The current and former chairman of the Revenue Commissioners will be questioned today about AIB's claim that it was offered an amnesty in 1991. Mr Dermot Quigley and Mr Cathal Mac Domhnail will also have to explain why the many proposals put forward by their staff over the years to crack down on bogus non-resident accounts were never implemented. The key question will be: was this as a result of political pressure?
So far the four senior tax inspectors who met AIB in 1991 say they were merely on a "cage-rattling" expedition and strongly reject the claim they offered an amnesty to the bank on its pre-1991 DIRT liabilities.
The delegation, which was headed by Mr Tony Mac Carthaigh, told the Dail Committee of Public Accounts that the option of a tax amnesty for unpaid DIRT on bogus non-resident accounts was never put on the table. It simply wasn't in their gift.
Revenue officials, who have repeatedly highlighted their lack of powers to tackle bogus non-resident accounts, put on a show of strength when they met AIB. The attendance of four senior tax inspectors at such a meeting was "unprecedented", according to Mr Mac Carthaigh.
Two of the tax inspectors explained they were given just a few minutes' notice of the meeting, claiming it was not unusual for the inspectors to call on each other at short notice to swell the Revenue presence.
Mr Mac Carthaigh had initially sought the meeting to discuss two specific cases where the Revenue had uncovered bogus non-resident accounts at two AIB branches. Both cases had been settled almost two years earlier but as he had been frustrated at the bank's blase attitude towards those incidents he later decided to broaden the agenda to discuss the bank's general compliance in relation to DIRT. He felt it was important at that stage to "make noises". Brokering a settlement with the bank had never entered his mind.
The most he had expected to achieve from the meeting was that the bank officials would be held personally responsible for the acceptance of non-resident declarations. He proposed that all declarations should be initialled or signed by the staff member who accepted them from customers in an effort to ensure they had checked their bona fides.
Based on their evidence so far, the meeting with AIB gave the Revenue the first indication of the scale of bogus non-resident accounts.
Mr Mac Carthaigh was "surprised and suspicious" when an AIB official, Mr James O'Mahony, said it had a "major problem" with these accounts. He said the level of non-resident deposits had fallen from £950 million to £300 million, suggesting up to 60 per cent had been bogus. He added that the bank was now diligently working to eliminate the bogus accounts.
Mr Mac Carthaigh, a long-time thorn in the side of AIB, said he didn't believe a word of it.
There was discussion that if the bank were to clean up the bogus non-resident accounts by a specific date that year the Revenue would be prepared to collect the tax payable plus a "reasonable" rate of interest on the outstanding funds, but there would be no penalty, publication or prosecution.
Mr Mac Carthaigh said it was normal for a tax inspector to offer such an incentive to taxpayers on the basis that they were making a voluntary disclosure, but he said the proposal couldn't be construed as an agreement with the bank.
In its detailed note of the meeting - reported previously - AIB contends that Mr Mac Carthaigh said the Revenue was prepared to be "pragmatic" and "prepared to look forward" if it were to regularise its non-resident accounts. This, in AIB's view, suggested the Revenue would write off any DIRT liabilities up to 1991.
Responding to the AIB version of events, Mr Mac Carthaigh said he had never given the impression during that meeting that tax would be written off. He also pointed to the fact that one of AIB's team, Mr Donal de Buitlear, would have known they didn't have the power to offer an amnesty. As a former colleague at the Revenue, he fully understood how the system worked.
His three colleagues are in agreement with him as to what happened that day.
Interestingly, however, the committee has uncovered an internal Revenue memo drawn up by Mr Mac Carthaigh two months before the AIB meeting in which he makes the case for financial institutions to be given a six-month period to rectify every improper account held and, in return, the Revenue wouldn't collect any DIRT arrears.
While he insists there was no tax write-off on the table in his AIB discussions, his earlier proposal is, in essence, what AIB believed it had secured from the Revenue at that meeting.