On a point of order, I understand it is for you, a Cheann Comhairle, to decide to disallow leaders' questions. Have you decided to do so?
Ansbacher Report: Statements.
Yes, if the Deputy reads Standing Order 26, paragraph 2, he will see it refers to a motion.
Is it not the case that you have that discretion?
No, I do not have that discretion. Before calling on the Tánaiste, I remind the House that, while the report discloses the names of many individuals outside the House and, as such, they are in the public domain, in keeping with the long-standing rules of the House Members should show restraint and not make allegations of wrongdoing that are unproved against a person outside the House as he or she is defenceless against accusations made under privilege. In that regard, it should be noted that in their report the High Court inspectors state they wish to stress "that a finding that any particular individual is a client of Ansbacher, is not a finding that that person evaded tax." I ask Members to bear those comments in mind when they are making their contributions. I now call on the Tánaiste and Minister for Enterprise, Trade and Employment to make her statement.
I welcome the opportunity for this House to debate the report of the High Court inspectors appointed to inquire into the affairs of Ansbacher (Cayman) Limited. I express my sincere thanks to the inspectors for the comprehensiveness and clarity of the report. The report and the process of work which produced it were tested nearly to destruction in a legal sense. It has come through that cauldron with unassailable authority.
It is appropriate during this debate today to remember what this House represents. The House is political in the highest sense, the Parliament of our people. It is right, therefore, for us to reflect on the Ansbacher report through political eyes. We should debate its significance for the conduct of the affairs of our democratic state, both in the past and for the future. Our debate today is decidedly not an opportunity to heap opprobrium on others, nor to look back in anger, still less to congratulate ourselves. Other gatherings can do that if they wish. Dáil Éireann should consider the report and the events it describes, in the light of the political responsibility and trust vested in us, to inform our legislative actions going forward.
The report raises issues at the heart of our democracy. A state that does not collect taxes, through lack of will or authority, or as a result of a degeneration of its political culture, is a failed state. There has been a great deal of discussion, some of it quite ill-informed, about the State's exercise of sovereignty in the international arena. The exercise of sovereignty within the State, however, occurs prior to that. One of the first sovereign acts of a democratic state is to raise taxes to allow it to function. This is why the events and the systematic failures set out in the Ansbacher report are vital matters for this House and for citizens who believe in a functioning democratic society. The systematic and planned denial of taxes to the State was a denial of its sovereignty. It was a subversion, one could say, of citizens' votes, of their equality before the law and of their right to live in a fair society. It undermined the ability of the State to provide vital public services and it cost us all dearly.
The Ansbacher scheme and the actions of its protagonists and beneficiaries undermined the ability of the State to provide vital public services. It deserves to be examined for costing us dearly in that regard and the political culture in which it thrived is worthy of similar reflection. I will not rehearse all aspects of that culture again, but I ask Deputies to consider whether the existence of the report is symbolic of a change in the culture in recent years. Would such a report have been possible in the previous culture? Is it not clear that political culture does not change by itself, but results from actions and decisions taken by political leaders, by those who established political leadership by taking such actions? The Ansbacher report was not the result of chance or random forces; it was not published as a consequence of the flapping of a butterfly's wings in a Brazilian forest. It would not have happened if certain decisions were not made by the Government and this House, decisions that were enabled by a changed and healthier political culture. The change in political culture was achieved by the effort, integrity and tenacity of former and present Members of this House. If the report points to failures of the State, it must be remembered that its existence and the Government's actions point to a healthier, functioning society.
As legislators, Members must demonstrate a determination to ensure that citizens are not only theoretically equal in law, but that they will be treated equally in reality. Decisions in relation to prosecutions must be made by the independent enforcement agencies established by the Oireachtas – the Director of Corporate Enforcement, the Revenue Commissioners and the Director of Public Prosecutions. I am confident that the bodies will pursue cases of wrongdoing with the utmost vigour and I assure the House that they will have the full backing of the Government in that.
I will outline briefly the origins of the report we are considering today. The report of the McCracken tribunal was published in August 1997, shortly after I came into office. I immediately appointed authorised officers to examine the books and records of Garuda Limited and Celtic Helicopters Limited, companies whose activities had been highlighted in the report. On foot of an interim report by the authorised officer on Celtic Helicopters Limited, I appointed in January 1998 an authorised officer to Ansbacher (Cayman) Limited, Guinness & Mahon (Ireland) Limited, Hamilton Ross Co. Limited and Irish Intercontinental Bank Limited. The authorised officer's report on Ansbacher (Cayman) Limited, submitted to me in June 1999, was not published, under the provisions of the Companies Act, 1990. It formed the basis for an application by me to have inspectors appointed by the High Court to Ansbacher (Cayman) Limited.
We must consider carefully the systemic failures identified by the inspector's report and the action taken by the Government to strengthen legislation, regulation and enforcement to prevent the recurrence of such practices and to maximise our ability to discover them quickly and bring the participants speedily to justice. We must identify further strengthening of the legislative and regulatory framework that may be required in the light of the inspector's findings. I assure the House that the Government is open to and will carefully consider all suggestions for such improvements.
The Ansbacher, DIRT and other tax evasion schemes that have come to light clearly indicate significant regulatory failures on the part of a number of statutory authorities. There was failure by the Revenue Commissioners to fully and aggressively investigate and target tax evasion in certain sectors. There was failure by the Central Bank to fully and effectively oversee and regulate the banking sector. Statutory auditors and their professional associations failed to ensure companies properly accounted for their activities and complied with the letter and spirit of the law. The Department of Enterprise, Trade and Employment failed to recognise that the code of company law created a regime that needed to be actively enforced and to devote adequate resources to the task.
The Government has already taken actions to address the failures identified in the report. We have introduced measures designed to ensure our society is a fair and just place in which to live and do business. Tax rates, both capital and income taxes, have been substantially reduced, thereby reducing the incentive to evade tax and the level of activity in the black economy. We have strengthened the regulatory framework and provided substantial extra resources in order that there is now a clear and determined proactive approach by the organs of State to enforce the law, whether this is by the Revenue Commissioners in respect of the tax code or the Director of Corporate Enforcement in regard to the provisions of the Companies Acts.
A range of regulatory initiatives has been introduced. The Office of the Director of Corporate Enforcement has been established with proper resources and staffing. Increased penalties for corporate crime have been introduced. Additional resources have been provided for the Companies Registration Office to ensure companies meet their filing obligations. New penalties have been introduced to discourage the late filing of returns to the Companies Registration Office. A statutory company law review group has been put in place to ensure the provisions of our company law are effective and appropriate to the needs of our society. Better oversight and regulation of the accounting and auditing profession are being achieved by the establishment of the Irish Auditing and Accounting Supervisory Authority. There is more focused enforcement of the tax laws by the Revenue Commissioners which have been given increased investigative powers. Improved and better co-ordinated regulation of all types of financial undertakings will be achieved by the establishment of a single financial regulator.
On foot of the information that was becoming available to me at the outset of these investigations, both through the work of the authorised officers I appointed and other sources, I established the working group on company law compliance and enforcement. The report of the working group, which was prepared in record time, led directly to the enactment of the Company Law Enforcement Act, 2001, which introduces a better corporate governance regime in Ireland by a range of new initiatives which will both encourage and enforce better corporate practices.
Clearly, the establishment of the Office of the Director of Corporate Enforcement represents something of a watershed. For the first time in our history, we now have a body with the resources, expertise and powers to effectively enforce company law, an essential part of the legal framework of our enterprise economy. The director, Paul Appleby, has a wide range of powers to investigate and prosecute corporate crime. A key provision in the Company Law Enforcement Act, 2001, is that the director is statutorily independent. He can initiate inquiries on his own behalf or respond to information brought to his attention. As well as powers to investigate and prosecute corporate crime, the director has the power to apply to the High Court for injunctions to restrain companies or their officers from continuing to breach the Companies Acts. The director also has the power to apply to the High Court for orders for the restriction and disqualification of company directors and other officers, where the conduct of the persons concerned in the management of companies warrants such action. The purpose of the disqualification provisions is to limit the scope for unscrupulous, irresponsible or otherwise unsuitable persons to use or abuse the vehicle of the limited liability company.
The High Court inspectors have identified a number of persons against whom they believe disqualification might be sought. This is one of the areas that the Director of Corporate Enforcement has indicated he will be following up on, using the powers available to him under the Com pany Law Enforcement Act, 2001. The Act also increases the penalties for offences under the Companies Acts, both in respect of summary offences and prosecution on indictment. The penalties for all offences which can be prosecuted on indictment have been increased to a maximum term of imprisonment of not less than five years. This means that persons suspected of having committed a serious breach of the Companies Acts are liable to arrest without warrant under the Criminal Law Act, 1997, and detention under the Criminal Justice Act, 1984. The new penalties will both facilitate the investigation of suspected indictable crimes and serve to more appropriately reflect the serious nature of such offences.
The director does not have a direct role in the regulation of auditors. This will go to the new Irish Auditing and Accounting Supervisory Authority. As well as the comments made by the inspectors, recent accounting controversies and corporate failures, notably in the US, have focused attention more than ever on the role of auditors and how companies regulate their financial affairs.
I intend to publish legislation in advance of the autumn Dáil session that will fundamentally reform the regulation of, and the rules governing, the auditing and accountancy profession. The package of measures in this legislation arises from the report of the Review Group on Auditing, chaired by Senator Joe O'Toole, which I established following the Committee of Public Accounts' inquiry into DIRT.
The central objective behind this new auditing legislation is to ensure that the regulatory structures governing auditors and accountants is at the forefront of international developments and that there is confidence at both national and international level in the regulation of this important profession. Most significantly, this legislation will establish a new independent regulatory body, the Irish Auditing and Accounting Supervisory Authority, IAASA, to supervise the regulation of the accountancy and auditing profession by the professional accountancy bodies. The independence of the supervisory authority from the accountancy profession is an important principle. The number of accountants on the board of IAASA will be strictly limited to no more than three out of a 13 person board. The authority will be given significant powers to discharge its functions and will have its own dedicated professional and other staff. It will have the power and resources to intervene in the disciplinary process of the accountancy bodies where it deems it necessary; it will have the power to directly investigate cases of public interest; to apply to the courts to compel the directors of a company to amend accounts that are not in line with generally accepted accounting standards; to require accountancy bodies to amend their ethical rules and their disciplinary and investigation procedures. An important provision introduced by the Company Law Enforcement Act, 2001, is the mandatory requirement on auditors to inform the Director of Corporate Enforcement where the auditor comes into information which leads him or her to believe that the company or officer or agent of the company has committed an indictable offence under the Companies Acts.
The new legislation will also contain a number of corporate governance provisions that will impose direct obligations on companies and are aimed at improving companies' compliance with statutory obligations. A good corporate governance regime is central to the efficient use of capital. Good corporate governance also helps to ensure that companies take into account the interests of a wide range of stakeholders as well as the communities within which they operate, and that their boards are accountable to the shareholders. This helps to assure that companies operate for the benefit of society as a whole. It helps to maintain the confidence of investors both foreign and domestic and to attract more long-term capital.
The integrity of corporations, financial institutions and markets is central to the health and stability of the Irish economy. We need to be vigilant to ensure that financial standards, regulations and methods of market surveillance are effective in maintaining investor confidence and protecting the interests of shareholders and stakeholders. The auditing legislation will place a requirement on directors of public limited companies to establish an audit committee comprising in the main, a majority of independent non-executive members that will have written terms of reference and will report on its activities in the annual accounts. The audit committee will be responsible for monitoring the performance and quality of the auditor's work. The proposed legislation will require directors to draw up a compliance statement each year and auditors will be required to review it. As Minister for Enterprise, Trade and Employment, I have the responsibility to promote an environment in which enterprise, trade and employment can thrive. These are the engines of wealth creation and wellbeing for our society. Trust and truthfulness are absolutely essential for this environment. Most people who are engaged in enterprise – and that means most of the working population – know this very well. Our ability as businesses, as shareholders, as workers and managers, to generate wealth in our society and for our society, depends on confidence and a basic trust among ourselves. We must legislate to have effective common rules. These rules will not achieve much unless they are drawn up, enforced and updated in a supportive and compliant culture.
We have made great progress in our enterprise and economic culture. Neither can we, nor should we separate that progress from the changed political culture to which I referred. A crucial part was the implementation of a tax regime that encouraged rather than stifled enterprise and initiative.
The events outlined in the Ansbacher report take us back to previous decades and are a reminder of a time when our society and business were more closed, more inward-looking and more satisfied with under performance.
We are now more open and trading more. We are setting standards of excellence for ourselves because we are competing in a European and global context. This too is no accident but rather the result of conscious decisions and actions by many.
If we want to achieve and maintain a political culture of fairness and an economic culture of achievement we will have to continuously work hard. The price of freedom, it is said, is eternal vigilance. It is the price of a fair, democratic society and of real economic success.
I welcome the publication of the Ansbacher report and join the Tánaiste in her comments on the work of the inspectors and their staff. I compliment Mr. Gerald Ryan and Mr. Paul Appleby, who have done a tremendous amount of work in unearthing the complex issues in the report. No one can fail to be impressed by the scale of detailed analysis done to prepare this study. It was clear that the inspectors were carrying out their task mindful of the legal minefield that surrounds such inquiries. Uppermost in their minds must have been the fear that their inquiry could be wrong-footed at any stage if the inspectors infringed on the constitutional or legal rights of the parties or institutions under investigation.
Many negative comments have been made about some of the professions in recent years but there can be widespread consensus that the lawyers and accountants involved in the preparation of this massive tome exemplify the very best standards of probity, independence and inquiry that should be the norm from accountants and lawyers. Sadly, this standard has slipped in recent years in many cases.
It is perhaps a sign of the degeneration of much of public and commercial life here in recent years that the public seem desensitised to the findings in this report relating to the former Taoiseach, Mr. Haughey. Many of the people who have been named as Ansbacher account holders were private individuals or companies that looked for deliberate means of evading taxes. Some of the account holders have given explanations of inadvertent involvement in the scheme but many knew perfectly well what they were getting into. What can be in no doubt is that the inclusion of Mr. Haughey as an Ansbacher depositor is perhaps, the single most alarming finding of the report. A man who held the office of Taoiseach, who lectured us all on financial probity and restraint and who presented himself as a man of the people had a Walter Mitty existence. Mr. Haughey presided over Cabinet meetings at which tax increases were imposed, health cuts applied and the Votes for the Revenue Commissioners and the Central Bank were discussed. All the while he was busy conducting his personal affairs in a manner that gave the proverbial two fingers to the people he was so anxious to lead. What was all right for Mr. Haughey and his close coterie of friends and advisers was drastically at odds with the rules and codes that were imposed on the rest of us. It was an example of crass hypocrisy and disdain for the people of Ireland that has been unparalleled since.
Despite these revelations about the Haughey era no one seems shocked or surprised any more. Is it that we have all come to expect that sort of thing in public and political life? Are the Irish people prepared to endure an acceptable level of double standards and dishonesty from key figures in politics or business? What have we done, as politicians, to create or dispense with this level of cronyism and corruption? Judging by the appointment of both Mr. Haughey's bag man and lawyer to senior State boards in recent months, it seems like cronyism is alive and well and that the Government has learned nothing about these unsavoury experiences. Can we safely confine the Ansbacher findings to a moment in history or will the Government have the honesty and courage to deal with them? If this report is to achieve anything, we must ensure that the day of turning a blind eye is over. There must be no more excuses or double standards. There is equality before the law and it must equally apply to all people, regardless of rank, position, wealth or affluence.
Many people and institutions have come in for criticism following the publication of this report. It is important that most criticism and opprobrium should be reserved for those who were dishonest or deceitful and who deliberately sought to avoid or evade their taxes. It is my earnest hope that the people identified in the report as likely to have committed criminal offences should be charged and brought before the courts. I am disappointed that the Tánaiste had nothing to say about this matter.
She did.
I hope the gardaí will call to these people's homes or places of work and arrest them, bring them in for questioning and, if appropriate, charge them. We should expect the same type of treatment for these individuals as for the small businessmen of 1970s, '80s and '90s who were faced with demands for VAT on the due date and the prospect of visits from VAT inspectors and sheriffs on a daily basis.
While the extent of dishonesty revealed by the report is distressing, the initial defeatist attitude of the Minister for Justice, Equality and Law Reform, the Director of Corporate Enforcement and the Minister on the possibility of securing convictions was depressing. The public did not want to hear that we had just spent more than €3 million getting to the bottom of a tax scam but that the people involved in the scam were now expected to get away with it. It is no comfort to hear that the Revenue Commissioners will go after them. They should all have been obliged to pay their taxes during the 1970s and 1980s, like all compliant taxpayers. Listening to the Minister explaining the context in which the Ansbacher account holders would avoid prosecution, I was reminded of some other context setting in which she and Deputy Séamus Brennan were involved during the Order of Business in the 1980s on the risk of outflows of capital from the Irish economy under the FitzGerald-led Government. Maybe she knew more about where money was going at that time but chose not to say so. I have read some of the Minister's contributions at that time and she had much to say about outflows of capital. She obviously knew more than she let on at the time.
I am delighted Deputy Hogan is taking such interest in my contributions.
I bet she would think twice about the wisdom of such remarks in the light of the Ansbacher report.
Deputy Hogan was doing well until this bit.
Reading the Ansbacher report I was reminded that there is a whole category of people who have been forgotten in this sorry saga and whom the Minister failed to mention. The true victims of this outrage are the people who paid their taxes during the 1970s, 1980s and 1990s. Let us recall the pressures that people were under at that time and contrast life for the ordinary with that of the elite. Ordinary people worked hard to earn a highly taxed salary while the elite worked hard to avoid paying taxes. Business people faced enormous financial pressures but also faced unscrupulous competitors with access to hidden offshore funds. Our biggest offshore deposit was the thousands of people who could not get a job here. Families were divided as sons and daughters left Ireland to seek work while some of the elite ignored the rules and stayed here, comfortable in the thought that their money was working for them both at home and abroad. Capital expenditure on new schools, infrastructure, hospitals and roads was cut, leaving decades of neglect that we are still struggling to address. Hospital queues, overcrowded schools, lack of remedial educational facilities and poor telecommunications are all legacies of the decades of neglect. Meanwhile there was a small coterie of wealthy people who had more to contribute but chose to cheat. The established elite – the people in the know – used positions of privilege to evade paying their lawful taxes while PAYE workers and compliant self-employed people paid through the nose. Most nauseating of all, the Taoiseach of the day was their cheerleader.
The results of the Ansbacher investigation remove any doubts about self-regulation for the auditing and accountancy profession in Ireland. There must be serious concerns about the standards applied to this profession, including some of the State's largest practices. We have seen a legion of tax advisers and tax consultants who have emerged in recent years, intent on helping their clients to avoid and occasionally evade tax. Of course, access to such advisers is a privilege reserved for a relatively small number of wealthy people who have spare cash. The ordinary Joe or Josephine Soap who works 40 hours a week, and pays PRSI, PAYE, and stamp duty does not have the luxury of such spare cash or the need for such advice. Ordinary people pay taxes and do not avail of schemes, back-to-back loans, amnesties or off-shore deposits. We need to streamline the system to ensure there are just two types of taxpayers, compliant and non-compliant ones.
The inadequacies of self-regulation of supervisory professions have been truly exposed by this inquiry. Among the names on the list are a number of accountants who are members of professional bodies and in respect of whom previous allegations have been made at the Moriarty tribunal. How have these professional bodies responded to the previous allegations of wrongdoing against individual accountants and how will they respond now?
On the face of the findings of the Ansbacher report, it is imperative that we consider extending the role of the Director of Corporate Enforcement to regulate the accountancy profession. He should have the power to determine the standards of entry, to carry out inspections, to handle complaints and to discipline errant accountants. Clearly the profession has failed at self-regulation and a new regime is required.
We must also consider introducing new measures to oblige auditors to look around corners and under the carpet when auditing companies, entities and individuals. It is alarming that so much of what happened with the Ansbacher deposits occurred either with the direct involvement of auditors or accountants or with a blind eye being turned. It is a matter of serious regret that it has taken five years to get around to introducing proposals to tackle the supervision of auditors. I hope the Minister will have the bottle to tackle this powerful vested interest.
The role of the Central Bank in this sad and sorry affair needs to be reviewed. Yet again we have an example of a Central Bank that is seen to be more concerned with prudential concerns than with the effective and ethical regulation of the banking sector. We also see an unquestioning Central Bank that was prepared to be spun a line and persuaded to take a more charitable interpretation of the law and of regulation, if convenient, concerning people such as Mr. Traynor. By any assessment the bank was a weak and lame regulator.
The ultimate irony is that the Central Bank operated from premises designed by one of the Ansbacher account holders, while another account holder sat on the board of the same bank. At least we are now presented with an opportunity to amend and refine the structures of the Central Bank in the context of the new financial services authority legislation that is to come before the House. I will be examining ways that we can strengthen the consumer focus of the bank in the new structure and ensure it becomes a regulator that is both feared and respected. It is regrettable that it has taken the Government five years to produce this long awaited legislation. It is another case of legislation delayed by a mixture of lethargy and fuddled priorities.
As for the Revenue Commissioners, I cannot accept that the schemes adopted by Mr. Traynor were so complex that they could not have been detected by a probing and fearless tax authority. There must have been people on the Ansbacher list whose personal circumstances did not add up and who would have been discovered if they had been investigated thoroughly. Compliant taxpayers were ripped off twice. They were conned by the people who used Ansbacher to evade tax and, worse, they were cheated by the regulators whose palatial offices they funded through taxes, yet who lacked the resolve to seek out hidden money and crooked practices.
I hope the House will accept the motion that was suggested by Fine Gael today – that this report be referred to the Committee of Public Accounts. A detailed examination of the role of these regulators should be undertaken by the committee so taxpayers can see if they are receiving value for money. The regulators should also be obliged to explain their failure to perform their statutory functions.
I applaud the Minister and her colleagues for what some would see as an innovative step in establishing the new Office of Corporate Enforcement. The director, Mr. Appleby, has certainly created an impression in his early activities and seems like a man who will be taken seriously. However, transferring responsibility for dealing with these matters to a statutory officer is no substitute for continued ministerial responsibility in this area. While the Minister may not have day-to-day responsibility for the matters that have been transferred to Mr. Appleby, the ministerial buck obviously stops in her Department.
It is vital that the Minister continues to exercise overall control and supervision of policy issues relating to corporate enforcement. In particular, the Minister must ensure that the various agencies and bodies involved in responding to the Ansbacher report will not get caught up in administrative wrangles or disputes over who does what, or who has more powers or responsibilities. All the agencies with a role in responding to Ansbacher should act in a co-operative and co-ordinated way to ensure the full weight of the law will be brought to bear on those who are found to have broken it.
Taxpayers should not have to foot the cost of this investigation. It should be faced by two companies, in particular, without whose involvement this scheme would never have got off the ground – Guinness & Mahon and CRH. Both companies have a moral and ethical obligation to pay the costs of this investigation.
Particular attention must be paid to the role of CRH in this affair. It is just five days since publication of the findings that CRH's head office was effectively the centre for Mr. Traynor's banking activity and that eight main board directors had Ansbacher accounts. The chief executive officer has made a public apology but now it seems to be business as usual as far as they are concerned. It was nauseating to see CRH issue a statement as late as yesterday trumpeting the fact that it was now spending €394 million on so-called development initiatives during the first half of this year alone, while it had nothing to say about putting its hands in its pockets, corporately, to pay for this expensive inquiry for which it had a major responsibility. If CRH wants to lift its reputation off the floor it should make this gesture sooner rather than later.
Given what we now know about CRH and the links between Mr. Traynor and his close relationship with Mr. Haughey, we need to examine the company's dominant position in the market. We need to explore whether any major political decisions were made by Governments under Mr. Haughey's leadership, and since then, that may have affected CRH's dominant market role.
Fine Gael will be a fearless and tireless advocate for improved standards in public, commercial and political life. If, as a country, we are to learn anything from the experience of Ansbacher, we must all be resolved to put the old practices of cronyism, corruption and dishonesty behind us. In particular, we must also root out those in commercial and public life who seek to operate by inappropriate standards and practices, and ensure they are not permitted to benefit from shoddy standards. We must banish intermediaries and advisers who engender, and profit from helping, people to avoid their lawful responsibilities. We must ensure the compliant taxpayer is no longer at a disadvantage under the law.
There is a great deal at stake in the Government's response to this landmark report. Will the State continue to turn a blind eye or will it pursue wrongdoers discovered in the report? Will the Minister effectively reform company law to place more control on auditors? Will the Government reform tax laws to outlaw avoidance? Will the Government apologise to taxpayers for the grievous wrong that many feel was done to them as they toiled in difficult times, while the institutions of the State seemed happy to apply tax codes to some, but not others?
It is the Government's response to this report that will be the true test of its resolve to improve standards in public, political and commercial life. Appointing inspectors was the easy part for the Minister. While I realise that delivering on the report's contents and conclusions will not be easy, it will be a real test of the Minister's resolve as it presents a great challenge. The economy must be regarded as an honest place in which to invest, and society as a whole must be regarded as fair to attract investment. I hope we will be able to convince people at home and abroad of our ability to do this job.
The Minister's statement lacked specific detail about prosecutions and who will pay for the cost of the report. There was no condemnation of individuals who held positions of responsibility in politics and business. There was no reference to what still remains to be unearthed or how this will be done in the future. There was no mention of whether similar Ansbacher-type schemes are still in operation and, if so, how they will be closed down if they are operating illegally. In the words of the Fianna Fáil slogan in the general election, the Minister has a lot done but she has more to do.
The 15-volume report before the House today is a damning indictment of the culture of tax evasion and corporate illegality which was practised by Ansbacher (Cayman) Limited, Guinness & Mahon (Ireland) Limited, Hamilton Ross Company Limited, and other related companies over nearly three decades. The late accountant, Mr. Des Traynor, and the other principals of these companies, perpetrated an outrageous fraud against the State. The report before us confirms what many people have long suspected – that there was in existence in the 1970s, 1980s and early 1990s an effective golden circle of rich individuals and professional advisers who engaged in a criminal conspiracy to defraud the Exchequer of tax revenue lawfully due to the State.
The findings of the High Court inspectors are an appalling commentary on the ethics and standards of many of those who are referred to in the report as "high net worth individuals" and who, according to the report, deliberately and persistently flouted the law for financial gain and placed personal greed before the national interest.
It is even more disturbing that this criminal conspiracy to evade tax occurred when PAYE workers were required to pay penal rates of personal taxation to keep essential public services, such as health, education and welfare, operating. Even after it emerged in the late 1970s that workers and their families were paying the vast bulk of taxation, and trade unions took to the streets to demand urgent reforms, few people could have comprehended the sheer level of tax evasion illustrated by this report.
The contemporary background to this well documented tax evasion, and earlier efforts to control and investigate this area of white-collar crime, are important aspects to reflect on today. I will return to this later.
The findings of the report also represent a serious indictment of the supervisory authorities in regard to taxation, auditing, corporate governance and company law and the management of exchange controls. While there have been improvements in regulation since the early 1990s, nobody can be confident that there are not other Ansbacher-type scams still operating with Irish connections to facilitate tax evasion by rich and powerful people. It is a key responsibility of the Minister and this House to ensure that all elements of regulatory supervision are strictly in place and constantly updated to keep abreast of modern business practice.
The publication of the inspectors' report at the weekend must not simply mark the end of the disgraceful Ansbacher (Cayman) affair. It must instead mark the beginning of a new phase in this investigation where those involved in law breaking are brought to account by the Revenue Commissioner, the Director of Corporate Enforcement and the Director of Public Prosecutions. While the inspectors write their often shocking conclusions in careful language, as was reiterated this morning by the Ceann Comhairle, all evidence of tax evasion, criminal conspiracy and breaches of company and banking law must be followed up with prosecutions and appropriate penalties, including prison. In particular, those who availed of the 1993 tax amnesty and failed to declare Ansbacher-related accounts, as they were required to do under law, must now face prosecution. If confidence in the taxation system is to be restored, compliant taxpayers, whether PAYE taxpayers, self-employed people or business owners, must be shown that tax crime does not pay.
The High Court inspectors' report is an outstanding investigation into a very secretive financial world where the inspectors and their staff had to overcome many serious obstacles. These included the destruction of records after the death of Mr. Des Traynor, another matter which must be investigated, the judgment of Justice Smellie at the Grand Court of the Caymans in May 2001, which limited the scope of the report, and the lack of co-operation, in particular by Guinness & Mahon (London) Limited and Investec Bank (UK) Limited. Despite these and other grave difficulties, the High Court inspectors produced a report which is a model of clarity, fairness and insight. On behalf of the Labour Party, I warmly thank the four inspectors, Judge Sean O'Leary, Mr. Paul Rowan, FCA, Mr. Michael Cush, SC, and Ms Noreen Mackey, BL. It is also important to thank Mr. Justice Declan Costello who was one of the original inspectors appointed by way of the High Court order on 22 September 1999.
Throughout the many transcripts of interviews with suspected Ansbacher clients and attached financial records in volumes two to 15, the high quality of questioning and research are a tribute to the great commitment of the inspectors and their advisers, researchers and staff. Every Irish citizen is indebted to them. The Labour Party would like to thank the original authorised officer who investigated Ansbacher (Cayman) under section 19 of the Companies Act, Mr. Gerard Ryan of the Department of Enterprise, Trade and Employment, whose report provided the basis for the appointment of the High Court inspectors in September 1999. The Director of Corporate Enforcement, Mr. Paul Appleby, is also to be congratulated on the final publication of the report.
I warmly commend the Tánaiste, Deputy Harney, who, as Minister for Enterprise, Trade and Employment, pursued this matter with diligence and determination since the autumn of 1997. My party was very critical of the Government decision, then supported by Fine Gael, not to include examination of the Ansbacher accounts in the terms of reference of the Moriarty tribunal and, of course, we were voted down. Yet the Minister's approach in using the investigating mechanisms of the Companies Act, 1990, first with the authorised officer and later with the petition to the High Court to appoint inspectors, has proved to be productive and this must be acknowledged. Indeed, many citizens are comparing the very focused approach of this investigation with the extremely wide remit and much slower mechanisms of the Flood tribunal. The Minister is right to regard the publication of the report as a watershed in Irish life and she can be proud of her role in its production.
A key conclusion of the inspectors' report is that Ansbacher (Cayman) Limited, Guinness & Mahon (Ireland) Limited and Hamilton Ross Company Limited carried on a banking business in Ireland without holding a licence to do so and, in the inspectors' words, "there is evidence tending to show that they breached Section 7 of the Central Bank Act 1971." A memorandum accounts system with pooled accounts was used by these institutions, again in the inspectors' words, "in a deliberately complex and secretive manner, which concealed the names of the clients involved while allowing them to withdraw funds." Loans were obtained from Guinness & Mahon for Ansbacher clients on the security of their Ansbacher deposits and their so-called back to back loans were at the very centre of this illegal banking business. The discretionary trust structure, as operated by Ansbacher (Cayman) in conjunction with Guinness & Mahon, is clearly found by the inspectors to amount to a sham and there is evidence that this facilitated widespread tax evasion. The Ansbacher operation, although an illegal criminal conspiracy, operated from a number of Dublin locations, famously between 1987 and 1994 from Des Traynor's chairman's office in the Cement Roadstone Holdings offices at 42 Fitzwilliam Square.
Yet when all these characteristics of illegal banking and financial transactions were well under way, the Central Bank of Ireland already had strong powers under the Central Bank Act, 1971, to invigilate and prevent the disgraceful abuses by Des Traynor and Guinness & Mahon. Under sections 9, 10 and 11 of that Act, the Central Bank had the power to refuse to grant a bank licence, to grant it with conditions or to revoke an existing licence. The Act also provided for the on-site inspection of banks and it was this power, through the action of conscientious officials led by Mr. Adrian Byrne, which we must acknowledge today, that came closest to aborting the Ansbacher conspiracy in its early years. Mr. Byrne was the lead examiner for the Central Bank in the 1976 inspection of Guinness & Mahon and he and his colleagues had the distinct impression that the back to back loans appeared to involve a system of blatant tax evasion. In one of the countless ludicrous aspects of this affair, the examiners were given sight of copy security documents but were requested not to note the names in which the deposits were held. Unfortunately, the concerns of Mr. Byrne and his examiner colleagues seem to have been ignored by the senior management of the bank in 1976. Further inspections and meetings in 1978, 1979, 1981 and 1982 failed to highlight the real nature of the Cayman trusts and back to back loans.
In this era, senior Central Bank officials seem to have been terrified of clear evidence of tax evasion and took refuge in the euphemism of tax avoidance on documents concerning the bank's key inspection function and, in a sort of re-run of the DIRT inquiry, issues of capital flight seem to have been a major consideration when the board of the Central Bank made the decisions. Astonishingly, the 1978 inspection discovered that a director of the Central Bank, Mr. Ken O'Reilly-Hyland, had a large loan secured by a deposit of £230,000 in Cayman. Yet the then Governor, Mr. Charles Murray, and other senior management seem to have no recollection of this matter being raised. The unfortunate reality was that the Central Bank was at that time largely dominated by directors who were also directors of the commercial banks and related large public companies. This seems to have created an atmosphere where prudential vigilance was lacking.
In several Central Bank inspections after 1982 it is clear that lies and misleading information were conveyed to the inspectors and an internal audit report by Guinness & Mahon in 1989, which clearly revealed the memorandum accounts, was not made available to the Central Bank. Acceptance by the Central Bank of wildly inaccurate information from Traynor and Guinness & Mahon and its failure, as the High Court inspectors conclude, "to test, appraise and gather the information available to it" are part of a systematic failure to implement the key supervision functions of the Central Bank. For that reason, the Labour Party is calling for an independent review of the Central Bank's past regulation of the banking sector and for the speedy establishment of the financial regulatory authority. We intend to request the new enterprise, trade and employment committee of the 29th Dáil and the Committee of Public Accounts to call in the current Governor and senior management of the Central Bank to discuss the findings of the High Court inspectors' report.
The Central Bank of Ireland is not the only regulatory authority to have serious questions posed by this report about its stewardship in the period covered by these frauds. It is hardly satisfactory, notwithstanding the extent of the criminal conspiracy involved, that the Revenue Com missioners were unable to detect this scheme. In all probability, it would still be in operation had Mr. Ben Dunne not got himself into a little local difficulty in Florida in the early 1990s. As a former member of the Committee of Public Accounts, I am well aware that resources and effective powers were denied to Revenue officials until very recently by the conservative parties which dominate this House. That is why Deputies were expected to be satisfied with hilariously low income declarations by self-employed people, large farmers and business people and with the annual ritual at the Committee of Public Accounts of computations of uncollected taxes.
The uncovering of the DIRT evasion scandal and the news that the Revenue Commissioners had been able to track down the beneficial owners of most Ansbacher (Cayman) accounts in recent times are hopeful signs that illegal offshore tax evasion will be more difficult to operate with impunity in the future. There are also implications for the professional organisations which are supposed to ensure high ethical standards among their members. It is clear this scam could not have operated without the active connivance of accountants, solicitors and company directors. The central role of Mr. Des Traynor, Mr. John Furze, Mr. John Collins, Mr. Padraig Collery, Mr. Sam Field-Corbett and Mr. Jack Stakelum is well documented in the inspectors' report. Despite the protestations of bodies like the Institute of Chartered Accountants in Ireland, of which Desmond Traynor was a member, the Labour Party believes that self-regulation in regard to professional organisations has not worked, does not work and will not work. While the new guidelines for auditors of Irish banks issued by the Auditing Practices Board are welcome, we need to change to a climate where failure to report corporate crime itself becomes a serious offence.
The Labour Party remembers well the vicious opposition from the Progressive Democrats and Fianna Fáil when the then Minister for Finance, Deputy Quinn, tried to introduce section 153 of the Finance Bill, 1995. As Deputies will remember, the section placed an obligation on professionals such as accountants and solicitors to report any wrongdoing they came across. However, the present Minister for Justice, Equality and Law Reform, Deputy McDowell, derided the section as a "snitchers' charter" and tried to condone unlawful behaviour on spurious constitutional grounds. His colleague, the new Minister for Transport, Deputy Brennan, wailed about section 153 amounting to "KGB-style tactics to collect taxes". I was personally criticised in an editorial in The Irish Times for my support for the proposal on the finance committee of the 27th Dáil. Dáil debates from 1995 show clearly that Fianna Fáil and the Progressive Democrats were bitterly opposed to legislation to regulate professional conduct, especially with regard to tax evasion. Given its recent history and the lethargy of the Tánaiste and the Government on these matters over the past five years, we cannot be hopeful that there are not other Ansbacher-type schemes still waiting to be found.
In a damning critique of Guinness & Mahon, Ansbacher (Cayman) Limited and Hamilton Ross, the High Court inspectors starkly outline a litany of lawbreaking with regard to taxation, including conspiracy to defraud and serious breaches of the Taxes Consolidation Act, 1997, Corporation Tax Act, 1976, Companies Act, 1963 and various Finance Acts. Aside from the unlawful behaviour of some of these companies and their principal officers, the inspectors inform us that "approximately half of those Ansbacher clients interviewed had availed of Ansbacher's services for the purposes of evading their tax liabilities either in Ireland or elsewhere". The inspectors went on to state that "other clients, although unaware they were clients of Ansbacher, were aware their funds were offshore and admitted they had not disclosed evidence of their offshore funds to the Revenue Commissioners".
The inspectors rightly warn readers of the report that a finding that any individual is a client of Ansbacher is not necessarily a finding that that person has evaded tax. They also point out that, following the judgment of Mr. Justice Johnson in March 2001, they ceased to make inquiries about the tax liabilities of persons they interviewed. The inspectors' finding in relation to the clients of Ansbacher, which were significantly based on the often unwittingly entertaining answers in the interview transcripts, imply a level of tax evasion which is staggering in its unfairness and ruthlessness. For much of the period between the late 1970s and early 1990s, PAYE workers were asked to bear what came close on many occasions to penal rates of taxation. It would be wrong to say that workers willingly bore this level of taxation but most accepted that revenue from taxation was necessary to avoid a total collapse in essential public services. At the same time, there was a general suspicion that not all citizens were bearing an equal burden and that the members of a small, wealthy elite were able to use their powerful positions in Irish society to avoid paying their fair share.
The anger at the high level of taxation manifested itself in the huge tax marches through Dublin in the late 1970s and early 1980s – the famous "axe the tax" campaigns. Very few of those marchers, some of whom are here today, realised the extent of the criminal conspiracy then under way involving those to whom the inspectors delicately refer as "high net-worth individuals"– to whom most of us refer as the very rich – and their professional advisers to defraud the Exchequer and taxpayers of money lawfully due.
During this period, the Labour Party and its allies on the Irish Left suggested there was in existence a golden circle of rich individuals and their professional advisers who conspired to defraud the State of legally due and necessary taxes. We were laughed at by right wing commen tators and ridiculed by Ministers of Governments led by Charles J. Haughey who insisted time after time that there was no pot of gold to be shared by the poorest in our society whether through better services or reduced taxes. Many of us remember those famous colloquia convened by the journalist Vincent Browne and Magill Magazine where pundits such as economists Sean Barrett and Paul Tansey gravely warned of cutting back on essential Government expenditure which simply could not be afforded with our allegedly narrow tax base. In retrospect, if we were wrong, it was only to the extent that we grossly underestimated the greed and avarice of the golden circle which is at last revealed in the inspectors' report.
It is hard to disagree with the Tánaiste's description of the report's findings as "a damning insight into a world of conspiracy, fraud and tax evasion over a long number of years". The report has exposed the unacceptable face of Irish capitalism over several decades. The inspectors have lifted a rock and what has been uncovered will appal and repulse most ordinary, decent, law-abiding citizens. There can be no doubt however that tax evasion was the primary purpose of this conspiracy. It is always important to remember that tax evasion is not a victimless crime and we should begin to treat it accordingly. Every euro evaded in tax means either an extra euro added to the tax bill of compliant taxpayers or a euro less to fund schools, hospitals, social welfare pensions and other essential services. We still cannot estimate the extent of the revenue defrauded from the Exchequer through this conspiracy but it is likely to run into hundreds of millions of euro. According to the report, the Dublin deposits of Ansbacher Cayman based at Guinness & Mahon grew from £3.6 million in 1972 to almost £56 million by 1987 and some £96 million passed through the Ansbacher Hamilton Ross accounts between 1991 and 1997 at the Irish Intercontinental Bank.
What has angered taxpayers most is that all this tax evasion was going on, not just at a time when they were being asked to bear a grossly disproportionate share of the tax burden, but also at a time when they were being asked to accept cutbacks in key services on which they and their families depended in the national interest, cutbacks that hit the old, the sick and the handicapped, to quote the weasel words of Ansbacher's most famous client. What is just as galling is that the same business community and the representative organisations of which so many Ansbacher account holders were such prominent members repeatedly lectured workers about the need for restraint and for cutbacks in public expenditure. It was truly a case of do as I say, not do as I do.
In the few days since the report's publication, the apologists have already begun to put their heads above the parapet. The line being trotted out is that, while what occurred was not justifiable, it took place at a time when those unfortunate Ansbacher account holders were working very hard and were being asked to bear crippling rates of taxation of the order of 60% or 70%. Let us put this myth to bed quickly. The vast majority of those involved in the Ansbacher affair were already in a position to minimise their tax liability through the various legal schemes available to avoid tax which their professional advisers were only too willing and able to exploit. These schemes were not available to PAYE workers or their families. Let us put it bluntly. It was not the rate of taxation these people objected to, it was the payment of tax full stop. People are rightly upset when they find that a significant number of very wealthy individuals can earn a living in Ireland but do not pay tax here. We note some very prominent people who are not tax resident in this State, yet appear at social functions on a regular basis.
Nobody can dispute that there are many upright, honest business people who abide by the law, pay their full taxes and are commendable citizens in every respect. However, what cannot be ignored is that the list of those named in the Ansbacher report represents an alarming cross section of the Irish business and professional community – old money and new money, Anglo-Irish and native Irish – many of whom are closely associated with and involved in the Fianna Fáil Party and a number with Fine Gael, directors of the two biggest newspapers in the country, solicitors and accountants, hoteliers and architects, builders and property speculators, board members of some of the country's biggest and most powerful companies and people who have been asked to serve on the boards of State companies. A cross section of Irish business society that might once have been described as the "great and the good" might more accurately be described as the "greedy and the grasping" in light of what we now know.
The fact is that these disclosures have done enormous damage to the standing of the business community in this country. I am rather surprised at the comparative silence of the representative organisations for business and commerce. Leaders of these organisations might consider what steps they can now take to rehabilitate the reputation of Irish business in the light of these shocking disclosures. Public embarrassment is not sufficient punishment for those who robbed the Exchequer for so long.
I acknowledge that the inspectors have indicated that prosecutions might be difficult but, difficult or not, they must happen if public confidence is to be restored in the fair and impartial administration of the tax system. There must a change in the culture in the Revenue Commissioners. We have to move away from a situation where, when serious tax evasion is discovered, the principal objective seems to be to secure a financial settlement, to one where prosecution should be the norm.
I am not fond of conspiracy theories. Five years ago, if one had outlined the scenario that appears in this report, one would have been accused of being a conspiracy theorist. Yet it was a conspiracy and a criminal one at that. One of the reasons I am not a conspiracy theorist is that I feel most people are honest. In my dealings with bankers, lawyers and accountants over the years, I have found them to be straight, hardworking and honest. All of us are tempted from time to time and all of us cross the line sometimes when a sense of momentary greed perhaps makes us do the wrong thing. The story of this report is that of people who allowed their sense of greed to completely outweigh their sense of honesty over a protracted period of time and allowed it take a legal form in a furtive and calculated manner. That is a tragedy for those people but it is a fact. They were led astray partly by people who possibly had no sense of honesty and whose sense of greed was dominant in their character. They were criminals. I do not know whether that was due to a genetic kink or nature, but looking for criminal opportunity is the main force in some people's lives. Such people set up the complicated schemes that were in operation here. As other Members said, this was at a time when the majority of Irish people had to pay huge amounts in tax to carry the State services. Others, because of their sense of greed, did not want to carry their share of the burden which is a serious offence to those who did.
I attended a conference recently at which the Garda Commissioner said criminals loved to work furtively and needed a shadowy world in which to operate. There can be no doubt that the political establishment created a furtive world in which such criminal activity could carry on. There is no doubt that the Revenue Commissioners were completely underfunded by certain people at the highest levels of Government at the time in order to help this furtive work. There was a climate of fear in institutions which was created by those at the very top of the political world. I do not have the same sense of celebration about this report as others because I have a terrible fear that that climate of fear and furtiveness still exists to a certain extent in our political world. On the day the Government was appointed it was reported that agribusiness companies and other large corporations seemed able to influence the appointment of Ministers. That sends out a message about the way the political world works.
Corporate donations are still allowed to parties. This creates a nod and wink climate. It suggests that if one is involved in business in the State, such as providing services worth hundreds of millions of euros, perhaps the best financial advice is to invest €50,000 in a corporate donation to a political party. Our political climate has not changed and we still have a lot of the problems in politics which created the climate in which these events occurred.
I am particularly interested in public-private partnerships, for some of which tender documents are being prepared. There is little or no public analysis of the financial conditions being set for them, rates of interest or the economic arguments in favour of such partnerships. The argument made is that certain information cannot be published for competitive reasons or because it is confidential business information, but this is public money. We are entering into multi-million euro deals with no independent analysis as to whether the State is getting the best deal.
The 1995 Finance Act was mentioned several times by Deputy Broughan, section 153 in particular. It is incredible. The Minister for Justice, Equality and Law Reform is present, but the Minister for Finance is notable by his absence. Where is he today? Is he interested in this debate or the report? He has a huge responsibility for implementing the measures that will result from it. Where are the members of his party? There is not one member of the leading party in the State present. Are they interested in what we have to say?
It is great fun reading the Committee Stage debate on the 1995 Finance Bill where the current Ministers for Finance and Justice, Equality and Law Reform lashed into the very provision the Tánaiste is now recommending – that we need the accountancy profession to be accountable, not just to the people who pay it, but also to the State in order to make sure this furtive criminal activity cannot recur. One could give a dozen quotes from the debate and Deputy Broughan used some good ones, but this is one from the current Minister for Finance. He said with reference to section 153: "The person who drafted the section should be removed from the area of his or her current responsibility because if that person has any more brainwaves like this I fear greatly for the Minister's future political safety." The then Minister was Deputy Quinn. That was a threat to him and an official. It is incredible that seven years on we must reintroduce that very section because it is needed. It is shameful. The Ministers involved should give their opinions as to whether they felt they were right at the time given the hindsight this report offers.
Talking to accountants one is aware there has been a significant reduction in the amount of Revenue audits. Six or seven years ago if one had a small business, one was in genuine fear of a Revenue audit every four or five years, but that fear has diminished greatly. If it is because resources in Revenue have had to be diverted to the DIRT inquiry and other matters, why did the Minister not resource the Revenue Commissioners? We can introduce powers, but if the Revenue Commissioners do not have resources, those powers are meaningless.
The Dáil does not have the political authority that is needed for these matters. After the Abbeylara decision the Supreme Court took much of the power to represent the people from these Houses, while the European Union has probably taken the rest. While this report is very laudable, one must question the length of time required – four years. We knew the nuts and bolts of the operation in the first year, but it took four years of legal wrangling to get the rest of the story. In America accounting fraud and criminal activity at WorldCom were exposed two or three weeks ago. Its officials are already answering very hard questions in Congress and will probably be in prison next week. That is the kind of authority the Oireachtas needs to ensure these matters are resolved speedily.
We have found that the political world was deeply corrupt over the last 30 years. This report shows that the business and corporate world could match the political world for greed and corruption. The worst thing about this problem is that it involved those at the very top, those in the Culliton reports and those who, at IMI conferences in Killarney, were lecturing the rest of us about how we should think of the country and show fiscal restraint while they were primarily thinking of getting money out of the country.
A central weakness of this report is that it fails to call a spade a spade, particularly regarding the activities of Cement Roadstone Holdings. Three of its chairmen and two managing directors were involved in the scheme. When its boardroom table had huge amounts of cash landed on it by its banking activities it seems incredible to pretend the company did not know it was running a bank as well as a cement and concrete business. There will be a tame apology from the managing director, but the corporate body of Cement Roadstone Holdings came out in the report as being very proud of its history of corporate governance. Environmentalists throughout Ireland are well aware of what we perceive as the atrocious corporate governance in Cement Roadstone Holdings. We do not have to go far beyond the whole Glen Ding saga when £23 million worth of gravel and sand was bought for a song in very mysterious circumstances which should be examined immediately by the Moriarty tribunal. We do not have to go further than the climate change policy: we say we need to change our policy on building materials and have more environmentally sound insulation materials, but not quite yet. Cement Roadstone Holdings has a cavity block industry which we must make sure does not collapse. Environmentalists have asked for years the reason we do not recycle any of our construction and demolition waste. Most other countries in Europe are building roads with recycled concrete and other materials but we do not. We prefer to use fresh concrete; it does not matter about the cost. What is the role of Cement Roadstone Holdings in this? What is our political role in allowing 53% of our waste to be made up of demolition and construction waste?
The Tánaiste is very interested in competitive practices. Serious questions must be asked about how competitive certain cement and concrete businesses are. Were the discretionary trusts that were so popular in the Ansbacher report used in other aspects of Irish society? Is the same legal cleverness at work elsewhere? Cement Roadstone may be very proud of its corporate governance but the message should go out from this House today that we intend to examine the role of corporate governance. When we speak of the great and the good, we effectively mean the top three in the Stock Exchange. I read in one of the newspapers on Monday that the Bank of Ireland was very angry at being mentioned in the report. I was livid that it was not apologising. Not one of the bodies involved, corporate or individual, involved has apologised or acknowledged its mistake. Bank of Ireland was angry that its good name was being demeaned. I will not go into particular accounts but there was clear evidence that in a number of cases outline in the report, banks were taking deposits which they must have known were effectively offshore. If they did not, they should not be in banking. This was not confined to the main clearing banks. We need to examine our own banks, the ICC and ACC banks, and the other merchant banks, including the IIB, to see whether other similar offshore facilities were used.
AIB also has questions to answer. One of the most remarkable parts of the report is the item on Jack Stakelum's activities. It reads like an advertisement for Allied Irish Banks. He switched from Guinness & Mahon, which was not good value, to AIB which was much better value. One could switch the money just as easily to Jersey rather than the Cayman Islands; it was the same operation. He was running his own bank but was using a current account in AIB Jersey rather than incur the costs involved in Guinness & Mahon. The AIB has questions to answer on that issue.
We do not have to go far to another report, Deputy Lowry's involvement in the Moriarty tribunal, where again there was evidence to show that the Deputy could turn up at an AIB branch and whisk money off to an account in AIB Jersey without any real consideration for exchange controls or any real knowledge of where the money was coming from or going to. Obviously there were certain places in the bank where this was possible and where it was accepted.
I come from a long line of bankers. Both my grandfathers were bankers, as were my father and mother. I do not think they would have been involved in this culture. There was a cultural shift in Irish banking in recent years. Perhaps the culture came from Cement Roadstone which was practically a crèche for the AIB board room in that people moved from Cement Roadstone into AIB. Maybe there was an exchange of cultures between the different companies at boardroom level. I know from bank managers that incredible pressure was exerted on them from the mid 1980s onwards to increase their loan book and deposits. In my discussions with bank managers about that time, it was hinted that one would look the other way if a deposit was coming in. Irrespective of whether an account was offshore, the first concern was to ensure the figures were right. That culture came from the top down and still exists. The culture where people have options or bonuses based on stock market performance is discussed around the world at present. Where chief executives or directors are on huge multi-million euro options, one must ask if that is in the best interests of a particular bank, the country, shareholders or customers because it is creating a climate where people are pushing numbers rather the right banking practices. If people were looking the other way on the deposits side, obviously they were also looking the other way on the liabilities side when Mr. Rusnak was able to lose some €600 million or €700 million. That corporate culture of looking the other way was costly in the end.
Where do we go from here? That is the important issue we have to decide here today. Companies which have breached the banking and other company law Acts must be prosecuted. The evidence is clear. I imagine that the Statute of Limitations would not apply as these cases would be taken by the State. The Minister for Justice, Equality and Law Reform could advise us on that. For those sad people whose sense of greed outweighed their sense of honesty, prosecutions are necessary because the original decision to participate in this scam was not their first offence. They also made two further decisions when they had a chance to get out. Those who did not avail of the amnesties had three chances. The first chance was to say they would not join, then they had the chance to avail of an amnesty. Their argument, that tax rates were too high and therefore they had to get money offshore, does not count in that case because they were only liable for tax at 15%. A second amnesty followed. If people did not avail of those amnesties or did not declare their true worth to the Revenue Commissioners, how can we fail to prosecute them when we are doing the exact same down in the District Court every day to 16 or 17 year olds who make the same mistake two or three times? We let them off with the probation Act the first time, we give them a stern warning the second time but the third time, as a rule, we prosecute.
There is a need for the Tánaiste to take heed of the fact that we need urgently to extend Mr. Appleby's investigations into all the other financial institutions and any offshore accounts they had. The report mentioned that Mr. Stakelum's dealings with AIB could not be investigated because they were included in the terms of reference. This makes it almost obligatory for Mr. Appleby to extend his investigations into other financial institutions with offshore accounts because we cannot just choose one example of fraudulent practices and deny their existence elsewhere.
With great urgency we need to send the Attorney General back again to Mr. Justice Moriarty, as we did a number of years ago, to say that the parties in this House want the activities of Cement Roadstone Holdings included in the Moriarty tribunal. Whether he wants to appoint a second judge to handle the case is not the main issue but we cannot let the Moriarty tribunal con tinue without including the activities of Cement Roadstone Holdings, particularly with regard to such issues as the Glen Ding woods, when there seems to be clear evidence of concern about the company's role in or links with political operators in recent years. The work of Mr. Paul Appleby has to be continued and expanded in terms of investigating some of the trust's activities and the possibility of fraudulent activities existing in areas or industries in which the company is involved. If the Tánaiste is serious about creating a climate of honest rather than corrupt capitalism, she has an obligation to pursue this with great speed.
We have to clean up our own act as we cannot just point the finger elsewhere. The Oireachtas created the climate for this type of culture to develop. The first way to change it is by banning corporate donations. I am aware Fine Gael is hoping to getting them back as rapidly as possible. There is no doubt that as long as that culture exists, there will be a perception that one can be bought. If we allow that perception to exist we cannot point the finger. The message should go out from here from all political parties that greed is not good and that crime does not pay. It is very simple – thou shalt not steal. Corinthians states that the thieves, the greedy and the robbers shall not inherit the Kingdom. Greed is the problem here and we need to change our views on where it should be allowed.
Inniu tá an Dáil ina suí chun déaláil le scannal cánach. Is scannal dochreidte seo a théann go croí an tíre agus polasaithe eacnamúla an Rialtais thar breis is 20 bliain. Tá an cuma ar an scéal go bhfuil níos mó le teacht.
Ansbacher now stands fully revealed as a massive scam, a criminal conspiracy, operated for years for the benefit of the wealthiest people in Ireland. Its purpose was to hide their money in offshore accounts so that they made no contribution to Irish society through taxation. Let us not forget all this was going on throughout the 1980s and the early 1990s when our people were suffering the worst effects of cutbacks in health and education and other public services. While people died on hospital waiting lists, others queued to be part of an exclusive and secretive Ansbacher banking club. Nuair a bhí dífhostaíocht ag méadú, nuair a bhí eisimirce ar ais ag leibhéal na 1950í, nuair a bhí fadhb na drugaí ag marú daoine óga 'chuile seachtain sa chathair seo, nuair a bhí gearrtha siar ar siúl in oideachas agus sláinte agus leas soisialta, bhí uasal-aicme na cathrach seo ar muin na muice. Agus ainm na muice sin ná Ansbacher.
While we were being lectured about the need for belt tightening, lower wages and reduced State spending, the Ansbacher elite were secretly hoarding their tax free money. While young Irish people had to emigrate to London and Boston, the Ansbacher circle of friends enjoyed the high life in Ireland and exported their riches to the Cayman Islands.
Our public services, particularly the health services, have not recovered fully from the cuts of that time but we see from this report that those who could most afford to contribute to public finances were the very people who made sure they paid little or nothing. They swindled the ordinary PAYE taxpayer who bore the brunt of both tax and cutbacks in services.
Successive Governments failed to tackle this corruption at the heart of the Irish financial system because the corruption reached into Government Buildings, the board room of the Central Bank and the board rooms of the top companies in this State. Leading figures in these institutions were members of the secret, exclusive Ansbacher club. From 1989 to 1994, the Ansbacher banking club was operated from the offices of Cement Roadstone Holdings where Des Traynor was chairman of the company. Two other chairmen of the company at different periods, Tony Barry and Michael Dargan, were Ansbacher account holders. Tony Barry was also managing director of CRH, as was another Ansbacher account holder, Jim Culliton.
The report clearly shows the Ansbacher operation was accommodated by Cement Roadstone Holdings. This was quite open, with Ansbacher correspondence coming in with CRH mail and wads of cash being counted in the office and collected and delivered by CRH staff, yet Cement Roadstone Holdings expects us to believe it did not know what was going on. Apparently its key people, some of whom were account holders, knew about it as individuals but they did not know about it collectively. These CRH managing directors, chairmen and board members were being serviced in their Fitzwilliam Square headquarters by Des Traynor's private bank but they passed one another like ships in the night. This is a new and interesting definition of corporate responsibility.
CRH must be held accountable for its role in this affair and for its wider role. For years it operated as a virtual monopoly in the cement and concrete business in this State, squeezing out, by dubious methods, those smaller companies it could not buy out. The EU Commission has found CRH to be in breach of competition rules on this matter. It is common knowledge in the industry that it is the beneficial owners of many businesses which it does not declare in its annual report and company accounts. In 2000, it emerged under the Freedom of Information Act that it concealed 11 companies which were not listed in its annual report. In all cases, CRH was the majority shareholder. Why was no action taken by the Tánaiste against the company for this breach of company law?
Two CRH Ansbacher account holders, Tony Barry and Michael Dargan, were also board members of the Bank of Ireland. Questions must be asked about this cross-over and the influence wielded by CRH in the banking sector. The banks and CRH face very serious allegations of dis criminating against banking customers who were out of favour with CRH.
CRH was at the very centre of the web of corruption exposed by the Ansbacher affair. Des Traynor was a key man in the formation of CRH in 1969. As a significant financial contributor to the establishment political parties, CRH was always a sacrosanct company as far as successive Governments were concerned. Why else, for example, would the State have sold the quarry at Glen Ding in County Wicklow to Roadstone at a knockdown price and at a major loss to the taxpayer? The role of CRH in the Ansbacher scandal highlights the need for a full investigation of the Glen Ding affair. That should have been done a long time ago. It should have been investigated by the Moriarty tribunal. That can still be done and one route would be the appointment of an auxiliary judge to the tribunal to deal with this aspect.
We also need investigations into the broader role of CRH. Its practices have been significant contributors to gross inflation in the construction industry and the knock-on effect on house prices, the spiralling cost of road construction and other aspects of the national development plan.
We now know the Ansbacher names. We know the property developers, politicians, bankers, architects, builders, doctors, solicitors and self-styled entrepreneurs who participated in just one significant and hugely lucrative tax scam. I say "just one" because we do not know the number of other Ansbacher-type schemes.
In recent weeks we have seen the report of the Revenue Commissioners detailing action being taken against 1,800 holders of illegal non-resident bank accounts which were opened knowingly for them by every major financial institution in Ireland. There was also the National Irish Bank's clerical medical insurance tax scam.
One of the most damning conclusions of the Ansbacher report is its finding that the Central Bank failed to "test, appraise and gather the information available to it" and that this "resulted in the true nature of Ansbacher's activities going undetected for longer than ought to have been the case".
Governments lacked the political will and resolve to tackle this problem of tax fraud by financial institutions and their wealthy clients. They cannot say they were not aware of the scale of the problem, but it was not tackled. Instead, the approach taken by the establishment parties in this House was to set up tax amnesties in 1988, 1989 and again in 1993.
At the same time, the prisons were being filled with thousands of people, many of them drug addicts, who were involved in non-violent theft where the value of goods was often less than £100. For example, Garda statistics for 1993, the year of the last tax amnesty, show that there were 47,000 larcenies recorded. Almost 45% of those involved amounts of less than £100. Just under 63% of the thefts involved amounts of less than £200. There are no Garda statistics in this or any other year for tax crimes. The Garda do not even attempt to record it. A handful of gardaí have been seconded to the new Office of Corporate Enforcement.
Ansbacher reveals a tale of two Dublins. At one end of the scale there is the city of the élite who have the inside track on business and Government. This is where a man called Des Traynor lived in a pleasant, respectable and obviously wealthy community. Traynor's friends often approached him for advice and help in investing their money. He set up accounts for them to hide their money from the Revenue Commissioners. Traynor was not alone in the advice business. His clients were often referred to him by accountants and tax consultants. One Cork businessman, Cornelius Collins, told the inspector how he was advised by Stokes Kennedy Crowley to invest his money offshore and out of sight of the Irish tax authorities.
Stokes Kennedy Crowley, now known as KPMG, is one of the largest accounting firms in Ireland and part of one of the largest accounting companies in the world. However, the co-operative nature of this business community does not end there. Sometimes Mr. Traynor would arrange loans for his clients on which it was unclear how much interest was being paid in that it seemed considerably below commercial market rates.
Friends in this financial community help friends in trouble. Independent News and Media chairperson, Tony O'Reilly, spent more than £1 million paying the debts of Vincent Ferguson and Jim McCarthy. The three were all directors of Atlantic Resources. Mr. Ferguson, Mr. McCarthy and the previously mentioned Cornelius Collins used the Ansbacher accounts to secretly buy shares in their company. It all went wrong and they lost their money. In stepped Dr. O'Reilly who, in 1997 and 1998, paid the debts of Mr. Ferguson and Mr. McCarthy.
The other Dublin I mentioned is a city where people do not have the helpful bank manager or accountant to call on. They do not get the help of the private banking services that all the banks offer to their wealthy clients. They do not get preferential loan rates or have debts written off when in financial difficulties. In some cases there are not even banking services in their local areas, not even an ATM, as these banking customers are not profitable enough for AIB, Bank of Ireland and the rest to bother with.
There are more than 60 money lenders licensed by the Director of Consumer Affairs who can charge loan rates of up to 195%. In addition, there are illegal money lenders who charge even higher and more extortionate loan rates. Families in this other Dublin and this other Ireland get into debt to buy school books and uniforms, communion and confirmation clothes and even Christmas presents. Meanwhile, in Ansbacher Dublin, those who have large amounts of money share the opposite experience.
For example, let us take the case of David Doyle, who, together with other family members, ran one of Ireland's best known hotel chains. Mr. Doyle set up an offshore account in 1983. Unlike Mr. Ferguson and Mr. McCarthy, he made money buying and selling Atlantic Resources shares. These and other share dealing profits were hidden from the Revenue Commissioners. Mr. Doyle made a settlement with the Revenue Commissioners in 1993 but, prior to that, one of the final withdrawals of funds from his Ansbacher account was to buy himself a new car in 1990. It was a Mercedes SL and he thinks it cost "about £80,000 or £90,000". If Mr. Doyle had to live in the other Dublin, he would know exactly how much his car cost.
The real question to be answered now is whether any action will be taken against the financial institutions who facilitated white collar crime in the Ansbacher scandal and other scams which have yet to be exposed. White collar crime, facilitated by hugely profitable financial institutions, has enjoyed a virtual amnesty in this State up to now.
Is gá go mbeidh na ceisteanna curtha, na freagraí faighte agus beart déanta dá réir. Má tá aon tionchar ann chun bheith ag tuairisc Ansbacher, is gá athrú meoin iomlán a bheith ann maidir le freagacht comhlachtaí airgeadais agus comhlachtaí móra. Is gá don athrú sin tarlú anois. Is gá fiosrúchán a chur ar bun láithreach faoina comhlachtaí ainmnithe sa tuairisc, Cement Roadstone Holdings agus a leithéid ach go háirithe.
If the Ansbacher report is not a turning point for the accountability of financial institutions, it will have been a wasted exercise.
I welcome the report of the High Court inspectors into Ansbacher (Cayman) Limited and pay tribute to the inspectors for their major and detailed work. It is now up to the various statutory authorities to examine the report and to vigorously follow up on the various matters arising.
As I previously indicated to the House, the Office of the Revenue Commissioners has been pursuing these Ansbacher cases. To date, more than €18 million has been received, mostly by way of payment on account in respect of 55 cases. The Revenue team has commenced inquiries into 224 cases and five of these have concluded in settlements. The total consists of 121 cases named by the authorised officer of the Department of Enterprise, Trade and Employment and 103 similar cases discovered by Revenue. The majority are still under active investigation. Apart from these disclosed entities, there are 700 other connected entities on which the Revenue investigators are assembling information.
Revenue has said the report of the High Court inspectors into Ansbacher will be very useful to its ongoing investigations. It has already begun the process of matching and associating the information in the report with the results of its own inquiries and has applied to the High Court for access to the documentation collected by the inspectors. Revenue has re-emphasised its commitment to pursue the outstanding tax liabilities, interest and penalties in these cases and to investigate for prosecution where sufficient evidence can be assembled.
This is not the only major investigation of tax evasion under way. As Deputies will be aware, the DIRT look back audit was undertaken to establish underpayments by financial institutions going back to 1986. The audit of 37 financial institutions resulted in €219 million being collected in tax, interest and penalties. Revenue has since gone on to investigate the source of the deposits in such bogus non-resident accounts and sought to collect the underlying tax that should have been paid. A voluntary disclosure scheme yielded €227 million and identified 3,675 account holders who held 8,380 accounts. The next steps are under way.
On the basis of the information gathered during the look back audits, 800 cases are already under inquiry and another 1,000 are ready for investigation. Some 18 applications have been made to the High Court seeking the production of books, records, documents and other information from financial institutions with a view to identifying those account holders who have not availed of the voluntary disclosure scheme or who were not otherwise identified by Revenue. A total of 15 High Court orders have been granted to date and work has commenced on analysing the first tranches of information supplied under these orders. It is too early to estimate the number of account holders who will be identified on foot of High Court orders. I understand the Revenue investigations will extend over a number of years and that prosecution will be pursued in appropriate cases.
Revenue has also been investigating the clerical medical-NIB schemes since 1998. A total of 452 cases are involved and, to date, 332 have been settled. Investigations are ongoing in regard to the rest and seven cases are being considered for prosecution through the courts. Revenue has collected more than €37 million in tax, interest and penalties so far. I fully support Revenue in these investigations and, more generally, in combating tax evasion. Tax evasion is a crime and needs to be pursued and tackled vigorously. The Government has introduced a range of legislative measures to enhance Revenue's capacity to combat this kind of tax evasion, many of which have been used to good effect in the investigations to which I have referred.
The Finance Act, 1999, provided substantial additional powers to Revenue facilitating greater access to material held by, or in, financial institutions, including, in certain cases, in non-resident accounts, where this information is necessary to pursue tax liabilities. Revenue is now able to obtain a greater range of information from third parties in regard to persons with whom they have dealings and to require taxpayers to provide fuller information to Revenue on their own tax affairs. The Act also broadened the existing powers of access to accounts of named individuals where Revenue has reasonable grounds to believe there is particular information in the possession of the financial institution relating to the taxpayers' liability to tax. Revenue, in specific criminal investigations, was also empowered to gain access to accounts in the same manner as the Garda in criminal investigations. Finally, Revenue was permitted to conduct on-site audits of a bank's affairs, not just a PAYE or VAT audit as had been the case up to then.
One further significant power provided to Revenue under the Finance Act, 1999, was that it was no longer required to seek the approval of the High Court for access to the account of a named individual but could secure such access by way of an order issued by one of the three Revenue Commissioners.
Other legislative provisions introduced in earlier years are also of assistance. Since 1992 Irish intermediaries, such as banks and professional advisers, who act for or assist Irish resident individuals or companies to open foreign bank accounts are obliged to make a return of the fact to the Revenue Commissioners.
In addition to these improvements in Revenue's powers, in the Finance Act, 1999, we introduced anti-avoidance measures relating to capital gains tax, including measures aimed at countering capital gains tax avoidance practices based on offshore trusts. The most important of these measures, which came into effect on 11 February 1999, were the attribution of charitable gains accruing to an offshore trust to beneficiaries resident or ordinarily resident in the State to the extent that they receive capital payments from the trustees of the trust and the imposition of a charge to CGT where the trustees of a trust cease to be resident or ordinarily resident in the State. Other anti-avoidance measures introduced in the Act related to the transfer of assets abroad.
As well as the legislative framework, it is important that sufficient resources are made available to the Revenue Commissioners. I have provided for an additional 400 Revenue posts in the last two years enabling, among other matters, a considerably enhanced audit and investigation resource. Action against offshore tax havens is also under way at an international level and an OECD model tax information exchange agreement has been established. It provides the template to allow exchange of information on request in specific cases between OECD countries and tax haven jurisdictions. A total of 31 such havens have so far committed to exchanging information, including the Cayman Islands, the Channel Islands and the Isle of Man. The deadline envisaged for such agreements is 1 January 2004 for exchange in criminal tax matters and 1 January 2006 for exchange in civil tax matters. The Revenue Commissioners will pursue the negotiation of such agreements with relevant jurisdictions.
At EU level agreement has been reached on the substantive elements of a savings directive which will provide eventually for automatic exchange of information on payment of interest from debt claims of every kind, including bonds and collective funds. Furthermore, the European Union is pursuing the adoption of the same measures in certain countries or territories outside the European Union, some of which would be regarded as tax havens. Once sufficient reassurances have been obtained in regard to the application of equivalent measures in these areas the European Council of Ministers will decide on the adoption and implementation of the directive. The target date for Council agreement is the end of this year.
I turn now to the role of the Minister for Finance in regard to financial regulation. As Minister for Finance, I am responsible for developing the legal framework under which the Central Bank operates. Operating within that legal framework it is a matter for the bank to carry out the day-to-day supervision of financial institutions.
That is a very narrow interpretation.
As pointed out in the report of the inspectors, when assessing the role of the Central Bank it is important to bear in mind what precisely the role of the bank was in these matters. As supervisor of the banking system, it is concerned mainly with protecting against prudential and systemic risk.
That is nonsense.
Prudential supervision aims to ensure financial institutions comply with a set of rules that safeguard their solvency and liquidity on an ongoing basis and ensure the safety of depositors' funds. Systemic supervision aims to safeguard the financial system as a whole. There can be no doubt that the Central Bank discharged these functions well during the whole period covered by the inspectors' report. There was no failure from a prudential point of view as is evident from the stability of the Irish regulated financial sector. With the benefit of hindsight, it is now clear that further questions could have been raised with Guinness & Mahon, though it is not clear that proper information would have been provided in response to such questions.
That is nonsense.
It is difficult to see how any supervisory system, including one with regular on-site inspection processes such as the Central Bank's, could have detected the existence of deliberately concealed arrangements adopted at the highest level and not forming part of its accounting records. In this context, the inspectors' report makes clear that the bureau or memorandum accounts system operated in Ireland was concealed from the Central Bank. When considering certain information that came to the bank's attention in the course of its inspections, regard must be had to the statutory provisions in relation to professional secrecy and confidentiality applicable to the bank in the performance of its supervisory role. These provisions were based on similar provisions in European Union law.
The report is at pains to point out that the duty of confidentiality meant that the Central Bank had no means of passing information about matters that might have warranted investigation from a tax perspective directly to the Revenue Commissioners. As the law currently stands, the bank may not disclose any information about the business of any person or entity which comes to its knowledge due to its supervisory activities. Some very limited exceptions are set down in legislation. These exceptions, or gateways, allow for limited circumstances of disclosure, including to a court in connection with criminal proceedings or a liquidation, to other prudential regulatory authorities which are subject to similar confidentiality requirements, to legislative authorities where this is necessary for prudential control, or to the Garda in relation to money laundering and other criminal activity. This last provision only came into effect as a result of the Criminal Justice Act, 1994, which imposes an obligation to report such suspicions to the Garda. This was a fundamental change in the legal environment in which the bank operates.
The report indicates several instances where it appears that banking activities have been undertaken in the State by various persons or entities without a banking licence. This is a matter of grave concern to the Central Bank and me and must be followed up. The bank has offered to provide full assistance for the Director of Public Prosecutions in relation to this matter.
The Central Bank will be examining all references to individuals named in the inspectors' report and consider any regulatory issues that arise with particular regard to directors and senior management of financial institutions. I understand the bank authorities have been in touch with the Director of Corporate Enforcement about the report and will be considering what action is appropriate in the light of those discussions.
The report mentions the question of possible breaches of the exchange control legislation, but it was outside the remit of the inspectors. My Department has in the past obtained reports on exchange control aspects of the various investigations under way from the Central Bank which was acting as the Minister's agent in this area. The matter was referred to the Director of Public Prosecutions as a result of which a Garda investigation is taking place. The bank will be revisiting the matter in the light of the inspectors' report and I expect the Director of Public Prosecutions to receive all relevant documents.
The Government is in the process of establishing a new structure for the regulation and supervision of financial services. The new struc ture and the legislation underpinning it will make it much more difficult for the type of activities outlined in the report to go undetected in the future. I appointed the interim board of the Irish Financial Services Regulatory Authority earlier this year while last month this House debated Second Stage of the Central Bank and Financial Services Authority of Ireland Bill, 2002. It is my firm intention that the Bill will be enacted not later than the end of this year, allowing the IFSRA to commence operation on a statutory basis early next year. This new dedicated regulatory authority for financial services will have responsibility for oversight of all significant financial services providers and its own independent board and chief executive. It will have a clear mandate to promote the best interests of users of financial services. The Bill before the House establishes the basic structure of the new regulatory authority and a complementary second Bill, which I hope to introduce in the Houses later this year, will contain some additional provisions relevant to today's debate.
This second Bill, as well as establishing a statutory financial services ombudsman and consultative panels as recommended in the McDowell report, will give significantly enhanced oversight powers to the IFSRA. In so doing it will implement the relevant recommendations of the review group on auditing and the DIRT report of the Committee of Public Accounts. The Bill will also require directors to confirm compliance, not only with general company and tax law, but also with all relevant regulations and guidance issued by the regulatory authority. The auditors of financial institutions will also have to review the directors' report and notify the directors and the IFSRA if they do not agree that it is fair and reasonable. The Bill will also give the IFSRA the power to commission specific compliance statements at any time from the directors of a financial institution or its auditors and impose a general obligation on audit firms to provide information for the IFSRA on request.
I referred to the issue of the constraints on banking regulators arising from the confidentiality provisions contained in EU and national legislation. I intend to make significant changes in the area of regulatory confidentiality by way of Committee Stage amendments to the IFSRA Bill now before the House. Specifically, I intend to provide for the Central Bank and the IFSRA to report directly to the Revenue Commissioners any suspicions of money laundering of the proceeds of criminal revenue offences that come to their attention in the course of supervisory duties.
There has been considerable tightening up across the regulatory front. This applies to company law enforcement, tax collection and the supervisory approach of banking regulators. The Criminal Justice Act, 1994, to which I referred, was milestone legislation in this regard. The new legislation, which is currently being drafted, will further and radically alter the compliance environment within which financial institutions must operate. Taken together with the provisions of the new Companies Bill, significant legislative measures will be in place to guard against the type of non-compliance with tax and other statutory obligations revealed in the inspectors' report.
The role of the enforcement agencies in implementing the provisions of the established legal framework is vital. As a society, we have a right to expect that all the agencies concerned will act vigorously to ensure that the law is respected and that wrongdoers are made accountable for their actions. I have every confidence in the people who manage and staff these agencies and in their determination to act promptly on the suspicions that they have and to take appropriate action in a timely manner. The inspectors' report is in the hands of the Central Bank and the Revenue Commissioners and both institutions are examining its contents with a view to identifying the follow-up action required, including identification of gaps or inadequacies in the current legislative framework.
It is the responsibility of Government, particularly of the Ministers whose remit covers the taxation code, the regulation of financial institutions and the criminal justice system, to put in place a comprehensive and effective national legal framework to address the kinds of activities that the report highlights and to encourage and co-operate with international action against these activities. For my part, I will give the most careful consideration to any suggestions for strengthening the legislative provisions that come from the agencies charged with administering this framework and enforcing the law.
I am extremely disappointed with the Government's response to this debate to date. It gives the impression of business as usual, that it has heard all this before, that it has everything under control and Members on the Opposition benches need not worry their pretty little heads because it has competent Ministers and regulators who will take care of everything for us. That approach misses what this report has shown. It reveals a criminal conspiracy to defraud compliant taxpayers, which is an extraordinary finding. This scheme was designed for the privileged, run for their benefit and it was done out of some of the most prominent companies in the State. This was a conspiracy about which the regulators – to whom we are now expected to genuflect and accept that they will handle this – knew, but to which they turned a blind eye. That is the reality. Ministers tell us in one breath that this may be only one of many cases. We heard the Tánaiste and the Minister for Justice, Equality and Law Reform indicate their belief that this is much more widespread than one or two cases, but in the next breath they said that prosecutions on foot of these findings are highly unlikely.
We never said that.
That is the distinct impression that has been given.
We never said that. The Deputy has used those words just now.
We will listen to what the Minister has to say. He indicated that he did not believe prosecutions would be easy to get and I also heard the word "unlikely" mentioned. I may have wrongly attributed that to the Minister – perhaps that was said by those who interpreted his words – but that is certainly the impression that has been given. I look forward to hearing the Minister's contribution in which I hope he makes clear that prosecutions will be vigorously pursued and that we will have a realistic expectation of these abuses being prosecuted.
We know that offences were committed. They include banking without licence, conspiracy to defraud the Revenue, fraudulent trading, failure to deduct DIRT and PAYE taxes due, failure to make company returns, breach of exchange controls and concealment from auditors. I do not have the legal background of the Minister for Justice, Equality and Law Reform, but all those activities are clear offences. I cannot understand why as soon as this report was published two Ministers indicated that it is highly unlikely that prosecutions will be—
We never said that it was highly unlikely.
The Minister indicated that we will not have prosecutions.
I did not say that.
The assurances from the Tánaiste and the Minister for Finance that the regulatory authorities have got to grips with the defects ring hollow. One need only read the various extracts on how the regulators dealt with this matter to know that these assurances are not very reassuring.
We are aware from the case of Enron and many others that the reality with all these scams is that the regulators arrive on the scene red faced, breathless, ill-equipped and too late. That is what is happening all the time. Ministers refuse to have a proper assessment carried out of what is best practice on regulation and the consequence of this is that they bury their heads in the sand. It is not good enough to do what the Minister for Finance has done year after year, to patch up the latest puncture and wait and see where the next leak springs. That is the type of reaction we have had in the Finance Act each year. This report must be the last wake up call that we receive. It must herald a concerted and sustained programme of reform to achieve best practice in regulation and compliance. If we walk away today and leave it to individual Ministers and the regulatory bodies to return to their offices, to the familiar culture and practices, the constant pressures of interest groups and the pragmatic compromises they have to reach, we will have failed to heed the wake up call this report represents.
That is why our party has recommended that the Dáil establishes immediately the Committee of Public Accounts, to which this report could be passed, to review the policy implications unearthed in this report and to make recommendations on matters such as how to enhance the chances of detection and prosecution – I am not sure what adjective the Minister will use – to guard against the likelihood of a repeat of this. We need to place much clearer obligations on advisers, directors and financial institutions on their practice. We need to strengthen the obligations of regulators on the investigations they conduct and to amend the circumstances where confidentiality is afforded by regulators.
The Minister for Finance cannot have read the sections of the report dealing with the Central Bank or he would not have given us the account he gave of how everything in the garden is rosy. He has genuflected slightly in saying that with the benefit of hindsight matters might have been different. Did he read that the Central Bank knew that Guinness & Mahon did not hold records for fear that they would come into the hands of the Revenue Commissioners? The Central Bank saw the loan security documents which provided a smokescreen for the Revenue, but it agreed not to take any notes of them. It changed references to "tax evasion" in reports by inspectors to "tax avoidance" to downgrade what was going on in these banks. The Minister is telling us that these are the people who, with the benefit of hindsight, might have acted differently. They should have acted differently at the time. It is jumping off the pages of the report that they should have done so.
They refused to disregard the back to back loans in calculating the free resources ratio. Why did they do so? It is stated in the report that they were afraid of the embarrassment if the Revenue Commissioners discovered that they were granting this type of relief to the financial institutions because this was tax evasion. That is what they did at the time. This is not about hindsight or that they might have done it better if they knew all the regulatory obligations that we now know. They knew that at the time. They became aware of a loan of £416,000 to one of their directors, but did nothing about it. They made no effort to look behind the bogus reassurances offered by Mr. Traynor at the time, even though they had in their possession documents that showed that these were bogus reassurances. They did not even seek the internal audit report which they knew had been undertaken. In saying that with the benefit of hindsight further questions could have been asked, the Minister for Finance has not the faintest understanding of the level of anger among the public about what was allowed to go on. These regulators were not doing their job. That is the long and the short of it. They were not doing the job that they were put in office to do.
The Minister for Finance expects us to believe that we are now living in a new era. The reality is that no attempt was made to review best practice in the framing of the new financial regulator legislation, which was decided on four years ago in October 1998. The Minister had to tell us today that the type of regulatory changes required by the audit committee are not included in that Bill. These recommendations were made a year ago, but the Minister has not incorporated them in that legislation. He will have to do so on Committee Stage of that legislation. Why did he present us with that Bill, which is no more than putting a bulldog clip around all the existing regulatory powers, centralising them in a new agency and saying that everything in the garden is now resolved? It is not resolved and the Minister was forced to admit today, in a mealy-mouthed way, that the legislation he brought before the House and drove through Second Stage against the wishes of the Opposition is inadequate. He has gone even further by indicating he will have to return to the House with secondary legislation. On introducing the Bill, he stated the secondary legislation was required to tidy up some loose ends. Now it transpires that all the Committee of Public Accounts' recommendations on Central Bank regulation will be implemented.
The legislation does not contain the key elements required. The Minister belatedly indicated he would produce proposals to deal with the failure of the Central Bank to convey to the Revenue Commissioners information it was aware of with regard to revenue fraud. The Committee of Public Accounts, with its all-party composition and powers to bring in outsiders, should evaluate the changes we need to make. It would be wrong to rely on the Minister, who has resisted many of the necessary changes to the Bill set out by the Department of Enterprise, Trade and Employment, or his advisers to return to the House at a later date with a definition of best practice. The Committee of Public Accounts should establish on our behalf what is best practice.
If, as the Minister and other Ministers contend, this is the tip of the iceberg, we need to learn a great deal more about it. We know the inspectors identified other financial institutions involved in these kinds of scams but did not pursue them. A trawl of Central Bank records is required to ascertain the extent to which other financial institutions gave the Central Bank poor reassurances of the type it accepted at face value in the past. The inspectors' reports are available to the Central Bank. Who is trawling through them to find prima facie evidence that other financial institutions provided returns which were not up to scratch? Ministers have not commented on this.
What flaws have been identified in audit practices? The Minister told us the Revenue Commissioners on their own account unearthed 103 additional cases of similar frauds, which is almost as many as in the Ansbacher case. In what institutions did these occur? Will the banking behaviour of these institutions be challenged? This is the reason the House wants further action. It will not accept bland assurances to the effect that everything in the garden is now rosy or that that was then and this is now.
With regard to the voluntary declaration, for example, we were told there were 300,000 non-resident accounts. Various estimates of the number of these accounts which were bogus were made, all of which were upwards of 50,000. Of these, little more than 3,500 complied with the voluntary declaration. What happened to the others, the upwards of 47,000 accounts? Where are they? The Minister informed the House they are being investigated on a one by one basis. We want to know what is being unearthed about the scale and nature of the practices involved. Can we do more to hunt down these accounts because the current process appears to be very desultory?
It is time to challenge preconceptions about best practice. There is no justification for the protection of confidentiality the Central Bank gives to financial institutions it regulates because it allows tax evasion go unchallenged. Why should auditors compromise their independence by selling tax advice and other services to the business they are auditing? Judging from the legislation she has introduced, the Minister appears to accept that this practice does not need to be changed. She needs to rethink her position on foot of this report.
Why should investigations of malpractice be conducted by members of the profession? This matter needs to be scrutinised. The compromise proposed by the Minister appears to suggest that while a degree of oversight is required, the process will continue to be essentially one of self-regulation. I have not heard her question self-regulation on foot of the report, which clearly indicates that some of the auditing practices were not up to scratch.
Why can discretionary trusts be so easily subverted, as is clear from the report? The Minister gave no indication that such trusts are adequately covered to ensure there are no more abuses of this kind. Financial institutions should be obliged to set out transparently the features of every financial product they sell? It is now clear that many financial products are not kosher. We had the examples of the NIB, Ansbacher and the 103 cases being pursued by the Revenue, about which the Minister has not informed the House. What kind of banking practices were involved in these?
To protect shareholders, it is time directors of public companies were required to have a full declaration of their interests and submit a tax clearance certificate. We must treat this matter much more seriously than in the past. It will not be good enough for us to leave with our buckets and spades after the debate, reassured that all is well and that the Director of Corporate Enforcement, the Revenue Commissioners and the Central Bank will have the matter in hand. The Com mittee of Public Accounts should independently examine the issue and draw the policy conclusions required for the future.
I thank Deputy Richard Bruton for sharing time. I am delighted to have the opportunity to contribute to the debate. As a taxpayer during the 1970s, 1980s and 1990s, it is galling that key business figures tried to avoid their lawful tax obligations and that people at the pinnacle of their professions and leading companies, who clearly plotted and planned to pay as little tax as possible, adopted a double standard in terms of their expectations of the behaviour of others. These were the very people who preached to us about the need for fiscal rectitude and prudent financial management of the economy. The bare-faced cheek and hypocrisy of many of these figures is stunning.
The lawful taxpayer was cheated not only by tax dodgers who sought to evade paying tax, but also by the institutions of the State charged with ensuring regulations and laws were respected. These institutions, which were funded by taxpayers' money and contributions, clearly failed in their duty to perform their statutory functions properly. The institution open to most criticism is the Central Bank which obviously adopted a "hear no evil, see no evil" strategy in the performance of its regulatory functions for financial institutions. It is galling to think that this institution, which is charged with ensuring that the banking sector operates within the law and is solvent, ignored clear evidence of illegality lest people felt uncomfortable about the probity inquiries.
As Deputy Richard Bruton stated, auditors and their professional associations failed to ensure companies properly accounted for their activities and complied with the letter and spirit of the law. This occurred despite the huge fees they charge. It is evident from current events in America that books have been cooked to send out a clear message to shareholders. Legislation on this issue is vital.
Similarly, the Revenue Commissioners must take some of the blame for failing to notice that certain people were living beyond their means. Regardless of the complexity of the scheme devised by Mr. Traynor and his colleagues, I cannot believe that in each of the cases listed in the Ansbacher report the Revenue Commissioners could not have achieved more by conducting probing and detailed examinations of individual account holder's tax affairs. One wonders if the Revenue Commissioners felt compromised or intimidated in terms of investigating the tax affairs of certain people who were close to the centre of power during the 1970s, 1980s and 1990s. This coincided with their rigour in collecting tax debts from compliant, if insolvent, taxpayers. It is galling to note the extent to which they ignored other obvious sources of revenue for the State.
I welcome the establishment of the Office of Corporate Enforcement and the appointment of Mr. Paul Appleby as its director. Mr. Appleby's initial impact in this role has been very positive and he has made his presence felt among the business community. It is important that entities such as the Office of Corporate Enforcement, the Central Bank and the Revenue Commissioners recognise that they are not self-serving bodies and that they have a duty to perform their statutory roles and give value to the taxpayers who fund their offices. In my capacity as incoming Chairman of the Committee of Public Accounts, I am anxious to examine whether taxpayers are getting value for money from such entities. Do they deliver on the mandates they have been given by the Oireachtas? Are they unflinching in their pursuit of non-compliant companies and individuals? Do they ensure that all those who do not comply are treated equally and that no sector receives preferential treatment? It is vital that such entities realise their performances will be clearly analysed and assessed to ensure that taxpayers are not let down by organs of the State established to ensure compliance and to enforce respect for the law. The Minister, Deputy Harney's decision to appoint an inspectorate to investigate the affairs of Ansbacher (Cayman) Limited was a momentous one and she should be commended for it. The manner in which the State responds to the report, however, will be the true test of its resolve to ensure that the issues that gave rise to the appointment of the inspectorate will never again be a factor in Irish commercial and public life.
I welcome today's proceedings and I commend the Deputies who have contributed so far. They have, in general, provided a thoughtful reflection on some of the issues that were disclosed in the inspector's report.
I pay tribute to the Tánaiste, Deputy Harney. I may not be regarded as an unbiased commentator in this regard, but Deputies from all sides have generously acknowledged that she instituted the sequence of events that led to the publication of this report. It is not so well known, perhaps, that since she embarked on this project she has lived with it in the face of criticism from some of those affected by it. She has mentioned on a number of occasions that many people are not pleased that the Government has pursued these matters with such zeal.
She has lived with constant negative and cynical comments about her determination to pursue the investigation. There have been many suggestions that she is merely interested in occupying the high moral ground and that her attitude is detached from the realities of commerce and life. In some sense, it has been hinted, she is flying against the interests of common sense and commercial reality. She has stood up to constant buffeting from interest groups who resent the fact that she is so keen to maintain a certain course of conduct.
Deputy Broughan has acknowledged on behalf of the Labour Party that it initially preferred an investigation conducted by the Moriarty tribunal. It put down a motion at the time suggesting that such an alternative route be taken. One of the attractions of the tribunal process is that it is more public than the private conduct inspectors are obliged to adopt. We should acknowledge at this stage that if the Moriarty tribunal had taken this on as well, it would have been a tribunal of prodigious length. It would have taken many years to conduct a public inquiry of the scale which has been completed by the inspectors. That lawyers would have been present would have meant constant visits to the courts to challenge various matters and it would have been impossible to cross-examine people privately. In retrospect, we should acknowledge that the Tánaiste made a wise choice, even if it did not immediately gratify public opinion at the time. Many people felt that the most open and transparent process possible should be put in place. As a method of investigation, a tribunal of inquiry has many shortcomings – its proceedings must be conducted in public, save in narrow circumstances, there is no possibility of compelling people to explain themselves in private and everything is contested on a line by line basis by people who are well attended by lawyers. It is quite obvious, therefore, that the correct choice was made.
On a number of occasions in recent years, the Tánaiste's motivation has been questioned, specifically in relation to this inquiry's timing. Deputies have suggested from time to time that she was keen for the outcome of the inspection to be delayed with a view to seeking advantage in this year's election. It should be clearly and unequivocally stated that she took the right course by putting the matter in the hands of independent inspectors who were subject to the control of the High Court.
I pay tribute to the four inspectors, who have done excellent work. They finished the report in time and showed tremendous zeal, industry and commitment. Similarly, I praise Mr. Justice Declan Costello, who was greatly disappointed when ill health prevented him from completing the job. Each of them deserve thanks and gratitude for their hard work. I reiterate that the fundamental wise choice in this regard was made by the Tánaiste. Those, both inside and outside the House who doubted her, who suggested other courses of action and who suggested that she was motivated by base motives, have their answer in the form of this report.
I will deal briefly with the cost of this report, an issue which has been mentioned by speakers today. As the inspectors pointed out, it cost €3.2 million, but a gain in direct revenue of about €17 million is now accruing to the State as a result of the activities of the Revenue Commissioners.
Does the Minister accept that the moneys were due to the State in any event, and that we have been left with the net cost?
I was just about to say precisely that in response to those who engage in crude arithmetic and say that the revenue accrued is the end of the matter. The Companies Act, 1990, which provides for the establishment of inspectorates of this kind, provides that "the expenses of and incidental to an investigation by an inspector appointed by the court under the foregoing provisions of this Act shall be defrayed in the first instance by the Minister for Justice". It goes on to provide that the Minister can apply to the court to make other corporate bodies mentioned in the report liable for the costs. As the House is aware, an application of that kind will be made. I do not want to make a further comment on the matter in case it may be seen as an attempt to prejudice the court or to urge it in one direction or another. Subject to legal advice I may receive, I wish to make clear that I intend to take all steps available to me to ensure the costs of the report are borne by the corporate bodies which the law allows to be made liable and not by the taxpayer.
Hear, hear.
A number of Deputies have commented on the inspectors' remarks, which were echoed by the Director of Corporate Enforcement, Mr. Paul Appleby, the Tánaiste and I. The institution of criminal proceedings arising from the misdoing revealed by this report or mentioned in it will be a difficult process. This observation is nothing short of the truth, although it does not suit some Deputies to acknowledge the truth. It suits them to appear outraged by the truth and to wave certain things away as if they were in possession of some kind of rhetorical magic wand. They choose to engage in the politics of competitive anger and outrage and to say that any difficulties which may lie between the sword of justice and the miscreants mentioned in the report are somehow the fault of those who point out that these difficulties exist.
Will the Minister give way?
I will not for the time being. The Deputy had more than enough opportunity to make these foolish points in the past and will have more than enough opportunity to comment later.
The reason the inspectors made that point was because they knew the extent of the misdoings they were revealing would cause anger and outrage among the public, rightly so. They also wanted to make it clear that the passage of time, the absence of and destruction of documentation, a point which has never been acknowledged sufficiently, that they themselves had powers to compel testimony which no prosecutor could receive in the same circumstances and that that com pelled testimony before them would be inadmissible in any criminal proceedings put them in a more advantageous position than any prosecutor attempting to reconstruct these events of ten, 15 or 20 years ago. To point out that truth is not in any sense to condone it. It is simply to lead public opinion fairly, not to orchestrate it in a way which is bound to disappoint sooner rather than later. The reason the inspectors and the Director of Corporate Enforcement made these points, which the Tánaiste and I echoed, was that public opinion, in the absence of these points being made, would expect immediately a massive and instant criminal law response to a situation where there are difficulties which will not go away.
The Tánaiste and I are in the position of having seen the authorised officer's report on this matter a number of years ago. It is sometimes difficult to recall how long ago it was. It is more than three years since the report first came to hand and the sequence of events which led to the appointment of the inspectors was embarked on by the Tánaiste. Therefore, knowing something for three years, I am not as skilled as some Members of the House in being able to flick on the switch of public outrage and simply address it as though it was fresh news which had come to my attention.
The Minister used to be good at that.
Give him a lamppost to climb.
The new Michael McDowell.
There is no point in barracking, Deputy Hogan. Unfortunately, I have been in possession of the bulk of these facts for a long time.
The comfort of office dulls one's senses.
It does not dull any sense. What I was about to say before the chorus of competitively outraged politicians opposite got going was that one of the disadvantages of knowing something for that length of time is that one's sense of outrage, annoyance, surprise and shock abates with the fact that it sits on one's desk for such a period when, owing to the exigencies of due process properly carried out, a lot of time elapses between one's learning of the matter and being allowed to speak about it in public. That is the reason I welcome the opportunity today to express my sense of deep anger and revulsion at the sequence of events set out in the report.
It is everything about which most of the Deputies opposite have spoken. As the Tánaiste said, it is a shocking indictment of the great and the good of an entire generation of Irish commercial life. There is no getting away from this. There is no getting away from the rank hypocrisy of those who postured in our society as being concerned with the interests of enterprise, probity, solid and sound national finances, those who held high office and those who were entrusted with office by those who held high office. It is difficult to get away from a feeling of revulsion about the rank hypocrisy of those people who opted out privately from the problems with which they were supposed to deal publicly. Words are difficult to find to convey a proper sense of anger and revulsion against the total hypocrisy that permeated the thinking and public posturing of many of the people identified in the report.
It is not the first time these things have happened and probably will not be the last. However, there has been significant movement. The Tánaiste did not spend the intervening period of three or four years doing nothing, just awaiting the outcome of the report. She set about – although not an elected politician at the time, I was privileged to be involved in this enterprise – reforming Irish company law to make it enforceable and ensure Irish entrepreneurs and Irish society generally complied with it. The process that led through the working group to the establishment of the Office of the Director of Corporate Enforcement was motivated by the private knowledge the Tánaiste had that while the work of the inspectors was going on, she would tackle one of the fundamental issues which would have arisen in any event whenever the report was met, the whole question of enforcement and compliance with company law.
There has been a dramatic change in the powers given to investigatory bodies, including the 1994 Act which deals with proceeds of crime and money laundering, the powers of various bodies to share information and the legislative initiatives now before the House for the regulation of the banking sector. A huge series of legislative steps either have been taken or are about to be taken which will address many of these problems. However, one issue they will never address is the presence of dishonesty as a constant feature in any society. I fully accept and agree with what some speakers opposite said, that dishonesty is not the monopoly of one class or section of society. It is liberally sprinkled throughout society. Those who practice dishonesty at a senior level and in senior institutions in society and seek to benefit from it are no different in moral terms from any other citizens of the State. One can recall the kind of events we have witnessed recently such as the sale of the Johnston, Mooney & O'Brien site and the attempts to use then inadequate inspectoral powers under the Companies Acts to get at the truth. We think of the £500,000 in cash being carried around the streets of this city in a tennis holdall to be paid, we were told, to a mezzanine financier—
By friends of this Administration.
—because he wanted cash for his interests on that side. When we think of all those events it would be very naive to think that any amount of legislative responses would be sufficient. There is also the fundamental question of standards, decency, honesty and integrity and the obverse side to which Deputies referred, the issue of simple, naked, dishonest greed which is exposed in the report.
All I would say to Deputies in this House is that the mere fact that time has passed, the mere fact that these events have effectively been factored into many people's political thinking as a given rather than as something which has suddenly come onto the scene as a nasty and shocking surprise, and the mere fact that the tribunals prepared us to some extent for what we have read in this report should not take away from our sense of genuine outrage and revulsion that an entire society should be dominated by an élite among whom there were so many people willing to disregard so many rules and not apply them to themselves while lecturing everybody else about the immorality, as they saw it, of other people's shortcomings.
Deputy Broughan mentioned my objections to section 153 of the Finance Bill.
I remember them very well.
As he recalls, I objected to it and his colleague, Deputy Quinn, amended it to accommodate my objection. The reason for my objection was that a fundamental constitutional issue, that of legal professional privilege, was threatened by it. Deputy Quinn made the change to accommodate my objections and Deputy Broughan voted for it. Sometimes it is better to look in the mirror before making cheap political points.
I remember what the Deputy said.
I wish to share time with my colleague, Deputy Rabbitte. I am pleased to speak on this matter today. I pay tribute to the two Progressive Democrats members of this Coalition Government for their presence in the House and deplore the fact that Fianna Fáil members of the Cabinet are not here during the course of this debate. The point was well made by Deputy Eamon Ryan that without the obligatory presence of the Minister for Finance and whoever else may appear on behalf of the Fianna Fáil party – a party that has benefited enormously from the contributions of the golden circle – that party has run away and hid when it comes to this matter. I can understand why Deputy Harney left Fianna Fáil.
I read in some quarters that Ansbacher Saturday had been a damp squib and in so far as no additional names were put into the public domain perhaps that is not surprising. The Ansbacher scheme and, no doubt, other schemes like it, cost lives. The health service has yet to recover from the savage cuts brought to bear upon it between 1987 and 1989. The pages of Barry Desmond's autobiography detailing his time in the Depart ment of Health reveal the continuing crisis in our health services brought about by a lack of funds. I have been fortunate enough to have served in ministerial office in three different Governments in two separate spells. I can honestly say that the spectre of Ansbacher hung over every issue dealt with by these Governments. None of them could afford the loss of tax revenue that Ansbacher represented. On a previous occasion I have spoken of my regret at my party's acquiescence to a tax amnesty introduced in 1993 by the present Taoiseach. What was revealed at the weekend was a list of names, none of which persons needed or deserved such generosity from the State. These were people who took from the poor to enrich themselves yet they had us over a barrel; without the money raised by the amnesty, about £250 million, health boards would have laboured under an increasing burden of debt. It was Hobson's choice.
Two years ago in my capacity as a former Minister for Finance I had the pleasure of being summoned to the Public Accounts Committee sub-committee investigations into non-resident accounts. I detailed some of the efforts I made to change the culture within the Revenue Commissioners with respect to seeking convictions on tax offences. My crude shorthand was that we needed a Lester Piggott – a high-profile prosecution and I stress, jailing – for tax fraud. My argument then and now is that without the fear of prosecution, any self-assessment tax system is open to fraud. Results continue to be difficult to find. The statistics made available to me at the time of that hearing make clear that more people had been jailed for defrauding social welfare over the previous three years than for defrauding the tax man. The situation has improved to a point in the meantime. Late last year, the Minister for Finance was able to inform me that of 17 cases of serious tax evasion brought before the courts, in 16 convictions had been secured. Of those 16 convictions, however, only eight led to prison sentences and of those eight, half received suspended sentences. These are hardly inspiring statistics. I accept that convictions can be difficult to secure and I have no doubt that in cases of serious tax evasion, defendants will probably have access to the kind of legal advice that a social welfare fraudster can only dream of. Nonetheless I suspect that the desire to settle remains paramount within the system. The desire of an agency to collect the maximum amount of money possible is no doubt encouraged by spend-hungry Ministers of all hues. A settlement is regarded as a better option than a lengthy and costly legal battle which may not be successful. The success of Revenue prosecutions as set out by Deputy McCreevy in his answer suggests a very conservative prosecution culture. It suggests that the motto of "better to have tried and failed" carries little sway within the system. This is a pity because it is precisely the fear of prosecution on which the whole system should hinge; it is the fear of prosecution and imprisonment that underpins compliance with the IRS in the United States and that is the system upon which our system is modelled.
Even the tax amnesty of 1993, debased as it is, contained one saving grace: it made failure to avail of its provisions for those in that position an offence in itself. I wait to see how this will be applied to those persons identified in the Ansbacher reports. Some of the headlines in newspapers this week talked about prosecutions that would follow publication of this report. Some others indicated that the Opposition would demand prosecutions. Yet in the same articles there were reports of moneys raised by the Revenue Commissioners from Ansbacher clients. Clearly then, no policy decision has been taken to prosecute rather than settle in respect of these offenders. Settlements continue to be made with people who in some cases must have been in a position to avail of two tax amnesties. I do not doubt that this will continue unless a policy decision is taken at a high level to stop it. I see no evidence that the present Minister for Finance will initiate a change of policy.
The Taoiseach in his one public outing on this issue prior to today has been less than convincing. He has his Tánaiste to thank that these matters have reached the public domain. I share in the tribute paid by Deputy Broughan to the Tánaiste in his opening comments in respect of her doggedness. She at least realised that something had to be done after she had mistakenly joined the Taoiseach in excluding the Ansbacher accounts from the terms of reference of the Moriarty Tribunal. I note that the Minister for Justice, Equality and Law Reform, has made a very cogent defence of that strategic option. Prosecutions will not flow unless the Taoiseach takes action. We need a decision from Government that no settlement be made with those who did not avail of the 1993 amnesty and that if this decision costs the State money it is worth it as a matter of principle and in fairness to those compliant tax payers who did without in the 1980s. This is not about maximising tax revenue; it is about underpinning the whole system of taxation and self-assessment. That is the political choice that can only be made at Cabinet level. The Taoiseach could well explain too why he has not ensured the full passage of Deputy Rabbitte's Whistleblower's Bill which passed Second Stage in this House more than three years ago and which the Government has described as its own proposal so often that it has forgotten who was the original proposer.
Ansbacher reveals something deeper about the Irish psyche and our attitude to tax in particular. The 179 names published on Saturday is dwarfed in comparison to the 50,000 holders of non-resident accounts revealed at the Public Accounts Committee. I am struck by a statement made on page 47 of the report which reads:
To understand the background to the discretionary trust schemes operated by GNCT, one must return to the early 1970s. In that era personal tax rates were high and the political preparations were under way to introduce capital Gains, Capital Acquisitions and Wealth Taxes.
The comment recognises the justification used by many, and often recited in this House, that the Ansbacher account holders were driven to it by high and unfair taxes. They were not concerned about the rate of tax, they were concerned about tax per se and there is a huge difference. This is one element of the “taxation is theft” argument and a philosophy that remains strong in Irish society, sadly fuelled by the Progressive Democrats on occasions.
In the run-up to the last general election my party advocated two tax increases which caused outrage from the Tánaiste. We would have returned employers' PRSI to its pre-Christmas level and would have taxed capital gains in the same manner as other forms of income. Surely that would have underpinned an enterprise culture. We did so to set out how we would fund a different type of society from that pursued by the Government since 1997. What would have happened had we won that argument? In advance of the election IBEC told us it would not support our proposals. What does that mean? Would it, for example, justify Ansbacher-type tax evasion?
I have heard the infamous "payback time" editorial of 1997 justified on the basis that people were asked to pay excessive taxes in the 1980s. Knowing what we now know it is fair to say that payback for ordinary and compliant taxpayers was in order, not because taxes were high, per se,but because those who paid taxes in that period were paying more than their fair share because others were not. This society is entitled to set tax levels commensurate with the public services it seeks to provide. However, whether those taxes are high or low, the same obligation exists on each taxpayer to pay his or her fair share. Given the manner in which the Government has spent in recent years, this is not an issue we may confront sooner rather than later. Let us not provide the philosophical basis for the next generation of tax cheats.
In the light of this report and having regard to our attitude to tax and to the points made by me and by the two Progressive Democrats Ministers, is it not time to address the anomalies of residency and tax exile?
Hear, hear.
Is it not time that people who claim the benefits of Irish citizenship and participate actively in public life in this State paid for that privilege? Is it not time that Irish citizens, wherever they live, paid Irish taxes if they want to avail of the privileges, benefits and respect of being an Irish citizen? The time has come to establish the fundamental principle that every citizen who can afford to do so should pay his or her way. That, at least, would be further proof that we have learned the lessons of this report and that there will be no going back to the old ways.
It is a disgrace that we have a single day to debate a report which Government Ministers themselves acknowledge is so important. It is a disgrace that the Tánaiste was unable to secure adequate time to discuss this matter.
I agree with the tribute paid to the Tánaiste by Deputy Broughan on behalf of the Labour Party and I have no difficulty in responding to the challenge of the Minister for Justice, Equality and Law Reform, that the Tánaiste took the wise and prudent course. However, when the Labour Party wished to go the Moriarty route, for which the Minister for Justice, Equality and Law Reform criticises us, the Moriarty tribunal was set up but it was five months later that the Tánaiste took the inspector route. I have no difficulty in acknowledging that it was the correct route but the Minister for Justice, Equality and Law Reform should similarly acknowledge that what was in the mind of the Labour Party at the time was first, the danger of not having experience of the efficacy of the inspector route and second, the prospect that it might be stalled. We have already had intimations of displeasure from powerful people. We have seen no enthusiasm from the dominant element of the Government for this or other inquiries. We had a brief entrance by the Minister for Finance to give a defence of the Revenue Commissioners from a prepared script but the Minister's heart was not in it. It is only three short years since, in a famous interview with George Lee, he derided the notion of any kind of corporate malfeasance or widespread tax evasion in this economy. I am all in favour of the Minister for Justice, Equality and Law Reform availing of the opportunity to garland his leader in flowers and suggest that the peasants strew petals in her path as she walks through the land after this marvellous performance but we should maintain a balance.
I have paid tribute publicly to the Tánaiste for her role in this matter. I was on the opposite side of the House to her when much of the legislation she has spoken about was put through. However, the Progressive Democrats must not be allowed arrogate all probity and performance in this area. If the system was defective up to now, the Minister who presided over it for longer than anyone else was the former leader of the Progressive Democrats, a man with whose political views I often differed but whose departure from this House I regret. He was an outstanding parliamentarian and the House is all the poorer for his departure. However, it is important to say that he was the longest serving Minister with responsibility for commerce in the history of the State and if the system was deficient, as indeed it was, the Progressive Democrats must be included among those who tolerated that position.
The inspectors had to struggle very hard to exonerate Cement Roadstone from complicity in a criminal offence. I know it is difficult to fix corporate knowledge but it is extraordinary that a company would devote the chairman's office to a purpose of which it was aware, make no attempt to hide correspondence and use minor staff of the company as couriers and messengers while eight members of the board were clients of the bank. I am reminded of Lord Denning's phrase about the hands which do the work being distinct from the mind which directs the operation. We are asked to believe that only the two secretaries and the driver knew about what was happening. The report appears to have gone a very long way to exonerate Cement Roadstone.
Reference must be made to the quite proper thundering of editorial writers in recent days. However, the same newspaper editorials, if not the same editorial writers, now thundering about the Ansbacher revelations do not seem to remember their response to the great tax marches of the 1970s and 1980s, when 750,000 tax compliant citizens went onto the streets of our cities and towns to campaign for tax equity. When it seemed that the protest phenomenon would get out of hand because people were so aggrieved at having to bear a disproportionate part of the cost of running the State, the same editorials warned that there was no crock of gold out there. That was the phrase that summed up the attitude that citizens, having had their little protest, should go back to their factories and desks because there was not sufficient wealth in the State to pay for their demands. We now know that there were several crocks of gold. Even the Minister for Finance is prepared to admit that now, although three years ago in his interview on the NIB question with George Lee, he was not prepared to do so.
These people had available to them an unprecedented number of tax shelters in successive Finance Acts. They cannot plead punitive tax levels as a reason for their tax evasion. In addition, they had a number of State aids, including generous grants to their interests and enterprises. They availed of mortgage interest relief, higher education grants for their children and a number of tax breaks and shelters that were almost unprecedented in any western European economy. I remember at the Beef tribunal – which, I regret to say, was whitewashed by the chairman – one company alone was found to have had a capital value of £30 million in section 84 loans. That was just one example of the kind of facility that existed. They had all these facilities, yet they were not satisfied and had to engage in what, as my colleague, Deputy Broughan, said, is not a victimless crime. People were driven out of the country because they could not get work. Poor people's children could not gain access to third level education or sometimes even hospital care. These were victims of the tax evasion that occurred at that time.
I would like to have been able to deal with a number of other issues but time does not permit me to do so. I do not know why the Minister for Finance is persisting with the Bill to establish a single financial regulator without our being permitted to take into account the implications of this report, as well as Allfirst, Enron, World-Com and the rest of them. He is proceeding apace with the Bill but we need time to examine the lessons, especially those concerning the professionals who assisted these types of scams. They could not have occurred if professionals had not used their expertise to facilitate them by devising sophisticated ruses to evade tax.
I welcome the report of the inspectors appointed by the High Court to inquire into the affairs of Ansbacher (Cayman) Limited.
Is the Deputy sharing his time with anyone?
Not at the moment but whether I will use the full 20 minutes is another question.
I congratulate the Director of Corporate Enforcement on the production and publication of the CD. I found it easy to use as it contained good reference material. I also congratulate the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, on the work she carried out over a number of years prior to the report's publication.
The report states that it was as a result of the McCracken tribunal that the Ansbacher accounts came into the public domain. The report of the McCracken tribunal was a thin volume and easy to read, rather like a novelette, in total contrast to the weighty volume that has just been published. I wonder if that person in Florida ever believed his social antics would have such a significant effect on fighting tax evasion and examining corporate governance in Ireland. While those actions were not significant in themselves, they had a huge ripple effect not only on the issues of tax evasion and corporate governance but also on a large percentage of the very wealthy people whose tax affairs have been examined as a result. That examination does not reflect well on a large number of individuals who have been named in the report.
I agree with the Minister we should examine the significance of the report for the conduct of State affairs. We should look at the report to see what is wrong with the relevant institutions and the ways in which we conduct business, from the point of view of the Revenue Commissioners, companies in general and the professions. As Deputy Rabbitte mentioned, there are serious questions for the legal, accountancy and other professions to answer concerning the facilitation of tax evasion.
In the recent past, a number of steps have been taken to help reduce the type of tax evasion that took place, including the reduction of tax rates. Many people no longer feel there is a need to evade tax because they would not lose as much if they fully reported their earnings. In addition, the power of the Revenue Commissioners has been increased dramatically. Under the terms of the Finance Act, 1999, in particular, the Revenue Commissioners have the power to examine individual bank accounts under strict circumstances.
The question of ethos, not only for the wealthy but generally, arises with regard to tax avoidance, tax evasion and greed. Many of the people named in this report held directorships of public companies. There was an ethos within these public companies and among the directors whereby directorships were shared between companies and banks. It worked so that, effectively, a very small number of people controlled corporate Ireland. As we have seen from the report, many of those people controlled corporate Ireland in a greedy fashion.
We have seen the demise of many of the locations in which these people socialised, including Jammet's restaurant, the Russell Hotel and the Hibernian Hotel. I hope we will also see the demise of the ethos that developed over the years.
I was a member, as was Deputy Rabbitte, of the sub-committee of the Committee of Public Accounts that carried out the DIRT inquiry. I am in no way trying to be self-congratulatory, but in that case company directors were questioned in public and for the first time they had to answer to the public for their actions. It was obvious that there was a deficit in corporate governance among the various banks whose directors were questioned at the DIRT inquiry. The question of ethics was seen as something that did not apply to the banking institutions which were there to make profits. I am delighted that, as a result of the DIRT inquiry, changes have occurred in that respect. Companies are being dragged into an age where corporate ethics are considered to be important. Companies must now be responsible not only to their shareholders but also to the communities they serve. Recently I noticed that Allied Irish Banks was seeking a manager to develop ethics within that organisation. I am delighted to see such an initiative being undertaken.
The greed of senior executives in major companies is reflected in the amount of remuneration they receive and how they receive it through controlling the people who decide such matters. The salaries earned by chief executives in practically all public companies exceed that of the Taoiseach and Ministers. Senior executives seem to have too big a say in the appointment of directors. Looking at this report in light of how we conduct our affairs in the future, it gives us a great opportunity to examine what is happening at the moment. While we may not suggest changes, we are throwing it into the public arena so that discussion can take place. There is a need for an in-depth analysis of directors, how they are appointed and what they do. Remuneration committees, audit committees and various other committees are established by companies but it appears the chief executive, in the main, and other executives have a big say in who is appointed to remuneration and other committees.
Another matter which must be addressed is share options. The objective of chief executives is to increase the share price because this will increase the value of share options. That can result in cutting corners within the organisation and within corporate governance generally and can result in window dressing, as has been seen recently in America with Enron and WorldCom. There are also questions in relation to some companies in Ireland. The objective is to increase profits while at the same time increasing the price to earnings ratio so there is a double whammy and the share price increases thereby increasing the value of the share options. It is definitely something at which we will have to look.
As Deputy Rabbitte said, this report reflects badly on the accountancy and legal professions and on the banking industry generally. It is only with the connivance of the professionals in these organisations that people who do not have expertise in this area can carry out the type of misdeeds which have been carried out and related in this report.
The Minister will bring forward legislation on accounting and auditing. Deputy Richard Bruton said the separation of the consultancy and audit functions was not included in the forthcoming legislation. Surely this and other things which have come to light over the summer should point to a rethink on the separation of the consultancy and auditing functions. If auditors are also consultants, they are in a position to have their arms twisted to go along with certain procedures which are not exactly kosher. It reflects badly on their independence.
The question of the chief executive officer and his responsibility in relation to tax affairs arose at the DIRT inquiry. There was a call for the chief executive officer to be the tax compliance officer, to sign off on and ensure all tax affairs were in order, that it be a job for the chief executive officer rather than somebody lower down the scale. I listened to George W. Bush on the television the other day when he was speaking to people in New York. Chief executive officers of public companies there will in future have to sign off on accounts as being true and fair accounts and state, effectively, that they are not hiding anything which would make the accounts non-transparent.
To return to the ethos of evasion and greed, if one needs a room painted or a pathway or driveway tarmacked, there is a tendency to ask if the person carrying out the work wants a VAT invoice. Instead of paying £1,000 plus VAT, the person doing the work will say they will do it for £800 but that they will not provide a VAT invoice. Because one is saving £400, one is inclined to pay £800 rather than £1,200. There is also the question of traffic violations. We go through red lights to a greater extent than in the past. In terms of alcohol levels and driving, we are prepared to accept that one can have one pint or maybe two and get away with it. On the changeover to the euro, doctors raised their fees substantially, as did hairdressers. Publicans raised the price of a pint and used the euro as a reason for so doing. There is an ethos in society which we, as legislators, must examine to see whether we want to try to effect change through legislation. It is part of the type of tax avoidance and tax evasion measures used by the people involved in this inquiry.
We cannot say everybody else is not complicit because the DIRT inquiry showed that hundreds of thousands of people had non-resident accounts. Those people knew it was wrong to have a non-resident account. There were also form F accounts which are now being done away with because the regulations and laws are being tightened up. As well as tightening up the laws and regulations, we have to ask ourselves what type of society we want in the future. This report, as well as specifically addressing the items in it and how those named in it are to be treated, is useful as a tool in looking at the ethos of this nation in terms of avoidance and evasion not only in monetary terms but in the other areas I mentioned.
I wish to share my time with Deputies Connaughton and Enright.
Is that agreed? Agreed.
I, like other Members, welcome the publication of the Ansbacher report. I congratulate the Minister on her determination to get this report finalised and published. It is a large and detailed document and its completion is a significant and positive achievement as we map out enterprise and employment policies for a healthy future.
My purpose in contributing to this debate is somewhat different from that of other contributors. My father, the late Hugh Coveney, is one of three former Members of this House to be named in the report. It is important that I make a statement in this debate to improve people's understanding of my late father's limited dealings with Guinness & Mahon Bank in the past. First, I reiterate a statement released on behalf of my family on publication of this report, that is, to confirm that the details contained in the report relating to the late Hugh Coveney are absolutely consistent with the detailed statements provided by him before his death and subsequently by the family to the Moriarty tribunal which are now a matter of public record. It is, therefore, important to note that there is no new information in this report relating to the late Hugh Coveney and no accusation of wrongdoing. We as a family, and my father prior to his death, at all times co-operated fully and openly with all inquiries relating to this matter. We have nothing to hide and have always been anxious to assist in building a clear picture and explanation of Hugh Coveney's limited dealings with Guinness & Mahon. For the record and the benefit of Members of this House, in particular those who served with my father, and others listening to this debate, I will outline details relating to Hugh Coveney's transactions with Guinness & Mahon which relate to two periods. The first occurred in the late 1970s and the second is a single payment in 1987 concerning a US property venture in which he was involved.
As pointed out in the inspectors' report, a memorandum prepared by the late Hugh Coveney in January 1998 for the Moriarty tribunal outlined the detail of this US property venture. This document disclosed that in 1980 my father, together with three American investors and four other Irish investors, formed a consortium to develop a property in the USA. The consortium caused a discretionary trust – the Lynbrette Trust – to be established of which Guinness & Mahon Cayman Trust was a trustee. The beneficiaries of the Lynbrette Trust were intended to be five registered companies. Hugh Coveney was to be given the option to acquire one of these companies, namely, Eclipse Holdings Limited. He was required to invest $212,000 in the venture. Eclipse Holdings borrowed the necessary funds from Guinness & Mahon Cayman Trust and Hugh Coveney guaranteed those borrowings in return for which he was to be given an option to acquire the shares of Eclipse.
The property development in question was unsuccessful and failed financially. My late father had his guarantee for Eclipse to Guinness & Mahon Cayman Trust called. He also had, with the other Irish investors, guaranteed borrowings of the Lynbrette Trust from AIB. That guarantee was also called. All investors suffered considerable financial losses on this venture. It is worth noting that the Revenue Commissioners were aware of this failed venture for ten years or so.
A number of points need to be made in relation to that transaction. First, this payment was clearly not an Ansbacher deposit but a payment to discharge a liability due to a failed business venture. Second, there is no implied tax liability of any kind in relation to this payment and, third, there was no so-called back-to-back loan or other devices involved. The other earlier transaction between my late father and Guinness & Mahon was in the mid to late 1970s. The existence of deposits at this time was accepted in statements provided to the Moriarty tribunal and to the inspectors by my family. It is worth noting that there is documentary evidence showing that a total withdrawal was made in December 1979 and there is no evidence of any subsequent deposit being made to Guiness & Mahon Cayman apart from the 1987 payment which I have already explained.
I wish to make a number of points in relation to these deposits in the 1970s. The evidence suggests there was no attempt to hide my late father's identity as the owner of these deposits at any time. According to the evidence gathered, the name of the account was always referred to in documentation by his initials, HC, or else by his full name, Hugh Coveney. There were no secret codes to hide his identity in relation to these transactions. For example, the closing of the account is confirmed by a Guinness and Mahon Ireland statement of account entitled Guinness and Mahon Cayman Trust Limited HC in which a deposit for April 1979 read "Transfer to Midland Bank. Reference: Mr. Hugh Coveney". The concealing of Hugh Coveney's name was not part of the equation in relation to my father's dealings with Guinness & Mahon Bank at this time.
I have reason to believe that the original deposit with Guinness & Mahon Cayman Trust came from the proceeds of a legitimate venture and that there were no attempts to evade tax or hide income at the time. The evidence gathered suggests that the transactions relating to my late father's deposits with Guinness & Mahon Cayman Trust were indeed connected with legitimate overseas projects and investments during that period.
The inspector, on publication of this report to inquire into the affairs of Ansbacher Cayman Limited stated clearly that not every name in this report was necessarily guilty of wrongdoing. We are here today, having reconvened Dáil Éireann, to debate the issues relating to Ansbacher. I feel I have a duty to speak up on behalf of a former Member of this House and a former Fine Gael Government Minister who has been named on this list but who is, unfortunately, unable to represent himself on this matter.
I believe that Hugh Coveney is one of a number of people who is not guilty of the type of tax evasion that this report has undoubtedly exposed. I hope that in time my belief and my conclusions will be supported by the conclusions of the Moriarty tribunal report which I look forward to reading.
I compliment the Tánaiste on this report which was an excellent exercise. Pressure was obviously exerted at certain times over the past four or five years to ensure that the report was published. A great number of people, irrespective of their politics, would thank the Tánaiste for this exercise.
It will not be long until an enterprising film or television director dramatises this affair as the mother of all scams. Given what we know now, it would make an excellent programme because seldom in the history of tax evasion has there been a system that can be so easily understood when it is explained but whose implementation is so complex.
I listened to the Tánaiste on a number of radio programmes over the weekend and I agree with her that there is no reason to believe that this is the only show in town. If someone could come up with something like this, there must be other schemes that are just as ingenious. The problem for every tax compliant person in the country is to figure out what should be done about this.
I was taken aback by the Minister for Justice, Equality and Law Reform, as he tried to ease himself into this particular debate, saying that the Government would do all it could but that this was a matter for the Revenue Commissioners. It appeared to me that what he was saying was that, in criminal law, there may not be much he or the Government can do. The Tánaiste may know better than most that there was a time when sheriffs travelled the country terrorising people. I saw a sheriff appear in a small village in County Galway to visit a publican who was having problems with unpaid VAT who was subsequently hounded out of town. This happened at a time when the activities we are discussing today were going on.
Some of the people interviewed by the inspectors for this report threw their hands in the air claiming they did not know what they were doing. Perhaps that is true but these are the same people who, if asked for a donation by bodies such as the Society of St Vincent de Paul, say they do not deal in cash and refer them to their accountants. Yet, they saw nothing wrong with getting a wad of notes under the counter and handing it to a friend without any documentation of any description. It appears that this was all about greed and that most of those involved knew exactly what they were doing. I am sure there will be a huge trawl. However, the ordinary taxpayer will not be satisfied if all these people only have to pay financial penalties on the overdue tax. What about people who were carted to Garda stations for interrogation and their files sent to the Director of Public Prosecutions? Why should that not happen in these cases? These people see money as one thing but dignity is quite another thing.
One remembers the problems of the 1980s, when people could not get hip operations and so on. How many such operations could be paid for with the tax overdue on the Ansbacher accounts alone? That is how ordinary tax-compliant people will look at this. If nothing else is done as a result of this debate, those who paid the high taxes in the 1980s will want to know that what would have befallen them if they got into trouble will befall those who could best afford to pay and who tried to side-step paying. The Minister for Justice, Equality and Law Reform, for a man of the law of his standing, does not seem to be getting across to the public that that is what he will do. We hope something in this vein will be done or everything the Tánaiste has done for the past five years will go by the board.
Predictably, and perhaps understandably, the report of the High Court inspectors into the affairs of Ansbacher (Cayman) raises as many questions as it answers. It is an achievement that the report has come to light and I welcome its publication. I commend those involved, particularly the Tánaiste, for the determination they have shown thus far and I hope that determination does not wane.
The time has now come for many statutory agencies and organisations to examine the report. Many of them, such as the Central Bank, are authorities which were in being when these events took place. I hope they are more successful now than they were in tackling the culture which allowed the tax evasion of that time. Other agencies, such as the Office of the Director of Corporate Enforcement, are new agencies set up in response to this situation. The mettle of all these Government and statutory agencies will be strongly tested and they will be judged on their actions and effectiveness in the coming months as they deal with the far-reaching consequences of this report.
The issues involved in Ansbacher (Cayman) form a complex web involving foreign-registered companies and financial trusts. However, it must be asked how many similar webs exist and how are those to be taken on and brought down? An admission that Ansbacher may not have been the only game in town is a start, but it is not a strong enough statement of determination to ensure these games are ended and that those who played will be adequately penalised. I am not saying all those involved are guilty of tax evasion, nor that all were equally culpable in the fraud perpetrated on the State but the behaviour of many of those involved shows a complete lack of respect for our laws, our country and our democracy. These people must be made to understand that they did not just get one over on the system, although that is inexcusable, but that they perpetrated a fraud not just against the Revenue Commissioners but against all our citizens.
The Minister for Justice, Equality and Law Reform has pointed out that there may be difficulties with prosecutions but despite his protests people are entitled to be angry. Institutions of the State failed in the past to deal with these fraudulent tax evaders as they denied us the tax they should have paid as members of Irish society and beneficiaries of State services. That meant denying Irish people the services to which they were entitled from the 1970s to the present. Whether the Minister likes it or not I am angered by the defeatist attitude of the Revenue Commissioners towards securing prosecutions. If they do not have the determination to prosecute these people this report will be far less significant than it might otherwise be. Naming and shaming people is a nine day wonder and in this instance it may not even last for nine days. It also fails to take into account the level of culpability of those involved, to ensure the punishment fits the crime and to make sure only those who are genuinely guilty are held to account. In democratic states legal systems are designed to ensure that punishment acts as a deterrent. Tax settlements should form part of the punishment for these offences but that alone is not enough.
The Chairman of the Revenue Commissioners has admitted that the bar is set very high for sec uring tax evasion prosecutions. Surely in order to achieve justice in this instance that bar should be lowered. As Deputy Connaughton said, the bar is set far lower for other sectors of society, where the Revenue can enter private homes and businesses in the interests of securing tax compliance. The same rigorous examinations must come into play here and examination should become more rigorous if necessary. The failure of State institutions like the Central Bank to do their work must be immediately examined to ensure it will not happen again. Also, the operation of companies and banks – and the apparent inability of our company law to adequately control these organisations – must be changed. The actions of numerous members of the board of one company are being seen as entirely unconnected with each other or with the company as a whole; that should be uncovered as the sham it clearly is.
Talking about this report in a vacuum is a fruitless exercise. People want to see action and reform as well as prosecutions and payments. Various agencies have jobs to do but in the meantime I call on the Government to support Deputy Hogan's call for the immediate formation of the Public Accounts Committee to bring this process forward.
I wish to share my time with Deputy Fiona O'Malley.
The report of the High Court inspectors into the activities of Ansbacher (Cayman) Limited is a welcome unveiling of past secrecy. It is also a welcome reminder of how far public expectations of statutory requirements in the area of corporate and revenue compliance have advanced in the last quarter of a century. Most of all, publication of the report represents the triumph of methodical due process over knee-jerk sensationalism. For the inspectors – Mr. Justice Costello, Judge O'Leary, Mr. Cush, Ms Mackey and Mr. Rowan – the work is finished and they are entitled to our thanks for the professional and efficient manner in which they undertook and discharged their formidable task. However, it would be wrong to consider that the presentation of the inspectors' report to the High Court and its subsequent publication represents the end of the road. If it were the end of the road, the web of deliberate complexity and secrecy which had its origins in June 1969, and which was purposefully utilised by some of those who manipulated the offshore facilities offered by the institution which became known as Ansbacher (Cayman) Limited, would have succeeded. That complexity and secrecy would have successfully facilitated the commission of a serious criminal offence, the evasion of tax lawfully due to the Exchequer, by thwarting the appropriate criminal prosecutions. The presentation and publication of the inspectors' report must be seen as no more than an important milestone on the road to justice.
The Revenue and tax consequences to which the report gives rise must be addressed, as must the issues of corporate compliance and company law it highlights. However, the undoubted importance of these strands of consequences cannot be allowed to mask the existence of the third dimension of the inspectors' findings: the criminal dimension. The report reveals the existence of material which tends to show the commission of serious criminal offences by some persons and perhaps by those who advised them. Under our Constitution it is for others to adjudicate on whether crimes were committed but neither the passage of time nor the presence of complexities can obscure the fact that there is material in the report which strongly suggests that the criminal law may have been broken. It would be wholly unacceptable for any group in society to be placed beyond the reach of criminal law solely by reason of the complexity of the manner in which they committed their crimes and the period in which they managed to conceal their wrongdoing; so must it be in this instance.
The deployment of skills and resources by those who participated in activities which might well be criminal requires the deployment of even greater skills and resources by the State in the proper investigation of the criminal dimension. In this regard it would be wrong to think of the State as being powerless or toothless. Substantial powers of search, seizure, arrest and interview exist to facilitate the Garda and the Director of Public Prosecutions in the proper investigation of this matter. The new powers of search and seizure introduced by the Criminal Justice (Theft and Fraud Offences) Act, 2001, go a considerable distance towards facilitating the gathering of documentary evidence in relation to activities such as those carried out by the clients of Ansbacher (Cayman) Limited.
It should also be remembered that efforts were made by the inspectors to obtain information from financial institutions in the Cayman Islands. In this regard it should be recorded that the inspectors noted that Ansbacher (Cayman) Limited "co-operated to the extent permitted by the Grand Cayman Court". Were efforts made in the context of the High Court inspectorship not criminal investigations or criminal proceedings, it is entirely possible that the Cayman Island courts would take a very different attitude to releasing information if that information was being sought as part of a criminal investigation or of actual criminal proceedings.
These issues are stones which must be upturned in the course of the necessary and inevitable Garda investigation. The recent statutory provision which, in certain circumstances, permits the use of copy documents should ease the burden on prosecutors. The wilful or inadvertent absence of key documents need no longer be fatal to a prosecution. The power to detain suspects for the proper investigation of serious offences which is contained in section 4 of the Criminal Justice Act, 1984, should be utilised by the Garda where appropriate.
There is no reason persons suspected of having engaged in substantial tax evasion or a serious and elaborate conspiracy to defraud the Irish Revenue should feel they are immune from arrest, detention and interrogation at Garda stations. All of these powers must be deployed to their fullest extent in the course of the criminal investigation which must ensue. No category of documents must go unscrutinised. No legitimate question must go unasked. It is for those entities and individuals who are the subject of criminal investigation to decide whether they will answer the questions or avail of their right to silence, but the mere apprehension that persons may decline to answer is not reason to abandon the investigation before it has properly begun. The apprehended deployment of the right to silence ought not inhibit the asking of questions which need to be asked. It ought not inhibit the arrest and detention of persons whose arrest and detention is warranted by the proper investigation of offences. It ought not inhibit the proper use of powers of search and seizure.
It is right to point out, as the Minister for Justice, Equality and Law Reform has done, the difficulties which criminal investigation and prosecution will encounter but it would be wrong to walk away from such investigations and prosecutions because of perceived difficulties.
The process of peeling back layer after layer of concealment and secrecy until the whole truth is finally established in a manner admissible in a criminal court must continue. Matters extraneous to the High Court inspectorship may well yield evidence. Some of those involved may well have made comments to the inspectors without the inspectors having had to utilise their powers of compulsion. Such material will pass the test of voluntariness and be admissible in a criminal prosecution. The manner and circumstances in which people have made contact with the Revenue authorities and, perhaps, made full or partial settlement with those authorities must be examined in detail to establish the evidence that can be gleaned from those sources, so too must the involvement of professional financial advisers be scrutinised with a view to ascertaining the evidence they are in a position to give. In this regard, both those conducting the criminal investigation and those with relevant evidence to give will find comfort in the words of the Chief Justice, Mr. Justice Keane, who on 20 March 1998 when delivering his judgment in the case of National Irish Bank and RTE stated: "Where somebody is in possession of confidential information establishing that serious misconduct has taken place or is contemplated the courts should not prevent the disclosure to persons who have a proper interest in receiving information."
It is clear that of necessity many financial advisers who are not inhibited by legal professional privilege or anything of that nature must be in possession of confidential information which establishes or helps to establish serious misconduct by some of those named in the report. There is nothing to prevent them coming forward to tell the appropriate authorities – in this instance the Garda and the DPP – what they know. For them to do otherwise would be for them to engage in a conspiracy of silence directed towards wilfully defeating the legitimate aim of society to prosecute criminal wrongdoing.
The response of professional accountants and tax advisers to the criminal investigation which must now begin will in many ways fashion the attitude of this House to their professions in the coming years. A full transmission of detailed information to investigating authorities would be powerful evidence of a change in culture within those professions. It would be powerful evidence that they stand with society and with those who wish to expose illegality in criminal behaviour. It would be powerful evidence of the successful operation of self-regulation and the appropriate self-imposition of proper professional standards. On the other hand an echoing silence from the professional accountants and tax advisers to requests made in the course of the criminal investigation would send a strong message to this House that further legislative intervention, along the lines of the amendment to section 194 of the Companies Act, 1990, which was brought about by section 74 of the Company Law Enforcement Act, 2001, is necessary to secure compliance from at least some of their number.
In the first instance, the decision to follow the route of voluntary compliance or to coerce people along the route of statutory compulsion will be taken by the accountancy and taxation professions. In arriving at their decision they should be in no doubt that this House will respond in the manner necessary to ensure that obstacles to criminal investigations will be removed. It is also appropriate in the course of this debate to note that statutory advances along the road to proper compliance and investigation have been made in recent years. Had it not been for the amendments to the Companies Acts in 1990 the process of High Court inspectorship leading to the presentation and publication of a report could not even have begun. It would be equally wrong to assume that the process of legislative fine tuning has come to an end.
In our manifesto in the last general election, Fianna Fáil proposed the introduction of legislation which would facilitate the establishment of a corruption assets bureau. I am glad to see this Fianna Fáil proposal has been incorporated into An Agreed Programme for Government. This legislation will permit the tracing of assets illegally obtained or retained. It will also permit the freezing and forfeiture of assets obtained with funds which were unlawfully obtained or retained. If in the 1970s, 1980s or 1990s persons acquired assets with funds which ought properly to have been paid to the Revenue, those assets can be traced, frozen and seized. There is no reason citizens who are not tax compliant should expect to be permitted to retain profits acquired with unlawfully retained funds.
In short, persons who evaded tax and successfully speculated, in addition to answering to the criminal law, must pay the tax, the interest, the appropriate penalties and forfeit all profits which arise from their use of the undeclared funds. Those who evaded tax and unsuccessfully speculated, in addition to answering to the criminal law, must pay the tax, the interest and the appropriate penalties. Those who may believe that this is a "heads you lose, tails we win" provision are right. In so far as personal and corporate tax is concerned compliance is no longer an option, it is a requirement that is mandatory and this House will take whatever steps are necessary to ensure the fair and even distribution of the burden of taxation throughout society.
The process of corporate climatic warming has begun. If this does not give rise to an immediate growth in compliance the temperature will have to increase even further. Investigation for the sake of investigation is of some use. The exposure of past practices may well hinder their reoccurrence. Investigation for the purpose of exposing wrongdoing and making the wrongdoers amenable to the criminal law serves an entirely different purpose. That purpose is to achieve justice, to righting past wrongs and to deter others from following similar paths. That is the course which must be followed.
Since the general election of 1997 many tribunals of inquiry have been established, many investigations, both statutory and non-statutory, have commenced, many new legislative requirements have been imposed. Undoubtedly, the scale and number of ongoing inquiries go beyond that to which we have been familiar. It would be wrong, however, to equate the absence of inquiry or inspection with the absence of wrongdoing. The 1970s, 1980s and early 1990s, when much of the activity which is under scrutiny by tribunals and inspectors was occurring, were marked by the absence of inquiry, and for much of the period prior to 1990 the power to appoint High Court inspectors did not exist. It would be equally wrong to equate the existence of inquiries or inspectorships with the presence of current wrongdoing. The pursuit of uncovering historic wrongdoing and iniquity is a hallmark of the health of the body politic, not of its illness.
Something of a rubicon was crossed in Irish society last week with the publication of the Ansbacher report. The journey to this rubicon has exposed the inglorious underbelly of elements of establishment Ireland in the 1970s, 1980s and 1990s. It is a test of the maturity of our democracy that we are now able to confront and expose improper activity, no matter how high the social or political status of those involved. For a long time, we in Ireland failed that test. We were able to go after the little people but there seemed to be neither the will nor the way to go after the big people.
This democracy has matured considerably in the past ten to 12 years. Tribunals of inquiry have been established. Powerful people are being required to account for their actions and the public were given an insight into the darker areas of the relationship between business and politics in this country. The publication of the Ansbacher report marks a significant step in the maturing of Irish democracy. This was the ultimate conspiracy of private privilege against public interest. The people involved were powerful and wealthy and I am sure that at least some of them genuinely believed they were above the law, whether it be tax, criminal or corporate law. That is why it is so significant that this inquiry has been conducted and the report published. It shows that we are prepared to investigate; that we are prepared to expose and make people accountable.
The media has been at pains to reaffirm the conclusion that the only finding arrived at in relation to the named persons is the fact that they were clients of Ansbacher. A further conclusion in Chapter 3 is that Ansbacher knowingly promoted tax evasion by Irish clients. The real value in this report will be the marrying of these two conclusions.
Prosecutions, however, are not a matter for us here in this House. Clearly, action will have to be taken on foot of what has been discovered. This will be primarily a matter for the independent authorities of the State – the Revenue Commissioners, the Director of Public Prosecutions and the Director of Corporate Enforcement. All of these institutions are staffed by dedicated public servants who operate free from political control and pressure. Their independence should be respected and they should be afforded the time and the space to arrive at whatever decisions they see fit arising from the matters disclosed in the Ansbacher report.
It is apparent from the report that our system of regulation was very lax in the 1970s and 1980s and, in some respects, even into the 1990s. Action has already been taken to address this problem. A fresh start in financial regulation is being made with the establishment of the Irish Financial Services Regulatory Authority; the Revenue Commissioners have been given considerable additional powers to combat tax evasion, particularly in the past five years; an oversight board for the auditing profession has been established on an interim basis and will be placed on a statutory footing; and the new Office of the Director of Corporate Enforcement has just been established and is now operating as an independent agency. These are significant initiatives and show that the Government has responded effectively to the issues which have arisen out of recent controversies.
In contrast to the culture of the times explored under the terms of the inquiry, I do not detect any present reticence on the part of these independent elements of State to pursue the breaches of the law highlighted and to bring justice to the taxpayers of Ireland. This route to justice has sometimes been thwarted. Ten years ago, this House was debating tax amnesties and how best the Government of the day might reward tax evasion. Today the House is debating Ansbacher and how best the Government might combat tax evasion. That shows we have travelled a long way in the space of a decade.
The amnesty of 1993 was a scandal and properly described at the time as a cheats' charter. I remind Deputy Broughan that the Labour Party assisted in putting this tax amnesty through the House.
I believe it was the current Taoiseach.
That is right.
The most important change, however, has been in the area of political culture. The parameters of acceptability have changed dramatically. The publication of the Ansbacher report shows this is the case. The public are naturally shocked and disturbed by what has been revealed in the Ansbacher report, the other inquiries and the evidence before various tribunals. These revelations should not weaken public support for our democratic institutions but rather strengthen it.
The Ansbacher report is an exercise in transparency and accountability. There are hundreds of thousands of compliant taxpayers who play by the rules. They pay what they should and we owe it to them to ensure the system works fairly and justly and that no group of privileged insiders benefits from special treatment.
But still more needs to change. Is it fair that those on the minimum wage are subject to tax while the very rich avoid it altogether?
No.
It is a sorry irony that many of the richest people in the country pay no tax, but that is a debate for another day. It is a laudable objective of this Government that those on the minimum wage will be taken out of the tax system and I look forward to the Government reaching that goal in the very near future.
The single most significant step taken by any Government in changing the culture of tax evasion was to make taxes fair and payable by reducing them significantly. We should measure the success of Ansbacher by the extent to which a shift in the culture of compliance has occurred, and for the good of the country, which will continue to be observed.
The successful completion of the Ansbacher investigation is a testament to the energy and determination of the Minister, Deputy Harney, who deserves great credit for the tenacity with which she has pursued the matter in the past few years. Deputy Rabbitte appears to be of the view that the Progressive Democrats deserve exclusive credit. That is not the case. No party deserves exclusive credit for what has been uncovered. People in all walks of political life have contributed to the cleaning up of politics in this country. Deputy Rabbitte easily forgets that it was our former leader, Des O'Malley, who brought about much reform of corporate legislation.
Credit is also due to the High Court inspectors who have laboured diligently on the investigation of Ansbacher in the past three years and the production of what must be one of the largest and most comprehensive reports ever produced by a team of investigators. I compliment also Mr. Gerard Ryan, the authorised officer from the Department of Enterprise, Trade and Employment, whose initial report provided the foundation for the work undertaken by the High Court inspectors. Mr. Adrian Byrne, the person who identified the rot at the core of professional Ireland and who was ignored and overruled, also deserves credit.
Many ordinary people will be dismayed by what they read in the Ansbacher report. They will be dismayed at what they see as yet more evidence of wrongful behaviour in the upper echelons of Irish society. They should not be dismayed. The publication of this report should be an occasion not of regret but of relief that at long last this country is embracing a real culture of openness and accountability.
I propose to share my time with Deputies Howlin and Costello.
Agreed.
In the very limited time available, I cannot observe the usual courtesies of listing all the people who should be complimented on the publication of this report but I want to make a few general comments which are absolutely necessary.
It is a shame that those of us who share time are sharing a total slot of 20 minutes, which confines us in terms of the important matter we wish to cover.
Hear, hear.
This report is in grave danger of being described as a kind of comment on the Irish condition or the Irish people. It is time we stopped beating around the bush. A large number of people could never get as far as approaching an accountant, not to speak of a crooked accountant. There is an identifiable elite here, some of whose names have not been mentioned today but who are well known, who are closely associated not just with Ansbacher but with other forms of corruption that have torn the heart out of this country.
It is extraordinary that other Members have suggested that Ansbacher has resulted in a coming of age in Ireland as if we were evolving out of a primitive state of corruption into a potential state of clean, ethical business. The reality is a small group of people, who knew where to go to obtain professional advice to enable them to avoid tax, have being doing so consistently for a long time. These people should not be described, for example, as belonging to the established parties. Corruption has been associated with the right, not the left, in Irish politics.
There are many decent people in the Fianna Fáil Party who would not dream of being involved in that in which a small number of their party members were involved. However, let us be clear if we are to have credibility with the public. It is noticeable that those who were named in the report come from a little confraternity which turns up in property deals involving sites for Government offices and different transactions involving road contracts. However, they also form a new class in society. These people feature in special pages in newspapers and their families are photographed like a backward version of the Monaco royal family. They are also interesting in terms of the property they own in Ireland as they are the equivalent of absentee landlords in olden times.
Did the Minister share my horror that when a once fine company such as Eircom was put up for sale and privatised in line with the philosophy of her party, the two lead bidders lived outside Ireland to avoid paying tax? Being a tax exile is regarded in some circles in Dublin as having the status of a minor royal. We have not been told who has been prosecuted recently for breaching the provision which requires tax exiles to be resident in the State for 180 days per year, not that they make much of a contribution when they are present. They contribute mostly to consumption and corruption rather than to anything else. It is about time we got real about this.
A theme in a number of earlier contributions was that the people were moving to a new state of moral perfection. However, the people to whom the Minister for Finance is providing a benefit of more than €2 billion in tax relief and special savings accounts do not include the majority of those who work in the State. That benefit is provided to those who can put aside the most loot. The Ansbacher phenomenon occurred at a time when, internationally and nationally, speculation was regarded as clever, cute and smart – something to be admired.
The Minister for Finance, in his famous RTE interview, suggested most of the bankers he knew were wonderful, loveable people who were straight as a die. However, he wasted our time earlier with a cheap little defence of the Central Bank which was entirely defective in doing what the Central Bank Act required it to do. To be fair, the Minister acknowledged in her contribution that there was failure by the Central Bank to fully and effectively oversee and regulate the banking sector. The officials in the Department of Finance who wanted to write an apologia for the Central Bank got to their Minister faster than the Minister for Enterprise, Trade and Employ ment, who usually speaks to him on an intimate basis in regard to financial matters.
A number of correctives must be made to activities taking place today. Another myth at the core of speeches made occasionally by the Minister and the Minister for Justice, Equality and Law Reform is that reducing tax encourages compliance. There is absolutely no support internationally in any published study I have read for the notion that there will be wonderful compliance if taxes are reduced.
We are talking about people who, at a criminal level, avoided tax through corrupt practices. I will not be able to list in detail how they did so in the few minutes available to me. People in the legal and accountancy professions facilitated their little rackets. Des Traynor operated out of CRH's offices. The company issued a statement through the media not to apologise to the public but to suggest that it is a fine company. However, one could write a novel about this.
Another interesting question arises in regard to the banks. While the banks, who were again defended by the Minister for Finance, were facilitating these rackets, they were also reducing the status of their staff. They destroyed many of the services that were available to consumers and they even went as far as ceasing to send calendars to their poorer customers at the peak of their offshore rackets and they subsequently closed branches in working class areas. The banks are not covered in glory.
There is no point in describing this as a kind of evolution, that individuals will be changed by the Ansbacher revelations. Those nasty little corrupt elites will still receive the same recognition from people with no discretion or moral sensibility and the public is appalled by that.
Changes could take place. I would like senior civil servants to impose a ban on themselves migrating to companies that enjoy transactions with the State. I would like to see an inquiry into transactions in State property. In particular, I would like an inquiry into how the valuation on Glen Ding was arrived at because this is a planning issue, not a heritage issue, relating to the then Department of Transport, Energy and Communications. We should wake up and realise that white collar crime has been acceptable in Ireland.
I will refer finally to the great man who has not been mentioned all day, the former Taoiseach who sat at the top of the pile with a lifestyle similar to the Borgias while Des Traynor went around gathering the cheques for him.
I regret we have so little time. My colleague, Deputy Higgins, and others would have made longer and more worthwhile contributions if more time had been made available.
The Minister, in her opening contribution, indicated she wanted a political response to the High Court inspector's report and I agree that is important. Our responsibility is politically to respond to the people and our obligation to ensure there is equality under the law for all our citizens. Such equality is patently absent in the reams that constitute the inspector's report nor is this a victimless crime. The reality is that because people sought to avoid and succeeded in avoiding paying their share at a time the country needed that money, operations were not carried out and people died and others were left without shelter and deprived of their full education and other supports. There are thousands of victims who demand a proper response as a result of the despicable shambles which has been uncovered.
We need to respond in a structured way in this debate. We must follow each account holder and deal with all those professions who devised, aided, contrived and constructed elaborate measures to evade tax. We must revisit the regulators to examine their role in, and their state of knowledge of, this criminal conspiracy. I wish I had more time to respond to the Minister for Finance's apologia for the Central Bank because I reject it. There are serious matters to be addressed in terms of regulation and political interference and the notion that arises when people must face their requirement to pay tax that somehow if everybody pays their fair share there will be a flight of capital from Ireland. We must seek out the other Ansbacher scams that Ministers, including the Minister for Enterprise, Trade and Employment, have suggested exist or existed in the past.
The centre from which this conspiracy operated between 1987 and 1994 was the office of the chairman of Cement Roadstone Holdings, Des Traynor. It is simply outrageous that an illegal, unlicensed bank was operated from the offices of one of our best known and important public companies. Successive chairmen and a majority of board members were involved with Ansbacher (Cayman) Limited. Employees of that company acted as employees of this illegal bank and there must be consequences. I want to hear from the Minister what it is proposed to do.
I must mention the political climate we need to have now. Very early this morning I listened on "Morning Ireland" to some of the political climate control that is already beginning to take shape and is reminiscent of the debates we had on the cleaning up of politics. The notion is that "they are all at it", that the whole country is corrupt and if they could get away with it, every individual taxpayer and PAYE worker would do the same thing. That is absolutely untrue.
Hear, hear.
There is a sense of patriotism and nationalism in people who pay their taxes and want public services and a decent standard. The notion that citizenship means different things to different people is not true. We should not allow that mentality to be created by those who want to spin the doctrine that everyone was at it, that it is a thing that happened in the past under which we now draw a line in the sand and do not look behind anything because the Central Bank and the new regulator will do a job they patently failed to do previously.
Today is not the end of a process, it is the beginning of a process. I hope the Committee of Public Accounts and the other committees of this House will go root and branch into the various layers of this onion until those who scandalised the country by robbing from people with horrendous consequences over two and a half decades are made accountable. We could then see in a transparent and real way that every citizen is equal under the law and accountable in this democracy.
I compliment the Minister for the good work she and her inspectors did in this area and for her honesty in the presentation she made today. She clearly directed some fault at the Revenue Commissioners, the Central Bank, the auditors and her Department, while pointing to areas where things will be tightened up. This is most welcome, but we have to look at the broader picture. Ansbacher is a metaphor for corruption in a way similar to that in which the name of Captain Boycott became a metaphor for rack-renting in the old landlord days of the 19th century. It will go down in folklore in that context.
The one thing I am somewhat disappointed about is that already white collar crime is being treated differently. Even though the Minister does not intend it, there is a whitewash. We are talking about prosecutions before we have completed the investigation, but we cannot simply say that because we have named and shamed people, we have completed the job. There is a whole lot of other work that has to be carried out and if we do not do it we are giving rise to a two-tier criminal code, which cannot be tolerated. This report should be taken very much in the way the Comptroller and Auditor General's report to the Committee of Public Accounts was taken.
What has been shown clearly is that a scheme was established with the sole purpose of evading tax. That is a criminal offence. There is a prima facie case, but with regard to the 200 names, or fewer, that have been mentioned there is a question mark about wrongdoing. In normal circumstances in the criminal code when a prima facie case of this nature is made, the suspects are rounded up and taken to the nearest Garda station. This may not be a case of rounding up the usual suspects, but we would certainly be rounding up some unusual ones. If it was a burglary with 200 sets of fingerprints found on the window of the house and something was missing – remember hundreds of millions of pounds in cash in the Ansbacher accounts have not been traced – the first thing that would happen is that those identified would be rounded up and the investigation would continue in the Garda station.
It is premature to talk of the DPP at this point. It is important to understand that we have com pleted the first stage of the investigation in gathering evidence of criminal wrongdoing and that now the full rigours of the criminal code should be brought to bear on finding further evidence. If there is prima facie evidence, why can we not conduct the investigation by bringing Garda officers into the arena? That is how we should approach this. If this was another jurisdiction, police officers would be involved, but we do not have a single one looking into this matter. I am very much afraid that the spin has been put on the issue and it will be difficult and complicated to obtain convictions, but we are avoiding a whole realm of investigation that should be employed straight away before the trail goes cold. I appeal to the Minister to take that on board.
The last thing we want is to have a culture whereby white collar crime is treated differently from any other crime. This is the first time we have hard evidence of people being involved in such crime where a lot of material has already been assessed. Some of the people involved will be innocent, but can the Minister imagine that it is possible that the board members of CRH did not know that eight of its directors and successive chairmen had an office from which an unlicensed bank was operating and are angry that nobody told them about it? That is prima facie evidence and what more is needed? The doorman knew what was going on, the cleaner knew, but the principals did not. The Garda should be in there straight away. Why are they not in Cement Roadstone Holdings? These are the questions that have to be answered and they are the questions the ordinary person in the street is asking.
They are.
We must ensure that a two-tier system of criminal investigation does not exist here and that the forces of law and order are brought to bear fully and firmly in this case.
I wish to share time with Deputies Gregory and Finian McGrath.
Is that agreed? Agreed.
I represent a constituency the Minister knows well, which has a high number of people dependent on social welfare. In some estates there is a greater than average proportion of people on low incomes while a number of small businesses struggle to make it in a very competitive market. I address some of the implications of the Ansbacher report for ordinary people in that area.
Anyone who has been through the social welfare system knows the tortuous bureaucracy you have to go through for even the most basic entitlements. Your income and that of your family is carefully scrutinised and assessed. At every stage there are checks and balances and no stone is left unturned to ensure that social welfare fraud is ruled out. The system is even more difficult for those applying for means assisted payments. Those who care in their homes for elderly and infirm relatives, people with disabilities or children with long-term illnesses must pass a means test to qualify for a carer's allowance. A minute increase in their income can result in the cutting of their allowance or its termination.
The means test is not really a means test because it assesses income only and takes no account of the cost of living for carers. One must also undergo a means test to qualify for a medical card. All Deputies and councillors are aware of the strict criteria that apply. Every week we meet the many people in real medical need and financial hardship who do not qualify for a medical card. These are the citizens of our country who cannot afford to pay professionals to sort out their affairs. They do not have accountants and private bankers, tax consultants to advise or solicitors and barristers to shield them from the rigours of the law. There lies the contrast between the ordinary citizens of Ireland and the Ansbacher set and that is what makes ordinary people angry.
The Ansbacher scandal is a damning indictment of corporate and political Ireland, but it is also a damning indictment of professional Ireland. We have no idea how many accountants, bankers, tax consultants and lawyers were involved in the Ansbacher scam. We only know the names of the account holders, but behind them there are probably hundreds of professional people whose role was to ensure those with the greatest wealth paid the least amount of tax or preferably none.
We are told that the era of self-regulation for financial institutions is coming to an end, but that must also be the case for the professionals. We need to address the disgraceful role of the banks in this scandal. They facilitated tax evasion and helped to defraud the ordinary PAYE taxpayer. These are the same banks which hold the small customer in contempt. They exact outrageous charges for every transaction. There are no private banking facilities and plush hospitality suites for the person seeking a moderate loan to start up a small business. They are shown the door by the bank manager or, in some cases, the security guard.
We also need to tackle those other financial giants, the insurance companies. The people are being ripped off in an outrageous manner by insurance companies with damaging knock-on effects. We have some of the highest insurance costs in the world. Where is the regulation of this sector? People are being ripped off. We all know this, but what is happening about it? The answer is nothing.
Some may say this is not relevant to Ansbacher, but it is. What it points to is a culture of greed in the boardrooms of major financial institutions and big business. Tax and company law is flouted in order that excess profits can flow into the pockets of the top people in these insti tutions and businesses. That is the reason we are being ripped off by banks and insurance companies.
The Ansbacher set has had no sense of civic or national responsibility. They were out to line their own pockets. There is no sense of the debt they owe to society or the working people who made their profits possible. Greed is alive and well in corporate Ireland today, courtesy of a political system that makes it possible and the politicians who profited from it.
I participated in the tax marches of the late 1970s. We were told then that higher wages for workers and an easing of the PAYE burden would bankrupt the economy, but we know who bankrupted it. It was the same Ansbacher golden circle of businessmen, bankers and politicians, including a former Taoiseach, Charles Haughey.
A recent EU survey showed this State to be one of the most corrupt in Europe. Ansbacher has exposed a rotten system, one that must be changed. It is up to us in this House to make sure change happens. The changes have to begin today. The worry about all this debate is that Ansbacher is only the tip of the iceberg.
It is evident that Ansbacher (Cayman) Trust was set up to facilitate criminal activity. It was an organised conspiracy to defraud the State of many millions of pounds at a time when State services in health, education, social welfare, housing and many other areas were completely inadequate to meet the needs of poorer people. It was at a time when cutbacks in health, we were told, were hurting the old, the sick and the handicapped, when proper provision in education was being denied to the most vulnerable children in disadvantaged communities and when many of those same communities were living in Dickensian overcrowded conditions in the inner city and elsewhere lacking the most basic facilities, yet we were consistently told the financial resources were not available to provide adequately for those in need.
At the same time the vast bulk of taxation was paid by PAYE workers. I know because I was one of those who participated in the tax marches in 1979 and 1980 to protest against what was clearly a most inequitable tax system and demand that everyone pay his or her fair share. Little did we know at the time, although many of us believed it to be the case, that some of the wealthiest people in Ireland in industry, tourism, construction, politics, the newspaper industry, medical, legal and other professions were so immersed in their own greed that they were conspiring to deny to the State millions of pounds that should have been rightly allocated to provide badly needed services for those in need. This, in turn, ensured the PAYE sector was crucified with penal rates of taxation.
The criminal Ansbacher conspiracy included people placed on the boards of State companies, supposedly to serve the country's best interests, people put in charge of commissions to produce reports on industrial developments which included studies of investment and taxation policy while privately and cynically they were acting in their own selfish interests and against the national interest. It is my strong view that such people must not be seen to get away with their criminal activity. Mere financial settlements and public embarrassment will not be seen as justice being done.
I well remember in the early 1980s a group of some of the most impoverished women in this country who, in what they saw as a honest effort to provide for the needs of their children, sold apples and flowers from prams on the streets of our capital city. They were told at the time by politicians and the business sector, representing the major shopping stores, that they were unlicensed street traders, that they were not paying tax and that the full force of the law would have to be used against them. That is precisely what happened. Women earning a pittance were hounded off the streets into Garda stations and the courts. For several years the women's prison in Mountjoy was home on a regular basis for these women, having been taken from their flats and families in the inner city. If that was justice for those unfortunate street traders, then the rich elite who used their wealth and influence to conspire to defraud the State of millions of pounds must surely go to jail. It is not enough to say prosecutions will be difficult. The message that should go out is that every effort will be made, first and foremost, to prosecute all those involved in Ansbacher tax evasion; second, to take all necessary steps to uncover other tax evasion scams and, third, to introduce measures to regulate those professionals, in particular accountants, who collaborated with and facilitated such conspiracies.
I have no doubt that tax evasion continues on a massive scale today. We have only to look at the individuals who have made hundreds of millions of pounds out of the people's State assets, yet their legal way out is non-residency tax status in which they appear to be facilitated in every way. Their greed is no different from that which motivated the Ansbacher clients. If anything, it is probably much more cynical and ruthless. It is this climate of greed among an elitist minority that makes it so important that those involved in serious tax evasion are pursued relentlessly and prosecuted and, where appropriate, jailed.
If the Revenue Commissioners are unable or unwilling to pursue convictions, the resources should be given to the Criminal Assets Bureau to go after the people concerned. When it was very difficult to get convictions against drug dealers and those involved in organised crime, we set up the Criminal Assets Bureau. Why should there be a lesser response against the Ansbacher conspirators? They are social vandals and criminals who deserve jail far more than many of those from disadvantaged communities who fill our prisons.
I welcome the opportunity to debate the statements on the report of the inspectors appointed to inquire into the affairs of Ansbacher (Cayman) Limited. It is only right and proper that the 29th Dáil be recalled during the summer recess to allow us the opportunity to discuss an issue of great national and international importance.
Before turning to the detail of the report, it is important to state this was a job well done. Despite the cynics, to spend €3 million on this major initiative and get a return of €17 million is an example of public service at its best. Those who are hostile to the good old fashioned ideas of accountability and quality public services should now realise that we have made €14 million on an investment of €3 million. Well done to all those involved, particularly the staff. I also congratulate the Tánaiste on this example of good practice.
We all know, however, that this is just the tip of the iceberg. The media, which were aware of what was happening, have not emerged from this affair squeaky clean. Where were all the investigative, objective and balanced journalists when this was going on? As a delegate to the Dublin Council of Trade Unions, I clearly remember many delegates repeatedly declaring that the rich were ripping off PAYE workers. The late, great Matt Merrigan, former president of the Irish Congress of Trade Unions, always told young delegates about the scams and tax dodging of the rich. Nobody wanted to know or listen. Above all, nobody really cared about the ordinary people or the public services which were being neglected.
If the Government is genuine about the Ansbacher report, it will send out a clear signal to the public that it will do something about the issues it raises by ring-fencing the €14 million brought in by the investigation. Let it divert this money to two worthy projects of its choice. I propose that it gives €10 million to all the credible agencies working with the homeless in this city. There are 5,234 homeless people in Dublin where more than 300 people sleep rough each night. In addition, 8% of children in the State live in dire poverty while 25% of women raising children on their own live in crisis poverty. Let us target the revenue from the investigation at these areas. These are the people who were left behind by the Ansbacher tax evaders.
I propose that we give the remaining €4 million to Down's syndrome Ireland to assist it set up its centre of excellence for services for children and adults with disabilities. These are just two of many sensible ways to spend the €14 million gained from the Ansbacher fraud investigation. We all know there is a huge amount of additional money out there which could be used to fund other worthwhile projects.
We can have all the reports in the world, but unless we tackle corruption and inequality the fat cats will continue to exploit and walk all over our people. The Dáil cannot allow this to happen again. We have to respond to the valuable judgments in these reports. It is simply not good enough for people on social welfare to be hassled and charged while white collar crime and those involved in it seem to get away scot free.
I welcome the introduction of a new company enforcement process. We urgently need a new regulatory authority for financial services. I welcome the Tánaiste's recent statement that the interim board, chaired by Brian Patterson, has been appointed and the legislation is proceeding through the Houses. It is essential that the public and taxpayers have confidence in the institutions of the State and the financial institutions here. If the people do not see action and a considered response to the Ansbacher investigation, this debate will have been worthless.
The report placed 190 names on the public record. This was not done purely to amuse the public or the media. We should not forget that the Revenue Commissioners' report for 2001 indicated that the first Ansbacher case it investigated had no tax liability. In 1999 a special unit was set up consisting of eight investigators and a back-up staff of 22 officers and headed by a very experienced senior inspector of taxes. While I have no doubt it will do a thorough job, the team is not large enough to tackle this issue. We need a bigger unit to ensure we can go after and bring in the finances rightly owed to the people.
Let us not forget the classic Ansbacher type arrangement yielded an average of €261,795 per case. This is very serious money. Just ten such cases would amount to more than €2.5 million. I know many groups, such as the Simon Community, Down's Syndrome Ireland and the Northside Partnership, which would give their right arm for this kind of money. The provision of one average Ansbacher payment for a project on the north side of Dublin, which assists more than 240 students from low income families to attend third level colleges, would enable it to develop its backup services and put 500 students from poor backgrounds through third level education.
These are the real issues involved in this debate. It is about equality and justice. I call on all politicians from all sides of the House to face up to this reality and take the contents of the report seriously.
I wish to share time with Deputies Healy and McHugh.
The inspectors appointed to inquire into the affairs of Ansbacher (Cayman) Limited have thrown a remarkable light on the twilight world of a subspecies of humanity which wielded enormous power and influence in Irish business and politics. Previously, I called this species "Ansbacher man". Ansbacher man was brought into being in the 1970s. Like his creator, he had a complex, dual personality, one half of which was "Ansbacher man the shadow," a shadowy persona who inhabited a secret world of offshore islands, coded bank deposits, fiddled taxes and secret loans. Leaving his plush boardroom or magnificent suburban mansion, he flitted in and out of the lobbies of top hotels, restaurants, clubs and pubs to rendezvous with his creator who handed him or took from him as the case may be bulky packages of tax evading cash or more discreet cheques or bank drafts. Ansbacher man the shadow was as furtive as a thief. He was driven by greed and the inordinate desire for personal enrichment. He was a walking conspiracy to defraud the taxation system of tens of millions, if not hundreds of millions, of pounds.
Meanwhile, his other half, "Ansbacher man the public persona," was generally basking in the warm glow of an approving establishment. Business colleagues, priests and political party leaders all deferred to him and his picture was in the business pages of The Irish Times every second day. He was on high powered committees which laid down industrial policy for this country for years and decades to come. He was enthusiastic about pouring million of pounds of taxpayer's money – PAYE taxpayers' money – into subventions for industry, just as he was unenthusiastic about industry being obliged to return the compliment to the PAYE taxpayer.
In the 1980s he was forthright in calling on the unemployed and the crucified, compliant PAYE taxpayer alike to tighten their belts in the national interest. He regretted the relentless rise in unemployment and the stream of talented youth forced to emigrate. He wrung his hands as hospital beds were closed by the hundred, if not the thousand, mentally ill people were sent in to communities which had not been prepared for them and the old and sick waited in pain for medical procedures that never materialised because the taxes were not there to pay for them – Ansbacher man the shadow had already salted them away in the Caribbean islands, far from Blanchardstown, Clondalkin, Knocknaheeny and Fairhill. Between the two worlds of Ansbacher man stood his creator. A cross between an octopus and Spiderman, Mr. Traynor's tentacles reached into very many corners while his web encompassed very many people in business and politics at the very top of society.
Then disaster struck. Appropriately it began with one of his own standing at the top of a stairwell in a Florida hotel threatening to throw himself down. I am sure many of the unmasked Ansbacher account holders rue the fact that they were not present to shout "jump, Ben, jump, it will not hurt".
The McCracken report unmasked the secret world of "Ansbacher man", revealing for all to see the corruption at the heart of crony capitalism, masquerading as a political and business establishment. The same establishment wants to say "that was then, this is now". The Tánaiste hinted at this in her speech. We are told that "Ansbacher man" is as extinct as Neanderthal man or the Tuatha De Danann and that to believe otherwise is as foolish as to say that fairies inhabit the liosanna and ráthanna they left behind. The establishment is trying to make us believe that "Ansbacher man" was an aberration, a branch of evolution that suddenly ended and has disappeared without trace, but that is not the case. "Ansbacher man" as we came to know him is extinct, but his DNA lives on. His genetic fingerprint can be found at the heart of major business conglomerates in this State.
Cement Roadstone Holdings, which was established by the creator of "Ansbacher man", Mr. Des Traynor, is one such conglomerate. It beggars belief that the inspector's report did not consider CRH to have corporate knowledge and responsibility for the Ansbacher fraud, considering the extent of the involvement of its chairpersons, chief executives and the majority of its board. The offices of CRH were used as a headquarters for the scam. Four of its employees were engaged in the business, including one who kept accounts and another who was sent all over town to deliver Ansbacher booty to defrauders.
Mr. Traynor was not a peripheral figure in CRH. He was involved in the heart of the enterprise from as early as 1969, when he played a central role in the merger of Irish Cement and Roadstone. He played a key role in the creation of CRH as a major multinational corporation. His methods of hiding the Ansbacher fraud centred around the creation of highly secretive discretionary trusts, the purpose of which was to surround substantial amounts of money or assets with such layers of camouflage that it was impossible to determine their ownership. Mr. Traynor was fiendishly clever in weaving this tangled web of deceit and disguise. Does anybody believe he did not employ similar methods when creating the giant CRH?
Only one and a half years have passed since the revelation that CRH secretly owned 11 operating companies which were not listed in its annual report. How many other concrete and quarrying companies, masquerading as independents, are secretly owned by CRH as a result of Mr. Traynor's fiendishly secretive methods? If that is true, we are facing an appalling vista. The State is supervising a massive €50 billion programme under the national development plan. A substantial amount of these funds will be used to pay for millions of tonnes of concrete necessary for roadways, bypasses, motorways, bridges and buildings. Local authorities and other public bodies are putting huge projects of this nature out to tender and several different suppliers of concrete materials are making offers in response. The appalling vista is that some of these companies may be linked and secretly owned by CRH, through a version of the secretive structures put in place by Mr. Traynor in Guinness & Mahon and in Ansbacher (Cayman) Limited. Are local authorities and public agencies being taken to the cleaners? Is taxpayers' money being used as part of such a conspiracy?
If the Government is serious about tackling these matters, it will ensure that sufficient resources are provided immediately to the relevant agencies, whatever they might be, to inves tigate Mr. Traynor's creation. If it does not act in that regard, its seriousness will be called into question and it will be held responsible for fraud that may be discovered down the line. Capitalism is built on greed. Corruption is endemic in the capitalist system. I want to see that system replaced with a society that is truly democratic and free from corruption, where wealth is possessed by working people and where there is no incentive to be corrupt. That is the system of democratic socialism I favour. We have to insist on immediate measures to root out the corruption that doubtless remains.
What now for the Ansbacher clients? It was fascinating to dip into the interviews they had with the inspectors. One might be forgiven when reading such interviews for thinking that one had stumbled upon transcripts of proceedings in the offices of the Irish Association for Victim Support. We are almost led to believe that Mr. Traynor had mugged these people and that they are nothing more than injured innocents. We are supposed to believe that his weapons of charm, reassurance and bonhomie were used to separate them from their money, which then somehow ended up in offshore accounts.
My party seeks the prosecution of all those engaged in the Ansbacher conspiracy to defraud. Their assets should be seized and applied to the public services that suffered. Although I do not dispute that prison sentences would be in order, a few years of community service at the coalface may be more appropriate so that those who engaged in fraud might, for the first time, encounter the society in which real people live. I ask the Tánaiste to address the matter of discretionary trusts, which I believe must be outlawed. How can our legal code allow people to camouflage their assets through these secretive trusts, so that nobody knows who owns particular companies? It should be outlawed.
Mar fhocal scoir, a Cheann Comhairle, córas caimiléireachta, córas coiriúil amach is amach a bhí i gcóras Ansbacher. Goideadh na milliúin ón gciste cánach agus, mar thoradh ar seo, ní raibh achmhainí ann chun an córas sláinte, mar shampla, a choiméad. Gearradh siar go géar ar an gcóras úd leis na gcéadta leapacha gearrtha amach as an gcóras. Caithfear deireadh a chur leis an gcóras Ansbacher agus leis an coiriúlacht seo agus caithfear iadsan a bhí freagrach as a phionósú.
The first thing I would like to do is to inquire as to the whereabouts of the Fianna Fáil Deputies.
Hear, hear.
Where is the Taoiseach? Where are his party's Ministers? The fingerprints of the Fianna Fáil Party are all over the Ansbacher report, but its representatives have abandoned this Chamber and this debate.
Hear, hear.
It is true.
I am similarly disappointed that a number of party leaders have not found it possible to be here today for such an important debate, for whatever reason.
That will be rectified shortly.
The former Taoiseach, Mr. Charles Haughey, began his address to the nation in 1980 by stating "I wish to speak about the state of the nation's affairs and the picture I have to paint is not a cheerful one". He went on to say that, as a society, we were living far beyond our means. These hypocritical remarks were made at the height of the Ansbacher period. Another famous Fianna Fáil slogan of the 1980s, which should not be forgotten in the context of this debate, was "health cuts hurt the old, the sick and the handicapped". A golden circle of rich and powerful people in Irish political and business life defrauded the State, fleeced compliant taxpayers and deprived the sick, the old and the handicapped of essential health and other services.
Official Ireland, consisting of senior politicians, Cabinet members, senior business people and others, was aware of the tax fraud associated with Ansbacher and other schemes. This knowledge extended from the office of Charles J. Haughey, the then Taoiseach, to the boardrooms of the Central Bank, where Mr. Ken O'Reilly-Hyland, an Ansbacher account holder, was a director for ten years. He told the Moriarty tribunal that he informed the Minister for Finance of the day that he had an offshore account. Official Ireland was aware of this tax fraud and, even worse, it chose to turn a blind eye to it, preferring to fleece PAYE workers and other compliant taxpayers. Various Cabinets and various Taoisigh condoned tax evasion and betrayed the trust of the Irish people by introducing tax amnesties that rewarded those criminals who had evaded tax, including corrupt politicians.
It was no surprise to me when the Ansbacher report was published, therefore, that senior Ministers sought to deflect the focus from pursuing criminal prosecutions against Ansbacher account holders. Criminal prosecutions and jail sentences must be the outcome of the report and not just financial recompense. Ministers and former Ministers who served during this period should resign from Government and from the front bench of their respective parties and the Taoiseach should lead the way. This is the only means by which confidence can be restored in the conduct of public affairs. A huge swindle of the Irish people took place while these people were responsible for the proper conduct of Government. That fact alone merits resignation.
Several hundred of Ireland's wealthiest people held illegal offshore accounts in Ansbacher (Cayman) Limited and in other tax havens. They defrauded the State of huge amounts of money. More than 55,000 people held bogus non-resident accounts on which they did not pay DIRT. In addition, huge amounts of undeclared and untaxed income were hidden in these accounts. Are we to believe that Haughey Ministers knew nothing of the fraud in which he was involved and knew nothing of the activities of Ray Burke? Are we to believe that Ministers of Fianna Fáil, Fine Gael, the Labour Party, Progressive Democrats and Democratic Left knew nothing of the 55,000 bogus non-resident accounts or offshore tax fraud? The Committee of Public Accounts exonerated all former tax Ministers. They would, would they not? Are we to believe that the Central Bank was completely unaware of the breaches of exchange controls? Where were they living? Mr. O'Reilly-Hyland, a member of the board for ten years, was an Ansbacher account holder. Are we to believe that senior officials in the Revenue Commissioners were unaware of the large-scale and widespread tax fraud? Are we to believe they never discussed these matters with Ministers for Finance? Whatever the pretence in this House, the answer to these questions among the vast majority of the Irish people is a resounding "No".
Furthermore, the tax amnesty introduced by the Fianna Fáil-Labour Government was not just a mistake, it was a betrayal of the people's trust. That decision allowed the laundering of £1.7 billion of tax held by tax cheats, corrupt politicians, criminals and drug dealers. Could anything be more corrosive of social solidarity than the official rewarding of tax criminals? The Taoiseach and some Members of the current Cabinet and the Labour Party front bench are in that position and they should resign forthwith.
While I welcome the publication of the report, we need to guard against being too euphoric over the simple fact that publication has been achieved. While it is very welcome to have the report completed and published, is not the end game. In terms of public confidence the real work is just beginning. The real work is to pursue the wrongdoers through the courts, secure convictions and deliver appropriate sanctions. If this course of action is not pursued with vigour then the whole exercise will be looked on by the general public with a suspicious eye. Their judgment on the Ansbacher affair will be that the people with money can still buy their way out of trouble. Because of the absence of convictions in the courts the only penalty on the wrongdoers will be a financial penalty. A financial penalty on a person or company who had so much loose cash 20 years ago is effectively no penalty.
The absolute necessity to secure convictions in order to be seen by the general public to be ridding society of that golden circle syndrome can be understood if one reflects on the fact that at the time the wrongdoers named in the report were cheating and evading just taxes, the suffering public were putting up with health cuts which, as the slogan said, were hurting the weak, the sick and the elderly. PAYE taxpayers were paying through the nose. Small business was effectively walking a very thin financial line between death and survival while at the same being pursued with vigour by the authorities to pay taxes which in many cases they could ill-afford. Failure by those small enterprises to pay taxes resulted in their being pursued ruthlessly in the courts. To show that we are moving towards a society of equals in terms of treatment before the law, we need to pursue urgently in the courts the wrongdoers in this case.
In view of my belief that this affair is not complete without convictions and sanctions being handed down by the courts, I was somewhat alarmed that some Ministers were effectively laying the ground work for acceptance that convictions would not follow, by their statements to the effect that convictions in this case may be difficult to achieve. I say to the Government that convictions may be difficult to secure but it is imperative that they are secured. In general terms, as we continue to trawl through the activities of a hidden Ireland in terms of the underhand and illegal activities by the business and political elite, we need to reflect on the vehicle we use to get to the heart of the matter. Some of the tribunals set up in the State are a waste of resources. They seem to go on and on without any end in sight. The public have not got the time or opportunity to continue to follow their proceedings. At the end of the day, massive tomes will be produced which the public will neither have the time nor the resources to study. Consequently, the public will feel they have been let down and have no ownership of the whole process. Accordingly, they will feel it does not serve them.
I compliment the Minister on the publication of the report. I acknowledge and recommend the method of inquiry in this case. I look forward to the conclusion of the process whereby convictions are secured in the courts and severe sentences handed down.
I thank Deputy Durkan for sharing his time with me.
The Ansbacher report confirms what the ordinary working people have known for most of their lives which is that ours is a society of unequal people an inequality that is institutionalised and leveraged by the powerful for their own political advantage and monetary gain and an inequality that is sustained and nurtured by the political system which regulates for it. There is one set of rules for the rich and the self-appointed great and another set of rules for the rest of us. Simply, the Ansbacher report uncovered a dirty little world of privilege and power that money can buy, a world of exceptions to the common good, a parallel universe for members only.
The report makes transparent what most ordinary people always suspected. It exposes the hypocritical double standard that permeates all sectors of this society down to the very core of the political system. Despite protestations that the report contains no accuser, no accused and no one found guilty, Ansbacher defines a cynical and abusive class system that is guilty as charged in the court of public opinion, a shadowy system of secrets, lies and spoils built off the backs of working people and sustained by a colonial culture of deference for the so-called good and great of the land. We do not need Ansbacher to tell us that this State always had two banking systems, one for the rich and one for everyone else. The rich regularly take advantage of low interest loans and high interest deposits while the poor and working people are afforded no similar access to capital. It is high interest loans and low interest dividends for small earners and savers, institutionalised inequality with incalculable economic consequences.
The revelation that an illegal banking system flourished for the past three decades right under the nose of the Central Bank and other Government regulators points directly to the sleazy fault line that runs through this State. It is an indictment of all successive Governments over the past 30 years. The Central Bank is the Government's premier banking authority and regulator. It is culpable and accountable for the litany of regulatory violations documented in the report. It is ultimately accountable to the people for the wholesale loss of taxpayers' money and the blatant exploitation of the public trust.
The Central Bank facilitated the Anbsbacher run on taxpayers' money by turning a blind eye to the highly irregular and illegal banking practices of the scam. I am curious to know how the Central Bank reconciled itself to the fact that one of its directors, Mr. O'Reilly-Hyland, was an Ansbacher client. At best, it was a conflict of interest given the ongoing investigations at the time but potentially it was much more insidious than that. Despite something not tasting right to investigators, the Central Bank did not pursue investigation insights as the matter was deemed to be a bit too delicate. Rather the regulators took Des Traynor's word that all was on the up and up with his banking practices. I wonder how often the same leniency has been extended to ordinary people who may have overdrawn their bank accounts? Clearly the Central Bank was compromised in its ability to perform its duties.
Meanwhile, as the powerful and mighty milked the system for millions and millions of pounds, ordinary people suffered the burden of excessive tax rates and did not have a Des Traynor to oblige them with a secret banking system as an alternative. They just paid their taxes. When people protested in 1979 and took to the streets to voice their objections to a system of repressive taxation that reduced their pay to a pittance, the elite golden circle closed ranks and told them to go home and stop whinging. In the 70s and the 80s, the economy was highly vulnerable, unemployment was rampant, services could not be supplied, inflation was spiralling, the national debt rocketed and infrastructure was out-dated and substandard. The new landlords of society – the banks – were repossessing houses as families faltered in their mortgage repayments. Young couples could not make ends meet, never mind afford a home, as mortgage rates escalated on the back of rising taxes.
People were forced to leave the country in droves for distant shores in the hope of making a living wage. The social fabric was damaged as families had members displaced all over the world. Young people could not leave the country fast enough. The brain drain was staggering. Rural villages became ghost towns and areas could not field GAA teams.
Against this backdrop, tax rates soared. There was no other way to service the debt and fund the economy. Ordinary people paid the tax bills while the Ansbacher thieves took their money out of the reach of revenue collectors – even out of the country – significantly reducing the money available to Government to fund economic essentials. The knock-on effect to the economy of the massive loss of tax revenue – millions and millions of pounds – in this period is immeasurable. We will never know the full extent of the loss in actual money or the cost of all the opportunities that were not realised.
How can the cost of the years of forced emigration from this island be calculated? When every pound of tax collected could have made a difference, and at a time when the economy was at its worst, the so-called good and great of this State took their money and robbed their fellow citizens of the collective benefits of tax revenue simply because they could. There was no one to stop them and they were not afraid of getting caught. This was business as usual. This group included a former Taoiseach and a director of the Central Bank, along with a high powered group of selfish elites who were not concerned about social consequences, law enforcement or harm to others. What made them believe they would get away with it? Put simply, it was a culture with a colonial hangover that has one set of rules for the rich and another for the rest of us.
The flagrant theft of tax revenue, and by extension, taxpayers' money, over the past 30 years under the eye of multiple Governments and Government regulators is a crime against our society and our economy as a whole. No one is more harmed than the tax compliant Irish workers. They are the victims of this crime. Words like "fraud", "intent", "corruption", "conspiracy", "irregularity", "tax avoidance" and "tax evasion" only add insult to injury by using language to mask the depravity of what was done.
Caution from the Director of Corporate Enforcement that no implication of tax evasion or avoidance, and definitely no criminality, can be deduced or ascribed to the 179 clients named in the report, adds little value to the search for justice and restitution. Posturing aside, the criminal scheme documented in the report is called theft – a larceny of grand proportions – the type of crime that would land an ordinary person a long jail sentence and a substantial fine. However, we are told this is white-collar crime to which a different set of rules seems to apply; a different type of enforcement and possibly a different set of penalties or, perhaps, none at all. The implication is that white-collar crime, as opposed to blue-collar crime, is crime of a different sort, a lesser type of crime in the hierarchy of offences, a more understandable criminality because it has been committed by the professional as opposed to the working class. This is more of the same old and tired story. It is the type of thinking and class-based distinction that furthers the inequality in this society. I am certain we can all agree that there is no context in which to justify what has gone on in this regard.
The Ansbacher scheme is only a symptom of what is wrong in Ireland today. Lies built upon lies and an untruthful past for a manifesto is the legacy of the last three decades of governance. As we have seen documented, many a wealthy pocket has been richly lined by this culture of greed and corruption. The rhetoric and pretence of equality needs to end. The empty promises of social justice from Government have been exposed. There is no acceptable level of inequality. There is no room in our future for what some regarded as acceptable in the past. Government needs to be held accountable for more than the intent embodied in tribunals, investigations and reports. Government needs to enforce the laws systematically and equally without regard to artificial class distinctions or positional hierarchies. Government needs to recover the trust and confidence of all the people and it needs to do so with rigour. In this regard, actions speaks louder than words.
The totality of the cost of the Ansbacher greed has impaired this economy and our people in obvious and sinister ways. The lost tax harvest, the magnitude of which may never be known, and the lost opportunity costs combine to paint a picture of the irreparable harm done. There is a lack of confidence in Government to act as a guardian of the public good and there is an insidious message as to who matters and who does not in our society. Our children are shown a two-tier code of behaviour.
I ask the House to imagine what we might have today if the stolen resources, time and energy went into society and were used effectively to improve infrastructure for all. We could have a health care system with equal access for all and equal opportunity to own and enjoy a home. There could be improvements in local authority housing, sustainable economic development and employment, equal access for people with disabilities and a good transport service. These are services necessary for all the people. There could have been an improved sense of comfort and wellbeing for everyone, not exclusive to the rich and the powerful. This is the equality people want and deserve. People want a level playing field. They should not have to bargain for it because it is theirs by right.
I am certain that all of us would like to return to our constituencies after this session and be able to tell people that the era of greed is behind us, that justice will be done and that Government facilitation of corporate and wealthy interests has ended. However, decades of systemic fraud and institutionalised inequality will not be eradicated over night or by good intentions and words. We must take back our destiny, with full accountability and authority, and never again allow power to accrue to the so-called good and great. Their record speaks for itself. The challenge ahead is to institutionalise the common motivation in our society to create an Ireland of equals.
There have been a number of inquiries over the past few years including the DIRT inquiry, various judicial inquiries and inquiries into financial matters. There have been difficulties in the corporate sector in the United States whereby it was seen to give information that was less than factual. These events cause serious problems for public confidence in the system which is an essential ingredient in any economy. If public confidence in the system does not exist then the system itself will ultimately crumble and collapse. It behoves us to do whatever is possible to ensure public confidence in the system. We should be seen to do what is necessary to bring that about. If we merely have a quick laugh and a snigger about the great scam that was perpetrated, then the system fails and we fail.
I fully accept the points made by the Minister and by the investigators that the naming of people outside the House in the context of the report does not imply that they were guilty of any wrongdoing. I have no doubt that quite a number of those people had genuine reasons for having banking interests outside the country. However, it is clear from what has been said in the report so far that a number of people had other reasons for attempting to use an exclusive system not available to the little people. That creates a serious problem of unfairness. If a system is neither fair nor seen to be fair, public confidence in it will falter and if public confidence in the system falters, the economy will falter. No one will have confidence in us and outsiders will take action to avoid us. That would not be in the interest of either the wealthy or the poor.
In the past the checks and balances, regulations and procedures which were put in place were either not observed or not acted upon and this continues to be the case. Some time ago the Secretary General of the Department of Finance announced that much greater resources could have been siphoned out of the country through the uncontrolled activities of an overseas subsidi ary of Allied Irish Banks. We need procedures which ensure that does not happen because if it does, not only will confidence be seriously eroded, there will also be a serious threat of major damage to the economy, from which we might not readily recover. The system must be fair and be seen to be fair if confidence is to be built.
I listened with interest to commentators on the radio claiming that politicians knew what was going on. Some of us who were in this House for much of the time in question knew nothing of what was happening. People in very senior positions in the system must not have known because it was of no benefit to them to withhold information. Members of this House were inquisitive enough to ask questions and those questions were repeatedly asked. I do not accept the suggestion that politicians should take responsibility for what has happened in the business and banking sectors. That suggestion does no service or favour to this House or the economy.
The Central Bank and the Department of Finance have done their best, but they must try harder. Much has been done, but much remains to be done if we are to recover the credibility that is in danger of being lost by this escapade.
If we have not learned our lesson by now, we have a serious problem. We have had a series of inquiries and investigations in the past ten or 15 years. It is time, therefore, that regulations were made operational to ensure public confidence in the system is restored.
I apologise for my absence this morning. I had made arrangements to be in Belfast and not having the facilities of Government, I was unable to get back as quickly as I would have liked. I have listened with interest to the comments made in the debate so far.
The words of the Fianna Fáil leader in 1980, "I wish to speak about the state of the nation's affairs and the picture I have to paint is not a cheerful one", go to show that the more things change the more they remain the same. However, this time we know more and we know better. The publication of the Ansbacher report gives Ireland few reasons to be cheerful. It is a damaging critique of our gilded elite and a damning indictment of worlds within worlds where tax evasion was endemic, conspiracy to defraud commonplace and getting a bigger bang for one's buck, regardless of how one did it, was the order of the day. When it came to hiding and making money the end always justified the means.
Not only is the Ansbacher report is a damning indictment, it is also a deep disappointment. The Minister's long awaited and much hyped magnum opus is no sword of Damacles but a crude and blunt instrument which blurs the boundaries between guilt and innocence to such a degree that it effects a kind of guilt by association. As such, it does a grievous wrong to the people listed who are entirely innocent of wrongdoing. The Mini ster has a serious case to answer in addressing this issue. She should outline the action she intends to take to ensure the absolute right of the people concerned to their good name and reputation. In view of the fact that some of those on the list have already settled with the Revenue Commissioners, is it intended that the identities of those parties and the settlement in each individual case will be made known? Ansbacher failed to live up to its pre-publication hype. Those who had hung on to every word of the Minister's righteous indignation and anticipated the apocalypse found only revelations.
If there are innocent people on the list, there are also those who have a serious case to answer. The report will increase the cynical belief of many that there is one law, or in some cases no law, for the rich and another for the rest of us. Despite its shortcomings the report provides incontrovertible evidence that in our midst there existed a circle of virtuous, wealthy people who, with the help of slick accountants, bankers and lawyers toiled long and hard to find ingenious mechanisms for evading taxes due to the State from their considerable wealth.
Tax evasion is a criminal offence. If, after due process, people on the list are found guilty of that offence, appropriate action must be taken against them, regardless of their position or status in society. It worries me that the Government appears to be confused on this issue. It would be against my nature to say it is duplicitous. On Saturday, the Minister for Justice, Equality and Law Reform took to the television to dampen public expectation of prosecutions, but on Tuesday the Taoiseach hit the headlines saying he fully expected prosecutions to follow. I ask the Government to make up its mind. Which is it to be? Either there will be prosecutions or there will not. Either the law applies to all the people of the country or it does not. Either this is an oligarchy, where we live by the rule of the few, or a democracy, where we live by the rule of the people. By this I mean all of the people, rich and poor.
I ask the Government to come clean and tell the people what it is to be. We will have prosecutions or we will not. In the interest of democracy and every compliant taxpayer, especially the hard pressed PAYE workers who suffered through the dark days of the 1970s and 1980s, we should be told. There can be no fudge because the bottom line is that if one evades tax, one breaks the law.
We must divest ourselves outright of two notions, first, that taxes are only for the little people, and second, that so-called white collar crime is victimless. Everyone with a tax liability must pay it in full. Much of this tax evasion took place when the PAYE sector was in hock to its ears. One need only ask people who had their homes repossessed or who lost a business at a time of double-digit interest and punitive taxation if this criminal activity was victimless. How many families all over Ireland are stuck today in the trap of inter-generational disadvantage, sprung by the cutbacks of the 1970s and 1980s?
The victims of white collar crime are myriad. They include the dreadfully neglected people with mental illness, many of whom were housed in squalor, the special children whose right to an education has to be fought for in the courts and the elderly who are consigned to living out the remainder of their lives in pain because they have to wait for medical treatment. This report shows that while PAYE workers were urged to tighten their belts, tax evaders tightened the noose on our ailing economy. For them, it was clearly a case of asking not "what you can do for your country", but "what you can do your country for".
Since last Saturday we have been assailed by jargon, including trails, discretionary trusts and impregnable codes, but these should not draw our attention from the real issue, the grievous wrong done to the men, women and children of this country in the 1970s and 1980s, whether they were compliant taxpayers or the hundreds of thousands of unemployed who never even got the chance to be compliant.
I wish to use this special sitting of the Dáil to be an advocate for those people, particularly the then beleaguered and over-burdened PAYE worker. Back then, there was more than a ring of truth in the saying that PAYE stood for pay all you earn. I speak on behalf of those who did not have an accountant, whose idea of offshore funds was a postal order from an aunt in Dagenham or an uncle in America, whose financial planning generally extended to next week's wages, this month's mortgage and the local Christmas club and whose idea of providing for their children's future was taking out an insurance policy so they would not have to pay for their funerals. When they needed a loan, such people braced themselves for the rigours of the credit union manager. If nothing was forthcoming there, it was off to the local moneylender and the prospect of 300% interest repayable, in well-documented cases, not so much by force of law, as by physical force.
Our tiger economy breeds the sense that it is not quite the done thing to look at our humble and not-so-distant past. However, in discussing the fall-out from Ansbacher and those other "games in town" that have yet to be revealed, it is vital to recall the grievous wrong done by guilty parties to their fellow and far less privileged countrymen. In many instances, those fellow countrymen, along with their children and grandchildren, are still paying for the substantial cutbacks in health and education in the dog days of the 1970s and 1980s. For the Governments of the day the cupboard was bare, so children left school early, hospital waiting lists became – sadly, for some – too long, our economy rumbled and the brightest and best were forced to leave us by the thousand.
Since the publication of this report we have heard much about the culture of the day, as if that culture excused the rush to lodge into undeclared overseas accounts what are, even by today's standards, fantastic sums of money. Perhaps it was due to the culture of the time, but let me place the activities exposed by Ansbacher – which are believed to be endemic in those other "games in town"– in the context of the 1970s and 1980s. At that time, PAYE workers faced mortgage interest rates of 17.25%, some 225,000 people were unemployed, and a single person on the dole received £20.85 a week in 1980. A person earning £6,000 per annum paid tax at a rate of 55% and the number of university students from working class backgrounds was negligible. It is also worth noting that during that time to get a grant to pursue an arts degree course, a working class student had to obtain four honours in the leaving certificate, whereas those who could pay needed only two honours.
It may have been a golden – some might say a brazen – age for our gilded elite, but the majority lived through proverbial hard times. The old saying goes that "of those to whom much is given, much is required". It has not been lost on our disbelieving public that many of those involved in these labyrinthine, financial practices were our leaders, movers and shakers. In notable instances, they comprised the very axis upon which Ireland Incorporated revolved.
The kind of activity revealed by Ansbacher is appalling but it is even worse when conducted by, or on behalf of, those who were – in many instances still are – Ireland's most favoured and privileged sons and daughters. It would appear they did disproportionately well out of this country, although by the standing our society accorded them, they should have been setting the correct ethical tone.
As a nation, we have moved from time to time against spongers and cheats. Last year, €269 million was saved by combating fraud and abuse of the social welfare system. Section 26 of the Social Welfare Act, which is designed to flush out cheats and spongers, gives swingeing powers to welfare inspectors, up to and including Garda assistance in any searches. Such was the Minister's resolve, he told the Dáil in 1999 that he was initiating roadblocks as part of that inspection process.
When Deputy Durkan attacked the proposed legislation, citing FBI tactics, the then Minister of State, Deputy Dan Wallace, famously countered "What about the just society"? I remind Deputy Wallace that his constituents in Fair Hill and Churchfield, who bore the brunt of our economic woes in the 1970s and 1980s, might be listening to this debate.
Based on what we know now, we would have had a far better chance of creating a just society if we had extended our search for fraud beyond the territory of the Hiace van and the working class neighbourhoods, to include some of the BMWs and Audis cruising the leafier, more desirable suburbs.
How can the members of the Government sit smugly before the people, slapping themselves on the back for finally having produced the Ansbacher report? The Taoiseach may well be delighted with its publication, and so he should be, but that is not an end in itself. People now want action on guaranteed probity, propriety and prosecution where necessary. Earlier, Deputies Hogan and Richard Bruton moved a motion to ensure the Committee of Public Accounts would be established and mandated to carry out a comprehensive review of the Ansbacher report. In the national interest this should happen as a matter of urgency.
It is fitting that Ansbacher should be published at time when the rot at the heart of the global corporate world is being exposed through WorldCom, Enron, Xerox, Elan and Merck. Even Martha Stewart herself is coming apart at her carefully sewn seams. In that context I would like to make a plea. Economically, times ahead are not looking great. When we raised this fact during the election campaign we were laughed at, but now Ireland knows the emperor really has no clothes. In view of the tough times that lie ahead, I appeal to our business leaders to go the extra mile and restore public confidence in big business by putting their money where their mouths are. They should think again and put the country's interest over self interest. They should do their bit for what Fine Gael regards as Ireland's most important business – the public business.
Every year, billions of euro are lost to the economy because some choose to legally absent themselves from this tax jurisdiction, which is now one of the least punitive in Europe for big business. By that action, by careful calculation of how many days they can safely stay in their home country, the people suffer huge losses. They have done well out of Ireland. We know they are tough, but this time when the tough get going, I say to them, "Do not go the traditional route. Stay put. Your country needs you."
To those who consider my request naive, I say the ordinary people of this country should be the judges of that. Ask the 50,000 on local authority housing lists, the 50,000 on orthodontic waiting lists and the 25,000 on hospital waiting lists whether asking our business people to keep their money in this country is naive. The bottom line is, if one does not ask, one does not get.
It will not be lost on those at home that while bankers, legal and otherwise, conspired to siphon money from the people, two men gave their lives protecting money for the people, Garda John Morley and Garda Henry Byrne, shot dead after an armed raid at a bank at Shannon's Cross in Ballaghaderreen in July 1980. It is important we remember people like them on a day such as this.
With the publication of the Ansbacher report, we meet today to discuss the great and the not so good. We meet to discuss conspiracy to defraud on a scale so vast, so ingenious and so brazen that it takes the breath away. We owe it to the people to make sure it never happens again. The Government must act immediately to ensure the cultural genetic marker of organised fraud, gross dishonesty and crass mé féinism, dies a death with that particular corporate generation.
We have heard much in this debate about that being then and this being now, but I am not convinced. We have been here before, yet no one has been brought to account after a succession of reports and scandals which have been visited on the country. The people listed in the Ansbacher report may have been the leaders – the movers and shakers – but they have led this country down a road of corruption, moved against this country's interests and shaken the foundations of the State and still no one has been brought to account. We have even reached a stage where, by introducing this report, expectations have been dampened about whether prosecutions can and will take place. The people deserve better because, not only is this an historical fact which we are recording, there are still instances of this type of behaviour within corporate Ireland, behaviour which is continuing to infest the political life of the country.
We are still getting mixed messages and wrong signals, much of which is being brought about by the nature of the political system we continue to practise. The Tánaiste stressed that one of the first acts of sovereignty of a democratic state is to raise taxes to enable it to function. I am glad she has reiterated this particular important function of state because her party seemed to articulate quite the opposite view – that taxes were somehow an attack against the State and that public expenditure was often unnecessary. When this culture is promoted within public life it cannot but infect the rest of society.
We have, through successive budgets, encouraged the national sport of tax avoidance – the legal and legitimate practice of tax avoidance – but the ethical and moral jump between tax avoidance measures and tax evasion measures has been so vague and so narrow as to allow the situations reported in this report to occur. It is beyond credibility for anyone in this House to believe that they cannot or are still not happening to a large degree.
This report is about the supposed great and good in our society. It confirms, in relation to many of the people listed, that goodness in terms of legality is very much open to question. We also need to question greatness. The very foundation of our commercial and economic system seems to reward people who are not wealth makers. They provide wealth for themselves but do not encourage the type of business which is in the best interest of the future development of the country. They make money out of business activities which are largely selfish – businesses such as property development and the exchange of currency between one jurisdiction and other. They do not produce goods, create jobs or act in the long-term interests of the country. We should question this and the type of changes made to our tax system where after years of Finance Acts, additional measures have been added to allow people to avoid the payment of tax in order that the greater the income a person has, the smaller the proportion they pay in tax. That is the equity we portray in our tax system.
A higher proportion of tax is collected here through taxes on income than in many other countries. Within that collection of tax, the proportion of those on middle and lower incomes is higher than in other countries. People on or below minimum income are still being taxed, yet we still see the creation of tax policies which have resulted in the halving of capital gains tax and the income which derives from capital gains not being treated as income but as a special form of income which has to be taxed less – rewarding those who have already been rewarded by avoiding tax and, in the case of many of those listed in the report, evading taxes.
What we need to see from the Government is a plan of action that will identify the extent of these practices in our society and the political will to challenge those who have and continue to evade tax. I would like to see this list checked, not twice, but several times. I would like to see it checked against the lists which exist in political party headquarters. Have the persons who will be found to have evaded tax been supporting the democratic process by giving donations to political parties and have they helped to influence decisions made? If it is the case that they have done so and continue to do so, will the political parties which have benefited from such largesse be prepared to admit it? If they are, will they be prepared to return the money?
This is a sorry tale, but I fear it is only one chapter in what will be a very long saga. What the people need to see is a process which will result in prosecutions, the end of double standards and an end to the relationships which exist with those involved in corporate Ireland and the undue and unnecessary influence they have had on political life.
That concludes statements. We will now have questions for a period not exceeding 60 minutes.
Is nobody from Fianna Fáil coming into the House for questions?
Leaving the watchdogs on their own.
Does the Minister accept that the Committee of Public Accounts is an appropriate one to investigate and adjudicate on the findings of the Ansbacher report? Will she positively consider this request? At Question Time some weeks ago reference was made to representations made to prevent publication of the report. Will the Minister indicate who made representations to prevent its publication?
As we know, Mr. Haughey was a central figure in the business of off-shore investments organised by Des Traynor. Did any part of the party leader's allowance, which was under the control of Mr. Haughey and in respect of which a significant number of blank cheques were signed by the Taoiseach, find its way into the Ansbacher deposits? Furthermore, was this matter investigated by the inspectors? How many properties owned by Mr. John Byrne and other named Ansbacher depositors are being leased by the State? Does the Minister believe it is appropriate for the Government to rent property from people who have serious questions to answer regarding where they got their money and whether or not they defrauded the State?
Will the Minister inform the House of the areas of financial activity to which she referred recently and the products that were, and perhaps still are, being sold which are of a similar nature to the Ansbacher deposits? Does she think a Dáil committee should be established to investigate these schemes to see if they are appropriate in the context of the Ansbacher report?
Will the Minister confirm that everyone mentioned on the Ansbacher list – some of whom are directors of semi-State bodies or beneficiaries of State contracts – are tax compliant? In view of the fact that some of those named on the Ansbacher list have settled their financial affairs with the Revenue Commissioners, will the Government publish those names or will the Revenue Commissioners publish them?
Does the Minister agree that the Competition Authority should be asked to investigate the dominant position of CRH in view of the close relationship between Mr. Traynor, the then chairman, a number of other directors named in the Ansbacher report and the then leader of Fianna Fáil and Taoiseach, Mr. Haughey?
I wish to express my appreciation to Deputies for their kind and over-generous comments. As we all know, if it were not for events in Florida, all this may never have come to light.
It is not appropriate for this House or any committee of this House to adjudicate on a High Court inspectors' report. However, committees of this House should have a role in discussing the findings of the report with the appropriate regulatory authorities. That may be a useful and important function that the committees could perform when they are established in the autumn, particularly the Committee of Public Accounts or the committee with responsibility for enterprise. That is a good suggestion.
As Deputy Hogan knows, two parties took proceedings regarding anonymity which was refused by the High Court and there was no appeal. Legal representations were made to me which were always passed on to the inspectors which is the appropriate procedure. At no stage did I engage in discussions with any of the parties or individuals in connection with the Ansbacher report, either formally or informally.
The matter of the Fianna Fáil party leader's allowance during the tenure of Mr. Haughey is being investigated by the Moriarty tribunal and, as I understand it, the report says that the inspectors did not seek to go over territory that was more appropriate for the Moriarty tribunal and its work.
The Companies Registration Office is in a building owned by a gentleman or a company that the Deputy refers to along with many other buildings. I have spoken to the Office of Public Works about this matter and I understand that, from recent times, it requires companies with which it is dealing to produce evidence that their tax affairs are in order. This is a matter for the Minister for Finance and the Office of Public Works and could, perhaps, be pursued on another occasion.
As Deputies know, in the appendices to the report reference is made to the fact that the State is leasing properties from one of the companies in question and there are wider issues to be addressed. The company or individual concerned owns a substantial number of properties. It may well be, for example, that the Courts Service is in a property owned by the same source.
Could the State get a discount on rent?
We need to examine all the issues around that point. I made the point this morning about the political response, but there is the reality and the perception of the reality. I have to be realistic. If there are a large number of properties involved there may be difficulties. We must be vigilant as a State in doing business with individuals. The Office of Public Works has informed me that in recent times it requires evidence that tax affairs are in order.
As I said at the weekend, it would be naive to think this was the only game in town given the large number of professionals that seemed to be promoting schemes of this kind for what have been referred to as "high net-worth individuals". It may be that there were other schemes but I am not aware of them. My authorised officer is concluding investigations into a number of other companies, the report of which should be completed shortly. It will then be a matter for the independent Office of the Director of Corporate Enforcement to take the issues forward.
The Deputy asked whether the names of Ansbacher account holders would be published if settlements are reached with them. The inspector states in the report that of the 100 cases examined, there were no contemporaneous tax returns and over half of those interviewed said they were there for tax evasion purposes. I understand that if settlements are reached, Ansbacher will be referred to in Iris Oifigiúl when details are published.
The links between Mr. Traynor and Mr. Haughey are not reasons to refer matters to the Competition Authority. However, such a course of action may be taken if someone is abusing his or her dominant position. We have radically different competition law under the new Act which has just come into force in July giving significant new powers to the authority. It will be more independent in the future and, where there is evidence that someone is abusing a dominant position, where there is no real competition in the domestic market or where someone is using the domestic market to grow his or her business internationally and damages the domestic market in that pursuit, these matters are properly within the remit of the Competition Authority and should be examined. Perhaps these matters are being examined at present but I do not know.
The Labour Party introduced the Whistleblowers Protection Bill, 1999, which Deputy Rabbitte saw through Second Stage in this House. As it is the Minister's responsibility as Minister for Enterprise, Trade and Employment, does she intend to reactivate the Bill or, if the Labour Party reactivates it, will she allow it go through the House given the discussion we had this morning?
The Minister mentioned in her statement that prosecutions would be pursued with the utmost vigour. What exactly did she mean by that? Will the Bureau of Fraud Investigation and the Garda immediately deal with the criminality involved and proceed to question and arrest people? Will there be a real attempt to secure prosecutions? Is the Minister considering taking any action regarding the behaviour of directors of CRH who were involved with Ansbacher (Cayman) Limited?
The Minister for Finance told us of plans to exchange information with 31 tax havens within three to six years, which seems a long time hence. Does the Minister intend to investigate further aspects of the report? For example, there are references to Mr. Stakelum doing business with AIB, Jersey. Is it intended to pursue AIB in this context? There is also reference to Mr. Ray McLoughlin regarding Liechtenstein. What earlier action, if any, will the Government take?
The Deputy has asked four questions and should be brief in fairness to the Minister and to other Deputies, including some from his own party. We do not want the hour to pass without giving other Members an opportunity.
Is there a reason all Fianna Fáil Ministers and backbenchers are absent?
That does not arise.
The record should show they did not have the courage to come in.
Regarding the whistleblower legislation, earlier this week I met my officials about our legislative priorities for the coming term and that Bill is a priority. I am sorry it has taken so long but difficulties arose in relation to whistleb lowing employees of multinationals who might have responsibilities in other jurisdictions. There are some very complex legal issues here that have to be addressed but whistleblowing elements were introduced in the Company Law Enforcement Act, where auditors are now required to report certain matters to the Director of Corporate Enforcement.
Prosecutions are a matter for independent authorities, including the Director of Public Prosecutions, the Director of Corporate Enforcement and the Revenue Commissioners. If resources are required by any of those bodies they will be forthcoming. We are all determined to ensure that action is taken on foot of this and other investigations. It is a fact, as the inspectors said, that it is not easy, due to the length of time and the onus of proof required, to successfully sustain a criminal prosecution and get a conviction before a jury. As we know, much evidence is destroyed while one of the main players, Mr. Traynor, is deceased. The inspectors were seeking not to hype public expectations and they have written a hard-hitting and clear report in a responsible and careful fashion. However, they did not say it was impossible but merely pointed out that it would be difficult. I hope there will be prosecutions forthcoming but that is not a matter for me.
Regarding co-operation with the inspectors, they themselves outlined the names of individuals and corporations which did not co-operate; those are recently committed offences and I hope the appropriate authorities take action on foot of that, as not to co-operate with the inspectorate is an offence.
As for the directors of Cement Roadstone Holdings, the inspectors draw attention in the report to the fact that none of the current directors were involved in this activity. That is important for the company as we go forward. The Director of Corporate Enforcement has enormous powers to apply to the court to have someone disqualified for five years from holding a directorship and those are powers he will be prepared to use. The OECD is pursuing the area of tax evasion and is seeking agreement on tax havens. We hope it will succeed but given that some economies are almost totally dependent on this form of activity in order to survive I would not hold my breath about it. However, if more information was forthcoming from overseas authorities in these kinds of investigations it would be much simpler for people in this jurisdiction to get to the bottom of what is happening.
As for AIB Jersey or any other company, initiating company inquiries or pursuing revenue matters are obviously matters for the Revenue Commissioners. They have already indicated in public on a number of occasions their determination to pursue these matters and they have been given substantially increased powers in recent years, including the power, in certain circumstances, to access banking information. That is an important power if they are to get to the bottom of what may have happened in the past.
Does the Government intend to revisit the previous call by the House to include an examination of the affairs of Cement Roadstone Holdings in the terms of reference of the Moriarty tribunal? I appreciate there were conflicts of interest in the past in relation to particular people but those conflicts no longer exist.
A question, please.
That is one question. Will a similar investigation be undertaken by the Director of Corporate Enforcement into the affairs of CRH? My other question related to AIB but the Minister has answered that.
The situation regarding the Glen Ding site, which is what the Deputy is referring to, was reviewed by a Dáil committee. I do not know if Judge Moriarty himself or others felt he was conflicted because he was a former shareholder but this is clearly not a matter for me. No current tribunal of inquiry, and the Moriarty tribunal in particular, would want its terms of reference expanded.
An inquiry into CRH or any other company would be an independent function assigned to the Director of Corporate Enforcement and it is no longer a matter for me. It would not be appropriate for me to comment on whether an investigation into any company would be appropriate. It is an independent function of an independent officeholder.
What is the Minister's view of the opinion expressed by the Director of Corporate Enforcement, Mr. Paul Appleby, that there will be difficulties in bringing prosecutions in this matter? What action will the Government take to minimise those difficulties? Will the Government ensure that all relevant agencies have the extra resources necessary to pursue these cases?
A number of Members asked about Fianna Fáil's absence. That is why they have the Progressive Democrats as partners.
The first question is in order.
I did not hear the second.
He said the Progressive Democrats were a mudguard for Fianna Fáil.
I will not be tempted by the Sinn Féin Deputy from Louth. Mr. Appleby was repeating what the inspectors said about how difficult this would be. The onus of proof required to sustain a prosecution and conviction is not easy. There is a long time gap in many cases and some key players are deceased, while much of the evidence is destroyed or was not forthcoming. Mr. Appleby pointed out that for those reasons it would be difficult but he also said he was determined to study the report thoroughly and to pursue it in whatever fashion he could. I am certain he will. He now has a staff of 37, including seven gardaí as well as legal and accounting experts. He has a level of expertise available to him that we have not had in relation to company law enforcement.
Company law generally was not enforced and was the responsibility of the Department of Enterprise, Trade and Employment. One or two officials would work in this area but they also had other duties. We did not take company law enforcement seriously in the past and we have paid a heavy price for it, so we must now take responsibility for it. We have resourced the new office properly, particularly with gardaí, which is necessary if an investigation is to be carried out with a view to prosecuting people.
In light of the Minister's role and that of Margaret Heffernan in initiating the inquiry, does she agree that if one wants to get a job done thoroughly one should get a woman to do it?
Better value beats them all.
Where it has been admitted that the purpose of using Ansbacher accounts was to avoid or evade paying taxes or where it was clear that that was the purpose of the exercise, will it be possible to pursue some or all of the people involved given there is an admission of guilt, notwithstanding the reference already made to the difficulties of time elapsing and the deaths of participants?
What penalties have been imposed in relation to individual cases where the Revenue Commissioners have already secured agreement in relation to payment of taxes foregone previously? Have those been ordinary or extraordinary penalties? Were they the same as those imposed after the DIRT inquiry or are other penalties contemplated?
I said earlier that in 100 cases at which the inspectors looked there were no contemporaneous tax returns. More than half of those interviewed said they were there for tax evasion purposes. Having said that, I repeat the caveat that the inspectors have, that we are not suggesting any individual named in the report has evaded their taxes. That is important. I will not decide as between the innocence or guilt of anybody named in any part of the report and it would be very wrong to do so. The Supreme Court decided in the NIB case that evidence that was forthcoming as a result of being compelled to give it is not admissible in a criminal trial. Therefore, any evidence in the transcripts attached to the report could not be used in criminal prosecutions. Only evidence given voluntarily can be used for that purpose.
What about the penalties?
I do not know what settlements have been made with individuals. I do not know who those individuals are nor should I know. That is a matter for the Revenue Commissioners when they publish the outcome of those settlements in the normal way in Iris Oifigiúil. The penalties which are stiff, include 1 per cent interest charge per month as well as a host of other penalties. We have had examples of people occasionally owing more than they own if a long period has elapsed. In the case of NIB the sum the Revenue has collected to date is of the order of €37 million. That is a considerable sum from a relatively small number of cases. Therefore, a small number of cases can generate a large amount of money when the tax, interest and penalties are paid on the tax owed over the period in question.
One of my regrets on leaving office as Minister for Finance was that I did not give to the office of the Revenue Commissioners the powers to initiate prosecutions independent of the Attorney General's office or the DPP. In view of what has been said, and in the interests of brevity, will the Progressive Democrats, who have taken upon their shoulders the responsibility of minding the major party in Government, give an undertaking that in respect of the pursuit by the Revenue of those named in the report for possible tax evasion crimes, a clear policy directive will be given by the Government and that a policy of prosecution rather than settlement will be pursued by the Revenue Commissioners, notwithstanding their independent statutory position? Will the Cabinet give that policy direction to Mr. Frank Daly, Chairman of the Revenue Commissioners, given that this is not a victimless crime, that settlement is inappropriate in the circumstances and that publicity and the naming and shaming as well as the prosecution is what is required if our system of self-assessment is to function?
Responsibility for prosecuting all indictable crime is a matter for the Director of Public Prosecutions. The vast majority of people have huge confidence in that process.
Will the Minister agree that in some cases the Revenue Commissioners send a file to the DPP's office and the DPP's office decide not to prosecute even though it would be the choice of the Revenue Commissioners to do so? It is a power that was sought in the past, unfortunately it was not acceded to. I ask the Minister to have a look at it on that basis. Other agencies have the power to directly initiate prosecutions.
I do not think they have the power to initiate prosecutions for indictable offences, certainly the Director of Corporate Enforcement does not. We went through all these issues at the time. There are huge difficulties involved in extending the number of people who can have that authority beyond the Director of Public Prosecutions. I do not wish to rule out anything that might be a good idea. We do not want to be back here in five or ten years agreeing to implement a measure that was suggested today but which we did not have the capacity to embrace because it was new and different. Everything should be examined. The same answer applies to the Deputy's request that the Government give a direction to the Revenue Commissioners. I am sure we could and they may heed it. I do not know under what power we could do that but I am sure a way could be found. Pursuing a prosecution that could be expensive, if one knew there was no chance of securing it, would not be beneficial.
We have learned—
I heard the point the Deputy made this morning about getting people into court. If one were to do that for the sake of it, knowing in one's heart of hearts that the evidence was not there to sustain a prosecution, that would be irresponsible, if in the meantime one could achieve the outcome of at least getting the revenue into the State. Many people went to extraordinary lengths to try to prevent the report coming into the public domain and a huge number of legal teams was involved. That it has come into the public domain is an achievement and a very good one. It is in the public interest that the matter is in the public domain. The next step is to ensure the tax owing is collected, including the interest and the penalties applied where tax is owed and, if possible, prosecutions. It would not be a good idea for the Government-—
The Minister is settling for a tax settlement. That is my point.
If one has no chance of securing it in that way, does that make sense?
If it is a choice between settlement and prosecution.
Looking forward, the Minister's indication that she believes there are other abuses of this nature is a cause for concern. Is the Government ordering a trawl of all records in the Central Bank which cover reviews of financial institutions to see whether they give any prima facie evidence of similar abuses occurring in financial institutions other than that which is the main subject of this report? Will the Government's decision, indicated today by the Minister for Finance, to lift the ban on the Central Bank exchanging information about tax evasion with the Revenue Commissioners be confined, as the Minister appeared to suggest, to criminal sources of revenue rather than general abuses such as standard tax evasion? Will the Government submit details of the investigations of exchange control breaches to the Committee of Public Accounts or the other committees of the House given that in his statement the Minister for Fin ance was extremely coy as to what these revealed?
What supervision will the Government undertake of the investigation by accountancy bodies in respect of breaches of their regulations and of investigations by the Stock Exchange in respect of breaches of regulations in relation to the Stock Exchange, in other words the non-statutory investigators who will be working in consequence of this report? Will the Government be in a position to report to the House on what progress is being made? As I understand it, one or other Minister has a supervisory role in respect of these. Is the Government putting in place a high level team comprising the Central Bank, the Director of Corporate Enforcement, the Revenue Commissioners to come together to pool their knowledge of the extent of these abuses? Clearly information is available to some that may not be available to others. There is scope for some of the parts being greater than they stand individually in their ability to hunt down this practice. Will the Government put in a place a team comprising those individuals and others, as appropriate, to pursue this issue?
On the question of disclosure the Minister indicated in the context of the IFSRA Bill that he intends to bring forward amendments to give the Central Bank the authority to pass on information to the Revenue. That would be a good thing.
That would be general.
As I understand it, it would be general application. It already exists in the other case. That would give us an opportunity to look at the whole area of financial regulation which is a complex area. In the past all the emphasis was on prudential regulation and there were concerns about the currency, the economy and matters of this kind probably were not addressed in a sufficiently aggressive and thorough fashion. Clearly that has to change because our country is the loser. One would hope when the new system of financial regulation is in place and when a new director of consumer protection is assigned to that new institution there will be a different approach.
I am not sure about bringing all the different bodies together. Many of them work closely with each other in any event. There may be legal reasons bringing them together as a team may not be a good idea because they have independent and separate functions. When the recent Act in relation to the establishment of the Office of Corporate Enforcement was being passed, strong powers were given to the director to exchange information with all other authorities and the same applies generally across the board. That exchange can take the form of information being given in writing or being passed on orally. Obviously these people talk from time to time but since they have separate independent functions to perform, it may not be a good idea to have them work together in the kind of co-ordinated fashion that Deputy Bruton suggested.
The Minister did not advert to the trawl of Central Bank reviews, exchange control and her own supervision of the non-statutory bodies that are being investigated.
On my supervisory role in relation to the auditing profession, that is about to change. As the Deputy knows, after the DIRT inquiry we established a review group chaired by Senator Joe O'Toole. The group presented an excellent report and its recommendations are about to be implemented. I hope to publish the legislation—
We are not talking about legislation but rather the actions they will take on the names.
I cannot order them to do particular investigations. Until we have the new supervisory board in place to supervise its own investigation of these matters we are not in a position to give them specific instructions. They have had inquiries under way since 1997. In particular, the Institute of Chartered Accountants have Mr. Justice Blayney carrying out an inquiry on their behalf. That inquiry may have been completed but there may have been many legal challenges and difficulties in this area. That is the reason we need a new system for the supervision of regulation by self-regulators because it has not worked in the past.
I am not aware that any stock exchange rules have been broken. As a matter of interest, insider dealing was not an offence in this jurisdiction until the early 1990s. I am subject to correction but I am not aware that there is any evidence in the report of any matters that should concern me in relation to the stock exchange.
It would not be appropriate for the Government to order a trawl of all the records on exchange control in the Central Bank. If that information is there, it is a matter for the Central Bank to act appropriately on that information and to take whatever action it should take, but perhaps these issues could be pursued by the Committee of Public Accounts with the Central Bank in the autumn.
We welcome a Fianna Fáil spokesperson to the House.
Who has already spoken on the issue.
I want to put three questions to the Minister. First, does she agree with the view expressed to the House earlier today by the Minister for Finance on the role of the Central Bank in this debacle when he said he believes it dis charged its functions well? Does she accept that that is a true reflection of the role of the Central Bank having regard to the fact that in 1978 a director of the Central Bank had a loan secured by a Cayman account? Second, in reply to a previous question on Cement Roadstone Holdings the Minister said there were difficulties in relation to the terms of reference of the Moriarty tribunal. What, if any, investigation does she believe should take place now into Cement Roadstone Holdings and its former directors who were involved in such a central way in this debacle? Third, the Minister talked about legislation on supervising the auditing and accounting professions. Is it her view that there should be supervision merely of self-regulation or a fundamental State controlled mechanism to regulate the accounting and auditing industry?
Can I add to what I said earlier about exchange controls? I have been given a note by the Department of Finance. After the McCracken report the Minister asked the Central Bank to examine the implications in relation to exchange controls and to report to his Department. The Central Bank's report was subsequently referred to the Director of Public Prosecutions and a Garda investigation is under way. In the light of this inspector's report, the Department of Finance has asked the Central Bank to revisit the matter.
In relation to corporate governance issues, they are a matter for the Director of Corporate Enforcement, Paul Appleby. If he is of the view that an investigation into any company is warranted as a result of this report—
I am asking the Minister's view on it.
I do not know whether the Deputy is talking about competition policy. I have to be fair and say that the report strongly states that none of the existing directors of Cement Roadstone Holdings, its chief executive or its chairman, Pat Molloy, or any of the other directors, were involved in any of this activity. That is significant. Those directors who were involved, the eight people referred to, are no longer involved with the company so if the Deputy is talking about corporate governance issues, I have no reason to believe the practice that was under way when Mr. Traynor was the chairman of the company has been under way since he left it but if he is talking about competition issues, that is a different matter.
On the regulation of the accounting profession, when the review group was established I had an open mind. It was important that it would examine international practice, and I accept that much of the international evidence has changed since it carried out that review, but the strong recommendation in the report was that we would go for what would broadly be called the halfway house, that they would continue to regulate themselves because in the main the vast majority of their members are honourable and honest and operate to the highest standards, and that we would have the supervisory authority with all the relevant powers, financed on a 60-40 basis by the profession and the State. These issues can be examined when we publish the legislation. The legislation is almost ready for publication and I am sure we will have a good debate in the House when we can reflect on this report.
On the comments of the Minister for Finance this morning about the Central Bank's role in prudential regulation, various State authorities do not come out of this well, including the Department of Enterprise, Trade and Employment which had responsibility for the enforcement of company law. All of us have a great deal to learn and the actions of some and the inaction of others enabled much of this to go on for far too long.
The arrival of the Minister of State, Deputy Hanafin, into the Chamber is a great relief to us on this side of the House. We thought there had been a coup d'état—
I presume the Deputy listened carefully to my 15 minute contribution earlier.
One of only three from the Minister of State's party.
—or that the entire Fianna Fáil Parliamentary Party had gone offshore for the afternoon.
First, given that the inspectors' report found that there was an organised conspiracy to defraud and since that organised conspiracy was carried on openly and organised from the headquarters of Cement Roadstone Holdings for six years, and the fact that senior people at the highest levels were involved in the scam, will the Minister agree that it is not tenable not to hold Cement Roadstone Holdings responsible as a corporate entity as well as holding individuals responsible? Second, with regard to an examination of current practices within the Irish corporate world and CRH in particular, will the Minister agree that the key question should not be about the individuals who are known to have been clients of Ansbacher and who have moved on but the methods Mr. Traynor employed in the creation of Ansbacher, particularly the hugely secretive trust system? Is it not almost inevitable that in his other major construction, which was Cement Roadstone Holdings, to which he was central, the same methods were used?
Will the Minister confirm that evidence has been brought to her office in recent years to show that they had secretly acquired key, independent concrete and building materials supply firms? Mr. Traynor's methods have been used by many other so-called independents which are similarly owned and may even be competing against each other for local authority tenders to boost the price. Does the Minister agree that is not simply a matter of competition?
Brevity, please. The Deputy has asked a question. I ask him to allow the Minister answer. Many Members are offering.
In view of these very serious allegations, for which there is evidence, the Minister cannot say it is up to the Director of Corporate Enforcement. Does she agree she has a responsibility to bring the grievous disquiet of many responsible people to the attention of the director to ask him to carry out an investigation?
I was wondering how the Deputy felt when he thought there would be a Government made up entirely of Progressive Democrats. Was it a nightmare or a dream?
A combination.
It was worse than a nightmare.
I am delighted the Deputy has been relieved of that.
The Deputy can have a good night's sleep.
As the inspector stated in the report, recognising the principles of corporate governance, which CRH did not acknowledge, the company must bear responsibility for what happened and there is no doubt that is the case given that eight directors, including two chief executives, were involved in this activity at various times. However, I do not have responsibility for corporate governance issues. When anything is brought to my attention, as has been the case in recent times, I have always brought it to the attention of the independent Office of the Director of Corporate Enforcement.
With regard to the beneficial ownership of the companies the Deputy mentioned, various pieces of information were brought to my attention. They were investigated by the Department and have been passed on to the Competition Authority which has the resources and power to examine these issues.
Has the authority the resources?
It certainly does.
I would prefer if the Minister did not answer questions put by way of interruption.
The chairman of the authority has acknowledged that he has enough resources, substantially more than he had in the past.
In spite of the Minister for Justice, Equality and Law Reform's comment earlier about moral outrage being switched on and off, I compliment him on his agreement that the report should not be paid for by the taxpayer. He is quite right to pursue whoever necessary as there is a long list to pursue to recoup the cost, including companies that have been mentioned.
Can anything be done at EU level to ensure co-operation by those who did not co-operate with the inspectors who produced the Ansbacher report, namely officials at Guinness & Mahon, London? Will there be an insistence on internal auditing by financial institutions under the supervision of the single financial authority which is in the pipeline?
I referred in my earlier contribution to the co-ordination of the agencies involved. I do not want to see turf wars developing between agencies regarding who is responsible for what and who does what when the report is referred to them. Has the Tánaiste considered establishing a system of co-ordination of agencies to take action on foot of the report? What other reports is Mr. Ryan involved in as an inspector? He is investigating other companies regarding outstanding issues in the context of Ansbacher. Which companies are still under investigation? When will they be completed and the reports published?
The authorised officer is investigating Kentford, College Trustees, Guinness & Mahon and Celtic Helicopters and the investigations have yet to be completed.
When will the reports be published?
They are section 19 reports, which cannot be made public, just as this report could not be made public.
When will they be concluded?
Fairly soon. I have not discussed with the authorised officer the precise date he will conclude but, hopefully, it will be very soon. It will then be a matter for the Director of Corporate Enforcement to take the issues forward.
We have passed on the report to the Office of Fair Trade in the United Kingdom, which has co-operated with the authorised officer and the inspectorate in the past. The office has been given a copy of the report and it is a matter for it to pursue issues regarding corporations in its jurisdiction.
The new internal audit function will be the responsibility of the non-executive directors. They will have to sign the annual report each year and include details of compliance with all the laws and so on. Greatly enhanced powers and responsibilities will be provided to non-executive directors and they will also have supervisory powers over the auditors. It will be a very changed regime but the legislation has not yet been published. We will have an opportunity to have a good debate in light of what has happened, not just in this report, but also in regard to issues that have arisen recently, particularly in the United States. It is a good time to introduce good legislation in this area.
Does the Minister agree that if Deputy Fiona O'Malley thinks women ought to get the credit for this affair, a woman is being omitted who played a part on a balcony in Orlando and who originated these revelations? I ask the question seriously because when the Minister says Ansbacher is not the only game in town, will she originate the trawl of Central Bank records about which Deputy Bruton asked? I am still not clear as to her answer to that question. If she thinks there are other games in town is she taking steps to establish whether her suspicions are correct?
Does the Minister know the identity of the clients who sought to suppress publication of the report? If so, will she tell us who they are? Was consideration given to the referral of the report to the Criminal Assets Bureau? Does she think that still might be a productive course?
Did I understand her correctly to have said progress on Ansbacher deposits and depositors and recoupment of taxation will be published separately in Iris Oifigiúil? Will the number of people who availed of the amnesty be published? Is she aware of that figure?
I do not know the answer to the final question. If people settled under the amnesty, their tax affairs are in order provided they declared all these interests. However, if people availed of the amnesty and did not provide the full truth, that is a serious offence which would warrant prosecution. The Revenue would not have an alternative.
I was not made aware of the identity of the parties who challenged the publication of the report, nor was the then Attorney General. I presume the inspectors know but I have had no dealings with them since they were appointed, other than making resources available to them.
The report is with the Garda and the Revenue. It is a matter for the Garda, if it feels it is necessary, to pass the report on to the Criminal Assets Bureau.
With regard to the trawl referred to by the Deputy, following the McCracken report the Minister for Finance asked the Central Bank to examine its implications for exchange control and I understand the report is with the Director of Public Prosecutions. In light of the report, I understand the Department of Finance has been in touch with the Central Bank regarding these matters.
Given the information gleaned during this investigation is it possible to identify a set of procedures or measures which will alert the authorities to such activity in the future?
I am still not happy with the Minister's reply in relation to a trawl of Central Bank records. These are supervisory records which are kept to protect the public and should be trawled. I do not understand the reason the Government is taking the view that it would be inappropriate to do so.
Has the Minister had discussions with the inspector in her office in respect of the other reports by Mr. Ryan and when they will be progressing? What are we to make of the Revenue returns which show that the voluntary declaration for these offshore abuses resulted in only 3,500 out of an estimated 55,000 bogus non-resident accounts actually being declared? Does this indicate that much more serious legislative reforms are necessary to make people believe they will be caught in respect of these offences?
Has there been any result of the external references of this report which I presume has been sent to the Inland Revenue, the IRS and other bodies? I would like to know if there has been any first reaction.
We have all become a little more familiar with trusts in reading this lengthy report. Does the Minister or her colleague, the Minister for Justice, Equality and Law Reform, Deputy McDowell, have any plans to introduce legislation in that regard given the blatant misuse of trust procedures? As nearly everybody said, 20 years ago many had suspicions about this behaviour. We have a significant number of tax exiles who seem to be here a lot of the time. In fact, a few of the leading gentlemen concerned will be in the Fianna Fáil tent at the Galway Races in a couple of weeks time. Does the Minister have any concerns about the operation of tax exile status and any statistics regarding it?
It is better to have them inside the tent than outside it.
I would not say the persons named in the report are tax exiles or that those to whom the Deputy refers are synonymous with any particular political persuasion.
They are the modern Ansbacher men.
They might even support Deputy Higgins for all I know. I do not know what their politics are.
The Minister does know. She is into that sort of thing.
To take Deputy Broughan's point first, what we saw was an abuse of trust. Legislative changes might well be required. While that would be a matter for the Minister for Finance, this House needs to acknowledge that, even with the best law and law enforcement in the world, too many people will take chances when it comes to paying their share. That is particularly true in relation to tax, the reason I am not too surprised that only 3,800 came forward under the voluntary disclosure provisions. Perhaps others feel they will get away with it. If they do, why would they volunteer? That is the reason we have to ensure we take determined action, particularly as far as Revenue matters are concerned, to enable tax compliant citizens to feel and see that the law is being enforced without fear or favour and that those who evaded their responsibilities for years will not get away with it. That is the best way to ensure we will not need too many inquiries in the future. Unenforced laws are ones that are brought into disrepute. They encourage people to evade tax and adopt the view that they do not need to pay their share. They somehow feel that the tax laws are for others. I often wondered why some were not overly interested in tax rates in the past, but if one is paying nothing, even a rate of 10% is too high.
Deputy Bruton asked about a trawl. I do not know about the word "trawl," but I said that after the McCracken report was published the Minister for Finance asked the Central Bank to look at all of its records in relation to exchange control.
This is not about exchange controls, but standard reviews.
What does the Deputy want us to ask the Central Bank to do?
To review the Guinness & Mahon—
Are there any other Adrian Byrne reports?
Yes.
Perhaps there are, I do not know.
That is the point we are trying to make to the Minister.
I said at the weekend that we would be naive to assume this was the only tax evasion scam.
The Minister may have the evidence in her files.
It is certainly not in my files. The new powers the Central Bank will have to reveal these matters to the Revenue Commissioners are important. There are now very stringent powers for executives and institutions, including banking institutions, to bring to the attention of the authorities cases where they are aware that the law has been broken and criminal offences are being committed. That is a huge responsibility on those who work in these institutions. If, for example, money is being laundered, under the 1994 Act there is a responsibility to blow the whistle.
Mr. Ken O'Reilly-Hyland, who has been named in the report, has confirmed to the Moriarty tribunal that on his appointment in 1973 as a director of the Central Bank he made the Minister for Finance aware that he was the holder of an offshore account. Has there been an investigation in the Department of Finance and, if so, what was its nature and the outcome? If no such investigation has taken place, will the Tánaiste ensure one does?
Will the Government consider my earlier proposal regarding the use of the €18 million collected in respect of the 55 cases mentioned and allow it to be spent on services for the homeless and a centre of excellence for Down's Syndrome Ireland, a voluntary group, instead of permitting it to disappear into central funds? Does the Tánaiste agree that to do as I have outlined would send a strong signal to the public that we are serious about this Ansbacher debate?
It is surprising that a senior honorary member of the Progressive Democrats, the Minister for Finance, is not present. Has he made any submissions or soundings to the Tánaiste regarding proposed legislation on reporting by the accountancy profession to the Director of Corporate Enforcement? What is his opinion on the proposal?
Has an investigation of competition in the building materials trade been initiated by the Director of Corporate Enforcement? If so, when will it report and what form will the report take? If an investigation has not begun, will the Tánaiste take on board the concerns expressed from this side of the House, allied to the submissions she has already received, and begin one? Will she be precise on this matter?
In view of the details contained in the Ansbacher report, will the Minister request the Competition Authority to initiate an investigation into the cement and concrete business to find out who the beneficial owners are? Who are the majority shareholders and owners of the businesses and quarries involved?
The Minister for Finance left at lunchtime to attend an ECOFIN meeting in Denmark. He spoke in the debate this morning. He shares the Government's view regarding the review group on accounting and auditing, whose recommendations it has taken on board to establish the supervisory authority.
What pub is the Taoiseach opening?
I will not comment on such matters. That is a sensitive subject for me as the Deputy knows.
He is not here to help the Minister.
The Competition Authority has hugely enhanced powers as a result of the Act which came into effect on 1 July, particularly in relation to the enforcement of competition. It also has huge powers to carry out studies and inquiries. I have no doubt such powers will be used wisely. If I believe there is any reason any sector needs to be examined in terms of competition, I will have no difficulty with asking the authority to carry out such an examination. The authority is examining the professions and due to report on some aspects of this work in the autumn.
The Dáil adjourned at 5.30 p.m. until 2.30 p.m. on Wednesday, 4 September 2002.