US: President Bush's former Irish ambassador Richard Egan invested $62 million (€52 million) in an illegal tax scheme that has become the biggest accounting scandal in the US since the collapse of energy giant Enron, new court documents have revealed.
However, Mr Egan, who invested the money with the KPMG accounting firm when he became Irish ambassador, claims in court documents that he did not know that the scheme was illegal and is now taking a multimillion dollar lawsuit against KPMG for failing to explain that the money would be invested illegally.
KPMG, the fourth-largest US accounting firm, agreed in August 2005 to pay $456 million to the US government to avoid criminal prosecution and admitted that it set up illegal tax shelters which allowed wealthy investors avoid $11.2 billion in taxes.
Seventeen KPMG executives and two other people are under indictment for involvement in the scheme.
Last September The Irish Times reported that the US Internal Revenue Service denounced Mr Egan's attempt to avoid tax on a $62 million investment as an "economic sham" that was designed solely as an illegal tax dodge.
In a separate case, Mr Egan, who strongly denies any wrongdoing, is suing the IRS to recover the $62 million, and had argued in court documents that he was working on the advice of an unnamed "international accounting firm". Mr Egan had hoped to avoid having his name linked to the KPMG lawsuit.
However, it emerged this week that the firm was KPMG, after a New Jersey judge ruled that the media could report the names of the 61 KPMG investors, including Mr Egan, who are taking a class action suit against the firm for investing their money illegally.
KPMG has already agreed to pay out $225 million in a settlement to other investors who say they inadvertently invested their money in the illegal scheme and ended up being embarrassed and harassed by the US government.
The IRS has rejected claims that Mr Egan was duped into investing the money and in its legal battle claimed the scheme's principal use was to reduce his tax payments.
The IRS said that Mr Egan, the billionaire co-founder of Massachusetts's most valuable technology company, EMC Corp, became involved in the scheme as soon as he resigned as the head of EMC to become ambassador.