Opinion Fintan O'TooleIn May of last year, the Sunday Business Post led with a story under the headline "Revenue Probe Into O'Brien's Tax Residency". The article revealed significant details about the tax affairs of the businessman Denis O'Brien, specifically a dispute with the Revenue Commissioners about whether or not his residency in Portugal exempted him from paying tax on the vast profits he made when he sold his Esat mobile phone company to British Telecom.
For reasons that will become obvious, that is as much as can be said about the article.
Last Sunday week, the same paper carried a front-page apology to Denis O'Brien. Usually, when a newspaper carries an apology it is because it got the story wrong. In this case, however, the act of contrition related, not to the substance of the story but to its very nature.
The Post stated that, "We accept that Mr O'Brien has a right to confidentiality in his dealings with the Revenue Commissioners, and that we are not entitled to make use of any confidential information relating to those dealings. We have undertaken to Mr O'Brien that we will not do so again".
This is an immensely serious development, potentially the most serious threat to the freedom of the press that has emerged in recent decades. Yet it has gone virtually unnoticed. A serious and well-respected newspaper has been forced to accept that the media have no right to deal with the relationship between any individual and the Revenue. The implications for the public purse, for ending tax evasion and for investigative journalism are enormous.
The avoidance or evasion of tax continues to be a huge issue which directly affects the lives of all citizens. Health, education, public transport, social welfare - everything is affected by who is and is not paying tax.
Newspapers and broadcasters are sometimes rightly reviled, but even the harshest critics of the media would surely accept that investigative journalism has paid huge dividends. Media revelations opened up the Ansbacher Cayman scandal, the bogus non-resident scandal and the unhappy practices at National Irish Bank. So far, the Revenue follow-up to these investigations has yielded at least €1 billion.
In Denis O'Brien's case, there is no allegation that he improperly avoided tax. Under Irish and EU law, he is perfectly entitled to change his residency, and the benefits he received by moving from Ireland to Portugal are legitimately open to anyone in similar circumstances. As it happened, an attempt by the Revenue to challenge his tax residency status failed last September, when the Revenue Appeals Commissioners found in his favour.
It is equally clear, though, that there is a genuine public interest in Denis O'Brien and Esat. The profits were made on the back of the granting by the State of a mobile phone licence to Denis O'Brien's consortium in circumstances which are being investigated by the Moriarty tribunal. The broader issue of State policy on tax exiles is a live political question. The problem is, however, that Denis O'Brien has now effectively established that the public interest in such matters is completely outweighed by the right to confidentiality.
In his case against the Sunday Business Post, Denis O'Brien claimed that the paper, and by implication any other organ of the media, could not report "the fact that and the extent to which the Revenue Commissioners conducted a probe or investigation of the plaintiff's compliance with rules governing tax residence; the fact that the Revenue Commissioners raised an assessment against the plaintiff in respect of Capital Gains Tax; the fact that the plaintiff contested that claim; the fact that the plaintiff appealed to the Appeal Commissioners; the arguments advanced by the Inspector of Taxes in support of the assessment to Capital Gains Tax; the arguments advanced by the plaintiff in resisting the assessment to Capital Gains Tax; all information of whatever nature relating to the matters in issue before the Appeal Commissioners on the hearing of the plaintiff's appeal against the said assessment to Capital Gains Tax; the decision of the Appeal Commissioners".
Faced with an extremely expensive court case, the Sunday Business Post essentially accepted that it had no right to report on these issues. This sets a precedent for a blanket ban on reporting, not merely the substance of a Revenue investigation or appeal, but the very fact that an investigation or appeal is under way. If this precedent stands, it will make it extremely difficult to report on a whole raft of issues concerning business, politics, and the relationship between them.
Less obviously but just as importantly, it will prevent public scrutiny of the Revenue itself. It would have been impossible, for example, to report on Charles Haughey's tax settlement.
If, as it claims, the Government is serious about restoring public confidence in the taxation system, it has to act. It could easily amend the Taxes Consolidation Act so that the dealings of a citizen with the Revenue remain confidential except where there is a clear public interest to the contrary. Otherwise, the rolling back of democratic accountability will continue and the realm of secrecy will have been significantly extended.