The Central Bank expressed concern as early as 1976 about Guinness & Mahon's offshore operations, but there was no evidence of any action being taken against the bank, the tribunal heard.
Mr John Coughlan SC, for the tribunal, said the governor of the Central Bank appeared to have first written to Guinness & Mahon on the subject in 1976.
In his letter, the governor said an on-site inspection carried out by Central Bank officials revealed Guinness & Mahon had banking subsidiaries closely connected with an offshore tax haven. "The bank is somewhat concerned at the extent of this involvement and would welcome an opportunity to discuss the matter."
In his reply, Mr John Guinness, the chairman of Guinness & Mahon, stated: "I am not altogether happy with your understanding of our situation" and said he too would welcome further discussion.
The next letter on record came from the Central Bank in 1978, saying a further examination had revealed that, of April 30th, 1978, Guinness & Mahon Ltd had advanced loans in excess of £5 million to customers which were secured wholly or in part by deposits placed with Guinness Mahon Cayman Trust Ltd, a wholly-owned subsidiary of the bank, or another subsidiary of the bank, Guinness & Mahon Guernsey Ltd.
"We are of the view that there can be no reason for these arrangements except to reduce the tax liabilities of the customers in question. It appears to the Central Bank that your bank's involvement in such arrangements is inappropriate and could be considered contrary to the national interests," the letter read.
In Mr Guinness's reply, he agreed the Cayman operation was wholly owned by Guinness & Mahon. However, he said the business carried out with the trust was "a normal part of the activities of the bank which is part of an international banking group and to the best of my knowledge the major Irish banks have similar structures".
Mr Guinness said "confusion sometimes can occur in regard to the extent, nature and purpose of banking business emanating from these international contacts". Because of this, he suggested a meeting between the bank's joint-managing directors, Mr Traynor and a Mr O'Kelly, and the Central Bank to discuss the matter.
Mr Coughlan said the tribunal had been unable to ascertain whether any meeting took place or what might have transpired.
However, he said it had been informed by a former official of Guinness & Mahon that all queries from the Central Bank were referred to Mr Traynor and that Mr Traynor would have informed the bank of the nature of the offshore deposits.
The Guinness and Mahon official said that in so informing the bank, Mr Traynor would also have made it clear that he was relying on their statutory obligation of confidentiality "so as to ensure any suspicions they might have concerning the true nature of the deposits were not brought to the attention of any other State agency".
