Lowry's tax liability for Dunnes work has yet to be resolved

THE tax liability on the money received by Mr Michael Lowry via his business arrangement with Mr Ben Dunne has not been settled.

Sources close to the former minister yesterday gave an outline of how Mr Lowry was given loans by Mr Dunne.

They said the former chairman of Dunnes Stores was a "very unorthodox businessman" who liked to lock his suppliers into exclusive arrangements.a

Mr Dunne would give Mr Lowry "a very low rate of contractual pay" and then, at the end of a period, evaluate the performance of the former minister's company and give an "appropriate sum" for the period. "He would regularly advance credit to people and he locked in their loyalty in this way."

The loan would be repaid when the "bonus" was advanced by Mr Dunne. Tax would be paid on the bonus and the loan repaid from money left after tax.

Mr Lowry, through his refrigeration company, Streamline Enterprises, has an annual contract worth around £5 million with Dunnes Stores.

In the case of the £208,000 which Dunnes Stores paid for the renovation and extension of Mr Lowry's home at Holycross, Co Tipperary, this money was an advance from Dunnes, according to the sources. However, soon after Dunnes had paid the third and final cheque - signed by Mr Ben Dunne - Mr Dunne was removed from his position as chairman.

When she took over as chairwoman, Ms Margaret Heffernan ordered an inquiry into deals which had been done by her brother, and put an end to his system of loans and bonuses, according to the sources.

Discussions between Dunnes and Mr Lowry over how much Streamline Enterprises was owed by Dunnes have not yet been concluded.

"What he got was against what he was owed. The precise level of what be is owed has not been resolved. In terms of his known tax liability he is completely up to date. There is no question of fiddling tax or tax avoidance or any such thing."

Once the settlement with Dunnes was arrived at, Mr Lowry would pay the resulting tax liability. "There are payments down the line to the Revenue Commissioners and they will be paid as they fall due."

The Price Waterhouse report which contains details of Mr Lowry's financial transactions with Mr Ben Dunne was ordered by Mrs Heffernan after she took over as head of Dunnes Stores. The investigation was primarily into "unorthodox" business deals done by Mr Dunne during his period as chairman.

Asked about the fact that the invoice from Faxhill Homes Ltd, which carried out the work on Mr Lowry's home, was made out for work carried out for Dunnes Stores in the ILAC centre, Dublin, sources close to Mr Lowry said this was an issue for Dunnes Stores and had nothing to do with him.

They would not comment on the fact that the Dunnes Stores money advanced by Mr Dunne to Mr Lowry was spent on Mr Lowry's home rather than invested in Streamline Enterprises.