Raphoe publican Frank McBrearty snr made use of a tax amnesty in 2004 to reveal to the Revenue money he held in an offshore account, the High Court sitting in Castlebar yesterday heard.
Mr McBrearty snr is suing the Garda Commissioner, the Minister for Justice and the Attorney General for losses his bar and nightclub business suffered after 1996 because of an alleged campaign of Garda harassment.
Mr McBrearty (63) is seeking €7.2 million in damages. The State has accepted liability in the case, and High Court judge Mr Paul Gilligan must decide the extent of the damages.
Lawyers for the State argued that if the funds held offshore in the 1990s had been kept in Ireland, they could have been invested in the business when it ran into difficulties in 1997.
"If the money had been used legitimately by the company, it could have generated a good income for the company," Paul Burns SC said.
But accountant Liam Grant said that Mr McBrearty could not bring the funds back without incurring penalties before 2004, and they were irrelevant to the losses that Mr McBrearty suffered.
"Mr McBrearty considered that always to be his pension," he said. The offshore accounts, in the names of Frank and Rosalind McBrearty, held money from "undeclared sales of the company", the court heard.
Mr Grant said the company's turnover shrank by 60 per cent in real terms after 1997.
"It takes a catastrophic effect for any business to go down 60 per cent," he said.