McCreevy defends Central Bank in tax controversy

 

Opinion offered by Allied Irish Banks and the Revenue Commissioners over the DIRT tax controversy appear irreconcilable, the Minister for Finance Mr McCreevy has said. He also strongly defended the role of the Central Bank and its role in policing financial institutions.

He was speaking yesterday, following last week's Dail committee hearings on a disputed £100 million possible tax liability which may be outstanding on bogus nonresident accounts in Allied Irish Banks (AIB).

Mr McCreevy said it was hard to accept that "an awful lot of people did not know about it, if there were thousands of bogus non-resident accounts in existence" in AIB and other banks in the late 1980s and early 1990s.

Mr McCreevy said a very difficult economic climate had prevailed during the period of the bogus non-resident accounts currently under investigation. "The Irish economy was in a very fragile state," he said. There would have been concern all around that there would be a flight of capital out of the country.

Mr McCreevy, who was speaking on RTE Radio One's This Week programme, said bogus non-resident accounts are a recurring feature right throughout the world, not just Ireland. He said the taxation laws in Ireland were more stringent than in other countries. "The laws must be applied even-handedly."

However, he stressed that tax evasion is, and was, an offence. "The sooner we get to the bottom of this, the better."

He defended the Central Bank, saying its role was the "prudential supervision of financial institutions". However, he said, recently there had been ill-informed comment and criticism of the Central Bank on issues over which it had no control. He said its performance had been "par excellence" for what it was supposed to do.

Mr McCreevy said he and the Minister for Enterprise, Trade and Employment, Ms Harney, would be bringing proposals to Government shortly on a regulator for the financial institutions.