The appearance of one significant Irish name on the database of offshore records is explained by a loophole in the Irish tax laws that the Revenue Commissioners spotted and closed with a legislative change in 2005.
In earlier years, foreign-registered limited partnerships listed among many offshore companies identified in the database – obtained by the International Consortium of Investigative Journalists (ICIJ) – could be used by Irish individuals to offset the interest paid, losses and capital allowances of the partnership trade against their entire tax bill in Ireland.
The loophole, which failed to distinguish between Irish registered and offshore partnerships, was identified as a weakness in the tax code by the Revenue Commissioners and tightened in the 2005 Finance Act.
A spokeswoman for the Revenue said the 2005 change in the tax law brought foreign-registered limited partnerships into the tax net, restricting the offsetting of any tax to the amount they contributed to the limited partnership and then only against the profits of the partnership trade. The change brought foreign registered partnerships under section 1013 of the Consolidated Taxes Act 1997, an anti-avoidance measure designed to prevent partnerships from being used to inflate tax losses.
Trucking magnate
One of those who managed to slip through the loophole before it was closed was Irish trucking magnate Robert "Pino" Harris who successfully defended a 2008 Revenue appeal brought against him after he offset the €9.1 million cost of fitting out the Christina O, a luxury yacht, against his tax bill.
The High Court ruled in November 2008 that Harris was legally entitled to the massive income tax refund, one of the biggest tax rebates to an individual in the history of the State.
Harris was a member of the partnership that had bought the yacht once owned by Greek shipping magnate Aristotle Onassis in 2000 for €65 million. The Christina Limited Partnership, which was registered in the south Pacific tax haven of the Cook Islands, was used by Harris to claim the tax reliefs and appears on the ICIJ database of offshore entities.
The partnership is listed at the address of Dublin law firm Ivor Fitzpatrick & Co, the database shows.
Another name on the ICIJ database is Waterford fisherman and businessman Brendan McGrath, who used a Cook Islands partnership for his fishing trawler venture, the MFV Solstice. The offshore company records show that Cork law firm Whelan Solicitors managed the administration of the Cook Islands partnership.
Cathal D O’Sullivan, a solicitor with the firm, said any work done by the firm involving the Cook Islands would have been carried out on behalf of clients and that the partnership had “long since lapsed”.
In 2007, Anglo Irish Bank won a court judgment for €6.3 million against Mr McGrath who looked after the day-to-day running of the MFV Solstice. The judgment was in his name but the bank pursued the investors in the fishing venture for the debt. By 2009 the nationalised bank had recovered €5.6 million.
Other Irish names and companies listed in the database set up offshore companies for other reasons.
One company in the database is Super Target Technology, which was set up in the British Virgin Islands in 2004 by Portcullis Trustnet. The officer of the company was Irish businessman Eanna Timoney who was behind Timoney Technology, a Co Meath company that made heavy-duty vehicle systems.
Shane O'Neill, chief executive of Timoney, said that the company was doing business in Taiwan and China, and was advised by the company's lawyers in Taipei that having a subsidiary in Taiwan could potentially pose difficulties when doing business in China. The firm decided to set up a British Virgin Islands firm.
Need evaporated
Mr O'Neill said that subsequent experience had shown that any perceived conflict in doing business in both jurisdictions was unwarranted. No money had ever moved through the British Virgin Islands account, he said, adding that "the need for it had pretty much evaporated," he said.
The database also lists a British Virgin Islands company called Global Holdings Group Services, which was set up by Portcullis Trustnet for the Dublin investment manager Paul Phelan who runs Global Reach Securities, the regulated Dublin investment manager that advises 60 Irish credit unions.
The British Virgin Islands company was set up in 2003 for the purposes of running an online foreign exchange business. The Caribbean offshore haven was chosen because it was seen as an easy place to establish such a business and because of the light-touch regulation of the island jurisdiction.
Nothing ever came of the business, one source said; the company never traded and never opened a bank account.
