Bank cleared by Revenue had bogus accounts

Department of Finance:Anglo-Irish Bank, which was cleared by the Revenue's DIRT Look-back programme, has been found to have had at least 102 bogus non-resident accounts.

The bogus accounts emerged when 62 of the bank's customers came forward to avail of the Revenue "amnesty".

The chief executive of Anglo-Irish Bank, Mr Sean FitzPatrick, said there had been no attempt to mislead the Revenue.

He told The Irish Times that his bank would still not have to pay DIRT in the way other banks had as it had had supporting documentation indicating its non-resident accounts were genuine.

He said it was only in cases where banks were found not to have adequate documentation supporting the non-residency of the account-holders that the bank became liable for DIRT. The DIRT bills for the bogus accounts would fall to the customers concerned.

Mr FitzPatrick said that when the documentation currently being given to the Revenue by the bank on foot of an "agreed" High Court order was examined, it would be found that what he was saying was correct.

Details of how the bogus accounts came to be discovered are contained in the C&AG's report, though the bank is not identified.

The bogus accounts were discovered after 62 of the bank's customers availed of the Revenue's deal whereby holders of bogus accounts who came forward were offered a number of benefits including non-prosecution and non-disclosure.

The C&AG, in his report, said the case raised concerns about the Revenue's Look-back audit on the institution in question, and about the audits generally.

In the wake of the DIRT inquiry by the Dáil Committee on Public Accounts (PAC), the Revenue conducted Look-back audits on all financial institutions that held non-resident accounts.

The C&AG said that in 2001 he was told by the Revenue that a sampling of the accounts in the unnamed institution (Anglo-Irish) had concluded that they were genuine. The PAC's DIRT inquiry was told the institution had no DIRT liability.

It was subsequently noted in June 2003 that, as part of the Revenue voluntary disclosure deal, "62 persons admitted to a total of 230 bogus non-resident accounts of which 102 were stated to be held in the financial institution in question. The payments which accompanied the 62 declarations totalled €8.7 million."

The 62 individuals included five whose accounts had been included in the sample examined as part of the Look-back audit, according to the C&AG's report.

Furthermore, a list of all non-resident accounts held by the bank as of October 1998 supplied to the Revenue at the time of the Look-back audit did not include 49 of the 62 individuals who subsequently came forward.

"As this information raised renewed concerns about the quality of the Revenue Look-back audit in the financial institution in question, and the possible implications for the Look-back audits generally, I sought the views" of the Revenue, the C&AG, Mr John Purcell, said.

Mr FitzPatrick said the reason the 49 names were not on the list of 2,700 accounts given to the Revenue was that the accounts concerned were not live on October 1998. The inquiry now being conducted by the Revenue would confirm this.

"Of course, we could do without this, but we feel very comfortable about where we are," Mr FitzPatrick said.

Mr Purcell's report said that until all the information being supplied on foot of the High Court order was received and reviewed, it would not be possible to form a clear view of the reliability of the Look-back audit on Anglo-Irish Bank.