An offshore investment product sold by Ms Beverley Cooper-Flynn to National Irish Bank customers was a perfectly legal investment in accordance with Irish tax law, a tax consultant told the High Court yesterday.
Mr Aidan McLaughlin said the Clerical Medical Insurance Personal Portfolio (CMIPP) product was a sophisticated product when introduced to the Irish market and was even today ahead of the type of product available in the Republic.
He was giving evidence on behalf of the Fianna Fail TD on the eighth day of her action alleging libel against RTE, journalist Charlie Bird and a retired farmer, Mr James Howard. The defence denies her claims.
Ms Cooper-Flynn alleges she was libelled on RTE broadcasts in June and July 1998 and that words used on the programmes meant she had instigated a scheme whose objects were tax evasion.
The cross-examination of Ms Cooper-Flynn by defence lawyers concluded before lunch yesterday, after which Mr McLaughlin began his evidence. His cross-examination resumes on Tuesday.
The action, before the President of the High Court, Mr Justice Morris, and a jury, is expected to run for at least two more weeks.
Mr McLaughlin said the CMIPP product had the feature of accessing 150 fund managers with access to quite a number of funds. It was the choice between the corner shop and a supermarket providing a wider choice, was in accord with Irish tax law and was perfectly legal to invest in.
The tax system allowed them not to be taxed at source. If you left the money in, it grew without tax being deducted. If withdrawn, it attracted Capital Gains Tax at a rate of 40 per cent from 1993 onwards. It had been exempt from CGT before that.
Cross-examined by Mr John Trainor SC, for RTE and Mr Bird, the witness said there was no question the CMI product was not a life assurance policy. He agreed the legal ownership of the asset passed from the person making the investment to CMI, the legal holder of the money. He agreed CMI did not provide investment advice.
He agreed CMI was an Isle of Man-based company but said he did not have enough specific knowledge to comment on the position of confidentiality of investments in the Isle of Man.
He agreed that when an investor died, the insurance company paid the money to the owner of the policy, the trustees, who then paid it to the beneficiaries of the trust.
Mr Trainor suggested the beneficiaries could collect a cheque from the Isle of Man, or receive it in the post, and whether the Revenue ever heard of this would depend on the honesty of the beneficiary.
He said there was a legal obligation to report receiving such a cheque.
Earlier, in concluding her evidence, Ms Cooper-Flynn said there had been a vigorous internal audit system in NIB, where she had been employed as a financial consultant. This system continued throughout her seven years with the bank and she believed it was a feature of all banks. There was also an external auditor who would examine the books of the bank.
Ms Cooper-Flynn said her father, the former EU commissioner Mr Padraig Flynn, had never been sold a CMI investment policy by her or by anybody else.