What really happened in 1991 in the negotiations between the Revenue Commissioners and AIB? The Dail Committee of Public Accounts no doubt hoped that written commentaries provided by AIB and the Revenue on the evidence given at the committee's public hearings would help to clarify matters. Instead, they have merely widened the gulf between the two versions of events.
Briefly, AIB contended to the committee that its negotiations with the Revenue in 1991 were part of an industry-wide initiative by the tax authorities to clean up non-resident accounts, that it dealt openly with the Revenue at the time and that an agreement was reached that no DIRT tax would be paid on bogus non-resident accounts for the period prior to 1991.
In a document now submitted to the committee, the Revenue takes issues with this version of events in the strongest possible terms. The Revenue dismisses outright the suggestion that there was some kind of general deal done with the financial institutions on the issue in 1991. The Revenue board - consisting of the three commissioners - never approved such an industry-wide move, nor did its senior management, it says.
The Revenue reveals it was examining the issue of non-resident accounts at two AIB branches, investigations which had arisen from it looking into the accounts of some branch customers. It was assured by the bank at the end of 1990 that the problem at these branches had been dealt with.
The Revenue says in its document that "although evidence of complicity by the bank or its officer in relation to this was skimpy, suspicions nevertheless existed that some bank officials may have been facilitating taxpayers in concealing their funds from the Revenue".
To this end, the Revenue says it arranged a key meeting of four of its inspectors with AIB on February 13th, 1991. AIB says this meeting indicated to it that, as part of a move to end the bogus non-resident account problem, the Revenue agreed it owed no tax on bogus non-resident accounts for the period prior to 1991.
The Revenue hotly disputes this, says that the purpose of the meeting was to ensure that taxpayers were not being facilitated in evading tax and that it had no idea of the scale of the problem - 53,000 accounts on which DIRT of £100 million was owed - as alleged in internal documentation by AIB's former internal auditor, Mr Tony Spollen. The Revenue does concede that, as revealed in a letter from it to AIB dated February 15th, 1991, it offered AIB the opportunity to clear up outstanding liabilities without publication in the list of tax settlements. But it had no idea, it says, of the scale of the problem.
AIB said that its group head of taxation rang the senior Revenue inspector, Mr D. A. MacCarthaigh on March 5th 1991. AIB has said that in this conversation its executive was led to believe that there was an effective "amnesty" on pre-1991 DIRT liabilities and that this arrangement had been cleared at the highest level of the Revenue.
Astonishingly, the Revenue says: "There is no evidence or recollection in Revenue of any such communication with the bank." In its commentary, AIB takes strong issue with the evidence of Revenue chairman , Mr Dermot Quigley, to the committee.
It asks why it was necessary, if there were only a small number of bogus non-resident accounts under discussion - as the Revenue contends - to review the whole situation and give the bank some months to do so. AIB also insists that the disputed March 5th phone call - and a subsequent conversation with Mr MacCarthaigh - led it to believe that Revenue at the highest level was aware of an agreement with AIB.
Finally, AIB points out, intriguingly, that it needs to be taken into account in determining what happened, that there are no formal minutes from the Revenue board at the time and that actions taken by one Revenue Commissioner would be binding on them all.
An interesting challenge, then, for the Comptroller and Auditor General, Mr John Purcell, to sort out what really happened.
