure a great many investment intermediaries did their job in accordance with the law, "but I don't think there is any doubt that a certain amount of hot money travels through that sector of the financial community".
The committee was told that section 28 (4) of the Investment Intermediaries Act, 1995, had not been implemented because of representations by the industry to the Minister for Finance.
Section 28 (4) would make the "product producer" companies responsible for compensation in cases such as the Taylor affair.
"The product producers argued that they would be open to unlimited claims in such a case," Mr Rabbitte said. Clients and intermediaries would be able to collude to defraud the product producers.
"The argument was seen to be very strong but the Taylor affair brings back into scrutiny whether the producer should be made liable where he has authorised an intermediary."
There were up to 3,000 investment intermediaries, the meeting heard. For many of these, the activity is just a small part of their business. The introduction of a bonding or compensation system would put many of them out of business.
"The question is, is it of value to have an independent (investment) advisory sector?" Mr Rabbitte said. "If we take steps that cause its demise, is that a good thing?"
Mr Rabbitte said he bad not come to any conclusion as yet as to whether it was possible for the sector to regulate itself. However, it was questionable whether the IBA would be able to enforce the standard of regulation which would be required.
