Department reluctant to encroach on `autonomy' of ACC

The secretary general of the Department of Finance told the DIRT inquiry the Department should have been more proactive in its…

The secretary general of the Department of Finance told the DIRT inquiry the Department should have been more proactive in its relations with the State-owned ACCBank.

Mr Paddy Mullarkey said he had never held a formal meeting with the bank's chief executive and the Department's representative on the board did not report back regularly.

Mr Mullarkey added that he did not believe the chairman of ACCBank would have had regular meetings with the Minister for Finance.

He said no complaint had been received from any quarter by the Department or the Minister in relation to DIRT since 1986.

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There had been no reason to believe that ACCBank had a particular problem in relation to compliance and the Department would normally be reluctant to approach ACCBank and "encroach on its autonomy".

Mr Gerry Hickey, the Taoiseach's adviser and a former Department of Finance director of ACCBank, told the committee he did not report regularly back to the Department but, from time to time, would keep people informed of what was happening.

Asked about a suggested £17.5 million DIRT liability, arrived at by ACCBank's auditors, Ernst & Young, in 1992, he said if it was a true figure it would be "very material" to the shareholder "and that is something I would have felt, had it been a fact, that I should have been told and I would have reported it to the Department".

Mr Mullarkey said that throughout the 1980s and 1990s tax compliance had been seen as a governance matter, dealt with by the ACCBank board. At no stage had the Department or the Minister received a report from the board in relation to non-resident accounts, nor had the Department representative on the board reported any particular problem on non-resident accounts.

On behalf of the Department, he was not in the business of complacency, he added. In terms of the emphasis placed on compliance and accountability in recent years, there was "a legitimate issue" that the Department could have been more proactive "in relation to ACC on the question of non-resident accounts".

He said in the early 1980s, although there was "a certain amount of mutual recrimination among the banks", there were one and perhaps two complaints about ACCBank "where the response of the Department looks as if it was insufficient by any standards".

Mr Ray Bates, the National Lottery director and a former assistant principal at the Department of Finance, said a complaint from the Midland & Western Building Society in 1985 that "exchange control regulations are being flouted on a fairly massive scale" by the clearing banks and ACCBank had no "specific details to substantiate the claim".

He had asked for a view from Revenue on the allegations. This was included in the response to the building society from the Department of Finance.

He could not remember his response, he said, when it was suggested to him by Mr Marcel Jacques, assistant principal in Revenue, that the Department's nominee on the ACCBank board should have found out what was happening.

Mr Jacques said: "Our experience with banks in the area of disclosure leads us to think that the statements in the letter from the Midland and Western Building Society are probably true . . . This body [ACC] has proved very unco-operative in the whole area of disclosure, most recently with regard to supplying returns of deposit paid or credited in the form of computer tapes."

Mr Bates said there had been no reports of specific abuses of non-resident declarations for the two years that scheme was in operation. He could not deal with "accusations or probabilities".