THE way in which Mr Michael Lowry managed his tax and financial affairs became clearer yesterday. It appears he regarded himself as having two jobs with Dunnes Stores. The arrangement, according to Mr Lowry, was that Dunnes would keep his company in small profit but would make Mr Lowry a wealthy man.
His first job was as managing director of Streamline Enterprises, which supplied and maintained refrigeration equipment for the supermarket giant. This company broke even or made very small profits or losses every year. Mr Lowry was paid an annual salary between Pounds 10,000 and Pounds 35,000 a year for this service.
In addition, from February 1989, to December 1996, Pounds 12 million was paid by Dunnes Stores to Mr Lowry's company, as well as an additional Pounds 13 million where the company sourced equipment to Dunnes Stores.
His second job was as an effective consultant to Dunnes Stores, also in refrigeration. This appears to have been confined to Dunnes Stores' operations in Northern Ireland and Great Britain, until the change of management when Mrs Margaret Heffernan took over in 1994. Mr Lowry confirmed yesterday that he received Pounds 718,000 over the period in cash, bonuses and consultancy payments.
The payment method for these varied. Several cheques were raised from Streamline invoices and paid into Mr Lowry's personal account. He repeatedly insisted that he regarded these payments as his own income for services provided. He did not keep full accounts or receipts for these.
These payments from November 14th, 1988, to March 15th, 1993, understood to number nine in total, included four cheques between Pounds 6,000 sterling and Pounds 10,000 sterling, made payable to Streamline Enterprises. A further cheque for Pounds 34,100 sterling in September 1991, was paid into an AIB account in the Channel Islands, with a cheque for Pounds 55,214 sterling paid into Mr Lowry's personal account in Ireland.
Mr Lowry also received a performance-related bonus of Pounds 40,000 sterling, paid into an Isle of Man company, Badgeworth Ltd, along with an additional bonus of Pounds 25,000 sterling in October 1990. He insisted he did not believe the Isle of Man money was his until it was transferred into hidictated by Mr Ben Dunne and that he constantly tried to regularise the situation.
Mr Lowry also tried to point out that the Pounds 718,000 was a very conservative figure. He noted that the company had a turnover of some Pounds 25 million; the smallest profit margin on that ought to be Pounds 4 million, he argued. However, as counsel for the tribunal, Mr Denis McCullough, noted, this did not include his Streamline salary.
It is also possible that, in addition to this money, Dunnes Stores made payments to bring the company into break-even or to a small profit. Payments for renovation to his home and an extension are also understood not to be included in the amount.
Mr Lowry stressed that all details of his financial affairs were now with the Revenue Commissioners. He said the contents of his Channel Islands bank account had been given to the Revenue.
Nevertheless the tax bill which he could face could be very substantial. In addition, there is the question about the tax amnesty. Mr Lowry is understood to have told the former Taoiseach, Mr John Bruton, that he availed of the amnesty.
Tax experts point out that the amnesty was purely for personal income and not for company income, meaning it is vital that Mr Lowry argues that all the extra payments were personal rather than company money arising from his services, despite the fact that many of the cheques were made payable to the company.
Mr Lowry repeatedly insisted:
"I always considered the company and myself as one". and that he always regarded the payments as personal income.
Tax experts said last night that whether the Revenue treats Mr Lowry's payments as personal or company money will be crucial. Among the terms for breach of the amnesty rules are imprisonment or heavy fines.
If the Revenue rules it was his personal income and that no tax had been paid on the Pounds 718,000 Mr Lowry has stated he was paid by Dunnes Stores, more than Pounds 540,000 would be owing to the Revenue on the basis of tax and the lowest possible interest and penalties of 50 per cent of the amount owing.
On the other hand, if the Revenue decided this was, in effect, company money that Mr Lowry borrowed, the tax bill with interest and penalties could come to over Pounds 1 million.