Ahern faces challenge on Haughey appeal decision

The Taoiseach will come under strong pressure in the Dail today to account for the appointment of his brother-in-law, Mr Ronan Kelly, as an appeal commissioner for taxation in 1992.

Mr Ahern confirmed yesterday that Mr Kelly dealt with Mr Charles Haughey's appeal against his £2 million tax assessment arising from the McCracken tribunal, and reduced his liability to zero.

But the controversy about the relationship between Mr Ahern and Mr Kelly, which generated bitter exchanges in the Dail yesterday, is apparently creating no difficulties within the minority Coalition.

A spokesman for the Progressive Democrats said last night that there was no reason to doubt "anyone's integrity" about the decision.

However, reflecting "serious disquiet" about the reduction of Mr Haughey's tax liability at its weekly parliamentary party meeting earlier, the PD spokesman continued to call last night for "the grounds for the decision to be placed in the public domain immediately, given the importance of this case and the need to maintain public confidence in our tax system." The Revenue Commissioners confirmed they are appealing the decision to the Circuit Court.

Two informed sources have told The Irish Times that Mr Kelly's decision to reduce Mr Haughey's tax liability to zero was delivered orally in a short judgment. No firm reasons were given. It is understood that the Revenue Commissioners relied on the report of the McCracken tribunal to fight the appeal.

The case put to Mr Kelly by Mr Haughey's lawyers was that he could not rely fully on the McCracken judgment.

The Minister for Finance, Mr McCreevy, told the Dail, under questioning, that Mr Kelly, a chartered accountant, and Mr J.F. O'Callaghan, a senior tax consultant formerly of Farrell, Grant and Sparks, were appointed by Mr Ahern, then Minister for Finance, on December 9th, 1992 during the government interregnum. Notice of their appointments was put before the Dail on January 8th, 1993.

Sources close to the Taoiseach said that Mr Kelly was "headhunted by the then Finance Minister." He was completely apolitical. Asked if he was, or is, a member of Fianna Fail, the sources stated: "No. Never. Isn't."

Fine Gael has tabled a special motion to suspend the Dail's normal business this morning.