Audit by Revenue of AIB has begun

The Revenue Commissioners have begun a detailed examination of non-resident accounts in Allied Irish Banks. Mr Lochlann Quinn, AIB chairman since 1995, told the DIRT inquiry that a detailed audit was in progress in the bank, which has 91,000 non-resident accounts.

Mr Quinn said the bank believed the maximum it owed for outstanding DIRT liability would be £35 million, not including interest and penalties, if it did not have an agreement with the Revenue. "I don't think we have a liability, because I think we have a deal."

He said that the £600 million estimate for bogus accounts was a "guesstimate of an estimate" and the £100 million liability which had been given "widespread and unquestioning acceptance" would have required "a constant interest rate of 11 per cent and a constant DIRT rate of 30 per cent applied to the £600 million over five years".

The bank had told the Revenue that there would be a substantial reclassification of non-resident accounts in 1991. Accordingly, there would be a corresponding substantial increase in DIRT payments, but the Revenue never came back to them. "I mean they walked away", he said. The Revenue never sent an assessment, "never lifted the phone, they did nothing". There was a "historic bill and nobody asked us for it".

Mr Quinn said that the Dail had passed legislation which turned the banks into policemen overnight. They did not "play a blinder as policemen", but in terms of their own behaviour "this is a quality, professional bank".

Mr Mitchell said that no previous chairman or chief executive had taken a direct personal interest in DIRT, yet AIB was saying it was a great bank. "In comparison to what?" he asked. Mr Quinn said that, in comparison to most banks around Europe, analysts would consider it "internationally a top-class bank".

Mr Mitchell said that AIB did not declare to the Revenue that there was a liability. Mr Quinn said that he was not "fully up to speed" on that, because he was looking at the "bigger picture".

Mr Mitchell: "But you sat through the evidence for the past couple of days. This came up several times." Mr Quinn: "Maybe I was not concentrating fully enough." Mr Mitchell: "Yes, this is a problem you seem to have."

Later, AIB's current chief executive, Mr Tom Mulcahy, insisted that there was "no systemic malaise in our company in terms of non-compliance".