The McCracken report's conclusions accuse Mr Michael Lowry of tax evasion and say it is "quite unacceptable" for a Taoiseach, Mr Haughey, to have had his lifestyle supported by personal gifts. The chapter ends with a referral of Mr Haughey's conduct during the tribunal to the Director of Public Prosecutions. The following are the report's recommendations in full.
Ordinary Political Donations
1. All payments considered under this heading were normal political contributions and, other than that to the Wexford Branch of the Labour Party, were made by Mr Ben Dunne on the basis of his personal regard for the individuals or organisations concerned, and were of amounts which he would have considered to be relatively small. The payment made to the Wexford Branch of the Labour Party was so small as to be insignificant. There was no further motive behind these payments.
Presidential Election
2. The cheque for £15,000 given by Mr Ben Dunne to Mr Ruairi Quinn was a spontaneous gesture on the part of Mr Ben Dunne to contribute to Mrs Mary Robinson's presidential campaign. The contribution was in fact used for that purpose.
3. This contribution was a personal contribution by Mr Ben Dunne, and was not paid out of monies belonging to the Dunnes Stores Group. The motive for the payment was not to assist the Labour Party, but was to assist Mrs Mary Robinson personally in her presidential campaign.
Waterworld plc
4. The payment of £50,000 by Mr Ben Dunne to Mr Dick Spring was not intended to, nor did it, confer any benefit on Mr Dick Spring or on the Labour Party. It was a normal transaction whereby the Dunnes Stores Group were, for commercial reasons, prepared to contribute to a facility in a town in which they did business.
The Fine Gael Party
5. Mr Ben Dunne made three large contributions to the Fine Gael Party, amounting in all to £180,000. The payments were made following representations by senior members of the Fine Gael Party and appear to have been made with the motive of assisting Fine Gael in its financial difficulties and of trying to ensure a stable opposition to the Government.
6. These payments were made out of the assets of the Dunnes Stores Group, but without the knowledge of the other directors or other shareholders in Dunnes Holding Company, and the final payment of £100,000 was paid in such a manner as to ensure confidentiality. There was no ulterior motive for the making of any of these payments.
Mr Michael Lowry / Streamline Enterprises / Garuda Limited
7. The relationship between the Dunnes Stores Group on the one hand and Mr Michael Lowry and Streamline Enterprises on the other hand was that Streamline Enterprises was responsible for the supply and maintenance of refrigeration equipment in all the Dunnes Stores outlets within the State. The terms of this agreement were never reduced to writing, and in financial terms, were vague in the extreme. The agreement was designed to put Streamline Enterprises into the position of being totally under the control of the Dunnes Stores Group so that it became virtually a division of the Dunnes Stores Group.
8. The financial aspect of this agreement was that Streamline Enterprises would be paid for their services in amounts which would allow them to show a small profit, while Mr Michael Lowry would personally receive bonus payments. It was part of Mr Ben Dunne's business philosophy that bonus payments were an important way of encouraging people and of getting a better performance out of people.
9. The relationship was extremely satisfactory from the point of view of the Dunnes Stores Group. Streamline Enterprises provided a skilled and efficient service resulting in very substantial savings to the Dunnes Stores Group.
10. In December of each year, between 1989 and 1992 inclusive, payments were made by Mr Ben Dunne to Mr Michael Lowry of amounts varying from £6,000 to £12,000 which were intended to be distributed by Mr Michael Lowry as bonuses to the staff of Streamline Enterprises. Such bonuses were paid by Mr Michael Lowry, although it is not possible to establish with certainty that the bonuses corresponded in total with the payments made.
11. Between November 1988 and March 1993 a number of cheques were issued by the Dunnes Stores Group in favour of Streamline Enterprises in relation to work carried out either in England or Northern Ireland. These cheques amounted in total to over £100,000 and were either cashed by Mr Michael Lowry or lodged by him to accounts in his own name, and were not accounted for in the books and records of Streamline Enterprises. Dunnes Stores Group at all times believed that these payments were being made to Streamline Enterprises and not to Mr Michael Lowry personally.
12. Four sums amounting in all to £155,000 were paid by Mr Ben Dunne to Mr Michael Lowry between October 1990 and May 1992. These sums were intended to be bonus payments to Mr Michael Lowry personally. Two of these payments were made into bank accounts in the Isle of Man, one in the name of Mr Michael Lowry and the other in the name of Badgeworth Limited, which was a company that had been set up for the benefit of Mr Michael Lowry on the instructions of Mr Ben Dunne. These accounts were opened and the monies paid in this way with the intention of enabling Mr Michael Lowry to have money in an offshore account, contrary to the exchange control legislation then in being, and to assist him in evading tax.
13. Mr Michael Lowry also had an account in the name of himself and his three children in the Jersey subsidiary of Allied Irish Banks, into which one of the cheques in an amount of £34,100 sterling paid to Streamline Enterprises in respect of work done in England was paid. This account was not opened with the assistance, or even with the knowledge of Mr Ben Dunne, and again was an attempt by Mr Michael Lowry to evade the payment of tax.
14. Dunnes Stores Group paid the sum of approximately £395,000 to contractors for refurbishment work done on the home of Mr Michael Lowry at Holy Cross, Co Tipperary. These payments were treated in the accounts of Dunnes Stores Group as having been payments for work done by the contractor for Dunnes Stores at the Ilac centre in Dublin and there is no record in the books of Dunnes Stores of these payments being made for the benefit of Mr Michael Lowry. This method of payment was a very inefficient method of paying a bonus to Mr Michael Lowry from the point of view of Dunnes Stores, and must have been made with a view to assisting him to evade tax.
15. The whole system whereby Mr Michael Lowry would be paid substantial sums of money on a personal basis, and ultimately have a large sum of money spent on renovations to his house, were designed to, and did, assist him in evading tax.
16. The relationship between Dunnes Stores, Mr Michael Lowry and Streamline Enterprises was an unhealthy business relationship under any circumstances, but was particularly disturbing in view of Mr Michael Lowry's position as a public representative, and subsequently as Chairman of the Fine Gael Parliamentary Party and ultimately as a Cabinet Minister.
17. By evading tax in the way in which he did, Mr Michael Lowry made himself vulnerable to all kinds of pressures from Dunnes Stores, had they chosen to apply those pressures. The threat to disclose the payments and the offshore accounts could have been used by Dunnes Stores to obtain favours, as indeed could a threat to cut off this source of income to Mr Lowry.
18. Quite apart from potential pressure from Dunnes Stores, should the existence of these accounts have become known to any third party, such third party could seek either political or financial favours in return for silence.
19. It would be very damaging if there was a public perception that a person in the position of Government Minister and member of Cabinet was able to ignore with impunity, and indeed cynically evade, both taxation and exchange control laws of the State. It is an appalling situation that a Government Minister and Chairman of a Parliamentary Party can be seen to be consistently benefiting from the black economy from shortly after the time he was first elected to Dail Eireann. If such a person can behave in this way without serious sanctions being imposed, it becomes very difficult to condemn others who similarly flout the law.
20. Neither Dunnes Stores nor Mr Ben Dunne ever requested Mr Michael Lowry to make any personal or political intervention on their behalf, and Mr Michael Lowry never sought to intervene in any way for the benefit of Dunnes Stores or Mr Ben Dunne. There was no political impropriety on the part of Mr Michael Lowry.
Mr Charles Haughey
21. Mr Ben Dunne made four payments for the benefit of Mr Charles Haughey amounting in all to some £1.1 million at the request of Mr Desmond Traynor, which request was transmitted through Mr Noel Fox.
22. In addition, Mr Ben Dunne personally handed three bank drafts for £70,000 sterling each to Mr Charles Haughey in November 1991 as a spontaneous gesture, and without any request for funds having been made to him.
23. All of the initial £1.1 million was ultimately paid through Mr Desmond Traynor into an account of a Cayman Islands bank known as Ansbacher Cayman Limited with Guinness & Mahon (Ireland) Limited in Dublin, having been routed through various accounts in England. The three bank drafts constituting the final payment of £210,000 sterling were lodged by Mr Desmond Traynor directly to an account of Ansbacher Cayman Limited with Irish Intercontinental Bank in Dublin.
24. The first payment of £182,630 sterling was transferred from the account of Ansbacher Cayman Limited to an account of Amiens Investments Limited with Guinness & Mahon (Ireland) Limited. Amiens Investments Limited was a company owned and controlled by Mr Desmond Traynor, and this money was then disbursed for the benefit of Mr Charles Haughey by Amiens Investments Limited, including a payment of £105,000 to Agricultural Credit Corporation to discharge a debt owing by Mr Charles Haughey to that organisation.
25. Mr Desmond Traynor was Chairman of Ansbacher Cayman Limited, which had originally been a subsidiary of Guinness & Mahon (Ireland) Limited at a time when Mr Desmond Traynor was deputy chairman and in effect chief executive of Guinness & Mahon (Ireland) Limited. He acted on behalf of a number of Irish persons who wished to deposit their money offshore, and deposited the money on their behalf in Ansbacher Cayman Limited. At the same time Ansbacher Cayman Limited deposited the monies which it had received from Irish clients in its own name with Guinness & Mahon (Ireland) Limited. It is not known whether each Irish client had a separate deposit account with Ansbacher Cayman Limited, as it has not been possible to obtain access to the records of that bank, but some form of internal accounting or memorandum accounts exists accounting for the funds of each Irish client.
26. During his lifetime Mr Desmond Traynor controlled monies deposited in this manner on behalf of Mr Charles Haughey with Ansbacher Cayman Limited. Each of the last four payments made by Mr Ben Dunne, namely the payments of £471,000 sterling, £150,000 sterling, £200,000 sterling and £210,000 sterling, were paid into accounts in the name of Ansbacher Cayman Limited and formed part of the monies deposited by Ansbacher Cayman Limited with Guinness & Mahon (Ireland) Limited and Irish Intercontinental Bank. At least two of the memorandum accounts or sub-accounts in Ansbacher Cayman Limited were held for the benefit of Mr Charles Haughey, being those designated S8 and S9.
27. After the death of Mr Desmond Traynor, the monies held on behalf of Mr Charles Haughey came under the control of Mr John Furze, who was a joint managing director of Ansbacher Cayman Limited. In about the year 1992 some of these monies were transferred into an account of Hamilton Ross Co Limited, a company owned and controlled by Mr John Furze, with Irish Intercontinental Bank.
28. For many years prior to 1991 Mr Charles Haughey's day-to-day financial affairs were dealt with by his former accountancy firm of Haughey Boland, which paid all his personal and household expenses. It received the necessary funds to pay his expenses from Mr Desmond Traynor during his lifetime, and after his death from Mr Padraig Collery. Such funds were withdrawn by Mr Desmond Traynor or Mr Padraig Collery initially from the account of Ansbacher Cayman Limited with Guinness & Mahon (Ireland) Limited and Irish Intercontinental Bank and subsequently from the account of Hamilton Ross Co Limited with Irish Intercontinental Bank.
29. It has been shown without doubt that the last four payments by Mr Ben Dunne for the benefit of Mr Charles Haughey were paid into accounts in the name of Ansbacher Cayman Limited with Guinness & Mahon (Ireland) Limited and Irish Intercontinental Bank, and it has been shown that substantial payments for the benefit of Mr Charles Haughey were paid out of such accounts. Beyond this, it is not possible to establish whether the payments by Mr Ben Dunne were used solely to discharge Mr Charles Haughey's living and household expenses, or whether such payments may have been used to discharge other substantial debts of Mr Charles Haughey. Such information could only come from the detailed memorandum accounts or the internal documents of Ansbacher Cayman Limited.
30. Mr Desmond Traynor and Mr Padraig Collery kept detailed records of the accounts of the Irish customers of Ansbacher Cayman Limited, including Mr Charles Haughey. However, shortly after the death of Mr Desmond Traynor a number of such records were destroyed or taken back to the Cayman Islands by Mr John Furze, and Mr Padraig Collery has given evidence that he no longer has any records relating to the affairs of Mr Charles Haughey. It is probable that such records do exist, either in the files of Ansbacher Cayman Limited or in documents held by the late Mr John Furze at the time of his death.
31. Mr Ciaran Haughey is a son of Mr Charles Haughey and is a director of and substantial shareholder in Celtic Helicopters Limited. His firm did a considerable amount of work for the Dunnes Stores Group, and for Mr Ben Dunne personally, and in October 1988 Mr Ben Dunne gave Mr Ciaran Haughey a cheque for £10,000, which was in the nature of a bonus payment to Mr Ciaran Haughey personally.
32. On four occasions funds held for the benefit of Mr Charles Haughey and forming part of the deposits of Ansbacher Cayman Limited with Guinness & Mahon (Ireland) Limited and Irish Intercontinental Bank were used to support debts of Celtic Helicopters Limited. In February 1992 a loan from Irish Intercontinental Bank to Celtic Helicopters Limited of £150,000 was repaid out of the Ansbacher Cayman Limited general deposit account with Irish Intercontinental Bank, from monies held on behalf of Mr Charles Haughey. While it is possible that Mr Ciaran Haughey was not aware of the monies being used to support the loans to the company, he must have been aware of the repayment of the £150,000 loan.
33. The tribunal has been unable to accept much of the evidence of Mr Charles Haughey. In particular, the tribunal cannot accept Mr Charles Haughey's assertion that he was at no time aware that monies were held for his benefit in Ansbacher Cayman Limited and the tribunal believes that he must have become aware of the existence of these monies shortly after the death of Mr Desmond Traynor at the very latest. The tribunal also cannot believe that Mr Charles Haughey was not aware of the taxation implications of the receipt of gifts of this magnitude from Mr Ben Dunne, but rather believes that Mr Charles Haughey deliberately shrouded the gifts in secrecy and allowed the money to be kept offshore in an attempt to ensure that the Revenue authorities would never know of the gifts, or indeed presumably of the existence of interest paid on the monies deposited on his behalf.
34. It is quite unacceptable that a member of Dail Eireann, and in particular a Cabinet Minister and Taoiseach, should be supported in his personal lifestyle by gifts made to him personally. It is particularly unacceptable that such gifts should emanate from prominent businessmen within the State. The possibility that political or financial favours could be sought in return for such gifts, or even be given without being sought, is very high, and if such gifts are permissible, they would inevitably lead in some cases to bribery and corruption.
35. It is also not acceptable that any person or commercial enterprise should make such gifts in conditions of secrecy, no matter how well intentioned the motives may have been.
36. There is no evidence of any favours sought of Mr Charles Haughey by Mr Ben Dunne, the Dunne family or the Dunnes Stores Group, nor is there any evidence of any attempt by Mr Charles Haughey to exercise his influence for the benefit of Mr Ben Dunne, the Dunne family or the Dunnes Stores Group. There appears in fact to have been no political impropriety on the part of Mr Charles Haughey in relation to these gifts but that does not take away from the unacceptable nature of them.
37. The large majority of the payments made by Mr Ben Dunne which have been considered in this report were made without the knowledge or approval of the board of directors of Dunnes Holding Company and without the knowledge or approval of his co-shareholders in that company, although such payments were made out of funds which were the property of one or more companies in the Dunnes Stores Group. It was clearly unwise that one person should be given such unsupervised financial control of the affairs of a business the size of the Dunnes Stores Group, and as a matter of general principle the company must have some responsibility for the actions of an officer to whom it delegates such wide powers.
38. The attitude of Mr Charles Haughey in relation to the tribunal has been such as might amount to an offence under section 1 (2) of the Tribunals of Inquiry (Evidence) Act 1921 as amended by the Tribunals of Inquiry (Evidence) (Amendment) Act 1979. All relevant papers will be sent to the Director of Public Prosecutions for his consideration and decision as to whether Mr Charles Haughey should be prosecuted under this section.