The Ansbacher report is not just a damning indictment of those wealthy and powerful individuals who evaded their due taxes, broke company law and engaged in criminal conspiracies from the 1970s to the 1990s, it reflects the failure of Irish regulatory authorities and professional bodies to uphold the standards required of them in the interest of the common good. There is a great deal to be ashamed of in the report and many lessons to be learned.
New and rigorous standards must be applied by the authorities.
It has taken nearly three years for this extensive report, conducted under the powers of the Companies Act, to be produced. The Tánaiste and Minister for Enterprise, Trade and Employment, Ms Harney, has paid a well-deserved tribute to the inspectors and officials involved for presenting a hard-hitting and clear document. It was her political determination and their hard work that ensured the preliminary information from the McCracken Tribunal, in 1997, was expanded into an in-depth investigation of the clients of Guinness Mahon Bank and Ansbacher Cayman.
Tax fraud involving hundreds of millions of pounds was involved. Many of the most prominent Irish companies and individuals were found to be clients of the late Des Traynor, formerly of Haughey & Boland, who recruited new customers and operated their highly secretive, off-shore accounts. The most notable of those clients was former Taoiseach, Mr Charles Haughey.
Nearly 200 prominent business people and companies have been named. Some of those were engaged in legitimate business dealings. But, while there is no accuser in the report and no individual is found guilty - on the important basis of a presumption of innocence - it is highly critical of certain companies and individuals. It finds the secretive financial transactions conducted by Ansbacher to be little more than a sham, a legal fiction, amounting to a criminal conspiracy where its clients sought to evade tax.
In a series of interviews at the weekend, the Minister for Justice, Mr McDowell, hoped for a change in Irish attitudes so that people who engaged in multi-million pound tax fraud were not regarded as heroes in their local yacht clubs while those who fiddled their social welfare payments were sent to jail. At the same time, however, Mr McDowell cautioned against public expectations that a rash of arrests and prosecutions would follow. Such a course would be difficult, he suggested, because of the lapse of time, the destruction of documents and the requirement to prove "intent to defraud" in any criminal prosecution.
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Nobody believes it will be easy to successfully prosecute some of the extremely wealthy individuals involved. But, if a determined attempt is not made, the consequences will do lasting damage to our democracy. The belief that there is one law for the rich and another for the poor will grow and flourish. The Ansbacher report lays bare criminal tax evasion by an elite within our society. It follows disclosures concerning illegal off-shore products sold by National Irish Bank and the evasion of DIRT tax by tens of thousands of wealthy citizens, aided and abetted by our major financial institutions.
There is no doubt that a tax-evasion culture has been deeply embedded in Irish society for generations. The real scandal is that it has been tacitly ignored or tolerated by successive governments and by those institutions of the State tasked with its elimination. Massive DIRT tax evasion was permitted in the 1980s and 1990s on the basis that any attempt to confront it would lead to a huge outflow of funds. Similarly, it has been suggested that attempts to properly regulate Guinness & Mahon could have led to its collapse. And attempts are now being made to minimise the importance of the Ansbacher report by suggesting that many other wealthy individuals operated similar tax-evasion schemes through banks in Jersey and the Isle of Man. Such diversionary tactics should not be tolerated. Sanctions should be applied immediately as breaches of the law and of regulations are identified.
A number of disciplinary options are available to the authorities in seeking to reassure the public. Companies and members of professions who conspired to break the law can be disqualified from further work. Criminal prosecutions can be taken, not least on the basis that individuals improperly availed of tax amnesties. And due taxes, along with harsh penalties, can be exacted by the Revenue Commissioners. Such a comprehensive response will require not just unambiguous Government support but the determination and co-operation of the Central Bank, the Revenue Commissioners, the Director of Public Prosecutions and the Director of Corporate Enforcement.
In recent years, we have borrowed a self-assessment system of taxation from the United States. But we have been reluctant to adopt the harsh penalties necessary to encourage widespread compliance. In New York, millionaires who believe that only "little people" pay taxes are sent to prison. Here, belated co-operation with the Revenue Commissioners is a passport to freedom. Tax evasion by wealthy citizens twenty years ago was not without consequences. Their criminal behaviour ensured the quality of life of young people was impaired because of a lack of educational opportunity. Older people died prematurely because of inadequate health services. The public must be shown that such behaviour will not be tolerated. The most obvious - and public - penalty is a jail sentence for the guilty.