£500,000 AIB bill not paid due to a `glitch'

More than half a million pounds in DIRT-related tax was recovered by the Revenue Commissioners from AIB in Castlebar and its sub-branch in Balla, Co Mayo, five years after the banks were thought to have cleaned up their act.

Mr Paddy O Donghaile, the Revenue's director of prosecution policy and principal inspector of the special inquiry branch, told the inquiry he had been informed that Castlebar was a "glitch" and the action of a "maverick".

Mr O Donghaile said he contacted AIB in 1996 after finding the background to a particular deposit account "a little bit peculiar".

He wrote to the bank and in its reply, AIB said there was an irregularity but it was not DIRT-related.

However, a "detailed exercise" had since been carried out at the branch incorporating its sub-branch at Balla, and "unfortunately some further transgressions of the Deposit Interest Retention Tax legislation have been uncovered", Mr Philip Brennan of AIB head office wrote.

The bank would be remitting DIRT of £342,318.98 as well as interest on late payment amounting to £219,051.92.

Mr O Donghaile told Mr Pat Rabbitte TD that he did not know how many customers were involved because he hadn't asked.

"It would certainly be interesting to know the numbers, but that wasn't going to get me the details of who was involved". The law at that time required that if he wanted access to a customer's information in a bank, he needed to know who that customer was in the first place.

Mr Rabbitte asked him to comment on the significance of uncovering half a million pounds in a single branch "five years after we had cleaned up the act, we thought".

Mr O Donghaile: "Well, it was not encouraging but, by the same token, it was represented to me certainly that this was the act of some maverick who was no longer in the institution at that stage."

He had gone to another financial institution in the area. Mr O Donghaile said they could not prosecute the maverick because they would not get the fundamental evidence from the bank. When there was "spring cleaning" of a witness there was a difficulty in using a witness like that against another person.

The laws of evidence were extremely difficult and unfortunately investigation was not as easy as they would like it to be.

Mr O Donghaile pointed out that it was presented to him very much as a "once-off scenario". He was listening to a senior person from AIB and, "rightly or wrongly I took the view that what he was telling me was valid and this was not something that was happening every day of the week".

Mr Rabbitte: "So you are saying because you were dealing with a major financial institution, when they gave you certain assurances you tended to accept those assurances?".

Mr O Donghaile: "Well, in the absence of any way of proving them, one way or another, I was left in that situation."

He said he suggested to the AIB official that he make his customers aware of the Revenue's policy of "voluntary disclosure". He warned that they should come to Revenue "before Revenue can get to them".