A director of National Irish Bank was warned by the chairman of the DIRT inquiry yesterday that his testimony would be reviewed, after the official admitted he had unintentionally failed to give a full and complete answer on a letter sent to the Revenue Commissioners last year.
Mr Jim Mitchell said the committee could not have a situation "where we are getting inaccurate or incomplete replies".
Mr Philip Halpin, NIB's chief operating officer, had been asked why he had not included particulars on DIRT irregularities in his reply to Mr Padraig O Donghaile, a chief inspector of the Revenue, after being requested to do so.
Mr Halpin said he was satisfied that, on February 12th, 1998, when he signed the reply, he was satisfied that it was "a full and complete response".
But he admitted that major findings on DIRT compliance, carried out during a 1994 theme audit, had not been given to Mr O Donghaile.
"If we did not supply that information to the Revenue at the time, it was not done with intent. We replied to the questions as best we could under extreme pressure, and all those matters were then taken forward," he said.
Asked by Mr Mitchell if he accepted his response had not been a full and complete answer, he said: "I accept, but it was not intentional."
In the reply to Mr O Donghaile, the tax inspector was told the 1994 theme audit had come up with general findings "and identified the need to give more clarity to DIRT compliance issues".
He was assured that NIB's staff had full instructions on opening non-resident accounts and the "expectation is all branches abide by those instructions".
In hindsight, Mr Halpin said, he believed the 1994 theme audit results should have been included in the response.
A copy of Mr Halpin's letter was provided to the DIRT inquiry from NIB's tax advisers, KPMG, but it omitted a reference to £34 million invested in an offshore Clerical Medical Insurance (CMI) product.
Mr Sean Ardagh described the omission as "absolutely, totally and utterly unacceptable". He said the complete letter showed about £3 million was unaccounted for in the £34 million invested through NIB in the CMI product.
He said the omission appeared to be a withholding of information "that is pertinent to the workings of this parliamentary sub-committee". This was denied by Mr Gerry McEvoy, a retired KMPG partner.
The complete letter, dated February 12th, 1998, which was a reply from NIB to the Revenue Commissioners, was provided directly by the bank to the committee.
The letter says over £34 million was invested through NIB Financial Services in the CMI personal portfolio. About £10.2 million came from NIB non-resident accounts, for which there were completed non-resident forms, and about £6.6 million came from NIB accounts on which customers were paying DIRT.
A further £7.3 million came from other financial institutions offshore and about £2.7 million came from other financial institutions within the State, giving a total of £26.8 million.
Mr Ardagh said the original letter showed there was £3 million missing "in that whole equation yet there is no way the KPMG version would show that".
Mr McEvoy said the decision "to blank out those references" was based on the view that they related to the CMI product and not to the specific area of DIRT. The complete letter had been seen by the Revenue Commissioners and the authorised officers investigating the CMI affair. It was also available to the Comptroller and Auditor General and the committee.
"If we were incorrect in that interpretation, we apologise for it but, in my view, we were not incorrect in the interpretation of the notice which was served on us," Mr McEvoy said.
Mr Ardagh said the CMI product related to the DIRT inquiry because insofar as it involved offshore funds, non-resident accounts were involved.
Earlier, the chief executive of NIB, Mr Don Price, provided an explanation for a recommendation within the group to move major non-resident accounts offshore to reduce documentation risks, as other banks within the National Australia Bank-owned group were doing.
He said the auditor who had made the recommendation was aware of the practice in Britain whereby non-resident accounts had been moved offshore, in particular to the Channel Islands, because of "onerous" compliance legislation introduced in 1992. The recommendation was not taken up by NIB.