Harney to decide next step on offshore investment report

The decision of the Tanaiste, Ms Harney, to forward a report on the sale of offshore investments by National Irish Bank (NIB) to the Director of Public Prosecutions (DPP), was prompted by concern that the bank, as well as some of its customers, may be guilty of breaches of the law.

Ms Harney will meet with legal advisers today to discuss the interim report supplied to her by the authorised officer, Mr Martin Cosgrove, late last week. Among the issues she will consider is whether to forward the report to the Revenue Commissioners, as well as the DPP.

The Revenue Commissioners are the authority which prosecutes individual tax evaders. Any issue of "aiding and abetting" would also be a matter for the Revenue. The Department of Enterprise, Trade and Employment would be concerned with breaches of the insurance acts.

A spokesman for NIB said the bank had no comment to make on the latest development, other than to say it had been informed that Ms Harney had received Mr Cosgrove's interim report.

The Revenue Commissioners are likely to seek to have a number of the NIB customers who invested in Clerical Medical International (CMI) offshore bonds prosecuted through the courts.

Officials in the Revenue's prosecutions unit, who have received training from the DPP's office, will examine the files in cases which merit prosecution, to see if sufficient evidence exists to support a case being brought before the courts.

Where firm evidence exists of tax evasion in relation to the source of the money invested, lodgements in bogus non-resident accounts, or investment in the bonds, files will be prepared for the DPP. It is not yet clear how many of the around 300 depositors who are now believed to have invested £50 million in the CMI bonds, were investing funds they had hidden from the Revenue, or how many cases are likely to be forwarded to the DPP. However, a number of cases will be forwarded for prosecution.

The Revenue got the names of the investors from the bank by using powers contained in the 1997 Consolidated Tax Act, and is now involved in negotiations with the depositors. In cases where non-payment of taxes has been discovered, the Revenue will seek settlement payments, which can be made up of the tax and interest owed, and penalties of up to twice the amount of the tax owed.

CMI, the Isle-Of-Man based company which sold the bonds, has said no tax has to be paid on the money invested in its bonds, until the policy matures and returns are realised. However, the Revenue Commissioners may not agree with this.

The sale of the bonds by NIB is the subject of a number of inquiries, including one where the Revenue is seeking to establish whether the bank or any of its employees were complicit in the evasion of tax by the investors or breached company law.

NIB has said its own investigation has discovered problems with the documentation in relation to "a significant minority" of the accounts.

The problems include false names and addresses. One of the allegations being investigated is that Irish residents who had funds deposited in bogus non-resident accounts in NIB, transferred the funds to the CMI bonds in an effort to make it even less likely they would be discovered.

In cases where settlements are made with the Revenue, the names and the amounts involved are published in Iris Oifigiuil. Settlements arising from the CMI scandal are likely to be listed in the quarterly over the coming 12 months. However the lists will not indicate the defaulters who were linked with NIB. In those cases which come before the courts, however, the identities of the persons involved will become public knowledge.