The PAC report could hardly have been more scathing in its criticism of AIB. The sub-committee has dismissed its claims of a tax "amnesty" on pre-1991 tax liabilities, questioned the reliability of one of its key internal documents submitted as evidence, and put it up to the Revenue Commissioners to finally collect what is due to the Exchequer from the Republic's biggest bank.
The Revenue has been given the green light to trawl through AIB's affairs, going back to the introduction of DIRT in 1986 and to make an assessment of the scale of the bank's tax liabilities. Based on the evidence given to the DIRT inquiry, AIB's liability could lie somewhere between £35 million - seen as a "maximum " figure by the bank management - and £100 million - the amount estimated by its former internal auditor. However the actual Revenue bill could yet be even higher to reflect penalties and interest owed.
But it would be simplistic to suggest AIB will just roll over and pay up. Despite the clarity of the report's findings, AIB is unlikely to take the damning report lying down and will take its time considering its next move.
Last night, it reserved its judgment on the report, stating it needed more time to consider what was said. But judging by the spirited defence the bank put up throughout the DIRT inquiry the real battle between the Revenue Commissioners and AIB could be just beginning.
Based on its evaluation of evidence to the inquiry from the Revenue Commissioners and AIB executives, the sub-committee is satisfied there was never a deal involving the write-off of millions of pounds of DIRT offered to the bank in 1991. It does, however, accept that the Revenue Commissioners' failure to follow through in collecting the disputed arrears after a series of meetings in 1991 could have allowed the bank to think it had secured an amnesty. Most damaging for the bank is the sub-committee's total rejection of its documentary evidence to support its claims. Based on the documents kept by AIB's tax officials and the Revenue tax inspectors, it decided nothing that transpired could be construed as a deal to write off DIRT arrears. In fact it concludes the opposite, suggesting a letter composed by tax inspector Mr Tony Mac Carthaigh makes it clear that any bogus non-resident accounts discovered prior to June 30th, 1991, would be subject to DIRT. Importantly, the committee attached "no reliance whatsoever" to a note which reports details of a subsequent telephone conversation between an AIB tax official and Mr Mac Carthaigh, which claims to clarify the bank's position on the amnesty.
The report also questions the reliability of the assurances offered to AIB's board of directors and its external auditors, PricewaterhouseCoopers, by its head of taxation, Dr Donal de Buitleir, on what had been agreed with the Revenue. In a memo, Dr de Buitleir indicated the bank did not have any outstanding DIRT arrears with the Revenue and his opinion was accepted by the board and the auditors as sufficient proof that there was no need to make a provision in its 1991 accounts for tax arrears. The sub-committee has concluded that such assurances could not be sustained. And the committee also questioned the role played by AIB's then chief executive, Mr Gerard Scanlan. The report states it is "extraordinary" that Mr Scanlan seems to have had no significant involvement in dealing with the bank's DIRT issue.
It also definitively states that AIB never made a full disclosure to the Revenue in relation to the scale of tax evasion being facilitated through bogus non-resident accounts. It didn't come clean in 1991 during those negotiations or at any subsequent time, according to the report, suggesting there was never a basis on which the Revenue could make such a deal.
Over the next few days AIB will mount its defence and is likely to take serious issue with many of the report's findings.
At the same time it will have to endure a fresh audit by the Revenue who will be examining its non-resident accounts going back to 1986 when DIRT was introduced. Such a scrutiny may prove frustrating for the Revenue with a fair chance that it will be difficult to trace records of these accounts given the length of time which has elapsed.
It should also be remembered that while the evasion of DIRT was facilitated by AIB through bogus non-resident accounts, the tax liabilities on the accounts ultimately lie with the bank's customers.