A controversial internal AIB memo which suggested that a former chairman of the bank had been assured by Mr Ray Mac Sharry that the inspection of non-resident accounts was not a priority for the Revenue Commissioners was hotly rejected by Mr MacSharry at the DIRT inquiry. The committee had heard a great deal of evidence and questions pertaining to the note, Mr MacSharry said, suggesting that he had told the late Mr Niall Crowley "that there would never be inspections". He had never said that to anybody.
"The Minister has indicated verbally that inspectability will not be an issue at any time and provision will be made in the 1988 Finance Act to cater for this," the note had said. "I want to take this opportunity immediately to categorically reject that inference," said Mr Mac Sharry. He was responding to questions from Ms Mary Irvine SC, for the committee.
The former finance minister doubted whether the "unsigned and undated" note could be attributed to Mr Crowley. The "inspectability" referred to at the start of the note was contradicted at the end, he pointed out, by the assertion: "In the event of failure to incorporate confidentiality into the 1988 Finance Act, it will be necessary to apply DIRT so as to avoid disclosure or inspection."
In addition, the minutes of a meeting on May 25th, 1987, of the Irish Bankers Federation chaired by Mr Crowley, which contained a report of the meeting with the minister, gave no suggestion of "never having inspectors", Mr MacSharry said.
Later, on December 15th, Mr Crowley had reported to the federation about another meeting with the minister for finance when the question of DIRT was mentioned, said Mr MacSharry.
The minutes noted: "This had proved to be unsatisfactory and although the federation representatives had stressed the level playing field aspects, there had been no positive reaction from the minister . . . The outcome of the discussion on DIRT was inconclusive."
Ms Irvine asked Mr MacSharry about another document, the minutes taken by Mr Michael Tutty, now Assistant Secretary-General at the Department of Finance, at a meeting he attended between Mr MacSharry and representatives of the federation, Mr Crowley for AIB and Prof Louden Ryan for the Bank of Ireland.
"The bank representatives also raised the question of the right of inspection of forms by the Revenue Commissioners in respect of non-resident deposits," this document said. "They feared the leakage of deposits because of this right of inspection (under Section 37 of the 1986 Finance Act). The minister indicated he was sympathetic in this area and intended looking at it thoroughly before next year's budget. He was unable to make any changes at present."
Was Mr MacSharry not clearly sending a message to the banks that he was sympathetic to their situation, Ms Irvine asked, and was he not saying he would like to change the law and would think about it for next year's budget?
There was nothing there, she said, that would seriously have worried the banks in terms of the minister saying, "Listen, it's very important that these Section 37 forms are filled in and there will be inspectability."
Mr MacSharry referred the committee to his Seanad speech at the second stage of the Finance Bill on June 24th, 1987, dealing with requirements on financial institutions for the "pay-over" of retention tax. The legislation provided that the institutions would have to make up any shortfall in their 1987 payments by an extra payment in October - and it also protected the yield from future years.
"Any activities by financial institutions aimed at avoiding the tax will be dealt with by legislation," Mr MacSharry had warned in his Seanad speech.
In response to Ms Irvine, he said the speech showed clearly that it was their responsibility to look after DIRT. Ms Irvine referred the former minister to his budget speech of March 31st, 1987, in which he said: "It is neither appropriate nor possible in practice for Revenue to institute indiscriminate widespread inquiries into the validity of Section 37 declarations." That, she suggested, amounted to a constraint on the Revenue Commissioners.
That was a total misinterpretation of the position, Mr MacSharry retorted. The reference was to the attraction of "genuine non-resident accounts" - and giving assurances that interest on such bona fide accounts would not attract any tax.