It was a very small world. The same people played many different roles and as they changed hats the line between the public and private business became blurred.

The gamekeepers became poachers. Some of those who had been charged with defending the public interest ended up serving private interests. Some of those who were supposed to be insisting on the highest standards were themselves drawn into murky dealings.

When the largest bank in the country, Allied Irish, decided not to meet its tax liabilities to the State, its chairman was a former chief law officer of that State. When the same bank wanted an independent view of what its tax liabilities were, it turned to a committee headed by Jim Culliton, revealed this week, along with Mr Peter Sutherland, as one of those named in the inspector's report on the Ansbacher deposits and therefore as having, in the words of the Tanaiste, a "case to answer".

The State itself, as an economic entity, was made up largely of men whose names feature in the Ansbacher report. When the State wanted to develop a coherent industrial policy, it asked Jim Culliton, a member of the IDA board for nine years, to tell it what to do. Mr Culliton also headed the RTE Authority.

Michael Dargan ran Aer Lingus. The chairman of Bord na Mona, Pat Dineen, who a few years ago was instrumental in the removal of his chief executive for allegedly unethical behaviour, is named as an Ansbacher depositor. So is a former director of the Central Bank, the body that is supposed to oversee the maintenance of high standards in the banking industry, Ken O'Reilly-Hyland.

The overlap between the business and political worlds was such that it is almost impossible to find a clear point of separation. And the leadership of Irish politics did little to change that underlying reality.

This week, many of the most senior members of the Irish political system gave evidence before the Public Accounts Committee. The inquiry into the DIRT scandal heard from three taoisigh, two distinguished former members of the EU Commission and the current leaders of the three largest political parties.

In all the maze of detail, amidst all the continuing uncertainties and contradictions, two stark facts stood out. One is that all of these men knew, at least in general terms, that bogus non-resident accounts were being used to evade taxes. The other is that none of them managed to do anything effective about it.

Before rising to the highest levels of international politics with the EU and GATT and of international business with Goldman Sachs and BP, Peter Sutherland had been, as a Fine Gael attorney general, the chief law officer of the State. He was, in the period that interests the PAC, the chairman of Allied Irish Banks.

That someone with his impeccable credentials as a lawyer and a public servant came to deal with the bogus non-resident accounts in early 1991 ought to have been a great comfort to the compliant taxpayer.

Peter Sutherland was unable to tell the committee precisely when he heard that his bank had underpaid DIRT to such an extent that it had accumulated a potentially catastrophic liability. Sometime in January 1991, however, he learned that his old friend from Gonzaga days, the bank's head of internal audit Tony Spollen, had estimated that AIB had a "potential liability" for DIRT unpaid since 1986 of £100 million - a sum roughly equal to the bank's then current annual profits. This figure was rubbished by the bank's senior managers. As Peter Sutherland put it, "there was no belief at all in the bank that that figure was a realistic figure".

Mr Sutherland passed the issue to the bank's audit committee, headed by the man who would succeed him as AIB chairman in 1993, Jim Culliton. By a cruel irony, Mr Culliton, on the day that he gave evidence to the PAC, was identified by The Irish Times as one of those named in the inspector's report on the Ansbacher accounts.

Even while he was telling the PAC of his distinguished service on behalf of the State - "Whenever the call came from the public sector I was happy and delighted to do what I could" - the State was investigating his own alleged connections to a bank whose conduct was, in the words of last week's High Court affidavit, "designed to defraud . . . the Irish Revenue Commissioners".

What became absolutely clear from the evidence of Jim Culliton and other AIB officials this week was that Tony Spollen's estimate of AIB's potential liability, while it may well have been a little exaggerated, was far from being a wild guess. Mr Spollen based his £100 million figure on a rough guess that 60 per cent of the bank's non-resident deposit accounts were bogus. The Comptroller and Auditor General's estimate, based on a more detailed breakdown of accounts that were subsequently reclassified as resident accounts, is that about 48 per cent of the money held in the accounts was falsely claimed as non-resident at this time. What this suggests is that, even if £100 million was an overestimate, it still gave a very good indication of the scale of what AIB owed to the Revenue.

Jim Culliton, moreover, blew a huge hole in the bank's explanation for its refusal to act on the DIRT scandal. Contrary to the insistence of AIB management that Spollen's figures were obviously fantastic, Jim Culliton told the PAC that "we didn't regard the 100 million as a fiction". Asked what was wrong with the figures on which Spollen based his calculation, he replied "nothing."

"I certainly accept," he said, "that it was a reasonable assumption in Mr Spollen's mind."

The very least that might have been expected, moreover, is that Peter Sutherland, as chairman of the bank, or Jim Culliton, as chairman of the audit committee, would have asked those who were rubbishing Spollen's figures to come up with their own estimate.

This was not done.

Peter Sutherland's evidence is essentially that he left everything to Culliton's committee. That committee, in turn, simply decided to accept the assurances of the bank's management that everything would be OK. On the critical question of how much the bank owed the Revenue, they resolved merely that "the appropriate provision will be determined in due course". That due course never came.

The reason nothing happened was not, in reality, that Tony Spollen's figures were utterly incredible. It was that, according to the evidence repeated by virtually every major AIB witness, they believed that the bank had been granted an amnesty by the Revenue on the accumulated debt for DIRT.

The issue, for them, was not whether they lawfully owed vast sums of money to the Exchequer. It was whether anyone was going to make them pay up, and they were confident they would get away with it.

Even this confidence, however, had strangely shallow roots. It was based, allegedly, on verbal assurances given at a meeting between the bank and Revenue and never confirmed in writing. Whether or not those assurances were given is, and will remain, a matter of dispute between the bank and the Revenue.

But the obvious question for Peter Sutherland ought to have been whether, even if his bank had been promised an amnesty, that amnesty had any basis in law. The two key AIB figures involved in negotiations with Revenue, Donal de Buitleir and Jimmy O'Mahoney, were themselves former Revenue officials, and would have known that individual tax inspectors did not have the power to grant tax amnesties. In a contemporary memo to Jim Culliton, Tony Spollen noted that "the Group Taxation Department has informed me that an amnesty cannot be given without legislation going through the Dail".

The truth, as Tony Spollen, enraged by attacks on his integrity by AIB, revealed on Tuesday, is that AIB's basic instinct was - when in trouble, dump on the little people.

In 1988, when AIB got into trouble over a share issue it was handling for a company called Dana, it used money belonging to its own pensioners to hide the truth. Instead of admitting that the share issue had been a failure, it placed £250,000 worth of the shares with its pension fund.

This, essentially, is the same impulse that operated in the DIRT scandal. Instead of admitting that the bank had withheld huge sums of money owed to the Exchequer, the bank decided to keep quiet and let the little people - the PAYE workers - bear the cost.