Clients allege bank breached confidentiality

Bank of Ireland customers at its Miltown Malbay branch, Co Clare, are suing the bank for breach of confidentiality, alleging that the bank disclosed information to the Revenue Commissioners.

More than £2 million in taxes, including £200,000 in DIRT, was paid to the Revenue Commissioners, following a 1992 revenue audit, in an incident well ventilated at the Public Accounts Committee inquiry.

Mr Pat Molloy, former chief executive, told the DIRT inquiry that the bank wrote the cheque for £200,000 and he did not think it was levied on the affected customers. However, "they are alleging that the source of the information to the Revenue Commissioners came from within the bank, and it was a breach of confidentiality".

When Mr Pat Rabbitte asked what loss it was to the customers, Mr Molloy said he understood they would otherwise have availed of the tax amnesty.

In what he had described earlier as a "very clever conspiracy", managers had colluded with customers. He said that an earlier investigation by internal auditors did not "alert" to this collusion, which led him to suspect that it was "very well camouflaged".

The chairman, Mr Jim Mitchell, said "some of the evasion of taxes was so well hidden by correct documentation that we'd never get to the root of it anyway".

Mr Molloy said: "That's right. I think that's right."

Mr Rabbitte suggested that the bank's "malfeasance" started after the Miltown Malbay audit.

Mr Molloy rejected this and said that the manager departed in 1988, and these accounts were in place for quite some time. Since they were not discovered by the internal auditors, he concluded "they were set up in a way that they were very exact and there were no indicators of residence".

Dr Margaret Downes, a director and chairwoman of the bank's audit committee, said that to the best of her recollection the DIRT issue did not come to the attention of the bank's board.

She said the bank was in discussion with the Revenue Commissioners about a DIRT arrears liability of £1.3 million but rejected the view that the Revenue were disputing it.