Mr Joseph Murphy snr had evaded tax in the UK and in Guernsey, deposited large sums of money in Switzerland, and exported money from Ireland without authorisation, it was alleged in an affidavit opened at the tribunal yesterday.
The allegations were made by Mr Liam Conroy, now deceased, who became chief executive of the Murphy Group, in an affidavit sworn in March 1989 in unfair dismissal proceedings he took against the group in the Isle of Man.
Mr Garrett Cooney SC, for the Murphy Group, said yesterday they were denying the allegations. He said they had documents of equal force which would refute the allegations in the affidavit. They would be strenuously denied at the hearing next week in Guernsey when Mr Joseph Murphy snr gave his evidence.
The affidavit was the subject of High Court proceedings which upheld a decision to admit the document when the Murphy Group objected. Yesterday it was read into the record.
Mr Conroy said Mr Murphy emigrated to the UK in the late 1930s or early 1940s and started his own company. He was advised in 1968 to divest himself of his interest in his company into a discretionary Isle of Man trust known as the Armoy Trust. In 1972 the Ashdale Trust was formed and controlled all Irish his interests.
In 1969 Mr Murphy became a substantial shareholder in a bank, the International Finance and Trust Corporation (IFTC), in the Isle of Man. In September 1981 IFTC was put into liquidation.
Mr Conroy said he had become friendly with Mr Murphy and was his confidant and adviser.
Mr Conroy stated that Mr Murphy demanded total secrecy about his affairs and consequently he (Conroy) could not use secretarial services of any kind or commit anything to writing.
"The reason for this secrecy was Mr Murphy's potential tax problems. Mr Murphy informed me that he had evaded UK tax and exchange control in the early 1970s and had deposited large sums of money in Switzerland in the name of two Liberian registered companies, Bremen Inc and Hammer and Springer Inc," Mr Conroy alleged.
"He had also evaded Guernsey tax by having bank accounts in Eire in his name and UK accommodation addresses such as Goulton Road, Clapton, London, and Dolphin Square, London. He failed to declare his income from these sources," the affidavit stated.
Mr Conroy said Mr Murphy informed him that his residency in Ireland and London was in breach of his residency status, and one consequence of this was that there should be no communication between himself (Conroy) and Mr Murphy other than verbal.
The ultimate source of Mr Murphy's undisclosed income was his trusts and, as the terms of the trusts specifically excluded him from being a beneficiary, he was concerned that, should the Revenue become aware of his actions, they would seek to take action against him and the trusts.
"I am also aware that Mr Murphy has on a regular basis breached Irish exchange control laws by exporting monies from the Republic of Ireland without authorisation," Mr Conroy stated.
Mr Murphy's problems were also associated with the large sums of money which had been placed with the Liberian companies. Eventually 78 per cent of the deposit in IFTC was recovered.
Mr Murphy's Liechtenstein Foundation, also known as the Jola Foundation, was set up by a bank in Zurich, and the substantial income accruing to Mr Murphy from the foundation had not been declared by him to the relevant revenue authorities, Mr Conroy alleged.