Moriarty tribunal: Members of the Dunne family trust did not know that Ben Dunne had a meeting with the chairman of the Revenue Commissioners in 1987 at which a capital gains tax (CGT) settlement of £16 million (€20.3 million) was proposed, the Moriarty tribunal heard yesterday.
Frank Bowen, former trustee and former partner with Deloitte and Touche, said he had no knowledge of Mr Dunne's meeting with Séamus Paircéir, then chairman of the Revenue Commissioners.
Another former trustee, Bernard Uniacke, also told yesterday's hearing that he was not aware of the meeting.
If the £16 million tax settlement was being seriously considered, then the trustees would have been told about it, Mr Bowen said. He believed it was not seriously considered as the figure was "off the wall".
Mr Bowen said the trustees never believed that the trust should be liable to CGT on top of Discretionary Trust Tax (DTT), so they would have opposed paying such a bill.
Mr Bowen was giving evidence about a tax issue that arose when the lifespan of the Dunne family trust was nearing its end in March, 1985. Taxes such as CGT and capital acquisitions tax had been introduced in the previous decade and the trustees were concerned that the trust would be presented with a huge tax bill.
He said the trustees accepted that the trust would be liable to DTT but because it did not have an income, it shouldn't have to pay the other taxes.
Any tax payment would have to come from the trading company and this would have a serious impact on the business, Mr Bowen said. The late Fine Gael deputy Hugh Coveney was "a long time friend" of his so he suggested that Mr Coveney introduce the trustees to the then finance minister Alan Dukes. Mr Dukes could then recommend a "high-level contact" within the Revenue Commissioners.
Confidentiality was essential, Mr Bowen said, as this was happening at a "difficult time" for Dunnes Stores. Mr Dunne had been kidnapped a few years earlier and substantial sums of money were involved in the trust.
At the meeting, Mr Bowen said he and Ben Dunne would have highlighted the "very significant contribution" the retail chain was making to the economy by keeping prices low. They would also have referred to the increasing foreign competition.
Mr Dukes helped to organise a meeting with Mr Paircéir but the Revenue chairman had "nothing but bad news" for the trust. The Revenue valued the Dunnes Stores group at £80 million and said its tax liability was £43 million.
Mr Paircéir told the trust he could not take into account the economic arguments raised, Mr Bowen told the tribunal.
The trustees decided that their only option was to revoke the trust and set up a new one with the same trustees. The Revenue argued that the trust owed a £38.8 million CGT bill but the trust appealed this and won its case.
