A former governor of the Central Bank responded sharply yesterday to the assertion by Mr Ken O'Reilly-Hyland to the Moriarty tribunal that the Central Bank should have informed him, as a director, of its misgivings about Guinness & Mahon when it knew of his Cayman Island trust account.
Mr Charles Murray, who was Central Bank governor between 1976 and 1981, described Mr O'Reilly-Hyland's comment as "outrageous" and indicated that the former director, who was also a Lloyds "name" at the time, was capable of getting the best taxation advice available if he needed it. "I think Mr O'Reilly-Hyland was better served in that issue that any other member of the [Central Bank] board," Mr Murray said.
He could not recall ever having been told that Mr O'Reilly-Hyland had an offshore account with Guinness Mahon Cayman Trust, which could have indicated a clear conflict of interest, given the concern of at least one Central Bank inspector at the time that Guinness & Mahon might been involved in tax evasion.
He would have preferred to have been told, said the former governor, since he could then have informed the minister for finance of the position when it came to the reappointment of Mr O'Reilly-Hyland to the board.
A solicitor for the Central Bank, Mr Darragh Hogan, said its former general manager, Mr Timothy O'Grady White, in his evidence to the tribunal, had no recollection of raising the matter with the governor, but said possibly he should have done.
"I accept that it was quite possible he did mention it to me," said Mr Murray. "It's equally possible that I did not remember it."
Earlier Mr Jerry Healy, for the tribunal, pressed the former governor on the gravity of the potential conflict of interest raised by Mr O'Reilly-Hyland's involvement in activities about which the Central Bank, of which he was a director, had grave misgivings.
The Central Bank had accepted the assurances of Guinness & Mahon's chief executive, Mr Des Traynor, that the offshore cash deposits as security for Irish loan arrangements would eventually be phased out, in a situation where one of its directors was availing of such a loan and was monitoring the situation.
Could there not be a "third-party" perception that the Central Bank had accepted Mr Traynor's assurances because one of the individuals involved was a director of the Central Bank? Mr Healy asked.
"It would want to be a very critical hypothetical third party to take that line," the former governor responded.
"It was not just a case of you `preferring' to be told," Mr Healy suggested. "Do you now agree that it should have been brought to your attention?"
Mr Murray agreed it should.
Mr Healy referred the former governor to the reports compiled by the Central Bank inspectors in 1976 and 1978 during his tenure in office, and specifically the concerns of one inspector, Mr Adrian Byrne, that Guinness & Mahon was involved in tax evasion.
At the very least, he said, no member of the inspection team (all chartered accountants) "had accepted that nothing was going on". There had been a difference of opinion between Mr Byrne and his immediate superior over whether the issue was tax evasion or tax avoidance. In the event, the word "evasion" was excised from Mr Byrne's report and replaced by "avoidance".
This importance nuance in the examiners' reports had not been brought to his attention either, Mr Murray said. "If it had been identified as `evasion', it should have come to the governor's attention." In this way it would have come to the notice of the governor and appropriate action would have been taken.