Tax man claims AIB had `game plan'

Funds in AIB non-resident accounts dropped substantially in the early 1990s but rose dramatically at the same time in AIB Finance, it emerged from figures given yesterday to the DIRT inquiry by the Central Bank.

Mr Pat Rabbitte TD, who drew attention to the figures, said that "amazingly" while they dropped dramatically from December 1990 onwards in non-resident accounts, they "rose proportionately in AIB Finance in the same years".

The £648 million in non-resident branch deposits in December 1989 had dropped by December 1992 to £386 million, while the amount rose in AIB Finance from £367.6 million in December 1987 to £788.9 million in December 1992.

The public hearing was also told about an AIB branch in Clanbrassil Street, Dundalk, which was described as "El Paso" territory. AIB minutes referred to one account holder in the branch as possibly "a criminal, a member of the IRA, a smuggler or perhaps all three".

Mr Rabbitte was questioning Mr Tony Mac Carthaigh, a senior inspector of taxes, about minutes of the Revenue's controversial meeting with AIB in February 1991.

AIB claims an amnesty was offered while the Revenue Commissioners deny this.

Mr Mac Carthaigh said he believed AIB had a "game plan" from the start. "I don't believe AIB ever had an intention to pay tax and they made a series of phone calls hoping to grasp a few words here and there, cobble together and ultimately get out at the end. Even by their own definition, they failed to make a payment ultimately."

He added: "Why would I give a concession to AIB, who had been a thorn in my side for a time when, at the same time, I was extracting the full shilling from Bank of Ireland who were co-operating with me?" Mr Rabbitte referred to comments by the then head of AIB's group taxation, Mr Jim O'Mahoney, that non-resident deposits dropped from £800 million or £900 million to £350 million.

He asked the tax official if he agreed with Mr O'Mahoney's comments about the drop in funds. He did not agree. "I knew then that he was not telling the truth," Mr Mac Carthaigh said.

Mr Mac Carthaigh said that prior to the introduction of DIRT, the depositor alone was engaged in direct evasion but with DIRT, the banks were brought "right into the criminal circuit".

He said it was his belief that the internal auditor at the time was creating a "little bit of a shindig" in AIB. He was not happy about non-resident accounts and had asked in an internal note for evidence of the "amnesty" that was offered at that meeting.

The senior tax inspector said he was engaged in "psychological warfare" with the bank and had no authority to threaten AIB to involve the Central Bank.