Mulcahy to put AIB DIRT row case

 

The AIB chief executive, Mr Tom Mulcahy, is to give a full account of AIB's side of the non-resident account controversy, when he appears before the the Dail Committee of Public Accounts today. In a lengthy statement - expected to run to around 10 pages - he will outline AIB's understanding of its negotiations with the Revenue Commissioners in 1991 and why it believed that it had satisfied its tax liabilities.

The chairman of the Revenue Commissioners, Mr Dermot Quigley and the governor of the Central Bank, Mr Maurice O'Connell are also to appear. The hearing begins at 11 a.m. Mr Quigley has already answered questions about the AIB controversy when he appeared before the committee on Tuesday. A request for a further attendance was received by him early yesterday.

Mr Quigley told Tuesday's hearing that no deal concerning DIRT was agreed between the Revenue and AIB in 1991. He said the bank seemed to believe there was an understanding that there would be no retrospection on DIRT, but the Revenue was not accepting this. The bank has yet to comment on this, but the issue will be dealt with by Mr Mulcahy today. He will outline the circumstances leading up to the departure of the former group internal auditor Mr Anthony Spollen and is expected to indicate that the bank does not accept Mr Spollen's view that there was a tax liability of £100 million relating to the accounts.

It is likely the committee will be contacting all the individuals named during the hearing on Tuesday, possibly in order to ask them to attend before the committee, its chairman, Mr Jim Mitchell TD, said yesterday.

Those named during Tuesday's hearing were: Mr Peter Sutherland, former chairman of AIB; Mr Jim Culliton, former chairman of the board's credit committee; Mr Spollen, former AIB group internal auditor; Mr Jim O`Mahony, AIB group taxation manager; and Mr D.A. MacCarthaigh, senior inspector with the Revenue Commissioners.

Under provisions of the Committees of the Houses of the Oireachtas (Compellibility, Privileges and Immunity of Witnesses) Act 1997, which came into effect on August 2nd, persons mentioned in proceedings may have an entitlement to give evidence if they so wish.

"We may have to draw the attention of people mentioned to the hearing and offer them the choice of appearing," Mr Mitchell said. He added that some or all might be also be asked to attend as witnesses.

The AIB chief executive will be asked by the committee to explain how the bank came to make a £14 million payment for DIRT due on bogus non-resident accounts at a time when the then internal auditor, Mr Spollen, seemed to believe that the bank had a contingent liability of about £100 million.

He will also be detailing how AIB dealt with its depositors on the issue. As the DIRT payment on bogus non-resident accounts was made on behalf of depositors holding these accounts, the tax paid would have been deducted from the accounts found to be bogus

He will also be asked how the bank allegedly came to have 53,000 bogus non-resident accounts on its books, holding some £600 million. He is expected to outline the bank's efforts to deal with these accounts in 1990-1991.

Mr Mulcahy will also be questioned about Revenue fears at the time that the bank would move money to its offshore branches, contrary to the exchange control regulations which then existed.

The governor of the Central Bank will be asked about his body's regulation of the banking sector, the existence of bogus non-resident accounts and DIRT payments by banks to the Revenue.