AIB officials gave £100m figure

The disputed estimate that AIB Group owed £100 million in tax on bogus non-resident accounts resulted from internal estimates made by senior officials at the bank.

However, the AIB group chief executive, Mr Tom Mulcahy, has said that the figures contained in the 1991 estimates are seriously misleading and overestimated and were drawn up at the time to get the attention of bank management on the issue.

The original estimates of the size of the bank's non-resident accounts were drawn up by Mr Jimmy O'Mahony, group taxation manager, according to evidence given by AIB officials at yesterday's public accounts committee.

It is understood that the estimates at the time were that AIB had close to 90,000 non-resident accounts in total and that the internal auditor, Mr Anthony Spollen, was told by other senior executives that they believed that 60 per cent of these - or some 53,000 accounts - were bogus. In the run up to the finalisation of the bank's half-year results in March 1991, Mr O'Mahony calculated that the tax liability for the six-month period on the bogus non-resident accounts was £10 million. From this half-year figure, Mr Spollen calculated that £20 million would be owed in a full year and that the liability going back to 1986 would be £100 million. Correspondence which has been published shows that Mr Spollen brought this to the attention of the head of the bank's Irish operations at the time, Mr Brian Wilson, conscious of the need to insert a tax liability figure in the full year accounts to the year to March 1991.

However, the negotiations between the bank and the Revenue Commissioners led the bank to believe - and its auditors Coopers & Lybrand to accept - that no liability existed for DIRT payments on bogus non-resident accounts for the 1986 to 1990 period. AIB says it has not yet calculated what the level of bogus non-resident accounts was. It will not break down the additional tax payments made in 1990-1991 and 1991-1992, saying that only some of the £14 million increase in tax payments over the period was due to the crackdown on bogus non-resident accounts. There is thus no indication of how much tax might be due on the accounts from the 1986 to 1990 period by the bank on behalf of its depositors.