Paradise Papers (Resumed): Allied Irish Banks

The item on the agenda for today's meeting is the Paradise Papers. We are joined Mr. Bernard Byrne and his colleagues from Allied Irish Banks, AIB. They are very welcome.

Before we begin, I wish to advise witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. Byrne to make his opening statement.

Mr. Bernard Byrne

I thank the Chairman and members of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach for inviting AIB to meet them today. My team, which includes Ms Helen Dooley, our group legal counsel, and I, look forward to answering, where possible, members' questions concerning leaks recently published in the Paradise Papers.

To begin, I will endeavour to provide an insight into the management and operation of AIB’s businesses in the Isle of Man and Jersey, both of which have been closed for several years now. AIB first established an offshore presence in the Isle of Man and Jersey in 1977 and 1981, respectively. The rationale for establishing this offshore presence was to support the bank’s growing business franchise in Britain and the United States and to meet the banking needs of the increasing international workforce.

In line with all financial institutions, the variety of the products offered developed over the years and included deposit, lending and trust services. AIB provided banking services to residents of the islands and to expatriate individuals who were working and residing in another jurisdiction, be that in the United Kingdom, the United States of America or, more latterly, in the United Arab Emirates, UAE.

Services did not include providing tax advice. Clients of the offshore businesses were required to take independent tax and legal advice. The offshore businesses worked with those advisers in full compliance with local and international regulation, to provide a range of products, for example, trust structures, that were used for a variety of reasons from estate planning to managing individual and corporate investments, to more basic banking services. AIB ceased this trust business in the Isle of Man 14 years ago and sold the Jersey trust business in 2011.

In the chaos that prevailed during the financial crisis, AIB, like every other Irish bank, was focused on the imperative of protecting its deposit base. The offshore business was no different in trying to maintain its deposit base. In any event, AIB’s offshore deposits declined rapidly during the bailout era, from a peak of almost sterling £2.5 billion in 2008 to sterling £191 million in 2012.

In 2012, the banking businesses in both Jersey and the Isle of Man, which at this time included Anglo Irish Bank’s business in the Isle of Man - these had been transferred to AIB on the direction of the then Minister for Finance in February 2011 - were identified as non-core to the bank. In April 2012, AIB announced that the remaining Isle of Man and Jersey businesses would be wound down. The orderly wind down of the businesses commenced in May 2012 under the supervision of the local regulators and was completed in December 2013.

Today, AIB’s sole interest in Jersey and the Isle of Man is in respect of its customer liabilities associated with the legacy book, which is administered in both jurisdictions by Estera, a managed services business previously owned by Appleby solicitors. Currently, circa sterling £13.5 million is being held in respect of AIB Channel Islands, CI, Limited and AIB ISL Limited as liabilities owed to customers.

The companies have surrendered their banking licences and have stopped doing any new business and no longer trade. The legal entities are required, under regulatory requirements, to remain in existence for up to ten years from the date of closure to honour the liabilities of customers. Thus, our interest, involvement and participation in the offshore business is and has been over for many years.

I thank the committee for allowing me the opportunity to make this introductory statement. My team and I will, of course, answer the committee’s questions to the best of our ability.

Thank you, Mr. Byrne. I call Deputy Burton.

I thank Mr. Byrne for his opening statement on these matters which arise in the context of the Panama Papers. As the chief executive of a major Irish financial institution which has been bailed out by taxpayers, what is his view of the disclosure in the Panama Papers of the widespread tax evasion on which they have shone a light?

Does Mr. Byrne have a view on that matter? While he has said the bank's activities in Jersey and the Isle of Man are long over, are there other jurisdictions or arrangements in place in which the bank continues to facilitate wealthy individuals or businesses in arranging their affairs in such a way as to avoid tax in this jurisdiction?

Mr. Byrne has described the services as including deposit, lending and trust services. Will he give us an indication of their capital value? He has stated bank deposits were in the realm of the figure of £2.458 billion in 2008. Is he aware of what happened to these bank deposits subsequently? During the crash were they moved to another jurisdiction or were people bringing them back here? Does Mr. Byrne have an indication of the capital value of trust services? Were the lending services to facilitate back-to-back loan facilities where, for instance, people were being given loans for construction in Ireland while using deposits and other assets they may have had offshore, including trust assets in this jurisdiction or offshore, as collateral? My understanding is such a practice would have been extensive at the time. I draw a contrast between ordinary bank customers and those who may have been in a position to facilitate this practice.

Not too long before this particular episode occurred, the bank provided services for many Irish individuals who were persuaded by their local bank manager that they should have a DIRT, deposit interest retention tax, type account in their friendly AIB branch on the Isle of Man and in other jurisdictions. How many of the accounts involved were business and commercial accounts and how many were held by ordinary people? In banking terms, the sum of £2.458 billion may not have been significant in the context of the bank's overall balance sheet at the time. However, to most ordinary customers of the bank, it was an enormous sum at a time when the country was in severe difficulty.

The bank made significant losses from 2008 on which are now deferred tax assets. Recently it gave an indication of their value at approximately €3 billion. Will Mr. Byrne advise the committee as to how long it will be before the bank will pay any corporation tax? Does he find it acceptable or surprising or is he simply just grateful that the bank will not have to pay corporation tax and that essentially it is left to its choice? Does it operate in any other jurisdiction which does not have an offshore avoidance structure and where it does not incur some local corporation tax or equivalent tax liabilities?

Will Mr. Byrne update us on how the situation for those unfortunate enough to have been caught by the tracker mortgage issue is being resolved? There will also be further questions about those in difficulty with their mortgages and where the bank is at on this matter.

Mr. Bernard Byrne

I will attempt to answer as many questions as I can as quite a few have been asked.

The invitation we received from the joint committee was to discuss the Paradise Papers. It is worthwhile looking at how the situation evolved and standing back from individual details, disclosures and media comments. It is important to look at how the situation evolved, what the situation was for the Office of the Revenue Commissioners and how it positioned itself. Based on my understanding, it really started in 2003 when the Revenue Commissioners became energised on the issue of offshore accounts. Obviously, they commenced a series of separate work streams in looking at offshore accounts. At the time they engaged with the chief executive officers of several banks in Ireland, ten in total. This culminated in a request from them to the banks here that they write to the boards of their overseas banks which were subject to separate regulation and separate legal entities to ask them to write to their offshore customers telling them that the Irish revenue authorities were about to begin an investigation which would start in 2004 and encouraging customers to avail of the voluntary disclosure legislation in place. That began the process in 2003.

By the end of December 2003 the then chairman of the Revenue Commissioners had written to the banks - in AIB's case, the chief executive officer at the time - requesting that the letter be written to the boards of the overseas subsidiaries and that these boards be asked to consider writing to customers. I will discuss the issue of data protection later. It was a voluntary request to do so because data protection legislation would have prevented anything more intrusive. My understanding of the position at that stage was that the boards, particularly of the AIB-related subsidiaries, considered the request and acceded to it. They wrote to any customer they had about this matter to advise them, as requested by the Revenue Commissioners, that a voluntary disclosure regime was in place, that they should comply with it because a full investigation would take place in March and that anybody who had not voluntarily disclosed at that point in time would not be able to avail of its benefits subsequently. I presume the basis on which the Revenue Commissioners were doing this was to get as much information as they could on a voluntary basis which would then allow them to target more specific transactions.

In 2004 the Revenue Commissioners, across the financial sector, began a series of High Court orders. It is important to point out that the only legal way they can get specific details on transactions is through the issuing of a High Court order. It is not the order of last resort but the order of first resort. There is no other way they can get such data.

Unless there is a leak as in through the Panama Papers.

Mr. Bernard Byrne

Yes.

Times have changed.

Mr. Bernard Byrne

I do not think there is anything in the Paradise Papers that is in any way remotely interesting from that point of view. They are comments that people have made and on which they have put articles together. I am trying to bring the committee through the factual series of events.

Over eight years from 2004, the Revenue Commissioners put in place 14 High Court orders in respect of AIB. The reason the High Court process is in place is that a judge must consider the details and a specific request to determine if there is enough evidence to support the disclosure of the data. What will happen in an investigation such as this is that one will start in a certain place, more information will be discovered and there will then be a separate request. There is a sequence of events which in this case took place over eight years. The chairman of the Revenue Commissioners has given evidence to the committee that overall they recovered €1 billion in tax on the offshore accounts. I have no information or evidence which indicates from where it came or which customers or accounts were involved. That is the Revenue Commissioners' information, not ours. We complied with every single one of the orders. There has been some commentary on that matter in the newspapers, but we are satisfied we did everything we possibly could have. It culminated in 2014 in the conclusion of the High Court order process.

This relates to data from the 1990s. There were incomplete data in terms of paper files and records in AIB. The Revenue Commissioners were not able to be fully satisfied about the accuracy of the records so there was a settlement by AIB in 2014 with the Revenue in respect of offshore accounts where there were incomplete data and it could not be evidenced as to what happened. The settlement took place in respect of the tax year 1998 and it was €10.7 million. That is the full position that took place in respect of how that process worked with all those offshore accounts.

My general comment, which I was asked about, covers the process and the procedure and I hope it is helpful to set out how it went from beginning to end. We are very clear that we do not encourage or support non-compliance with tax law or regulation. There has not been any encouragement. The policy of the bank since 1998 or 1999, as far as I am aware - the awareness piece is only as to the date it started rather than when it existed - is that we in no way target Irish-resident customers in respect of overseas activities. There is no policy in the bank in respect of that.

I joined the bank in 2010, and as we all know, the world changed around 2010 and 2011 with the recapitalisation of the bank and the introduction of €20.8 billion of State capital. I can talk to what happened subsequent to that but my knowledge and detail does not extend to what happened prior to that, in a different era and regime in terms of how the bank operated. The board changed as well as leadership team members. All the top 200 in the bank changed. The decision on the offshore business is reasonably straightforward. In 2011-----

I asked about the value of the assets but the witness gave the value of the deposits in the statements. There are two other categories listed in the statement, lending and trust services. What is the number of trust services? I know they are historic data but is there an indication of values? I presume that whereas the deposits amount to a very significant figure at €2.4 billion, trust services may also have involved significant numbers of customers and had significant assets.

Mr. Bernard Byrne

I do not know the answer but we will see if we can find the information. We gave the number for 2008 as that was the date of the deposit guarantee coming into place. The point of maximum balance was the line. To some extent we are trying to anticipate where the questions are going. The capital value or equity value to the business in respect of both of those activities is very modest. These offshore businesses, certainly from 2010 onwards, were not highly valuable businesses. When the strategic review took place in 2011 around the core activities that AIB would be engaging in as part of the recapitalisation and restructuring plan, these businesses were deemed as non-core. In 2011, around the time the final equity from the State came in, these businesses were deemed non-core. They were not the only ones deemed non-core at that point. A separate exercise in respect of each of those non-core activities was engaged in to consider the strategic options for those businesses. In December 2011, it was determined the most likely strategic option was to exit those businesses. That effectively became a formal decision in March 2012, which was then communicated to local regulators in April.

Was the view of the bank at the time influenced by the fact that the bank had just relatively recently been rescued by the State with tremendous sums of public money being injected into it, along with guarantees? Was it entirely just about the value of the business or did it come down perhaps to the bank taking a view on the fact that it had very significant deposits offshore which gave rise to tax liabilities in the Revenue examinations and which were not declared? Given that the bank was effectively dependent on the State, was it an influencing factor in the decision-making at the time?

Mr. Bernard Byrne

The three priorities from 2010 for the business were very clear. One was the radical restructuring and repositioning of the bank and putting it in the position to allow the State to get back its €20.8 billion. We keep that at the forefront of our minds by seeing it as €10,500 for every taxpayer. The second was focusing the bank on delivering its core markets and customer base and in the servicing of the Irish economy in a more efficient and effective manner than before. There was also the support of the first agenda of delivering commercial value. The third point was dealing with all the legacy issues that would inevitably arise during the course of the years afterwards as a result of the activities of previous decades. They were the three priorities set out by the banks.

If it is helpful, there is another point. The offshore businesses failed from approximately 2009 or 2010 onwards to be able to upstream deposits. The local regulators became concerned about the solvency of AIB and other banks and it effectively trapped deposits in the offshore businesses. One of the considerations in terms of the strategic review would have been absolutely influenced by the fact these deposits were offshore, remaining offshore and not coming back into the core activity. The issues that determined the non-core nature of the business were very heavily commercial at that point. All the decisions we try to make are very heavily commercial, but we have an overview in terms of the reputation and positioning of the bank. The decision made was strategic and concerned the bank going forward.

I have no idea what happened to the deposits in terms of how they ran out. People would have just taken their deposits. Looking at AIB in a similar period, from 2010 to the middle of 2011, approximately €40 billion of deposits left the bank. They went from €100 billion to €60 billion, and a major outflow of deposits took place. That happened across the Irish system and one of the key systemic problems at the time was the exiting of deposits. It took place in corporate, commercial and retail deposits. It is not surprising to me that those deposits left an Irish-based institution. I do not know if they were corporate, personal or retail deposits.

There was a point on the deferred tax asset issue and I have commented on that before. It is approximately €3 billion. It is slightly less but we can keep it at that round number. Around the time of the recapitalisation and the capital assessment set by the Central Bank, the €3 billion was considered equity. In other words, the State did not have to put in an extra €3 billion in equity that it would have had to if the deferred tax assets had been disallowed. It is very simple and therefore it was capital goods from the State's perspective. It is really a choice issue in terms of how the Government and the Department of Finance considers the matter. Currently, based on closing prices last night, our bank trades at a market cap of approximately €14.9 billion. Included in that is a deferred tax asset of €3 billion. The price to book - how much people pay relative to the book value - is 1.12. They are paying 12% more than the book value of the assets. This is choice for the State. Does it want to realise the cash by selling the asset now and getting cash upfront or does it want to get rid of the deferred tax asset and effectively recover it in the form of corporation tax? It is not our decision and it is part of the taxation matter on the land. Personally, I believe the State has benefited from the treatment of deferred tax as it went in and it can currently benefit from it in terms of a sell-down position. That is a personal view but the Government decides what to do in respect of taxation policy. All we do is comply with what is there and operate to that system. My comments are more about how we can see this playing out more positively if the Revenue Commissioners get the money earlier rather than later.

Does the witness have the information about the numbers of trusts and the likely value of the contents of the trusts? At the time, Mr. Byrne's bank and others had special sections or subsidiaries dealing with high net worth individuals and families of high net worth. It would be interesting to know how many such trusts there are and what value is wrapped up in the trusts.

Mr. Bernard Byrne

We will have to look at that. Today, there are none, as we do not own any of those businesses. There are no trusts.

I am aware of that and I am talking about at that time.

Mr. Bernard Byrne

We will have to look. The Deputy is interested in the 2008 to 2010 period.

I welcome Mr. Byrne and Ms Dooley. We are here today to discuss the Paradise Papers. I want to deal with that. Mr. Byrne's presentation was very short. I have no doubt brevity is the soul of wit but his presentation was particularly concise. What we have read in the media is a lot more expansive.

Mr. Byrne mentioned that £2.458 billion was the amount in 2008. What was the peak? We are looking at 1977 and 1981. What did deposits peak at in terms of offshoring in the Isle of Man and Jersey? What level did they peak at? What was the absolute highest?

Mr. Bernard Byrne

I have no idea. The 2008 number was the one we took, which was the date of the guarantee. I am happy to look back and figure out what it is. It is an historic number, which I have almost no interest in as I run the business going forward. I am happy to get the Senator the information in terms of how the history played out.

It is a key element in understanding the story. Our job here is to ask the questions. What we were reading in the papers is that from 1977 to 1981, which coincided with when the DIRT accounts were coming in for ordinary deposit holders, many of whom I dealt with when I was in practice, a lot of the money was put into non-residential accounts by AIB and other banks. A lot of them dated back to 1977 and 1981. Were some of these accounts that were in the Isle of Man at that time DIRT accounts for ordinary deposit holders who ended up in many cases paying 500% in liabilities? I am not even certain if many of them were fully aware of what they were doing at the time. The banks put them into non-residential accounts.

The Paradise Papers give the impression that AIB was using the offshore accounts in the Isle of Man and Jersey in two ways. In many cases they were deemed to be tax havens and the deposits that were received were being used to fund operations in Ireland. They were effectively a conduit and people were told to put the money offshore, that they would not pay tax and get the best of both worlds. People would not pay tax but the bank would get to use their deposits to grow its business in Ireland. What does Mr. Byrne say to that? That is what comes across in the Paradise Papers. From the papers, it looks as though AIB split into pre-1998 and post-1998 in terms of offshore accounts. Post-1998 it would only allow funds offshore for legitimate tax planning but it was not giving that assurance to pre-1998 deposits.

Our job is to probe what came forward in the Paradise Papers and the veracity of the papers for the information of the public and to hear from AIB. Mr. Byrne might comment on that. I have given a flavour of what I believe is coming across in the Paradise Papers.

Mr. Bernard Byrne

My main objective and the thing I can really handle is what we do today and what we have done for the past number of years. We can give colour and flavour but what happened in history happened in history and we can in no way control or influence what that was. We ended up with a very dramatic event in 2010, which was the entire recapitalisation of what was a bankrupt institution at that point in time and a complete change going forward. My main objective is to convince the committee of what has happened since then. We can talk about and comment on the history but I have no ability to influence or control it.

We are obliged, as public representatives, to ask about both periods.

Mr. Bernard Byrne

I understand.

We have to get the complete story, which means the early chapters as well as the later ones.

Mr. Bernard Byrne

I am not as well versed on the early chapters. The Senator has talked about the 1990s period. There seems to have been a complete change in the 1998 era in terms of AIB offshore activities and whether other institutions would accept Irish resident accounts. That did seem to change. It is reasonably clear that is the policy that applied for 1998. Therefore, by implication, something must have happened before that. The investigation process with the Revenue has evolved and the fact there was a 1990s period that need to be settled suggests that those things happened.

There was tax evasion.

Mr. Bernard Byrne

I am not standing over that in any way. We have no support or encouragement for that. If it took place, it took place. Our job-----

Surely as CEO of AIB, Mr. Byrne has access to material that shows whether tax evasion took place or not through the use of offshore accounts. We have ordinary people coming to us, who earn just above the average industrial wage, and they are paying nearly 50 cent on the euro in tax. They see something that was going on for many years and they are asking how and why it happened and are asking us to ensure it will never happen again. They are saying there are two worlds. Some people are paying heavy tax, trying to educate their children, pay their mortgages yet the institution with which they hold their mortgages and which holds them to account to pay their mortgage on a monthly basis was facilitating high-worth individuals having money offshore a short distance away in the Isle of man and Jersey and paying no tax. These are questions we have to ask.

Mr. Bernard Byrne

I get that but I cannot change what happened. The Senator used the word "was". In the time periods I can deal with-----

I am assuming it is "was".

Mr. Bernard Byrne

The Revenue has investigated these issues thoroughly and carried out its own reviews. I do not have access to those things and I do not see them. There was a DIRT inquiry. All of those issues took place.

In more recent times, there has been the Panama Papers and what has been published about that. We are relying on what is in the media. Appleby solicitors, which acted as an agent for AIB in the Isle of Man and Jersey-----

Mr. Bernard Byrne

Yes.

There was a court order from the Revenue Commissioners in 2015 which AIB did not accede to. Is Mr. Byrne familiar with that?

Mr. Bernard Byrne

That is not true.

Will Mr. Byrne elaborate on that?

Mr. Bernard Byrne

There was no court order in 2015 and all 14 High Court orders that were issued by the Revenue have been acceded to.

So what is purported to be in the Paradise Papers, specifically in The Irish Times-----

Mr. Bernard Byrne

We have no evidence whatsoever to suggest that is true.

That court order did not happen.

Mr. Bernard Byrne

No.

Ms Helen Dooley

The last court order served on us was in 2012.

Since that, there has been none. AIB has complied with all court orders.

Ms Helen Dooley

Yes.

What has AIB done on foot of the fact there is something in the public domain which, for someone looking in, says that in 2015 a court order was served by the Revenue Commissioners on AIB for their offshore funds in the Isle of Man and Jersey through Appleby solicitors which at the time was AIB's agent and that AIB did not comply?

Mr. Bernard Byrne

We issued a statement that said what we have done and what we do. We are unfortunately used to commentary that is not always grounded in fact. We have this opportunity to talk about it here. We are very clear that the last court order that issued was in 2012 and we have complied with all of the 14 court orders that took place during that process.

Were the Isle of Man funds operated from Ireland or from the Isle of Man and Jersey?

Mr. Bernard Byrne

That is a very good and important question to answer.

There is an indication that these funds were managed out of Ireland.

Mr. Bernard Byrne

It is a completely separate legal jurisdiction. It is part of the Crown legislature. It has a completely separate regulator and completely separate independent subsidiary. All those things matter and are hugely important to how that entity operated itself. It had a completely separate board operating to its local regulatory requirements.

Did AIB refer customers to its offshore branches on the Isle of Man and in Jersey?

Mr. Bernard Byrne

Based on what I have talked about regarding the position since 1998, that is the only evidence we have for clarity. We do not do that. I am not aware of it, but I am happy to look into any evidence people have that says we have or have not.

Therefore, Mr. Byrne is cutting loose the period pre-1998.

Mr. Bernard Byrne

All I can say is this is the era when it is clear that-----

AIB is the one institution-----

Mr. Bernard Byrne

In fairness, it was 20 years ago and I do not have the ability to change what happened in respect of it or to influence it. If it took place, it took place. I can give the Senator clarity that we can see a policy that has been clear from 1998, but I cannot give him something that did not exist-----

There have been no referrals of customers post-1998.

Mr. Bernard Byrne

Again, I can tell the Senator what the policy was. I do not have evidence that runs contrary to it.

As of now, are AIB's offshore interests being wound down?

Mr. Bernard Byrne

In April 2012 the first communication took place with the regulators in these jurisdictions which basically stated these entities were ceasing. Winding down a bank is not easy becuase there are significant obligations to customers. A detailed regulatory engagement took place and a plan was developed and approved by the local regulators which was delivered. The licence was handed back and the entity formally ceased in 2013, but from the date of first notification to the regulator, there was no new business activity. Everything was about the closure of the business. There was no new business activity from 2012 and the entire entity closed in 2013, with the banking licence being handed back. An amount was kept to represent customer deposits and it will sit there for up to ten years for any deposit holder who is entitled to it to claim it.

As of this moment, is there anything outstanding that AIB is required to provide for Revenue in respect of court orders or otherwise? Is the bank fully up to date?

Ms Helen Dooley

Yes.

Have there been inquiries by Revenue of any description?

Mr. Bernard Byrne

The Revenue Commissioners have, as they indicated to the committee, written to the institutions asking if there is other information that may or may not lead to further investigations. I cannot comment on that matter, but at this time, the answer is "No."

Mr. Byrne has said AIB's capital valuation is just short of €15 billion. Is that correct?

Mr. Bernard Byrne

Yes.

It is trading at 1.1 times book value. Would Mr. Byrne advise the Government to sell some of its stake in the bank because there has been speculation about the matter in this morning's newspapers?

Mr. Bernard Byrne

My views on these issues and the view of the institution-----

Is it a personal view or the view of the AIB?

Mr. Bernard Byrne

As chief executive officer of AIB, I will give a position. During the early part of this year we went through an intensive process to market the institution to international investors. Between ourselves and the advisers appointed from the various investment banks, there were 1,400 individual meetings with international institutions. Some were double up meetings at which they might have met us and a broker. Many of the meetings were with just one person, but some of them might have been attended by 100 people. There was a huge marketing campaign throughout Ireland and in AIB because one would not buy AIB unless one liked Ireland and one had to like both to participate. There was a great deal of interest and we were pleased the initial public offering, IPO, at the back end of June had seen its way through a lot of turbulent activity. The stock and markets have since performed well, which has been positive. My commentary generally is that these processes come and go. If there is a market and a willing investor set that understands the story now because stories change over time, it is often opportune to take advantage of it. The State has a long-term objective of exiting. As of close of business last night, the total value of cash received, plus 71% of the market value, equated to €20.8 billion, which people would have said was fanciful a few years ago when we sat in this room. We are at that position at this time. I cannot tell the Senator what will happen next regarding valuations, but there is an opportunity which looks attractive. Investors understand the story and have an interest in it. They like Ireland.

Is that a "Yes"?

Mr. Bernard Byrne

Yes, I encourage people to look at a sell-down at this time.

What is the expected outturn for AIB in 2017? What does Mr. Byrne anticipate will be its total operating profit?

Mr. Bernard Byrne

I cannot give a profit forecast at this time. In a closed period, it is a market-based number; therefore, I cannot give it. In the trading statement we issued on 5 December we said we expected to achieve all of our key overall targets in respect of the performance for the year. We are trading well.

Would Mr. Byrne's advice to the Government be to sell?

Mr. Bernard Byrne

This is a good time. The investors are comfortable. They like Ireland and the bank's story is positioning well.

My final question is related to tracker mortgages. AIB is making money. Mr. Byrne mentioned a figure of €20 billion, which is well over double the budget of the Department of Education and Skills per annum. It is an astronomical sum. Where is the bank at in the Central Bank's tracker mortgage examination? Where is AIB at in making redress and paying full compensation to the individuals who were ripped off?

I do not want to cut the Senator short, but we will have a special meeting with AIB on 23 January on the tracker mortgage examination. We agreed earlier that we would send the bank the full range of questions to be answered. Mr. Byrne can give a general overview.

Mr. Bernard Byrne

I was going to say we would be before the committee next month and that we would go through the issue in great detail. The Minister's statement informed by the Central Bank's position, which is ongoing, will be issued next week. We will not get involved in early disclosures in that respect because we do not have the information. The last time we made a public statement, we commented on the fact that we had progressed pretty well. On the total number of cases that have been identified and in which compensation has been paid, we are at a figure of more than 90%. We have progressed well with those we have identified, but we have always said the programme will continue within the remit of the Central Bank and that it will not conclude until 2018.

Is there a target to be reached by the end of the year?

Mr. Bernard Byrne

We are on target to meet all of our commitments and obligations in that respect.

Cuirim fáilte roimh Mr. Bernard Byrne and Ms Helen Dooley chuig an gcoiste. I would like, first, to ask about Mr. Byrne's involvement with AIB and the position he held in 2010.

Mr. Bernard Byrne

I joined the bank as CFO in May 2010. I was in that position until May 2011. Is that okay?

Yes. It is important to clarify that Mr. Byrne was not involved with the bank prior to that time.

Mr. Bernard Byrne

I joined on 17 May 2010.

Has Mr. Byrne read Colm Keena's article about the Paradise Papers that refers to AIB?

Mr. Bernard Byrne

I have.

Does Mr. Byrne dispute its contents?

Mr. Bernard Byrne

I feel it is a media article written to take certain positions. I do not think it is fully balanced.

Aside from its balance, does Mr. Byrne dispute the facts presented in the article?

Mr. Bernard Byrne

We have discussed one of them, that concerning the court order. The way I positioned the story gave context to the fact that it was all part of one sequence of events from the Revenue Commissioners' investigation. That did not emerge from the story which makes it seem more disparate in terms of that position. I disagree most with the statement - the headline - that we were encouraging people to do this during recent times. I do not agree with that statement.

Let us deal with the issue of the court order and Revenue. I ask Mr. Byrne to be helpful to the committee. We may ask a question and he may be able to answer it but I ask him to answer it in the spirt in which we are trying to elicit information, and I sure he will do that.

Did the subsidiary of AIB go to the courts in the Isle of Man to ensure it did not have to provide information to Revenue?

Ms Helen Dooley

No. They did not.

Was there a Revenue request to the offshore subsidiary at that time?

Ms Helen Dooley

No. The court orders, all 14 of them, were served on the Irish group company, Allied Irish Banks plc. The court orders related to Irish customers. Revenue would not have had any powers with regard to overseas subsidiaries.

Did it request the information regardless of its powers?

Ms Helen Dooley

No.

They never requested the information from AIB plc or from the subsidiary?

Ms Helen Dooley

No.

I cannot recall the detail of the proceedings and I cannot pull up the transcript of it on my mobile phone, but we had the chairperson of the Revenue Commissioners in here. I questioned him. Did Mr. Byrne follow the conversation we had at this committee?

Mr. Bernard Byrne

I read a summary of it, yes.

I put it to the chairperson of the Revenue Commissioners that information that was requested was blocked at that time and, to my recollection, he confirmed that was the case. He also confirmed that he had now written to AIB seeking the information given what AIB has put on the record. I think I got this through parliamentary questions that I put down to the Minister - that the bank has indicated that it is willing to share information. I ask Mr. Byrne to square that circle for me. How is the chairperson of the Revenue Commissioners of the view that there was some block?

Mr. Bernard Byrne

Again, I think that is an interpretation issue, being honest. In responding to the previous questioner, Deputy O'Donnell, I referenced the issue of Revenue writing to us. I talked about that at that point in time.

The two points are that the data in respect of those customers resided in and is owned by an offshore entity. Therefore, any process to request that data has to go through the owner of the data. The Revenue has a protocol and system in place with the Isle of Man, as I understand it, where it can do that. I am not aware whether it has or has not done that. That is its protocol that it can comply with. We have given all the data that we can, and that is in full compliance with the order, which is within our control. That is what is being complied with.

Let me tease through that. The owner of the data at the time in 2011-12 was who?

Mr. Bernard Byrne

The Isle of Man subsidiary.

Mr. Bernard Byrne

I am sorry, I know the Deputy wants an easier answer on this. The regulated entity that has the banking licence is the owner of the data. The parent company-----

What is it called?

Mr. Bernard Byrne

AIB is in the title. I know that.

That is all I want to know. We are not saying the offshore subsidiary. There are thousands of offshore subsidiaries. Who owned the data?

Mr. Bernard Byrne

It was AIB Isle of Man.

Ms Helen Dooley

And AIB Jersey.

Mr. Bernard Byrne

AIB Isle of Man is a separate licensed entity.

Mr. Bernard Byrne

It is a separate subsidiary. AIB does not have the right to go into a different jurisdiction on the owner. That is a basic principle which underpins law, as we know, and we cannot go through that.

Let us go step by step through this. AIB Isle of Man owned the data. Was there a Revenue request for that data to AIB Isle of Man?

Mr. Bernard Byrne

No.

Mr. Bernard Byrne

Not that I am aware of.

Not that Mr. Byrne is aware of. There was no request ever to AIB plc or any of the bank's other subsidiaries looking for that data from AIB.

Mr. Bernard Byrne

Not specifically, no.

Would Mr. Byrne be surprised to hear that Revenue did request that and AIB Isle of Man actually went to court to ensure that it did not have to provide that data?

Mr. Bernard Byrne

I will link this back to the Deputy's comment on the letter as well. The law on this, which was established in the Taxes Consolidation Act by this Legislature in 1997 requires specific details to be requested. If specific details are not requested, general fishing exercises do not and cannot be complied with. A letter to us saying, "Will you please tell us everything you know?" cannot work because we cannot comply with that.

I thought Mr. Byrne was going to go into more detail. I will return to the question. Would Mr. Byrne be surprised if AIB Isle of Man went to court in the Isle of Man to ensure that it did not have to provide data to the Revenue?

Ms Helen Dooley

As I understand it Deputy, neither our Isle of Man subsidiary nor our Jersey subsidiary went to court on this matter. At one point when we were coming to the end of compliance with the court orders, we did write to our subsidiaries asking them what was their position with regard to the data and they confirmed, as we had always thought, that for local regulatory and data protection reasons, they could not voluntarily provide the data to Revenue.

At what point did AIB write to Isle of Man looking for data for Revenue? Ms Dooley has just told me there was never a request made by anybody.

Ms Helen Dooley

We were just making sure we had been as thorough as we could be and we were co-operating with the Revenue.

AIB plc wrote to AIB Isle of Man; was AIB plc asking them to provide the data to Revenue? Was it asking them, "What are you doing folks with your data that you are holding?" Was it asking it to consider sending it? Was it asking it not to consider doing so? What did AIB plc ask it in that letter at that time?

Ms Helen Dooley

We asked them if they would make their data available, not on foot of a court order because the Revenue's court orders did not extend to the offshore subsidiaries.

On foot of the Revenue request. We have just been told that there was no request.

Mr. Bernard Byrne

No-----

On foot of what? It was not a court order but what was it on foot of?

Mr. Bernard Byrne

An inquiry by us about the data.

Not initiated by Revenue?

Mr. Bernard Byrne

Not, as I understand it, initiated by Revenue.

Okay. AIB plc asked it to consider providing the data to whom?

Ms Helen Dooley

We asked if they would make their records available to Revenue because it was conducting an offshore asset investigation. They confirmed, as we always had understood, that it was outside their powers.

Okay, and it responded that it would not and that it could not. It is a different legal entity, therefore, AIB plc had no power to ensure that it did provide that information. When did AIB Isle of Man lose ownership of that data? Who owns the data today?

Mr. Bernard Byrne

They do.

It still owns it today. It is still not under the control of AIB plc. That company is wound up.

Ms Helen Dooley

No. The companies have handed back their bank licences but they are still legal entities in the Isle of Man and in Jersey.

AIB plc has no reach on them - no control, no nothing?

Ms Helen Dooley

We do not have access to the data. It is not our data.

Who decided to wind them up or who made that decision, was it AIB plc?

Mr. Bernard Byrne

AIB plc can make a decision in respect of a subsidiary that it no longer wishes that subsidiary to exist-----

Why does AIB plc not do that and take the data in and provide the data to the Revenue?

Mr. Bernard Byrne

We have done that but we have to comply with the regulatory involvement, which, as I have said, is up to ten years in terms of how that entity works. The data will still be data from an overseas jurisdiction operating in a different environment, which will still be subject to overseas legislation and data protection.

It is reported again in the media - we are having to rely a good deal on what has been said in the media - that in 2006 Mr. Ray O'Connor, the head of group taxation with AIB, I presume that is AIB plc. Sometimes it is very hard to follow the structures of AIB, if one misses a comma here or there, one is talking about a completely different company, which is something we may pick up on a later stage. I presume Mr. Ray O'Connor is head of tax at AIB plc.

Mr. Bernard Byrne

He was.

Formerly in 2006. It appears from what we have seen in the media that he was basically warning AIB Isle of Man not to have its data centralised because it would come under the reach of the Revenue. Is that correct?

Mr. Bernard Byrne

I do no know. I have not seen the memo the Deputy is talking about.

Mr. Byrne read Colm Keena's article and this is one of the claims within it. I will read it to refresh Mr. Byrne's memory. It states:

In 2006, AIB was introducing a centralised transaction processing and data storage capability in the Republic. In February of that year, Ray O'Connor, the head of group taxation with AIB in Dublin, wrote to Howland in the IOM suggesting that they get legal advice on whether outsourcing their data to the Republic might create a risk for their offshore branch.

"Under current Irish legislation [this is a quote from the document that has been seen] one relevant point is whether the data could be within the "power, possession and procurement" of AIB plc and therefore within the scope of a potential information request from Revenue. ...

Is this not AIB plc basically facilitating its offshore entity to make sure that it was completely out of reach of the Irish tax authorities while at the same time the witnesses knew damn well that they had Irish residents who were using that offshore account to avoid taxation in this State?

Mr. Bernard Byrne

I disagree with that interpretation. The way the Deputy has read it makes it sound like it was legitimate to query whether it was going to have data ownership implications. I do not know.

We can all take different interpretations. Obviously, this did not come under the centralised system. If that had happened, however, perhaps Revenue would not have had to go through this process and possibly we would not have had to wait for these leaks for whatever version of AIB we are talking about to provide this data. Is it not the case that if this warning had not been issued, and it did come under the centralised transaction processing and data storage capability of the Republic, it would have come under the scope of Revenue?

Mr. Bernard Byrne

I am not aware of the tax loss issue the Deputy is describing being asserted.

Okay. On that issue, does Mr. Byrne acknowledge that the subsidiary had legacy customers? The previous Deputy mentioned that in 1998, AIB Isle of Man started accepting only those residents of Ireland who could avail of legitimate tax planning opportunities. A note drafted for a board meeting of AIB Isle of Man in 2004 broke the business into legacy customers from before 1998 and post-1998 customers who had legitimately availed of the bank's services. For how long did AIB continue to facilitate legacy customers who, we can infer, illegitimately availed of the bank's services and who, through the structure that was created, were out of the reach of the Irish tax authorities?

Mr. Bernard Byrne

As I said earlier and as we have discussed, there was a change after 1998. I do not know the answer to the Deputy's question about how the banking activities and operations of the business continued. Obviously, the provision of services continued at that stage. As I have mentioned, there was a settlement with Revenue in respect of any 1990s data issues associated with Irish customers which could not be resolved.

Okay. Mr. Byrne has said that the offshore entity was not targeting Irish residents.

Mr. Bernard Byrne

I said that is the post-1998 policy of which I am aware.

As Mr. Byrne knows, the offshore entity continued to have legacy customers. We must assume that those customers were Irish residents.

Mr. Bernard Byrne

This entity is closed now.

Mr. Bernard Byrne

It is gone.

It is not gone. Mr. Byrne has told us that it has lost its banking licence, but it still exists.

Mr. Bernard Byrne

It does not have customers.

Mr. Bernard Byrne

It does not have any materiality.

We are looking at the past. Did it still have legacy customers in 2012? I appreciate that Mr. Byrne was not the CEO of the bank at that time. Did it still have Irish residents as legacy customers in 2012? It is claimed that after the bailout in which we pumped billions of euro into AIB, an offshore entity of that bank continued to have the deposits of customers who were Irish residents in offshore accounts, thereby enabling those people to avoid tax. We know that these were high net worth individuals.

Mr. Bernard Byrne

The only response I can give is to say that we closed down the business pretty quickly after all of those events took place. I do not know what else the Deputy thinks we could legally have done.

Hang on now. AIB closed down the business not because it was facilitating legacy customers in tax avoidance but as part of the restructuring of the bank after it went bankrupt. As CEO of-----

Mr. Bernard Byrne

The objective of facilitating tax avoidance was not part of the bank's strategy.

I ask Mr. Byrne to listen for a second. A minute of a board meeting talks about-----

Mr. Bernard Byrne

I am talking about the period after 2010, when I got involved and was in a position to do something useful.

I established at the very start, to be fair to Mr. Byrne and other AIB staff and board members, that Mr. Byrne was not involved at the time in question. It is important to say that again. Mr. Byrne has a responsibility to answer on behalf of AIB past and present. I have time for Mr. David Duffy, who drew a handsome salary from the State for many years, but he is refusing to come here to answer questions about what happened during this time when he was in charge of AIB. Therefore, we have to put these questions to Mr. Byrne who has a responsibility to answer for others. Will he find out whether a subsidiary of AIB plc was facilitating legacy customers after the bailout? Is that something Mr. Byrne can find out?

Mr. Bernard Byrne

I will take the question and find out what I can in respect of it.

Okay. Earlier in this meeting, Mr. Byrne said in response to two other members of the joint committee that he does not know when the deposit levels in the bank peaked. He does know that they peaked in 2008. Is that correct?

Mr. Bernard Byrne

That was the September number, which is generally considered a high point because deposits started to exit thereafter.

Was that the peak?

Mr. Bernard Byrne

I cannot say that the September 2008 number was the peak. I have committed to returning with an answer.

The reason I ask is that Mr. Byrne told us in his opening statement that it was the peak. He said that "AIB's offshore deposits declined rapidly during the bailout era, from a peak of almost sterling £2.5 billion in 2008 to sterling £191 million in 2012".

Mr. Bernard Byrne

Okay.

Can I ask the question?

Mr. Bernard Byrne

I do not have any other evidence. The number was in there on the basis of the peak during the bailout period rather than the peak at some point in history.

Mr. Bernard Byrne

It is not meant to be a very clever answer.

It is a clever answer.

Mr. Bernard Byrne

It depends on the position one is coming from. The number for 2008 was included in our opening statement because 2008 was definitely considered to be the start of the crisis in the financial position.

I believe it is a clever answer. That is a judgment call by all of us. The entire sentence, which refers to how deposits "declined rapidly" from the peak in 2008 to a low figure of £191 million in 2012, gives us a certain impression. We have information that the post-bailout peak was in 2010, which suggests that what Mr. Byrne is stating to this committee is not true. Irish taxpayers pumped billions of euro into AIB in 2010, which makes it an important year. The information we have is also held by Mr. Byrne. He told me in response to my first question that he read Colm Keena's article.

Mr. Bernard Byrne

He wrote many articles.

He wrote quite an important one on this matter. It refers to a document that was produced in 2011, in which "the offshore bank said it remained 'a key provider of funding for AIB' with deposit balances peaking at £2.8 billion in June 2010", which is substantially higher than the figure claimed by Mr. Byrne. The article goes on to note that "by April 2011, deposits had fallen to £1.36 billion". That is important because Mr. Byrne gave the impression that deposits declined rapidly after 2008. The truth is that 2008 was not the peak. During the nationalisation period, when people had to put their hands in their pockets and mothers and fathers had to say goodbye to their sons and daughters at Dublin Airport because of the financial crisis, we saw a peak in deposits in this offshore entity. Some people might think that is insignificant, but I think it is very significant. Has AIB looked at that? It has many staff members. I assume some of them have looked at Colm Keena's article. I have asked whether the bank disputes any of the facts set out in it. Is this one of the facts that it disputes? Perhaps it simply does not know whether this fact is the truth.

Mr. Bernard Byrne

As I have said consistently, I need to check that. I do not ascribe the same level of significance to it, or I had not done so up until this point. I am thinking about a different perspective from the perspective the Deputy is thinking about. I will take it away. We will look at what the peak was.

I have a final question. When the chief executive of AIB wrote to the Isle of Man subsidiary in 2013 to tell it about the planned Revenue investigation, he suggested that customers should make a qualified disclosure. Does Mr. Byrne accept that this happened?

Mr. Bernard Byrne

I believe so, yes.

Okay. Why would he suggest that customers should make a qualified disclosure? Why would such a disclosure have to be made?

Mr. Bernard Byrne

The chairman of the Revenue Commissioners asked him in writing to do that.

Why would he believe that customers would need to make qualified disclosures?

Mr. Bernard Byrne

He received a letter.

What I said was that he received the letter, which was in agreed form, I suspect, between the Revenue Commissioners and themselves, encouraging people to make a qualified disclosure. As I said in my opening statement, the reason for this was to encourage anyone who could and would be willing to come forward to create the beginning of the process, which ultimately resulted in the Revenue raising the €1 billion mentioned by the chairman of the Revenue Commissioners. I think he was simply following a request, which appears sensible in the context of encouraging people to make a qualified disclosure. That is a system that exists under the Taxes Acts and it has been used many times in many circumstances effectively to start a process of encouraging people to come forward. I understand that not that long ago, Revenue initiated a similar process in respect of overseas accounts in different jurisdictions. It is part of the Revenue toolkit. I did not read much more into it than that but perhaps my perspective is incorrect.

The point is that one only makes a qualified disclosure if one has avoided paying tax.

Mr. Bernard Byrne

The evidence is that clearly people were because it was a settlement.

We do not have the evidence because AIB's subsidiary never provided the data to the Revenue Commissioners. We are only guessing here.

Mr. Bernard Byrne

No. To be fair, the chairman of the Revenue Commissioners has told the committee that its overall programme resulted in a significant gain.

The chairman of the Revenue Commissioners also told us that Revenue never received the data from AIB's subsidiary in the Isle of Man and that it has written to that subsidiary outlining the comments made by AIB plc through the Minister in the Dáil in response to questions from me that AIB is open to facilitating this type of information being provided. Is that still the position?

Mr. Bernard Byrne

It is. The statement made in the Dáil was that we in no way encourage and are against any tax avoidance or tax evasion.

I thank the witnesses for being here today. Mr. Byrne mentioned that his objective today is to talk about the future and what is happening now, which I believe. However, that is not my objective. What is important is that we establish to what extent AIB facilitated tax avoidance and tax evasion and thereby a substantial robbery of the public purse.

Mr. Byrne referred in his opening statement to the establishment of the offshore presence in the Isle of Man and Jersey in 1977 and 1981 and he said that the rationale for establishing this offshore presence was to support the bank's growing business franchise in Britain and the United States and to meet the banking needs of the increasing international workforce. Was that really the rationale for the establishment of those offshore entities? Jersey and the Isle of Man have populations of approximately 80,000 and 160,000 respectively. What is special about them is that they are jurisdictions that have extensive banking secrecy laws and so I believe that the primary rationale for establishing those entities was to facilitate tax avoidance and tax evasion.

Mr. Bernard Byrne

Not that I am aware of. It was an attractive location and people availed of it.

On what basis was it an attractive location?

Mr. Bernard Byrne

It was considered a banking centre utilised by a mobile workforce. People who travelled and operated in different jurisdictions used it as a location. I will return to the piece which I know the Deputy will not like, namely, that is what existed at that point in time. That is the rationale that exists in terms of documentation that exists around why it was established. I was not there. It is not part of where the business is, as I see it, going forward. I am not sure of the benefit. I have a different view in that regard but I do not have access to a pile of data about what happened in 1977.

Mr. Byrne mentioned in his opening statement that the rationale for establishing the offshore presence was to support the bank's growing business franchise. There is a reason for this presence in the Isle of Man and Jersey and it is not because there were lots of people there or that they were attractive destinations in terms of climate and so on. Rather it is because they are jurisdictions wherein there are significant banking secrecy laws.

Mr. Bernard Byrne

The Deputy can ask the same question but I am not-----

I am doing so because I would like an answer.

Mr. Bernard Byrne

The Deputy has told me the answer he wants me to give.

No. Mr. Byrne can answer "yes" or "no".

Mr. Bernard Byrne

No, based on what I have said.

Okay, Mr. Byrne does not believe that is the case but I do not think that is credible. I find it hard to believe that Mr. Byrne thinks it is credible that it was just by accident that these entities were established in the Isle of Man and Jersey. However, that is fine. At least we have an answer.

Mr. Byrne disputes some of the points made in Colm Keena's article, including that leaked files from the Isle of Man offices of offshore law firm Appleby reveal Government-owned AIB also refused to give the Revenue Commissioners access to data on its offshore customers when responding to a court order in 2015. Mr. Byrne believes that is inaccurate. Regardless of how one interprets that sentence it is not an arrow-----

Mr. Bernard Byrne

There is no evidence whatsoever to suggest that that is true and so "yes" is my answer.

Mr. Keena also says in his article that a spokesman for the bank would not say whether it subsequently acceded to the Revenue Commissioner's request. Can Mr. Byrne make any sense of that?

Mr. Bernard Byrne

I do not know the question that was asked and I do not know why that response was delivered but what I can say, as I said earlier, is that the bank acceded to all 14 requests that were issued by Revenue. Sometimes we are asked questions to which people know the answer they want. In terms of the question asked, we complied with 14 requests.

In the responses to Deputy Doherty it became clear that the bank did respond to the 14 requests but the Isle of Man and Jersey entities did not transfer to AIB plc information that it requested.

Mr. Bernard Byrne

There are two parts to this issue, including the High Court order process involving Revenue. When it was unable to obtain clarity around transactions that it was pursuing, it went that way. The other piece is the opening question around what happened in terms of the Revenue request in 2003 through to the process in 2004 of writing through those offshore subsidiaries to customers advising them to make a voluntary disclosure. They were the two prongs, I presume, of the Revenue approach in respect of that and trying to capture both aspects.

Can Mr. Byrne set out the rationale for the Isle of Man and Jersey entities not wanting data about their customers on file in the Republic of Ireland?

Mr. Bernard Byrne

Fundamentally, it is based on their assessment that to be fully compliant with laws in those jurisdictions, and local regulatory requirements, they were better off having that data within those jurisdictions.

Does Mr. Byrne not believe that they did not want the information in the Republic of Ireland because there it would be easier for the Revenue Commissioners to access?

Mr. Bernard Byrne

I do not. I think the piece that supports that is that during that entire period there were a series of court orders running anyway. I cannot state exactly why they made that decision but I can rationalise it, which I think was the request. I can rationalise it that the controller and owner of the data wanted those data to sit within its legal jurisdiction. Everything else presents a different risk. I can rationalise it and that is what I have done.

As the data were retained in the Isle of Man and Jersey, the Revenue Commissioners were not able to access it.

Mr. Bernard Byrne

Nor would they have been able to access the data were the data sitting in a different jurisdiction, as I understand it, because the owner and controller of the data had legal ownership of them and therefore the jurisdictional issue of where they sat, be that a Microsoft cloud and so on, was a matter for the entity concerned.

Sure, but if the data were sitting in Germany, the Revenue Commissioners could go to court in Germany and seek access to them. They could get a court order in Germany to access them.

Mr. Bernard Byrne

I do not know the data protection issues associated with Germany.

I am just citing Germany as an example. There are other countries where it might be easier-----

Mr. Bernard Byrne

There are other countries that may have different reciprocal arrangements. That may well be true. I cannot comment on that.

The data that were held in the Isle of Man and Jersey never found their way to the Revenue Commissioners, despite the fact that they may have been interesting to the Revenue Commissioners.

Mr. Bernard Byrne

I cannot say that. I can say that the data around customers and transactions may well have made it there, but the data that sat there were never subject to a specifically targeted High Court order.

Mr. Byrne, when rationalising why this happens, seems to me to be at pains and prepared to go to substantial lengths to avoid the conclusion that it may have happened because those entities did not want the Revenue Commissioners to get the data which, had they sat in the Republic of Ireland, would be easier for the Revenue to access. Surely that is the most obvious explanation for the approach they took in terms of secrecy of their clients and the data.

Mr. Bernard Byrne

Confidentiality in banking, which I hope is generally accepted, is very important to all customers. The primary obligation of the owner of data in banks is to respect customer data.

The rules and regulations in that regard are quite stringent and, therefore, it is not surprising to me that their number one objective is to always try to protect data. The consequence of that may be what Deputy Murphy is describing but I am not surprised and am able to rationalise it in the way I have outlined.

Ms Helen Dooley

It is also important to remember the context in which the data came to Ireland was we were winding down the subsidiaries, we wanted to hand the bank licences back and it was imperative that the data were on a secure server. That server was in Ireland and was an outsourced service. A few years later, a decision was taken locally that the data should reside in the Crown dependency and, therefore, the data were moved back to Jersey.

AIB introduced a centralised transaction processing and data storage capability in the Republic in 2006, at which point the subsidiaries in the Isle of Man or Jersey were not being wound down. They were still operating and presumably had billions of deposits at that stage.

Mr. Bernard Byrne

Yes. What is the question?

The answer was that it related to the wind down of operations but that is not true because the question related to 2006.

Mr. Bernard Byrne

Yes. Sorry, I do not think we knew the time period to which the Deputy was referring. The point is still true, which is that the data owner has the overall obligation, kept it and has a legal obligation in that respect. It is important to point out that the Legislature has thought of this point and the only reason that High Court orders exist in respect of the data is to balance and recognise in law the requirement that a High Court judge can sit and determine whether it is appropriate that the owner of data of interest to the Revenue be entitled to pass them on to the Revenue. It is not an unusual principle. All legal systems have a principle addressing the protection of data.

The article also states:

Up to the time the decision was made to close it in 2012, AIB Offshore saw itself playing a crucial role in the AIB group by getting business from 'high net worth individuals', the vast bulk of whom would be doing business with the bank for 'tax planning' reasons, the documents show. The resultant deposits could then be used by the group.

Is that an accurate description of how AIB Offshore positioned itself in the overall AIB family?

Mr. Bernard Byrne

To what time period does that refer?

Up to the time when the decision was made to close AIB Offshore in 2012.

Mr. Bernard Byrne

I cannot find the detail of all the documents but I can outline what happened in terms of the process and have covered that when we discussed the strategy. The strategic intent was that the offshore businesses were non-core. That then became a detailed implementation plan decision at the end of December 2011, which I have discussed, which then rolled into 2012. As that decision was coming and was given to local management, they put in a position paper stating they believed the entity could have an existence and a viable future. It may be in that context that that piece is coming out of the documentation, although I am not sure of that. However, the view of local management was not supported by the group and was not followed. It is not unusual for the management of a subsidiary with 300 employees that was about to be closed down to say they think there is a future for the business. However, it did not become policy or a position for the group.

Mr. Byrne does not think that the majority of those who had offshore accounts with AIB were doing so for tax planning reasons.

Mr. Bernard Byrne

I do not know.

Does he have an opinion on it? He has expressed opinions on other matters.

Mr. Bernard Byrne

I have expressed opinions on matters on which I have experience and competence. I am not a tax expert, nor was I in banking during the time period the Deputy is referring to.

It seems that Mr. Byrne is willing to state opinions and come up with rationales when they do not point to what is staring everybody in the face, which is that these operations were to facilitate at least tax avoidance and probably tax evasion in terms of pre-1998 clients.

Mr. Bernard Byrne

I have twice stated that because the Revenue were ultimately very successful in recovering amounts of money, the evidence supports the fact that some customers were involved in such activities. That is clearly true. I cannot state how many people or what percentage of the book were involved in that, but it is clear from the evidence that a number of customers were doing that and that has come out in terms of how the Revenue has gone about addressing the issue, but I cannot quantify or qualify that statement. I am not disagreeing with the principle stated by the Deputy that some customers were doing that in the 1990s but I cannot comment beyond that.

A letter was sent on 15 September 2015 by Appleby to AIB for the attention of Andrew Smith, head of AIB group legal services. It comes in the context of Mr. Byrne being in AIB and he would have a certain responsibility for it. It states that Appleby had been instructed by AIB ISL Limited in respect of Mr. Smith's letter of 3 September 2015 in which he asked whether AIB ISL Limited would consent to AIB plc reviewing customer data held in AIB's data server for documents relevant to the disclosure orders made by the Irish High Court and, if relevant, disclosing them to the Revenue Commissioners. It further states that it was not possible for AIB ISL to consent to that request. If that letter exists, as I believe it does, does that not illustrate that Mr. Byrne misled the committee when he said that-----

Mr. Bernard Byrne

That is the exact point that was being discussed with Deputy Pearse Doherty.

I think it is the opposite. I ask Mr. Byrne to explain his statement. I asked him about this matter and he has repeatedly stated that this statement in the article was inaccurate: "Leaked files from the Isle of Man (IOM) offices of offshore law firm Appleby reveal Government-owned AIB also refused to give the Revenue Commissioners access to data on its offshore customers when responding to a court order in 2015." Again and again Mr. Byrne has said that is inaccurate-----

Mr. Bernard Byrne

Exactly, yes.

------yet here is a letter to prove it.

Mr. Bernard Byrne

The comment that was made by Ms Dooley in respect of the comments of Deputy Doherty stated that we asked could those data be presented-----

No, Ms Dooley stated that was not on foot of a High Court order nor a request by the Revenue Commissioners.

Mr. Bernard Byrne

That is correct.

This letter asks whether AIB Isle of Man consents to AIB reviewing customer data held in AIB's data server for documents relevant to the disclosures order made by the Irish High Court.

Mr. Bernard Byrne

Exactly.

No, not exactly. Mr. Byrne a moment ago stated it was nothing to do with the court order.

Mr. Bernard Byrne

The request asked if we could review the data in the context of figuring out if there was any information that could be passed on, and AIB ISL refused. The last time there was a request in respect of that information and those data was in 2012.

That is an example of clever answers that try to avoid responding to questions. I appreciate Mr. Byrne is trying to say that is not true because the court order was not made in 2015, but there is a response illustrating that up to 2015, at which stage Mr. Byrne has to take responsibility, AIB Isle of Man refused to hand over information on clients flowing from a High Court order.

Mr. Bernard Byrne

We quite clearly stated that AIB Isle of Man, as the owner of the data, maintained its right to keep those data. I do not think that is different.

When we go back through the transcripts we will find it is quite different and that Mr. Byrne tried to mislead the committee by saying the article was wrong.

Ms Helen Dooley

The High Court orders did not seek access to those data. AIB ROI was the subject of the High Court orders which related to, in total, approximately 50,000 transactions over the eight years. When we wrote the letter to which Deputy Murphy has the response, we asked the subsidiaries, in the context of the Revenue investigation as a whole, if they would voluntarily hand over their data and, as we thought, they could not accede to that because of local legal and regulatory restrictions.

Mr. Bernard Byrne

The High Court orders are very specific about specific transactions and asked about them and we acceded to that. This was a request to see could we go beyond that in respect of those data.

Who is the beneficial owner of the AIB subsidiaries in the Isle of Man and Jersey?

Mr. Bernard Byrne

They are part of the AIB group and, therefore, AIB is the beneficial owner.

An ordinary person looking at this situation will recognise that AIB group is the beneficial owner and think that he who pays the piper calls the tune. How can an institution say to its parent company and beneficial owner that it will not give information on deposits, many of which, based on the papers, found their way back to AIB Republic of Ireland for its use?

Mr. Bernard Byrne

Everyone at various points-----

It makes no sense to an ordinary person looking at the situation.

Mr. Bernard Byrne

Unfortunately, the legality of the position determines the answer, not how people might wish the situation to be. AIB ISL is a separate entity and regime governed by separate law and has a separate obligation in respect of data.

It is 100% owned by AIB Republic of Ireland.

Mr. Bernard Byrne

AIB's only response can be to change the board constantly.

If all the board is doing in that circumstance is complying with the law, one will not get a different response. We deal with this issue regularly in terms of banking positions. For example, our UK banking entity, which is based in London, is subject to the Prudential Regulation Authority, PRA, and UK law. There is a very clear code, which applies for all Crown jurisdictions, regarding the independence of mind in respect of subsidiary activities. It is part of the regulatory obligations. The entity exists and has a legal personality and a form. It has rights, responsibilities and obligations. Data is one of those. I understand the point the Deputy is making; it is not that I do not understand it. Unfortunately, however, the law is the law in respect of that issue and it is different. Subsidiaries exist and they have to obey the law.

I accept that it was before Mr. Byrne's watch but does Mr. Byrne accept that there is a moral problem with AIB, having been bailed out with €7 billion of public funds, continuing to facilitate the robbery of other public funds by facilitating tax avoidance, at the very least? Is there a moral problem with that?

Mr. Bernard Byrne

I do not think that is what happened. Since the period of the bailout in 2010 and 2011 the business has been focused on making sure it delivers for the State and the customer base and that it does so by complying with the law and encouraging compliance among its customers.

However, the witness hides behind the law in the Isle of Man-----

Mr. Bernard Byrne

We do not hide behind it.

That is what the witness has been doing the entire time. That is what the letter reflects. It is hiding behind the law in the Isle of Man. That is why it is there.

Mr. Bernard Byrne

We comply with the law.

Yes, but the law is very friendly to banks in secrecy jurisdictions and in avoiding Revenue Commissioners officials getting information.

Mr. Bernard Byrne

We comply with the law.

It is convenient that the bank happens to be established in two jurisdictions where the law means that the Revenue Commissioners cannot get access to information and facilitates people avoiding tax. The witness might say it was not the intention to do that, but if the bank is set up there of course people will do that.

Mr. Bernard Byrne

All I can say, again, is that they are closed. They do not exist from that point of view anymore. The activity we are engaging in does not involve that.

I welcome Mr. Byrne and Ms Dooley and thank them for attending the meeting. Deputy Pearse Doherty said that the peak in those offshore accounts went up from €2.4 billion in 2008 to €2.8 billion by 2010. Would it be fair to say that at the time the banks would have been scrambling for deposits, the bank would have to get deposits from wherever it could and that it still kept getting deposits into those offshore accounts?

Mr. Bernard Byrne

A very relevant point in that respect, which I mentioned earlier, is the upstreaming, that is, moving deposits from an offshore base in the Isle of Man or somewhere similar to the Irish entity, effectively ceased in 2009 in terms of the local regulatory environments. No matter what deposit base was in the Isle of Man it could not be flowed and used as a funding vehicle after that date for regulatory reasons in those countries. It would not matter what the balance was because, effectively, the local regulator said one cannot upstream those deposits.

Are all those deposits taken into account when calculating the capital ratios for the bank?

Mr. Bernard Byrne

At the time there was no liquidity obligation, so the deposits would sit in respect of the liquidity, not the capital side. In terms of the liquidity position of the bank, in 2008 and 2009 there were no specific liquidity requirements as there are now, so they would not have been included. If we were to rerun the calculations today they probably would be included. Deposits generally would be included. However, they would count in each separate legal entity and each separate licensed entity. The Isle of Man would have its own liquidity requirement. AIB Plc and AIB as an operating entity subject to the licence requirements of Ireland would have its own requirement, so they would not be grouped. There is no group piece.

There is no grouping. Are they all separate?

Mr. Bernard Byrne

They would all be separate.

They were all separate at that time.

Mr. Bernard Byrne

There was no obligation-----

There was no obligation at that time.

Mr. Bernard Byrne

The liquidity requirements at the time, and I cannot remember them exactly, were much lighter than they are now. Now the requirements are quite specific.

There is no grouping now either. Would that all be grouped together for the AIB group now?

Mr. Bernard Byrne

It would be those that operate within a common regulatory regime. Ireland would be grouped from a liquidity point of view. However, there are all sorts of restrictions around how one calculates liquidity and the obligations around liquidity. On the net point of the question about the offshore accounts, it would be no use now in calculation of liquidity accounts.

Mr. Byrne said that the deposits declined sharply from 2010 to 2012. That money had to go somewhere. Did the bank have to advise the clients that they should move the money to a different account?

Mr. Bernard Byrne

As I said, the flow would be quite consistent with what happened across many banking systems, including the Irish system. There was a very significant exodus, particularly from AIB, at the time. There was not much confidence and the credit rating of the institutions had dropped, so deposits were leaving the institutions anyway.

The sum of €2.8 billion is a sizeable amount of money.

Mr. Bernard Byrne

However, €40 billion left the Irish system.

I have a question.

Is it on the same topic?

Yes. There are two streams to my question. Mr. Byrne said that the data held in the Isle of Man is beyond the scope of the Revenue Commissioners. Is it also beyond the scope of the Criminal Assets Bureau, CAB?

Mr. Bernard Byrne

As the Deputy knows, I cannot make any comment at all about the CAB in any circumstance, and I have no particular knowledge of the CAB. One cannot say whether somebody is or is not or can or cannot in respect of the CAB. That is my understanding of the position about anything to do with the CAB.

The leaked files in the Paradise Papers suggest that the CAB has requested from AIB documentation linking Deputy Michael Lowry and Denis O'Brien. Those documents would be in the Isle of Man subsidiary. I am not asking Mr. Byrne about specific incidents-----

Mr. Bernard Byrne

Actually the Deputy is, to be fair.

I am putting this in the context of what we are discussing here, which is the leaked Paradise Papers. I am asking about policy in respect of access to information. Mr. Byrne has made it clear that the Revenue Commissioners does not have reach into the data held by AIB in the Isle of Man. Does the CAB have reach into that data or is it governed by the same principles that do not allow the Revenue Commissioners to reach into that data?

Mr. Bernard Byrne

There are three quick answers. On CAB, I do not know personally. I will ask Ms Dooley to respond to that. The second point still applies, which is that one is not allowed to make a comment either way in respect of anything to do with the CAB. That is a legal obligation. One cannot make a comment as to whether somebody is or is not subject to something. That is my understanding of it. The third point is that we referred to the fact that the Revenue Commissioners have other routes to access information as a result of protocols and agreements with the Isle of Man authorities. The question we are answering is in respect of our ability, not the Revenue Commissioners' ability, to use other channels. I do not know the position for other entities such as the CAB.

Ms Helen Dooley

I do not know if the CAB has the reach from a jurisdictional point of view. However, in the same way as the Revenue Commissioners, the CAB has similar protocols with agencies in other countries to obtain information.

It would not necessarily have to request that information from AIB. I assume that if any request, for whatever reason, came in the past or might come in the future, AIB would provide every assistance.

Mr. Bernard Byrne

As long as we can. It is the same point.

Did AIB seek to pass a resolution in a foreign jurisdiction to require its foreign registered subsidiary to provide information on its account holders who hold an address in this State to the Revenue Commissioners?

Mr. Bernard Byrne

It sounds like the Deputy knows the resolution. It does not sound familiar to me.

Ms Helen Dooley

No.

There was never a resolution by AIB to force the subsidiary to provide information. That did not take place in AIB.

Mr. Bernard Byrne

We spoke to the previous Deputy about, and Deputy Doherty might have been out of the room-----

No, I was listening. I was getting documents.

Ms Helen Dooley

No, that does not ring a bell.

I am not sure if it is AIB. This is what the Minister informed me when I asked him questions about court orders.

He spoke about the 40 occasions on which information had been requested and provided for the Revenue Commissioners on foot of High Court orders. The reply stated:

In one case, following a process of engagement with Revenue, an Irish financial institution sought to pass a resolution in a foreign jurisdiction to require its foreign registered subsidiary to provide information on its account-holders holding an address in the State.

Mr. Bernard Byrne

I do not think that was us.

Ms Helen Dooley

I do not think it was AIB.

The reply continued:

The directors of the subsidiary concerned challenged the matter and the court in that jurisdiction held that it would be against public policy for the court to exercise its discretion to compel the directors of that foreign registered subsidiary to disclose the information.

Mr. Bernard Byrne

I do not think that was us.

I brought up this issue with the Revenue Commissioners when they were before us. I was of the view, as were they, that it was AIB. That is my recollection of the conversation, but the delegates say it was not AIB. I will leave it at that.

Regarding the evolution of our laws dealing with tax avoidance and tax evasion, in 2003 the Chairman and I sat on the Committee of Public Accounts. At the time it became clear and was accepted that AIB and other banks were involved in tax avoidance of almost an industrial scale with their customers. It was not a matter of conjecture but was proved to be the case. As well as the debates we had at the Committee of Public Accounts in 2003 and 2004, it resulted in a change in the law.

The Central Bank and Financial Services Authority of Ireland Act 2004 made it an offence to aid and abet, conceal and counsel customers in tax avoidance and tax evasion, but I am not aware of any conviction arising from the Act since. In actual fact, several years ago, relating to HSBC and deposits held in France, the then chairman of the Revenue Commissioners, Ms Josephine Feehily, made it clear that the 2004 Act was completely insufficient. She made a point that tax inspectors would have to be standing beside the tax official and client to actually prove a case to the criminal level of proof required. That is still the case with regard to our tax evasion laws. I am not asking the delegates to comment on that matter as I am asking the wrong people the question. However, perhaps the delegates have an opinion on the current tax law, as it pertains to bank officials and tax evasion generally.

Mr. Bernard Byrne

It will be a general comment. We believe we comply with all of the laws in place. Our objective is to ensure we are compliant and encourage customers to be compliant. We do not offer tax advice and it has not been part of our business structure for quite a while. If we find evidence that people are doing it, it is not part of our policy, but they will be subject to normal internal disciplinary procedures. It is not what we are about and it is not worth trying to target or do. We comply with the law and our objective is encourage compliance.

My basic point is that AIB and other banks were involved in the setting up of bogus foreign deposit accounts. Even though the law was changed based on the work we did in 2003, I am dubious about the efficacy and utility of the Act passed in 2004. That has been verbalised by the chairman of the Revenue Commissioners since.

Mr. Bernard Byrne

In a similar vein, the requirements and obligations on banks, generally, whether it be anti-money laundering, positioning or suspicious transaction reporting, are quite developed. We issue in the region of 5,000 suspicious transaction reports a year, based on the methodology and the application of principles whereby we say it is a matter of which Revenue or the Garda needs to be aware.

That is fair enough. This is not directed at Mr. Byrne or his bank. However, I am not sure why people are surprised when it comes to continuing tax evasion and tax avoidance as it pertains to certain financial institutions. We need to go back and take a look at the laws which govern this area. Certainly, when it comes to the Revenue Commissioners, they are still of the opinion that the laws are not sufficient when it comes to governing the entire area.

Arising from this exchange on the independence of the subsidiaries of AIB outside the jurisdiction, how many banking licences does AIB hold in this jurisdiction? Will the delegates explain in layman terms the make-up of these entities?

Ms Helen Dooley

That is a good question. At the last count, we had 120 companies in the group which grew by one this week when the new holding company was established. I accept that 121 companies is a lot. The reasons largely stem from the past when we acquired many entities. There was also a practice in the past that if activity did not require to be undertaken under a banking licence, it was included in a separate subsidiary. That is not the practice we follow today. We intend to undertake an exercise to simplify the structure and reduce the number of subsidiaries. Of the 121, probably 100 are in Ireland.

Mr. Bernard Byrne

For example, as a regulated entity, AIB has a banking licence. The EBS still has its own banking licence as part of a regulated entity. Both the EBS and AIB have subsidiaries, some of which provide mortgage finance. To comply with certain elements of legislation in including mortgages in certain structures to obtain finance, we each have subsidiaries in that respect. As a result, they can build. One of our tasks - it has not been highest on the list - is to go through some of them and remove dormant entities.

In Ireland AIB comprises roughly 100 companies, not all of which have a banking licence. Is that correct?

Ms Helen Dooley

We have other licensed entities, but we have four actual banking licences.

Some of those licences are held because of the structure of mortgages. Is that correct?

Mr. Bernard Byrne

It will be to cover financing options. It has to do with securitisation legislation.

Ms Helen Dooley

It has to do with asset-covered securities.

The other companies deal with non-banking activities which have grown during the years. Is AIB going to rationalise all of them?

Ms Helen Dooley

Yes.

What is the new holding company?

Ms Helen Dooley

Under the EU bank recovery and resolution directive, the regulators are simplifying bank structures by putting-----

It does not sound like that.

Ms Helen Dooley

The directive requires banking groups like ours to have a holding company at the top of the group separate from the entity which will conduct the banking business of accepting deposits and the giving of mortgages. It means that in the future, if there ever is another crisis or banking failure, the holding company is where debt will be written off or converted into equity. Ordinary customers at the level below will be safeguarded as a result.

Mr. Bernard Byrne

That structure is to specifically address concerns about the bailout of AIB, about which we have spoken.

Under this new structure the entirety of AIB as it sits today is here; all those companies, and new companies put in on top. That company will issue debt that can be bailed in. In other words, if there is another crisis at some point in time, that debt bails straight in.

Profits will go to this holding company.

Mr. Bernard Byrne

The profits will sit within the group. We have an obligation. We are in the market with a statement of between €3 billion and €4 billion of what are effectively bail-in instruments, which will have to go in. In addition to our capital, we will also have debt instruments. In the event of a crisis or of capital being reduced, those instruments will be liquidated and will become more capital for the bank.

That holding company was requested by the regulator.

Mr. Bernard Byrne

Yes. That is, the European regulator, the Single Resolution Board, SRB.

The European regulator has demanded that structure.

Mr. Bernard Byrne

Yes.

I would like to discuss the banking licences. They are separate entities. As Mr. Byrne described them, they are separate regimes with legal personalities.

Ms Helen Dooley

As Mr. Byrne mentioned, EBS and AIB each has a covered bond entity which is used for financing. Those entities also require a bank licence, so that makes four bank licences.

Once one has a bank licence, and there are four in this situation, that is a legal entity all of its own.

Ms Helen Dooley

That is correct.

It has a licence all of its own, and it has a reporting mechanism all of its own.

Ms Helen Dooley

It has its own board of directors.

Why are licences established in this way? For example, there is AIB plc, and then there is AIB, plc. Why would they not have really distinctive names or descriptions so that no one is confused? If we are to understand that that is a different company, one notes there is only a comma in the difference. Why is it structured like that? Why not create a clearly named entity that has no confusion? Even if the term "AIB" has to be used, it could be used in a better description.

I do not think we have been clear enough on this in the past. With our new holding company, that is, AIB Group plc, we have tried to signify that it is at the top of the group. The banking company that was at the top of the group until last week is Allied Irish Banks, plc.

Is that the main group?

Ms Helen Dooley

That is the main banking company that was at the top of the group until the new holding company was implemented.

There is AIB comma-----

Ms Helen Dooley

Allied Irish Banks, plc.

What are the other ones? There is also AIB.

Ms Helen Dooley

"AIB" is just the generic name for the group.

Who are the holders of the four licences?

Ms Helen Dooley

They are as follows; Allied Irish Banks, plc; EBS Designated Activity Company; EBS Mortgage Finance; and AIB Mortgage Bank plc.

Are all of AIB's mortgages held by AIB Mortgage Bank plc?

Ms Helen Dooley

Yes.

Are other banks structured in the same way?

Ms Helen Dooley

Yes, because of the Irish legislation. Under the asset covered securities legislation, that type of funding requires banks to set up a separate company. As I understand it, the Legislature is considering removing that requirement, which would help us to simplify the structure as we could get rid of those vehicles.

That makes four licences.

Ms Helen Dooley

Yes.

Two of them are with EBS, one designated for mortgages and one for general activity.

Ms Helen Dooley

Yes.

The same structure applies with AIB, plc and AIB plc.

Ms Helen Dooley

No, Allied Irish Banks plc is the main bank, and then we have the AIB Mortgage Bank plc underneath it.

Allied Irish Banks, plc is the main bank.

Ms Helen Dooley

Yes.

Very well.

Ms Helen Dooley

I agree, it is very confusing today.

Do the customers deal with AIB, plc?

Ms Helen Dooley

Yes.

Is that right, generally?

Ms Helen Dooley

Generally that is correct.

The customers have mortgages, and products like that. They deal with AIB Mortgage Bank plc.

Mr. Bernard Byrne

The customers will deal with AIB plc. That is the bank. I am being very general here.

Does the witness mean AIB, plc by that?

Mr. Bernard Byrne

The mortgage finance company is effectively a funding vehicle established to comply with the Asset Covered Securities Acts. The mortgages move between those entities but the customer does not see the financing aspect associated with that.

However, the customer signs up to a mortgage. Are they signing up to AIB, plc, or are they signing up to AIB Mortgage Bank plc, that is, the funding vehicle?

Ms Helen Dooley

They are signing up to a mortgage with the latter. AIB Mortgage Bank plc.

Is that what they are signing up to?

Ms Helen Dooley

For home loan mortgages, yes.

An AIB mortgage funding vehicle is distinctly different from AIB, plc.

Ms Helen Dooley

It is a wholly owned subsidiary, but it is a separate legal entity.

Is it true that for the purposes of anything actionable, they are two separate entities?

Ms Helen Dooley

That is correct.

I am asking this in the context of the upcoming meeting, in order to get an understanding of the range of aspects. When one mentions 100 companies, people think that there are 100 banking licences. It is important that people have a good understanding or grounding around these issues.

The Chair asked about the group structure. I would like to ask for clarification, because I agree with Ms Dooley, it is confusing. Mr. Byrne was talking about AIB plc, and he omitted the comma at one point. People watching might laugh, but is it the case that there is an an AIB plc? Is there a UK company called "AIB plc"?

Mr. Bernard Byrne

I believe it is called "AIB UK".

Ms Helen Dooley

Yes, it is AIB UK plc.

"UK" is in the title of that company, in that case?

Ms Helen Dooley

I think so.

What is the legal structure around that company?

Ms Helen Dooley

It is a wholly owned subsidiary. As of a few days ago, there is the new holding company, which is AIB Group Plc; the main bank is Allied Irish Banks, Plc; and the remaining 120 subsidiaries are all subsidiaries of the main bank.

I know that the structure has changed, but let us consider the situation last week or last month. Where does AIB plc, that is, the UK company, fit into the structure? As it is very important, can the witnesses clarify what the name actually is?

Ms Helen Dooley

The actual name is AIB Group (UK) plc. That is a wholly owned subsidiary of the main bank, which is called Allied Irish Banks, plc.

Can the main group, AIB, plc, take legal action on behalf of any of its subsidiaries?

Ms Helen Dooley

No. A legal claim arises in the name of a company or an individual. They are the proper plaintiff in taking legal action.

Does the AIB Group (UK) plc, whatever its official title is, operate in Ireland?

Ms Helen Dooley

It operates in Northern Ireland, but not in the Republic.

It cannot operate in this State, so therefore it cannot take legal actions in this State.

Ms Helen Dooley

It can take legal actions where it is a party to a contract. If there is a contract with AIB Group (UK) plc on one side, it can take action wherever the person on the other side of the contract is situated.

However, that only applies if a party entered into a contract with that subsidiary, as opposed to AIB Mortgage Bank plc or whatever. Do all of these banks have the same directors?

Ms Helen Dooley

No. The regulatory regime requires independence and separate boards for each of the subsidiaries.

When we are looking at these structures, as I think we should with other banks, it might be helpful if the witnesses could provide the committee with a list of the banks, an outline of the structure, the official names and the registered company numbers. It would be helpful for us as we are trying to go through this maze.

I thank Mr. Byrne for his attendance.

The Chairman was going to ask for guidance on-----

I am sorry. I hate asking a question at the end of a meeting, but, with a view to preparing for future meetings and based on correspondence we have received, how far can we go with the bank in asking about Belfry investments?

Mr. Bernard Byrne

We will have to think about the answer to that question. In anything subject to litigation the answer is not very far at all.

Will Mr. Byrne let the clerk know?

Mr. Bernard Byrne

Yes.

We have received a request which has been circulated to some members on this matter and I want to find out how we can deal with it. I thank the delegates for attending and wish all of them a happy Christmas. I also thank members for their co-operation and help during the year.

The joint committee adjourned at 12.10 p.m. until 2 p.m. on Tuesday, 16 January 2018.