The prevalence of bogus non-resident accounts in AIB, many used for the purpose of evading the payment of Deposit Interest Retention Tax (DIRT) and other taxes in the mid-1980s and early 1990s, was first revealed last year. The resulting Comptroller & Auditor (C&AG) investigation has covered all the main financial institutions and regulatory bodies in the State and will be published today. It all started with reports that former AIB internal auditor, Mr Tony Spollen, had estimated that 53,000 bogus non-resident accounts existed in the late 1980s at the bank on which DIRT of £100 million was owed. AIB has hostly disputed this figure.
However, it did emerge that in a confidential arrangement, the State's largest bank paid about £9 million extra in DIRT payments to the Revenue Commissioner for the 1990/91 tax year after the practice was first uncovered internally, and £5 million the subsequent year.
AIB contended to the Public Accounts Committee last year that these payments were made as part of a deal with the Revenue which absolved it from paying DIRT due before 1991.
The Revenue took strong issue with this and dismissed outright the idea that there was a general deal done with many of the financial institutions at the time on unpaid DIRT. Instead, the Revenue said it had found isolated incidents on mis-use of the accounts at AIB and was dealing with this and had no idea of the scale of the problem.
The C&AG, Mr John Purcell, was charged with trying to shed some light on the conflict of evidence and at looking at the wider issue of the Revenue treatment of such accounts and their prevalence across the financial system.
AIB is expected to have repeated to the C&AG what it told the PAC late last year, while the Revenue will also have held to its line that it had no idea of the extent of the problem. The C&AG's report will outline this evidence from both sides and will report on details of interviews with both sides and examination of documents.
However, given that much of the debate depended on conversations between AIB officials and those in the Revenue - and that the C&AG can only report on evidence and not make findings - it is likely that it will be up to the six members of the PAC's subcommittee to probe and assess the findings.
The committee chairman Mr Jim Mitchell argues that the whole process is a crucial test of the committee system. It will be assisted by accountants from Chapman Flood and by three senior counsel and the six members of the sub-committee have undertaken extensive training. They are, as well as Mr Mitchell, TDs Mr Bernard Durkan, Mr Pat Rabbitte, Mr Sean Ardagh, Mr Sean Doherty and Mr Denis Foley.
An initial public meeting of the sub-committee will be held on Thursday week.
