I thank the Minister for taking this matter this evening. Reports in the media appear to have established a prima facie case that National Irish Bank was involved in the active promotion of tax evasion schemes by the use of offshore accounts. I want the Minister to put on the record what he knows about this matter. I also want to know if he has discussed the matter with the Revenue Commissioners.
In 1993 and 1994, National Irish Bank had accounts of a peculiar nature in branches throughout the country. Some were supposedly non-resident accounts, others were in bogus names and all appeared to contain money hidden from the Revenue Commissioners. NIB had a system in place to highlight these accounts and readily identify the beneficiary. If, for example, a depositor in one of the accounts applied for a loan, the centralised system highlighted the fact that he also had another hidden account and the true credit position was easily established. Nothing hinges on this other than the fact that the central management of the bank had a system in place which readily identified the account holders. When they wished to approach them to sell a particular financial product to them, it was a simple matter to identify their names and addresses and send the bank's sales staff to visit them.
It is relevant that these accounts existed after the last tax amnesty and after the granting of strenuous powers to the Revenue Commissioners by the Houses of the Oireachtas which included, among other things, what is known as the whistle blowers' charter. Approximately eight months after the closure date for declarations of money under the amnesty, somebody in National Irish Bank decided that the money in the accounts I described earlier was no longer safe from the Revenue Commissioners. An ingenious scheme was organised and sales executives of the bank were dispatched to visit the deposit holders. These sales executives were extremely successful and encouraged approximately 188 depositors to invest a total of £30 million in the ingenious scheme.
Depositors were asked to transfer their money into bank drafts drawn for the benefit of Clerical and Medical International, known as CMI, based in the Isle of Man. I understand the money was immediately transferred back to the bank branches of origin and was deposited in the name of CMI, with a number to identify the identity of the original deposit holder. Subsequently the deposits appear to have been centralised, but the essentials of the scheme remained the same. Depositor money was passed through CMI and redeposited in National Irish Bank in the name of CMI and appeared in that bank as offshore accounts. Initially, it appeared, the depositors could transact business over the counter in the usual fashion. Some time later an arrangement was put in place which worked generally as follows. If a depositor wished to withdraw, for example, £20,000, CMI would be notified in writing by the depositor and it would immediately instruct NIB to pay out the money.
There was no advantage in terms of security of the money or interest return to the depositor on the money from these arrangements. Significant start up costs were charged by CMI and it appears a management fee was charged by both CMI and NIB. Consequently, we must ask why depositors got involved in this costly arrangement. For example, I am reliably informed that NIB charged £20,000 to a depositor of £250,000 for making this arrangement. If this is applied pro rata to £30 million on deposit, NIB gained in excess of £1 million from this arrangement. CMI also received significant fees.
It makes no sense for a depositor to pay such fees unless there is some advantage. Since there is no advantage in terms of security, return on investment or access to deposits, the only explanation is that they were evading tax and that the bank was facilitating them in doing so. It is a criminal offence to aid and abet persons evading tax. The whistle blowers' charter makes it an offence for any person, including directors and employees of banks and other financial institutions, not to inform the Revenue Commissioners of incidents of tax evasion of which they are aware. There is a case to answer not only by NIB but also the Minister for Finance, the Revenue Commissioners and the Central Bank.
The Ansbacher accounts have already passed into the general vocabulary of the people. It appears now that the third biggest banking group in the country also operated offshore accounts with money deposited in Ireland with full access by the depositors and that this was done for the purpose of tax evasion. Yesterday I received a telephone call from a person who identified herself. She told me that two years ago she approached a leading building society with a deposit of £30,000 and was offered a facility to place it in an Isle of Man account. She declined the offer but the arrangement suggested appeared to be that the rate of return would be a quarter per cent less than available in Dublin, but there would be certain tax advantages.
I do not know Ireland's balance of trade with the Isle of Man, but it is not significant. Consequently, it is a matter of some surprise to me that practically all our clearing banks, building societies and investment banks have branches in the Isle of Man. Some also have branches in Jersey. I wish to pose a number of questions to the Minister. Are certain financial institutions organising tax evasion schemes for customers in clear breach of the law? If so, what does the Minister intend to do about the matter? Does he intend to do it in a manner where the issue is exposed to public scrutiny?
