The Public Accounts Committee (PAC) has castigated ACCBank for failing to disclose a possible £17.5 million DIRT liability to the Revenue Commissioners in 1992, describing the omission as "especially unacceptable behaviour by a State bank".
It also said it was "incredible" that Department of Finance officials could claim they were unaware of a serious compliance problem at ACCBank.
It says there was "a general disregard for compliance" with the DIRT regime at the bank, "notwithstanding the issuance of formal letters on compliance". ACCBank responded last night that it regretted the failure to live up to its obligations on DIRT compliance but it was in a process of strengthening its controls and procedures. "We are co-operating fully with a detailed and thoroughgoing audit which is being undertaken by the Revenue Commissioners, and will continue to do so."
The PAC report says the absence of evidence that the DIRT issue had worried the former chief executive, Mr John McCloskey, was "remarkable". It finds it "incomprehensible" that this state of affairs continued after Mr McCloskey received the first draft of a Long Form Report (LFR), which disclosed a possible £17.5 million DIRT liability. The report was drawn up by the bank's auditors, Ernst & Young, in 1992 when there was a possibility the bank might be privatised.
It was improper that the Minister for Finance was not informed of the report's implications, the committee states.
"It was unacceptable that senior management withheld information from the board and, latterly, from the chairperson, Ms Gary Joyce." During the PAC hearings, Ms Joyce, ACC chairwoman from 1996 until April this year, said the management did not treat the board as if it had a serious role and described her experience as "unpleasant".
ACCBank's contention that it arrived at a deal with Revenue in February, 1993, to write off DIRT arrears was "without foundation", the committee adds.
It is also critical of Ernst & Young for "dropping" the £17.5 million liability it arrived at when it drew up the LFR.
The decision, without regard for the bank's legal obligations, was "without justification".
"It is impossible to reconcile the knowledge in the possession of Ernst & Young with the unqualified opinion given on the 1992 financial statements of ACCBank." The report says the auditors acted improperly by failing to challenge the bank's non-disclosure of the liability at a 1993 meeting with Revenue.
Ernst & Young stated that it had taken serious issue with findings concerning it. "In particular, the firm refutes any suggestion that it acted improperly and emphasises that the evidence presented by Ernst & Young partners at the committee reflects a true and accurate representation of the relevant factors."
The committee also states that it is "incomprehensible" that successive ministers were not informed of DIRT arrears.
"Resulting from the inadequacy of reporting procedures concerning ACCBank, ministers were unable to discharge their responsibilities for the bank in an appropriate manner," the report states.