£1.7m for Revenue from four bogus AIB accounts

Since October 1991 four incidents of bogus accounts were identified at AIB resulting in the payment of £1

Since October 1991 four incidents of bogus accounts were identified at AIB resulting in the payment of £1.7 million in DIRT and interest to the Revenue. These cases arose at branches in Waterford, Castlebar, Co Mayo, Stillorgan, Co Dublin, and Portlaoise.

In January 1995 a routine internal audit at AIB, The Quay, Waterford, found that DIRT amounting to £642,484 plus interest of £390,075 was due on two accounts and was included in the next DIRT payment to the Revenue Commissioners.

The customers operating these accounts were interviewed and their DIRT liability and interest payments were collected by the branch. The involvement of staff at that branch was examined and some were disciplined.

The most senior member at that branch also subsequently resigned, according to the report.

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In October of that year the Chief Inspector of Taxes wrote to the chairman of AIB about a deposit account at its branch in Castlebar, which had shown up during a tax audit.

The bank's internal auditors investigated the matter but were unable to find any evidence that account ever existed at AIB Castlebar.

This investigation showed that a bank official who had been in charge of a sub-office of the bank, and who had recently left to join another financial institution, had opened a number of these accounts which were not on the bank's system.

A full review of all non-resident accounts held at that sub-office was undertaken, necessitating additional payments of £579,000, including £22,000 in interest for late payment, to the Revenue.

In July 1998 the bank was again alerted to a bogus account by the Revenue. In this case, the Revenue maintained that funds from that account were subsequently transferred to the Isle of Man.

It asked AIB to explain the circumstances in which the account was opened and the subsequent transfer of the money offshore. It also asked the bank to submit a report on DIRT compliance within that branch.

Again the bank's internal auditors investigated the account. An official from the branch was requested to provide a formal statement on the matter and disciplinary action was taken.

It was found that tax amounting to £35,432 had not been paid by that branch. AIB subsequently made two payments to the Revenue, £26,524 in October 1998 and £8,907 in April 1999.

Further DIRT liability was discovered at AIB in Portlaoise by the bank. It arose in relation to a non-resident joint account for a couple, where the wife had a business in Northern Ireland.

The customers were paid gross interest on their account over the years on foot of a declaration of non-residence using the Northern Ireland address. In 1995 the couple moved the money from a demand account to a term account at the AIB's Retail Deposit Centre.

A new declaration was completed but was queried by the bank because, while the clients had a business in Northern Ireland, they were in fact resident in the Republic.

The branch calculated DIRT retrospectively to April 6th, 1986, plus interest on the late payment of the tax totalling £15,488. This was paid to the Revenue.

Three divisions of AIB group were involved in the collection of DIRT: AIB plc, AIB Finance (AIF) and AIB Capital Markets (AIBCM).