A former chairman of the Revenue Commissioners, Mr Seamus Pairceir, is to be called before the DIRT inquiry following the publication of one of the "most interesting" documents released to the Public Accounts Comittee.
Mr Jim Mitchell, the committee chairman, confirmed yesterday that Mr Pairceir would be called, partly because of the document, and also for the committee to deal with the genesis in 1987 of SIM 263, the internal Revenue document which prevented tax officials from examining declaration forms for non-resident accounts.
The document published yesterday stated that Mr Pairceir planned to "strike terror into tax evaders" with "comprehensive" inspections by tax officials in provincial bank branches.
It was a Bank of Ireland record of a meeting in 1987 with Mr Pairceir, then chairman of the Revenue Commissioners, and noted his plan to "mount an exercise" to demonstrate the Revenue's intention to use fully the powers of inspection given to them in the 1986 Finance Act.
They would inspect the declaration forms on non-resident accounts. In addition bank managers would be required to "sign declarations that all of the forms have been produced".
The main purpose "in effecting these inspections will be to strike terror into tax evaders in the locality". However, Mr Pairceir's "principal concern about this is that the Government will not approve of the exercise because of its potential to cause further outflows of sensitive funds".
Mr Pat Rabbitte, TD for Dublin South West, quoted from the minutes of the meeting in February 1987 during questioning of the former chief executive of Bank of Ireland, Mr Mark Hely-Hutchinson, who was at the meeting.
Mr Hely-Hutchinson also told the inquiry that in 1983, when he became chief executive, it was a major concern for him that the bank's style as an "upright and compliant organisation" was being "torn apart" by "undesirable practices".
A meeting with the Revenue Commissioners in 1983 was concerned with those practices where the bank's employees advised customers about evading tax by spreading deposits over different branches and accounts.
Mr Hely-Hutchinson said the bank never concealed the fact there were undesirable practices going on in 1983. "I don't think we invented [them] but we had certainly inherited from the competition and which we were anxious to get rid of," he said.
Describing the minutes of the 1987 meeting with Mr Pairceir as "one of the most interesting discovered to the committee", Mr Rabbitte noted Mr Pairceir's surprise "that some owners of `sensitive' deposits had not taken the easy escape route provided by the 1986 legislation, i.e. pay DIRT and achieve confidentiality for their principal."
The document also stated that the Revenue were more interested in the source of principal than tax on interest. "S.P. (Mr Pairceir) would not have expected, therefore, that tax evaders would be prepared to take risks in order to get gross interest."
The TD said Mr Hely-Hutchinson was "probably the only chief executive of any Irish bank who went to see the chairman of the Revenue Commissioners about procedures to diminish tax evasion".
Mr Hely-Hutchinson, who was chief executive until 1991, had drawn up a code of practice for the banks and the Revenue Commissioners subsequently introduced a similar one, but they were not policing it.
He asked Mr Hely-Hutchinson why he thought the chairman said he was going to use fully the powers of inspection when an instruction had already issued to do the contrary.
The former chief executive suggested that "you might like to ask him that". Asked if he could assist the inquiry at all, he said it would be difficult "for me to try and speculate as to the reason why he would be telling us what amounts to a lie".
