£17.5m DIRT arrears estimate outrageous, says former executive

A former senior executive of ACCBank described as "spurious" and "outrageous" an estimate by the bank's external auditors that its DIRT arrears liability was £17.5 million.

Mr Billy Moore, deputy chief executive until 1998, said he believed the liability was closer to £700,000. He also told the tribunal he was "completely satisfied" he did not mislead Revenue officials about the bank's DIRT problems at a meeting in 1993.

He said the Revenue indicated at that meeting that they would not be pursuing the bank for arrears of tax on deposit interest. However, he admitted that he never mentioned this in a minute of the meeting which he drew up later the same day for the then chief executive, Mr John McCloskey.

He also never sought a written assurance from the Revenue that they would not pursue them for DIRT arrears. However, their advice was that they did not need this.

He agreed that it was a "watershed" meeting and it was "puzzling" that he did not write this, given its significance. He told Mr Pat Rabbitte that if he had included this it would have been a "negative factor". It might have engendered a certain amount of complacency in the branches, when very firm action had to be taken to deal with the problem.

Mr Rabbitte pointed out that at the time of the meeting he had had the £17.5 million DIRT liability from the report drawn up by Ernst & Young as part of preparation for privatisation, when profits were just £8.5 million. This was a "momentous" meeting with the Revenue.

"You didn't know how much Revenue knew, and you came out with a clean bill of health, and yet you didn't put that in the note to the chief executive." Mr Moore replied that all he could tell the deputy was what he believed happened.

He was also satisfied that while the bank still had a problem with DIRT at the time of the meeting, an exercise was under way, even though it was slow to get off the ground. Management was telling branches that the matter of nonresident accounts had to be given priority attention.

He told Mr Rabbitte that Ernst & Young's £17.5 million estimate of the DIRT arrears liability was "ridiculous, a completely spurious estimate of a potential liability of tax," and that this was backed up by the auditors withdrawing the figure.

Mr Rabbitte said the senior auditor, Mr John Hogan, told the inquiry he would not do anything differently.

Mr Moore said it was his understanding that Ernst & Young were not standing over the figure. He said this was the only occasion on which he ever found himself having any difference with the auditors.

"But this is some occasion. You were about to be sold off. I mean, you've released a whole basket of pups here that Ernst & Young will be chasing for a long time."

Mr Moore replied that it was an evolving situation and the report was a first draft only.

ACC's general manager of retail banking, Mr Jim Skelly, later told the inquiry that it was "aggravating" to see how slow some of the bank's branches were in complying with internal directives.

He had written to the bank's 50 branches in 1992 seeking confirmation that non-resident accounts without a valid declaration form would revert to DIRT-liable status, but only half the branches replied.

Mr Skelly said that they kept at it and did not let the matter slip.