The Cayman Islands were favoured over the Channel Islands for investing in a discretionary trust because secrecy could be safeguarded from the authorities, the tribunal was told.
Mr John Coughlan SC, for the tribunal, was referring to a memo by businessman Mr Raymond McLoughlin, chief executive of James Crean plc, an industrial holding group, which had business dealings with Guinness & Mahon since 1972.
Mr McLoughlin said that in 1983, Mr Des Traynor of Guinness & Mahon suggested he meet Mr John Furze, a director of Guinness Mahon Cayman Trust. At a meeting in Dublin, Mr Furze gave him information on discretionary trust services available through Ansbacher Cayman. He wrote the memo after this.
Counsel said the memo was later submitted to the tribunal team from the personal papers of Mr Kyran McLaughlin. Mr McLaughlin stepped down from Davy stockbrokers last year.
Mr Raymond McLoughlin told the tribunal he could not recall giving Mr Kyran McLaughlin the memo but accepted it was likely that Mr McLaughlin obtained it from him. He had a vague recollection that Mr McLaughlin called him to say he had been asked to meet the man from Guinness Mahon in the Caymans. It would have been natural in those circumstances to have sent him a copy of his notes on it but he had no recollection of doing so.
It was his intention to send the memo to Mr Furze to check that his understanding of the situation was correct. However, to his best recollection, he did not believe he ever sent the memo to Mr Furze and he took no further steps. He decided that the idea of a discretionary trust was not appropriate for him and he informed Mr Traynor.
One of the reasons he did not proceed with the scheme, he said, was because "I had no money. I had just heavily borrowed so the whole idea didn't stack up from that personal point of view".
Mr Coughlan referred to a part of the memo headed "Note re: Cayman Island situation". Referring to notes about Cayman Islands as compared to the Channel Islands, Mr Coughlan said: "What it's really conveying here is: Cayman is good for secrecy, the Channel Islands is becoming a little bit vulnerable and the UK authorities can get information out of the Channel Islands. Isn't that the information being conveyed? It's saying Cayman is good for secrecy on tax matters?"
Mr McLoughlin said the only basis he had for offering a view as to what was said at the time was simply what was in the memo.
Mr Coughlan said what the tribunal wished to know was whether the words intended to convey that the Cayman Islands were to be favoured over the Channel Islands because secrecy was safeguarded in Cayman and that secrecy could not be guaranteed in the Channel Islands.
"It is in my view an accurate deduction or conclusion from what I see here," said Mr McLoughlin.
Mr Coughlan added: "It's secrecy - not the protection of personal information from snooping busybodies or journalists or people like that, but secrecy from the authorities."
Counsel referred to a mention in the memo of clients using "noms de plume" and suggested it was directed towards a very high level of secrecy in the use of fictitious names.
Mr McLoughlin said: "Confidentiality is a very significant feature of this kind of arrangement for whatever reasons."
Mr McLoughlin also confirmed "one of the elements of the overall picture" was that documents relating to the scheme would be kept outside the jurisdiction in order to safeguard secrecy.