Accountant resigned over threat of audit

HUGH McGOWAN, accountant to lobbyist Frank Dunlop, said he resigned as a director of Mr Dunlop's company Shefran Ltd in 1994 because he became "uncomfortable" when the Revenue Commissioners initiated an audit of Mr Dunlop.

Shefran Ltd was set up in 1990 for the benefit of Mr Dunlop, but its listed directors were Mr McGowan, of chartered accountants Coyle & Coyle, and another company accountant, Barry Tucker. Mr McGowan told the tribunal Mr Dunlop wanted to use a separate public relations company from Frank Dunlop & Associates Ltd to process new clients.

Patricia Dillon SC said that in October 1994 Mr Dunlop had a meeting with the Revenue. She pointed out Mr Dunlop closed two of his "war chest" accounts in the same month. The accounts, in the Irish Permanent Building Society and AIB Rathfarnham, were used to fund payments to politicians.

Mr McGowan said he was not aware of the existence of either of the accounts at the time, but he probably advised Mr Dunlop to "make a full disclosure" to the Revenue when the audit was threatened. Mr Dunlop then told him there were funds in Shefran that Mr McGowan knew nothing about, he said.

"I was uncomfortable being a director and I wanted to resign," Mr McGowan said. He resigned from the company, along with Mr Tucker, in December, and transferred his shareholding to two companies in the Isle of Man.

Ms Dillon said Mr McGowan knew of two Shefran bank accounts and knew Mr Dunlop had not returned money in them as part of his personal income by the end of 1994.

"You had a concern at that stage that Shefran might become the subject of a Revenue audit and you'd be in the firing line for it," Ms Dillon said.

"Probably," Mr McGowan responded.

The tribunal was told the threatened audit "withered on the vine". But in 1998, when it appeared that his dealings would become public through the tribunal, Mr Dunlop asked Mr McGowan to help him make a voluntary tax disclosure. He paid almost £250,000 in tax that October for income he received through Shefran.

However, Ms Dillon said Mr Dunlop did not declare an off-shore bank account he held through his company, Xerxes Ltd.

Xerxes Ltd was set up by Mr McGowan through a firm of solicitors, Jaques and Lewis of Jersey, on behalf of Mr Dunlop. A bank account was set up with the Midland Bank Trust to collect payments to the company and the bank statements were sent to Jaques and Lewis, who forwarded them to Mr McGowan.

It was out of this account that Mr Dunlop paid £40,000 to horse breeder Jim Bolger in April 1992 for a share in a horse, which subsequently died.

Meanwhile, former independent councillor Richard Greene told the tribunal he believed he was given a donation of £250 from Cork developer Owen O'Callaghan in 1992 to support his pro-life work. Mr Greene, a supporter of Mr O'Callaghan's Quarryvale development, ran in the November 1992 general election on a pro-life ticket.