Guinness & Mahon auditor, Stokes Kennedy Crowley, now KPMG, is mentioned eight times in the inspectors' report on the Ansbacher deposits, writes Colm Keena

Clients of Stokes Kennedy Crowley, now KPMG, placed funds in the Ansbacher deposits in the 1970s following meetings between the accountancy firm and a Cayman banker, according to the Ansbacher inspectors' report.

Kennedy Crowley, later Stokes Kennedy Crowley and now KPMG, is mentioned on eight different pages in the Ansbacher report, excluding the voluminous appendices. It audited the books of Guinness & Mahon for much of the period during which the Ansbacher deposits were based in the Dublin bank. KPMG had no comment to make on the matter yesterday.

The firm seems to have been particularly close to the Guinness & Mahon offshore scheme. However, the impression given by the inspectors' report is that all the major Irish accountancy firms in the 1970s were investigating ways of facilitating wealthy clients who were considering sending funds abroad. Irish solicitors' firms were also canvassed for business for the Cayman bank in the 1970s.

"To understand the background to the discretionary trust schemes operated by Guinness Mahon Cayman Trust (now Ansbacher Cayman Ltd), one must return to the early 1970s," according to the report. "In that era, personal tax rates were high and the political preparations were under way to introduce capital taxes such as capital gains, capital acquisitions and wealth taxes. In these conditions, those with money were concerned about their financial future and were receptive to schemes that appeared to offer a measure of security.

"The class of person with these concerns was also coincidentally the target market of Guinness & Mahon, who wished to provide personal banking services to wealthy clients. The major accountancy firms in Dublin at that time were developing tax strategies to respond to their clients' concerns."

Guinness & Mahon provided vehicles to implement these schemes. "It was a common feature of such schemes that those wishing to avail of them wanted to locate their assets in tax havens abroad."

The late Des Traynor, who set up the Ansbacher deposits structure after he was invited to join Guinness & Mahon in late 1969, was himself an accountant. He resigned as a partner in Haughey Boland when he moved to Guinness & Mahon.

By 1971, the Dublin bank had set up a subsidiary in the Cayman Islands. One of the Cayman bankers involved was Mr John Collins. The report states that Mr Collins visited Dublin in May 1971.

An internal Guinness & Mahon memo said a meeting had been set up between Mr Collins and Kennedy Crowley "who are interested in services which we can offer in Cayman". Another memo referring to the same proposed meeting says it is "with a view to arranging that business shall flow through our trustee company".

"This is the genesis of a mutually profitable liaison between Kennedy Crowley and Guinness & Mahon," according to the report.

"Kennedy Crowley had, at that time, wealthy clients seeking a secure and perhaps confidential investment for their funds, while Guinness & Mahon had an offshore trust company waiting for customers."

Eventually meetings did take place, some involving Mr Collins and others involving another Cayman banker, the late Mr John Furze. Mr Collins's trip to Dublin and his discussions with Kennedy Crowley in May 1971 did result in Irish trust business for the fledgling Cayman company, according to the report. In time, Mr Furze became the key Cayman banker involved in looking after Ansbacher's Irish clients.

A number of particular clients are identified in the inspectors' report as having used Stokes Kennedy Crowley. One is Mr Cornelius Collins, managing director of Heffernan's Travel, Cork, and a property developer both here and abroad. He told the inspectors that, when he was left assets in the United States by an uncle who had died, he took advice from Stokes Kennedy Crowley, who were his financial advisers. This led to the establishment of a Cayman trust.

Mr George Crampton, former chairman and managing director of building firm G&T Crampton, got advice from Mr Don Reid of Stokes Kennedy Crowley when his firm was involved in a joint venture with Guinness & Mahon involving a Dublin site.

Mr Reid, a former chairman of the Irish Times Trust, was asked about the taxation aspects of a proposal made by Mr Traynor to place the proceeds of the joint venture in a Cayman trust, according to the report. "Mr Crampton told the inspectors that, following Mr Reid's advice (given after taking legal opinion), he was satisfied that the scheme did not involve tax evasion," the report says.

Mr Geoffrey Miller, director of GB Millar & Son, told the inspectors that, on the advice of Mr Reid, UK firm British Cedak Ltd, which was a distributor of GB Miller and paid GB Miller on a commission basis only, established a company in the Channel Islands.

The Channel Islands company was appointed by British Cedak as its adviser for the Irish market and half the commission earned by GB Miller was paid to the company. Mr Miller believed the company, the name of which he could not remember, was managed by College Trustees. College Trustees was a Channel Islands subsidiary of Guinness & Mahon. Mr Miller availed of the 1993 tax amnesty, according to the report.

The inspectors looked at the issue of the auditing of the Guinness & Mahon books during the time the Ansbacher deposits were located in the bank. Although Touche Ross, London, were auditors to Guinness & Mahon for the period 1973 to 1981, the work was carried out for them by Stokes Kennedy Crowley. From 1982 to 1986, the auditors were Touche Ross (now Deloitte & Touche). From 1986 onwards, the auditors were Coopers & Lybrand, now (PricewaterhouseCoopers).

The Ansbacher inspectors interviewed representatives of the various firms.

"The inspectors conclude that it is a matter for the appropriate regulatory authorities to consider whether the fact that different audit firms did not identify the evidence of the unlicensed banking business of Guinness Mahon Cayman Trust over many years highlights any deficiency in either the general practice relating to auditing of the banking sector and/or, if appropriate, in the manner in which the audit work was carried out.

"The absence of audit records over much of this period and the frequency of changes in audit personnel make it unsafe for the inspectors to attempt to identify individual shortcomings by those who conducted the audits."

As well as Mr Traynor, another Irish accountant features in the report. Mr Jack Stakelum is a former partner with Haughey Boland who trained with Kennedy Crowley. After he went into business on his own, he placed clients' funds in the Ansbacher deposits by way of Mr Traynor.