POLITICAL ANALYSIS: The Government must now reassure the scandal-weary public that this can never happen again, writes Mark Brennock, Political Correspondent
The Ansbacher report has not rocked the political system to its foundations. We have had too much prior warning and too many other scandals for that.
Ireland has been investigating scandal, sleaze and corruption since 1996, but for a political class and a public which have become inured to political scandal, this report colours in details of the systematic cheating of society by elements of the political and business elite in the 1970s and 1980s.
It also challenges the Government to show it is committed to strengthening financial regulation and the criminal law to ensure it never happens again.
The details of the scandal and the context are worth recounting . In the 1970s and 1980s young Irish people were emigrating in tens of thousands from a country and economy mired in failure.
Personal income-tax rates were at punitive levels, made all the worse by the low level of income at which the high rates kicked in. PAYE workers were on the streets demanding tax reform, businesses were laying off staff or closing altogether, national debt was spiralling, public services were creaking.
A Taoiseach who came to power in 1979 went on television to tell us we were living beyond our means. Meanwhile the same Taoiseach was the most infamous inhabitant of a separate Ireland operating parallel to the dismal one in which the rest of us lived.
In this Ireland, the very well off observed the rest of us paying top tax rates on modest PAYE incomes. Many decided that taxes were only for the little people.
As the factories were closing and the young emigrating, these people were giving caseloads of cash to Mr Haughey's personal accountant to be looked after far from the clutches of failing official Ireland and its Revenue Commissioners.
They handed over notes, cheques and drafts in hotel lobbies, offices and restaurants as part of what the Tánaiste yesterday called "a world of conspiracy, fraud and tax evasion over a long number of years".
The amount of money diverted from the Exchequer in this way cannot be estimated, but was very substantial. As the well off evaded their tax, the rest of us paid more, public services deteriorated further and national debt rose.
The participants in the Traynor scheme were not some outlaw cabal removed from official Ireland: they were part of the elite who were running it. The Taoiseach, bankers, chairmen of State companies, a Central Bank director, builders, hoteliers and others were all giving their money to Traynor to be lodged, technically, offshore in secret accounts.
Several were among those chosen by the government of the day to steward State companies through the difficult times. A number were involved in fund-raising for Fianna Fáil. One went on to be a leading light in Fine Gael.
Not all named in the inspectors' report had deposits with Ansbacher, nor were they necessarily involved in wrongdoing, but it is clear from the report that a substantial number were involved in tax evasion. Half of those interviewed by the inspectors "readily admitted" it.
It could be that this was the only such scheme in existence at the time, but that is hard to believe. The Ansbacher scheme was only uncovered through a bizarre series of events that began with Mr Ben Dunne out of his head on a hotel balcony in Florida and ended in the McCracken tribunal. The report implies a belief that there may have been many other such tax-evasion operations.
Such evasion took place under the nose of the financial regulatory authority, the Central Bank. As well as tax-dodging, it involved the operation of an illegal bank and systematic breach of exchange control regulations.
It wasn't that the Central Bank didn't know: The inspectors' report pays tribute to Central Bank examiners, particularly a Mr Adrian Byrne, for spotting as early as 1976 what was going on.
However, while it is clear that the Central Bank believed something very fishy was going on, on it went. Almost comically, this 1978 Central Bank inspection found that one of its own directors, Mr Ken O'Reilly Hyland, had a loan of £416,000 secured by a deposit of £230,000 in Cayman.
The Bank told Traynor that these schemes were "not in the national interest". Traynor assured them he would scale back the operation. He didn't. Subsequent Central Bank investigations expressed varying levels of concern, there were meetings between the Bank and Traynor but there was no action, no sanction.
Governments are responsible for the level of regulation, and there was clearly a massive regulatory failure. This systematic evasion went on for over two decades, unhindered by the Central Bank, the Revenue Commissioners, company law regulators or prosecuting authorities.
The Government is anxious to say that that was then and this is now. The Tánaiste yesterday pointed to a new system for regulating the accountancy profession, new legislation to encourage "whistle-blowers" and enhanced powers which have been given to the Revenue Commissioners.
The powers of a new financial services authority are detailed in a Bill currently before the Dáil. There was a new Company Law Enforcement Act including an Office of the Director of Corporate Enforcement. There was an ongoing review of company law, she said. Much is promised, but not all is yet delivered.
The Opposition is demanding blood or at least prosecutions. Fine Gael's Mr Phil Hogan expressed "shock" at suggestions that prosecutions arising from the report would be difficult to sustain. Labour's Mr Tommy Broughan demanded prosecution to show "that tax crime does not pay".
Should prosecutions prove difficult to sustain, the political pressure for legal changes to make the trial and conviction of tax-dodgers will grow.
Meanwhile there have been changes in political culture since the height of the Ansbacher era.
All those standing for election must produce a tax-clearance certificate. The same applies to companies seeking to do business with the State and could usefully apply to nominees for membership of State boards.
There will be consequences for many of those mentioned in the report. Already €18 million has been received by the Revenue in relation to 55 cases, with more expected from most of those 55. Just five cases have been fully settled. There will be more money flowing into the Revenue's coffers.
But politically, it's not about the money or even about whether any wrongdoer from the 1970s and 1980s ends up in jail. The report is what Ms Harney called "a watershed in Irish life" for the clarity of the insight it gives us of how a section of the political and business class in this State used to operate.
The political task is to demonstrate to a scandal-weary public that it can't happen again.