sbacher - Justice demands jail
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As An Phoblacht goes to print, Leinster House deputies, media pundits and the public at large are debating whether to name the 120 Irish citizens who held secret offshore bank accounts with Ansbacher Bank. Sinn Féin TD for Cavan Monaghan Caoimhghín O Caoláin is to support a Fine Gael motion calling for changes to the Companies Act to enable the account holders to be named.
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This week, Robbie MacGabhann gives a background to the Ansbacher debâcle and the Dublin government's double standards on tackling tax evasion in Ireland.
One rule for the rich
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What ought to be under scrutiny is the shady dealings of the Golden Circle at the pinnacle of Irish society who are unwilling to pay their fair share of tax
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One hundred and twenty Irish people held deposits of at least £50 million in offshore accounts during the 1980s and 1990s. They did this through a system described as ``ingenious'' by High Court Justice McCracken. McCracken was the presiding judge in the Payments to Politicians Tribunal. The tribunal found in 1997 that Ben Dunne had diverted money to former Fianna Fail leader and
Taoiseach Charlie Haughey through the Ansbacher accounts.
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In January 1998, Fine Gael and Fianna Fáil banded together to oppose a Labour motion supported by Sinn Féin and the Greens to include the Ansbacher accounts within the terms of the Moriarty Tribunal
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The offshore millions were held in accounts administered by Guinness and Mahon Cayman Trusts Ltd, Ansbacher (Cayman) Ltd and the Irish Intercontinental Bank.
The Dublin government, for nearly three years, has known the names of many of these account holders. During this time Enterprise and Employment minister Mary Harney has been attempting through the courts in Ireland and the Cayman Islands to gain access to the exact details of the Ansbacher accounts.
sbacher Cayman has been blocking these legal challenges. Last week the High Court appointed inspectors to investigate the activities of Ansbacher Cayman to determine whether the bank operated a deliberate scheme of tax evasion for its Irish account holders.
In the aftermath of the Appointment of High Court inspectors to Ansbacher, Fianna Fáil Taoiseach Bertie Ahern has declared that ``tax evaded will have to be paid and some of the Ansbacher depositors could go to jail''.
This is interesting because in October 1997 when only 15 Ansbacher names were known Finance Minister Charlie McCreevy was seeking the legal advice of the Attorney General and told the public that the Director of Public Prosecutions (DPP) would decide whether he could take action on the account holders. Two years later, no action has been taken.
It was also disclosed in November 1997 that internal audits of Guinness and Mahon were withheld from the Central Bank on the orders of Desmond Traynor, the accountant who controlled Charlie Haughey's financial dealings and who was also in charge of the Ansbacher accounts.
The Central Bank did discover between 1989 and 1990 that Guinness and Mahon were in breach of banking regulations and were holding deposits on behalf of another bank. The Central Bank does not seem to have alerted the Revenue Commissioners to the existence of these deposits that only became public during the McCracken in 1997.
Guinness and Mahon Bank handed over documentation in January 1998 covering the years that the offshore accounts were run from their offices. This covers the period 1971 to 1989. Irish Intercontinental Bank (IIB) who administered the accounts between 1989 and 1991 were at this stage still opposing Mary Harney's legal inquiries into the accounts.
At the same time, in January 1998 Fine Gael and Fianna Fail banded together to oppose a Labour motion supported by Sinn Fein and the Greens to include the Ansbacher accounts within the terms of the Moriarty Tribunal.
At the time, Sinn Féin TD Caoimhghín O Caoláin said: ``Without investigation of the Ansbacher accounts the tribunal would be discredited from day one. The general public knows that the issue here has moved far beyond the financial dealings of one person. What ought to be under scrutiny is the shady dealings of the Golden Circle at the pinnacle of Irish society who are unwilling to pay their fair share of tax.''
In the months after January 1998, the authorised inspector into the Ansbacher accounts Gerard Ryan continued his work into uncovering the details of the offshore accounts. In May 1998, Ansbacher Cayman's attempts to block the Enterprise and Employment inquiry received a setback when a legal challenge to the investigation was struck out in a Cayman Island court.
Now in September 1999, Ansbacher Cayman are still not co-operating with the High Court inquiry. IIB are co-operating. Once again the Irish public are being promised that the DPP will be receiving the findings of the High Court inspectors.
However the only really known facts are that three years after the Ansbacher accounts were first discovered no-one has gone to jail while the number of account holders and the amount of money they deposited has grown. The golden circle is still untouched by the law.
What happened at Ansbacher
Certain people ``played by different rules to the rest of us''. This was how Enterprise and Employment minister Mary Harney described the workings of the Ansbacher accounts.
Their workings of the accounts were relatively simple but very successful. People who had money in the accounts could firstly hide income from the Revenue Commissioners and cut down on their tax bills.
Secondly, they did not have to pay DIRT tax on the interest accruing to their deposits as the accounts were being ignored by the banking regulators and were unknown to the Revenue Commissioners.The only cost to the deposit holder was a small reduction in the interest they would have received in a standard bank account, before tax was levied of course.
Des Traynor, founder of Ansbacher Cayman, was the controller of the Ansbacher accounts.
People using the accounts gave their money to Traynor along with a `letter of wishes' setting out each client's instructions on how they wanted their funds invested. After that all instructions would be by phone to minimise any paper details being created that might lead the regulatory authorities to the bank accounts. Traynor called this ``minimising the footprints''.
The deposits were also used to create low cost loans for selected clients. Some of these loans made by Traynor have generated money trails that now allow the Revenue Commissioners trace money back to the Ansbacher accounts.
Traynor was, with John Furze and Padraig Collery, one of only three trustees who knew the exact details of the accounts. From 1978 to 1989 these accounts were held at Guinness Mahon Cayman Trust Ltd, then at Intercontinental Bank and finally at Ansbacher Cayman Ltd. Furze and Traynor are now dead with Collery being the sole Trustee still alive.
Collery the last person to administer the accounts kept a secret ledger with the details of transactions written in code. He had worked with Traynor at Guinness and Mahon bank.
What is to be done?
There must be recognition by the Dublin government of their responsibilities. Successive governments created the culture of tax evasion and avoidance that fed the mindset of the Ansbacher account holders. Members of both Fine Gael and Fianna Fáil governments have been beneficiaries of illegal offshore account transactions.
Successive Dublin governments created a complicated tax code where highly-paid tax consultants could help high-income earners take short cuts and cut their tax bill.
A prime example of this is that the Revenue Commissioners revealed in December 1997 (the same time as Charlie McCreevy promised convictions of the Ansbacher account holders) that only one in eight of the state's top 400 earners paid the high rate of PAYE tax. Ten per cent of the high earners handed over less than five per cent of their income to the Revenue Commissioners.
The second issue that must be tackled is yet again the failure of the Revenue Commissioners and the Central Bank to tackle fraud and regulate the financial sector.
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