The Irish Bankers' Federation was unaware until last month that proposals it first made in the 1980s on non-resident accounts were successful, the DIRT inquiry was told.
Mr Jim Bardon, the federation's director general, told the Public Accounts Committee inquiry that his organisation had put forward proposals that declaration forms on non-resident accounts would not be inspected by the Revenue Commissioners.
The proposals were put in May 1987 to the minister for finance, Mr Ray MacSharry, who, Mr Bardon said, was "sympathetic". He gave an undertaking to look at the situation in the context of his next Budget.
However, the minister told the federation at a later meeting that year that a solution would have to be found which did not interfere with Ireland's international obligations.
Mr Bardon told Mr Pat Rabbitte, TD for Dublin South West, that that "put paid to our proposals that we could have legislation introduced that would prevent the Revenue disclosing this information abroad".
The Comptroller and Auditor General's report on DIRT stated that no inspections took place. Mr Bardon said that nonetheless the federation was unaware that its representations were successful until it saw the report last month.
"But you had been making aggressive recommendations and didn't know you were successful," said Mr Rabbitte. "Precisely. Had we known we were successful, there would have been no need to make the recommendations," Mr Bardon replied.
"My God," said Mr Rabbitte. "That must make life awful gloomy. Imagine having a tremendous success like this, and you weren't able to tell your members how successful you'd been." Mr Bardon said their minutes "show that we continued to make the recommendations". Mr Rabbitte asked if "at any subsequent meetings of the federation none of the banks ever said `at least we've got this inspectability monkey off our backs.' "
Mr Bardon said the political reality was that they were not going to get the "inspectability" clause.
He said he had no real problems with the Department of Finance's minutes of that meeting. He could not speak for AIB's interpretation of the meeting. The bank believed the Minister had given an assurance that there would be no inspectability at any stage.
Mr Rabbitte asked Mr Bardon what he knew about why the inspections didn't take place.
"We only knew about the non-enforcement of inspectability when it came out in the CAG's report," he replied. At the 1987 meeting Mr MacSharry - who was not named at the hearing - wanted to know if any Revenue inspectors had asked to see any declaration forms.
Mr Bardon said the banking representatives were not aware of any, but there was a perceived danger of "outflows" or a flight of capital if such inspections took place.
He said their information was that the level of non-resident deposits was substantially lower than it might have been if no action was taken. Their figure was £481 million in outflow by 1985, but he accepted the CAG's figure of £200 million.
Mr Rabbitte said the inquiry heard earlier that it was "small beer" at a time of a great currency crisis and when the DIRT controversy was inevitable.
"If I were the dentist from Dortmund who in some way had wound my way to Swinford I would have known the market situation and would certainly have taken my money out," he said. "Isn't it amazing that more didn't if they were really non-resident?" Mr Bardon said they were now dealing with the benefit of hindsight.
