Revenue faces difficult week of questioning

 

Most observers watching the Moriarty tribunal suspected Mr Charles Haughey declared only a fraction of his income to the Revenue Commissioners. No one was expecting tax rebates.

Yesterday Mr Jerry Healy SC, for the tribunal, opened a series of hearings at which officials and former officials of the Revenue will be questioned under oath as to their actions in relation to Mr Haughey.

From what Mr Healy said yesterday it seems that in the 1970s and 1980s, at least, the Revenue believed Mr Haughey's main income was his monthly pay cheque from the Exchequer. With hindsight, of course, the notion is laughable.

We now know that since 1979 Mr Haughey had a practice of cashing his monthly salary cheque and using the cash for what he has called "out of pocket expenses". His political income was his pin money.

In 1983/84, when Mr Haughey was leader of the opposition, a TD's salary was £13,802, before tax. Even in the early 1980s Mr Haughey was spending well in excess of that every month.

The money was coming from accounts in Guinness & Mahon bank controlled by the late Mr Des Traynor. It was lodged to the "number 3" account in Haughey Boland & Co, before being used by that firm to settle bills sent from Kinsealy.

As well as running this bill-paying service, Haughey Boland also handled Mr Haughey's tax affairs.

According to Mr Haughey, the late Mr Michael McMahon was involved in the deal with Mr Patrick Gallagher in January 1980 which saw Mr Haughey benefit to the tune of £300,000.

The same Mr McMahon met a Revenue official, Mr Padraig O Donghaile, in 1981 in relation to a submission by Haughey Boland to the Revenue on behalf of the then Taoiseach. The point of this submission was that Mr Haughey had lost so much money through his farming activities in the period 1976/77 to 1980/81 that he deserved a £13,868 refund of tax paid on his Dail salary.

Deloitte Touche, of which Haughey Boland now forms a part, was represented at yesterday's hearing.

The Revenue must be very glad this week that it did not grant Mr Haughey the PAYE refund requested. Nevertheless, it is facing into a grim week.

It knew that in April 1981 the Taoiseach had declared that he was broke and had been for some years. Yet he was living on a 250-acre estate in north Dublin and sleeping in a Gandon mansion.

It then learned that Mr Haughey had made £300,000 from a 1980 deal with the Gallagher Group which the Revenue suspected was a "sham", and which had not been declared to the Revenue by Mr Haughey.

Armed with these indications that something was awry and that Mr Haughey was not to be trusted, it did nothing.

Mr Haughey managed to come up with £102,330 in the mid-1980s to settle tax debts arising from the Gallagher deal and a land sale.

The Revenue never sought to find out where Mr Haughey got this money.

If it had followed the payments backwards the trail would have led to the Haughey Boland number 3 account, and from there to the accounts in Guinness & Mahon.

Likewise, if the Revenue had looked behind the Gallagher deal it might have discovered how the money was used to settle Mr Haughey's overdraft, and that a total of £750,000 was involved.

As Mr Healy put it yesterday, the tribunal will now examine whether the Revenue had the powers to discover Mr Haughey's real income, and the extent to which it used those powers.

The Revenue may argue about the extent of its powers to investigate people's bank accounts. The net point at this stage, however, seems to be that Mr Haughey was living in a Gandon mansion at a time when his Revenue file said he was broke.

Apart from the tribunal itself, the Revenue is the only party to have had barristers present at every public hearing the tribunal has held to date. They have a tough job ahead of them justifying their fees.