Revenue established team to inquire into Haughey affairs

The Revenue Commissioners established a special team to inquire into the affairs of Mr Charles Haughey in the wake of the 1997 McCracken tribunal.

Mr Stephen Treacy, senior inspector of taxes with the Revenue's investigation branch, said the special project group examined the files on Mr Haughey and also wrote to him seeking extra information.

While some information was given, Mr Haughey's tax adviser, Mr Paul Moore, later said legal advice had been received to the effect that Mr Haughey should deal with the Moriarty tribunal first.

A number of meetings between the two sides occurred following the establishment of the group and on May 4th, 1999, a letter was sent outlining the matters still outstanding. However, these matters were not dealt with.

Mr Treacy said he did not recall "probing" the legal advice which Mr Haughey had received. "They'd been given legal advice and we accepted that was the case."

In December 1997 the Revenue applied to the High Court, in camera, to get certain orders from Guinness and Mahon bank and IIB (formerly Irish Intercontinental Bank).

Further hearings occurred in 1998 concerning the two banks and documents were handed over.

Mr Treacy said he was not clear as to why the existence of the tribunal prevented Mr Haughey from replying to the Revenue's queries "but the fact of the matter is that it was conveyed that there wasn't going to be a reply".

He said he was getting the impression that it wasn't likely he would be getting a clear reply from Mr Haughey's agent, as he was in turn relying on Mr Haughey.

Mr Maurice O'Donoghue, an assistant principal officer with the Revenue's capital taxes division, said he would have sent a copy of a purported 1980 land deal between Mr Haughey and the Gallagher Group to the valuation office in 1989 if he had known of its existence.

The document was in the possession of another division of the Revenue. It covered a purported deal which valued land at Kinsealy at £35,000 an acre. In 1989 the valuation office valued 227 acres in Kinsealy at £1.2 million. The valuation was for the purposes of a gift tax evaluation for Mr Haughey's four children. In 2000, nearby land was sold for £600,000 an acre.

Mr Pat Kenny, a tax partner with Deloitte and Touche and formerly with Haughey Boland, which now forms part of Deloitte and Touche, said he would not have considered the Gallagher document relevant to the valuation of the land in 1989. Mr Kenny acted for the Haughey family in 1989.

Mr Kenny said he could not remember considering the matter but his general policy was to disregard abandoned agreements such as the Gallagher document, if they were more than two years old. The Gallagher document was nine years old.

Mr Colm Allen SC, for Deloitte and Touche, said it was his understanding that if a witness for the valuation office was called he or she would say a document such as the Gallagher agreement would never be taken into account by it.

The chairman, Mr Justice Moriarty, said it was likely a witness from the valuation office would give evidence.

Mr Kenny said valuation of development land was a very inexact science. He had seen property change in value by factors of up to 70.

The tribunal adjourned until next week, when more evidence is to be heard concerning the Revenue and Mr Haughey and Mr Michael Lowry.

It is understood Mr Haughey gave evidence in private yesterday morning and Monday morning.