AIB'S former group taxation manager conceded at the DIRT inquiry that there was a "weakness" in the bank's case that it had an agreement with the Revenue Commissioners. Mr Jimmy O'Mahony said, however, that it was a legal issue that should be dealt with by the lawyers.
He acknowledged that the "amnesty" aspect of the agreement following a meeting with Revenue in 1991 was not in writing but he was satisfied that there was a "forward-looking" agreement about DIRT liability.
Mr O'Mahony was responding to the chairman, Mr Jim Mitchell, who said there was "an inherent contradiction" in Mr O'Mahony's position.
Mr O'Mahony, who was a Revenue official until 1966, accepted that no amnesty could have been put in place without legislation. But he believed that within the Revenue's "powers of care and management" they could "settle matters".
He said the senior tax inspector, Mr Tony MacCarthaigh, told him, "not once but on several occasions", that he was acting with the approval of the board of the Revenue. "Why were we to doubt him?"
Asked by Mr Mitchell why he "balked" at getting a written confirmation about what he believed they had been offered, he said: "I knew if they wanted to get a formal amnesty that they would have to get legislation for it."
Under their powers of care and management they could do it, but to put it in writing "would have been a major problem".
Mr Mitchell put it to him that no such amnesty could have been given without legislation and the absence of any such law "means that no such understanding could have been valid. Isn't that really the weakness of your case?"
Mr O'Mahony: "It is, but again I think that's a legal matter that should be thrashed out between the legal people."
Earlier Mr Vincent Reilly, the sole surviving banker who attended the meeting in 1987 with the then minister for finance, Mr Ray MacSharry, said it was not a meeting of any particular importance as far as he was concerned.
At that meeting, it was alleged, Mr MacSharry indicated that non-resident depositors need not expect to have their declaration forms inspected, a charge he vehemently rebutted last week.
Mr Reilly, a former council member of the Irish Bankers' Federation, said his recollection was that Mr MacSharry "very much toed the party line, the Department of Finance/Revenue line on it. While he was very polite and very sympathetic, he didn't really offer any assistance or consolation."
