An internal audit at National Irish Bank showed an "unaccept ably high" proportion of declaration forms for non-resident accounts were missing or incomplete, it emerged at the inquiry.
However, the bank's former chief executive, Mr Jim Lacey, who left it in 1994 several months before the audit, denied that its findings were a reflection of his stewardship of the bank.
He told the inquiry that he always "categorically stated" that the bank had to abide by the procedures. He had to be "vigilant" and ensure that his staff "didn't weaken in any way".
The "theme audit" on compliance with DIRT showed that about 40 per cent of non-resident declaration forms, 53 per cent of charity forms and 20 per cent of Special Savings Accounts declaration documents were missing or incomplete.
Total SSA deposits were £136 million while non-resident accounts totalled £88 million. The audit picked the top eight SSA branches and the top six non-resident branches.
The audit concluded that there needed to be an organisation-wide "change in attitude. This is a risk area and the penalties for noncompliance at the level shown in this report would be very significant."
Mr Lacey agreed with Mr Pat Rabbitte that it was a "pretty serious conclusion" but he stressed that in his time as chief executive the only case of bogus non-resident accounts was in Castlebar, where there were "six or seven" false accounts and they took immediate action.
When Mr Rabbitte asked him "how do you persist in claiming that there's no reference to bogus accounts?", Mr Lacey replied that there were no references to it in the various audit reports.
Mr Rabbitte put it that it was "straining credulity" to suggest that 40 per cent of the declarations were wrong and that it was all because "your staff weren't able to get the form right". How was it that "elementary filling in of a form posed such difficulties for educated young people?".
Mr Lacey said he did not know the answer because the problem still existed today. "I have failed in my life to find the answer to that because people have difficulty filling in . . ." Earlier he told Mr Bernard Durkan that he could not "come up with any case" where there actually was "deliberate ignoring" of the procedures that led to bogus accounts.
Mr Durkan said the directive from headquarters about compliance didn't seem to have been treated with the same urgency by branch managers as would be normal for a letter from a bank manager to a customer.