The Mayo TD Ms Beverley Cooper-Flynn said yesterday she was "horrified" when she learned that some £100,000, which a social welfare officer had invested in a policy with her while she worked for National Irish Bank, had not been declared by him to the Revenue.
When the man invested the money with her in a CMI personal portfolio in the early 1990s, she had no idea it was undeclared, Ms Cooper-Flynn told the High Court. When she was told of the situation by a local bank manager following the man's death in the early 1990s, she referred the matter to her boss in National Irish Bank.
Asked what she believed NIB should have done, she replied she had referred the matter to her boss and she believed that was the right course of action. The bank should have resolved the matter in the best interests of the bank and in the public interest.
Ms Cooper-Flynn was being cross-examined on the sixth day of her action alleging libel against RTE; journalist Charlie Bird; and a retired farmer, Mr James Howard.
The defence denies that she was libelled on RTE broadcasts in June and July 1998 and that words used on the programmes meant she had instigated a scheme whose object was the evasion of the lawful payment of tax.
Continuing his cross-examination of Ms Cooper-Flynn, Mr Kevin Feeney SC, for RTE and Mr Bird, referred her to an internal CMI memorandum, which had been sent to NIB, relating to the case of the man who died. The memorandum said CMI had been put on notice by NIB and the man's family that the policy proceeds represented undeclared funds. As the writer understood it, the memorandum stated, this meant that it was money that had not been and was not intended to be declared to the Irish Revenue.
The memorandum said one of the objections of the personal representatives dealing with the policy was that its value or the proceeds would form part of the man's estate which would be valued for Revenue purposes. The writer assumed this would cause a tax liability.
"The intention in asking CMI to pay the money to the `nominated beneficiaries' and to take this somewhat unorthodox route is to ensure that the policy proceeds remain undeclared monies and that the Irish Revenue are not informed. It seems to me that this may amount to an attempt to defraud the Irish Revenue," the document stated. It added that the situation required "caution".
Ms Cooper-Flynn said her boss had discussed the case with her but not the memorandum. The case concerned a social welfare officer in Co Cavan. When she had dealt with him, she had no reason to think the money he invested had been undeclared. She was very concerned when she learned it was undeclared.
Asked how the funds were paid out from the policy following the death of the man, Ms Cooper-Flynn said she understood the proceeds were sent to NIB who paid out to the beneficiaries of the man's will.
Ms Cooper-Flynn said she had never heard that the investment was "hot money" when the policy was taken out. She was surprised when she learned following the man's death that it was "hot money". Referring to another case, Mr Feeney inquired whether it caused her alarm or seemed strange when a Naas publican indicated he had £30,000 sterling in a bank in the Isle of Man with a further £40,000 under his wife's maiden name.
Ms Cooper-Flynn said she was not suspicious. It did not seem unusual that a man in his position would have cash. She never questioned or cross-examined him about how he might have got this cash.
When the question of tax came up during the course of a meeting with a client, she always made clear to the customer that their tax affairs were a responsibility for them. She had made this clear to the Naas publican.
