New laws requested to enable tax evasion inquiry

The Government has been asked to introduce major legislative changes to enable a full investigation into the use of non-resident bank accounts for the purposes of tax evasion. The request came from the chairman of the Dail's Public Accounts Committee, Mr Jim Mitchell, in an interim report laid before the Dail last night.

He announced the decision of the committee, on legal advice, to suspend its hearings into the non-payment of DIRT on bogus non-resident accounts in Allied Irish Banks to avoid "foreseeable problems and delays".

The committee is proposing that the Comptroller and Auditor General (C&AG), Mr John Purcell, should be given additional powers to conduct a fact-finding inquiry into the administration of DIRT by the Revenue Commissioners and the relevant financial institutions.

The committee is also seeking changes in the Compellability of Witnesses Act, 1997 and the appointment of financial and legal assessors.

As the committee was meeting in private session throughout yesterday, the Government announced it had decided to establish "a new single regulatory authority for financial services".

The membership of an implementation group and the terms of reference of the independent regulator will be announced later today. Government sources are adamant that the new regulator will be independent of the Government, Government departments and the financial services sector.

The implementation group, which will draw up proposals on the role and functions of the regulatory authority, will report to the Tanaiste and the Minister for Finance by the end of February.

The Government also agreed a revised motion with the Labour Party yesterday afternoon. This instructs the committee to examine and report to the Dail on the circumstances surrounding the purported settlement by AIB of its outstanding liabilities for DIRT, and the use of non-resident accounts in the banking system generally for the purposes of tax evasion. The motion, which was debated last night, is expected to receive cross-party support in the Dail tonight.

Mr Mitchell said last night he expected the new legislation to be introduced awarding extra powers to the C&AG to conduct the investigation "within a fortnight", and amending legislation passed shortly thereafter.

He also confirmed to The Irish Times that the committee had been advised by Mr Frank Clarke SC of a possible conflict of interest involving one or more committee members which may need to be addressed. This could be a matter for the Dail's Committee on Procedure and Privileges to consider in the light of the Ethics in Public Office Act.

The shortcomings in the committee's powers to proceed with its investigation came to light after it had requested six other witnesses to come before it, including the four senior tax inspectors who apparently met AIB officials on February 13th, 1991.

The Revenue Commissioners and AIB were given transcripts of each other's evidence and asked to comment, page by page, on points of disagreement. The committee also decided to request the full files of the Revenue Commissioners and AIB on the matter.

Pending clarification from the Dail on a number of issues the committee decided to suspend public hearings and not to proceed with its decision to send for documents in the light of legal advice.

Among the legislative changes now being sought by the PAC committee are an exemption for the C&AG from the rule of confidentiality in this investigation.

The committee also wants to provide absolute privilege to persons giving evidence or providing documents to the C&AG. The changes would give the C&AG quasi-judicial powers, such as those of an inspector of the High Court, to conduct the investigation.