Most of the approximately 700 individuals or companies who had money or shares in the Ansbacher deposits or in National Irish Bank's offshore bond schemes are now likely to come within the Revenue net, according to sources.
For those depositors against whom sufficient evidence of wrong-doing exists, a criminal prosecution is likely to be sought by the Revenue. For the individuals and companies who have or had funds in the Ansbacher deposits, "it is hard to see how that fact in itself" will not prove sufficient to warrant charges being brought, a Government source said.
It is now believed the bulk of the persons and companies who had funds in the Ansbacher deposits are known or will become known to the Moriarty tribunal and the separate investigation being carried out by authorised officer, Mr Gerard Ryan. Despite the fact that the Cayman bank, Ansbacher (Cayman), is refusing to hand over vital files, the names of most of the depositors can be ascertained from documentation available here as well as from interviews with a number of bankers and other individuals, some sources have said.
The number of depositors involved is thought to be approximately 300 and to include some of Ireland's wealthiest business people. The deposits have been in existence since the mid-1970s and are believed to have held money, most of which was not declared to the Revenue. In most cases, the depositors are thought also to have been in breach of exchange control regulations. In some cases the money was made in business dealings abroad and not returned to Ireland, although at the time exchange control regulations stipulated that such monies had to be returned to this jurisdiction and declared within three months.
If the business people had complied with the law, they would have lost up to half their earnings in tax. Instead they left the money on deposit in the Cayman Islands. This meant they also did not have to pay tax on the deposit interest they were earning.
The Cayman bank was established in the 1970s as a subsidiary of Guinness & Mahon bank, Dublin. The deposits lodged in the Cayman Islands were redeposited in the Dublin bank, in an account bearing the Cayman bank's name. This was commercially advantageous for the Dublin bank and also suited the operation of the Ansbacher deposits.
Some depositors made withdrawals in the way described in the McCracken tribunal. That tribunal heard that, for instance, in December 1987, instructions were given to Guinness & Mahon, College Green, Dublin, that £58,000 in cash should be prepared for collection by Mr Charles Haughey. It is not known why Mr Haughey needed so much cash. He was Taoiseach at the time, having been appointed the previous March.
Other depositors, however, did not want their money coming under their control in Ireland as they might have had difficulty explaining it to the Revenue. When these depositors needed access to their funds, for instance for a particular business deal or because of cash flow difficulties, they would arrange for a loan from Guinness & Mahon. If asked questions about the money, they could then say they had borrowed it from the bank.
During the 1970s and 1980s, there were also laws regulating the holding of foreign shares. The Ansbacher deposits included accounts which held foreign shares for Irish depositors. The timing of the acquisition of the shares would determine whether this contravened the exchange control regulations. The McCracken tribunal heard that when Mr Haughey's accounts ran short, they were replenished with funds from the account of Overseas Nominees, a Cayman company which held shares for others.
The value of the shares held in accounts such as these has not yet emerged. The McCracken tribunal heard that the cash in the Ansbacher deposits amounted to £38 million in 1989. One source close to the tribunal said his impression was that the amount held in shares would have been in the order of £10 million or so. But he emphasised that this was simply an impression.
According to some sources the amount deposited by the Cayman bank in Ireland was a close reflection of the entire amount contained in the Ansbacher deposits. However, during hearings in London, the McCracken tribunal was told by a London banker, Mr Peter Greenhalgh, that the Cayman bank had assets of £114 million in 1988. Mr Greenhalgh worked for Henry Ansbacher, the banking group which bought the Cayman bank that year. He said the bank had felt it was buying "effectively an Irish operation" and that "a significant amount of business was emanating from the Irish Republic as a result of the ongoing relationships that had been built up".
The depositors were all known to the late Mr Des Traynor, the accountant and banker who Mr Haughey told the McCracken tribunal had looked after his personal finances since the 1960s. Because of the way the Ansbacher deposits were operated, the names of the depositors were closely-guarded secrets. Mr Greenhalgh was worried about this, and he once contacted Mr Traynor and told him he was concerned that some of the money might be linked to "drugs or terrorism".
Mr Greenhalgh told the McCracken tribunal: "I remember he [Mr Traynor] told me on one occasion: `I know all about this money-laundering. You don't need to worry about this. These transactions are all right. The clients are known to me and you may be sure we would not put transactions through you which would give rise to money-laundering considerations'."
Between 1991 and 1994, the accounts were moved from Guinness & Mahon to Irish Intercontinental Bank. Mr Traynor continued to operate the system. He died in 1994. A number of the accounts remained in existence, managed in Dublin by Mr Padraig Collery and in the Cayman Islands by a company called Hamilton Ross. Mr Haughey's were among these accounts.
The Moriarty tribunal is examining all the Ansbacher accounts for evidence of donations going from them to Mr Haughey or any other politicians. They will privately question the account holders about these matters. The hearing of evidence in public was to commence prior to August but the tribunal has had to contest the case the Haughey family took against it. The High Court ruled against the Haughey family and the Supreme Court is to hear an appeal against that judgment later this month. When the tribunal will commence hearing evidence is not clear.
The Moriarty tribunal is unlikely to identify any account holders who are not linked to payments to Mr Haughey or other politicians. However, the authorised officer, Mr Ryan, may identify them in his report to the Tanaiste, Ms Harney, and she is likely to send a copy of his report to the Revenue.
There have been calls for the public identification of all the Ansbacher deposit holders. The reports of authorised officers cannot be published. However, when Mr Ryan supplies an interim report to the Tanaiste, Ms Harney, she may well then seek to have a High Court inspector appointed to examine the deposits. The reports of High Court inspectors may be published and have the protection of the High Court.
Earlier this week Ms Harney, having received an interim report from an authorised officer inquiring into NIB's sale of offshore bonds, decided to petition the High Court for a ruling that the matter now be investigated by inspectors Mr Justice John Blayney and Mr Tom Grace. In March they were appointed under Section 8 of the Companies Act 1990, to investigate allegations that NIB had made unauthorised interest and fee charges against customer accounts
The authorised officer inquiring into the sale of offshore bonds by NIB, Mr Martin Cosgrove, said in his interim report that £48 million had been invested in just under 500 policies. The money was invested in insurance products managed by Clerical Medical International (CMI), Isle of Man; Scottish Provident International, Isle of Man; and Old Mutual International, Guernsey. These companies were not authorised to sell their products in Ireland. Some of the portfolios were sold to non-residents and as unit trusts, but more than 400 were sold to Irish residents and are now under investigation.
The bulk of the money, £33 million, was invested in one particular CMI product. It has been alleged that money was invested in the bonds in order to hide it from the Revenue. Ms Harney's decision to petition the High Court means that, if the petition is successful, the two inspectors, Mr Justice Blayney and Mr Grace, will now take over from Mr Cosgrove. The matter will be heard on Monday. Section 8 inspectors have extensive powers, including the right to question, under oath, the bank officials who sold the bonds and the investors who put their money into them.
The reports of Section 8 inspectors may be published and have the protection of the High Court. However, the publication of a full list of the NIB investors might be considered unjust, as some of them may be innocent of any offence.
The CMI customers have been described as persons with businesses which handle a large amount of cash, such as hoteliers, publicans, and garage owners. In some cases, it is known that depositors who had money in bogus non-resident accounts with NIB closed the accounts and invested the money in CMI bonds. The money was then re-invested by CMI back in the customer's local NIB branch. In some cases, the customer subsequently made withdrawals from the branch, which the branch then recouped from CMI. One banking source told The Irish Times: "It was like a poor man's Ansbacher."
The names of the NIB customers who invested in offshore bonds are known to the Revenue and most are already involved in negotiations with it. At least a number of them are likely to be charged in the courts. Most are likely to have to make settlements. Settlements involve paying any taxes due on a lump sum previously undisclosed, DIRT unpaid, interest on unpaid taxes and a financial penalty up to two times the size of the original lump sum. The names of persons and companies who make settlements are listed in Iris Oifigiuil.
The names of many if not most of the 700 individuals and companies involved in the NIB offshore investments and the Ansbacher deposits, are likely to appear in Iris Oifigiuil over the coming few years. However, the listings only give the names, addresses and amounts involved, and not the reason for the settlement. So the defaulters will not be identified as Ansbacher depositors or NIB customers. It seems the only way individuals will be identified in this way is in evidence in court or in any lists that may be published by Section 8 inspectors.
