The former chief executive of ACC, Mr John McCloskey, told the DIRT inquiry he was shocked to learn last year that the Revenue Commissioners would be seeking retrospective DIRT payments for the years 1986-92.
He said that even though ACC was holding to its understanding that at a meeting with the Revenue Commissioners in 1993 the bank was told retrospective DIRT payments would not be sought, that understanding "did not converge" with the Revenue view expressed at a meeting last year.
"I was shocked in point of fact . . . Our understanding was quite clear and it is still clear to this day," Mr McCloskey said.
Although he was not present at the 1993 meeting, ACC's deputy chief executive, its general manager of finance and its tax advisers were. They were told that "if we put our house in order", no backdating of DIRT would take place from the tax year in which the reclassification occurred.
He believed a Mr Aidan Nolan and a Mr Denis O'Connell were present from Revenue.
ACC's view of such a deal being offered by the Revenue Commissioners is similar to that of the AIB, which contends that an amnesty on retrospective payments was offered in 1991, a claim denied by the Revenue.
Mr McCloskey added that between 1993 and 1998, ACC had acted on its understanding in paying DIRT on resident accounts.
"There was no further discussions or demand by the Revenue between 1993 and 1998," he said.
The ACC has since paid £1.4 million in retrospective DIRT on 852 accounts, with a total value of £7.7 million reclassified in 1993.
The ACC is currently in discussions with Revenue which is doing an audit on all the financial institutions.
Mr McCloskey said the £1.4 million was divided equally between interest and DIRT. "There were no penalties involved," he said.
Asked about the lack of response by 50 per cent of branch managers in 1992 to a request by the general manager, retail banking, to confirm the status of non-resident accounts, he said they had not replied by the due date.
"But over a period thereafter, that would have been pursued and they would have replied." It would be "virtually Utopian" not to have problems with compliance in banks. ACC had deficiencies but efforts were being made to improve the position.
Mr Sean Doherty said that a DIRT liability figure of £17 million, arrived at by ACC's external auditors in a draft long form report in 1992, could represent hidden taxes of £170 million. This was based on the multiplier effect found in the Miltown Malbay experience, where £200,000 was paid over in DIRT and £2 million in other taxes, following an audit by the Revenue Commissioners on the Co Clare town.
"That is £170 million of hot money potentially that is somewhere stuck in the accounts of ACC," he said.
Mr McCloskey replied that in respect of companies holding accounts with ACC without correct declarations, he had "not an ounce of evidence" that there would be hot money there.