Members of this House will be aware that the events giving rise to this Bill have been the subject of extensive coverage in the media. Indeed, the articles in the October and November 1998 issues of Magill magazine significantly influenced the overall pattern of the controversy. The basic elements of the matter are relatively straightforward. Serious allegations were made regarding the collection of deposit interest retention tax. The revelations raised questions in particular about the actions of one of the main banking groups in the country. By implication, other banks were caught in the shadow cast by the media reports. Moreover, the efficiency and effectiveness of the systems and procedures operated by the Revenue Commissioners in relation to the administration and collection of deposit interest retention tax were severely questioned.
Public opinion demanded that, as far as is practicable, all available facts should be brought into the public domain. This is entirely understandable. This controversy affects areas central to our economy and society, and citizens look to the Houses of the Oireachtas to ensure propriety, efficiency and effectiveness in both financial management and public administration. Our primary duty is to ensure that the citizens of this State will have all pertinent information made available to them in a timely and effective manner.
In this regard, I believe that the response from the Houses of the Oireachtas has been rapid and appropriate. The examination of the appropriation accounts of the Office of the Revenue Commissioners by the Committee of Public Accounts focused on the core issues exposed by the media coverage. In particular, the committee highlighted the fundamental conflict in evidence about the administration of deposit interest retention tax between the Revenue Commissioners and AIB bank.
Arising from these deliberations, Dáil Éireann passed a resolution on 21 October which put in place the first important elements of the investigative process. The Committee of Public Accounts was requested to examine and report inter alia on “any purported settlement between the financial institutions and the Revenue Commissioners in respect of undeclared DIRT” and on information known to the financial institutions and regulatory authorities concerning the use of bogus non-resident accounts. I am also aware of and welcome the positive response of Members of this House who have expressed their support and commitment to facilitating by all appropriate means the furthering of this investigation.
As events unfolded towards the end of October, it became increasingly clear that the existing powers available to pursue this matter were not sufficient. New arrangements were needed to bring the investigation to a satisfactory conclusion. Accordingly, recommendations were made by the Committee of Public Accounts setting out key requirements for advancing the inquiry into the central issues.
The arrangements envisaged in the first interim report of the Committee of Public Accounts form the essential basis for the particular approach to this investigation made under this Bill. The process begins with the passage of this legislation to empower the Comptroller and Auditor General to conduct a comprehensive fact finding investigation. The Comptroller and Auditor General will then be requested to prepare a report to Dáil Éireann. Having received and examined this report, the Committee of Public Accounts will continue its examination of the key issues. In undertaking this examination, the committee will use enhanced powers under the compellability Act. It will then proceed to draw conclusions, determine findings and make recommendations for further action.
The drafting of the Bill to satisfy the specific circumstances arising from this controversy is crucial. The inquiry will look into the administrative arrangements and procedures of the Revenue Commissioners relating to DIRT. It will also address how the relevant financial institutions exercised their duty of care in relation to this tax. It is not our intention to construct unnecessarily complicated or bureaucratic procedures. A central feature of the arrangements under the Bill is that the special provisions will, in the main, cease when the inquiries of the Comptroller and Auditor General and the examinations of the Committee of Public Accounts are completed.
Moreover, it is important to acknowledge that the Bill owes its genesis to a proposal put forward by Members of Dáil Éireann drawn from across party lines. There is a genuine will to proceed as rapidly and as comprehensively as possible. There is a shared determination that the process of investigation should be driven by elected representatives.
The compellability Act, introduced by the previous Government, was supported on all sides precisely because it promised to meet a long standing aspiration to give committees of the Houses of the Oireachtas powers to conduct meaningful examinations of matters of pressing public interest. There is also a common concern that other methods of public inquiry imposed very substantial costs on the taxpayer and that Oireachtas committees could provide more cost effective means of managing inquiries.
In evaluating our approach to this investigation, it has been recognised that certain modifications are needed to the compellability Act. These have been provided for in the Bill. The arrangements also acknowledge that the scope and range of the investigation needed would impose such demands on time that it would be unrealistic to expect parliamentarians themselves to undertake the "nuts and bolts" of the inquiry. A commitment of that nature would put pressure on their wider legislative duties and the care of their constituents. It is proposed, therefore, that the initial process of investigation should be conducted by the Comptroller and Auditor General. However, it is necessary to expand his statutory powers on a temporary basis in a manner that is germane to his constitutional role.
These difficult and complex arrangements have been fairly described as a "hybrid" mechanism of inquiry. Indeed, the two tier arrangement — in which the Comptroller and Auditor General will present the relevant facts and identify areas of dispute and the committee would reach conclusions, determine findings and make recommendations — draws on different legislative backgrounds. Senators will see in these arrangements precedents in the statutory provisions for committees of the Houses of the Oireachtas, the functions of the Comptroller and Auditor General and the Companies Act. This diverse grounding is a source of strength in the Bill.
Moreover, the fact that support for this investigation crosses party political boundaries also bodes well. There appears to be general agreement across the spectrum in relation to the following: the serious matters to be investigated; the essential arrangements for the investigation; the Comptroller and Auditor General should prepare a fact finding report; to carry out his investigation he must have new powers of direction to compel the giving of evidence and confer privilege; the Committee of Public Accounts should examine his report and, if necessary, hear further evidence; the committee should have enhanced powers under the compellability Act in furthering its inquiry and, finally, the committee must draw conclusions, reach findings and make recommendations on further action. These core elements of the investigation are provided for in the Bill.
I wish to emphasise the key questions to be addressed in this investigation. Was there an agreement between the Revenue Commissioners and a financial institution, in particular AIB bank, in relation to undeducted deposit interest retention tax during the early 1990s? If so, what was the basis and nature of that arrangement? Were the systems, practices and procedures of the Revenue Commissioners adequate in relation to the administration of the deposit interest retention tax? Were those systems properly implemented during the relevant period? Did the financial institutions exercise their statutory duty of care in satisfying themselves that relevant accounts were genuinely non-resident? Were the financial institutions aware of the existence and extent of bogus non-resident accounts? If they knew, what did they do about these bogus accounts? If not, why not?
Members of the House will appreciate that in seeking answers to these questions we will inevitably get into an area of conflicting interests, rights and entitlements. Therefore, I have worked closely with the Office of the Attorney General and the legal advisers of the committee and the Comptroller and Auditor General to ensure that the arrangements we will put in place avoid, as far as possible, foreseeable constitutional or other legal difficulties.
The Comptroller and Auditor General is an independent constitutional officer with functions defined in statute to control and audit accounts administered by or on behalf of the Oireachtas. In order to ensure that the arrangements being made in this Bill are sound, we have provided that the Comptroller and Auditor General will have discretion to appoint independent auditors in certain circumstances during his investigation. These may arise where the Comptroller and Auditor General decides that he needs to have access to information contained in the accounts of private individuals held by the financial institutions.
This will not preclude the Comptroller and Auditor General looking at books and documents in the financial institutions that might refer to such individual accounts. The possibility that he might inadvertently come across these accounts is not a barrier to his examination of relevant documents of the financial institutions, such as audit reports. If necessary, details of individual named account holders can be blacked out of such documents. He will have adequate powers to compel the presentation of evidence and documents in this regard under section 3 of the Bill.
In co-operating with the Comptroller and Auditor General in this investigation those who have evidence to give are not at risk of criminal prosecution on foot of what they say or give as evidence. However, should the Comptroller and Auditor General come across prima facie evidence of non-payment or underpayment of tax, he can draw that information to the attention of the Revenue Commissioners. The names or any other means of identifying individual account holders cannot be published in his report to the Dáil. The point of this investigation is to concentrate on the core issues and to seek answers to the pressing questions of public concern. I am satisfied that the statutory arrangements being provided for in the Bill will enable this to happen.
The Bill is complex in its construction but straightforward in its objective — to present the truth as fairly and as quickly as possible. I now propose to give a brief summary of some of the specific provisions. With the exception of a limited number of matters, the special provisions of the Bill are temporary. This is provided for in section 1 by attaching the special provisions to the Committee of Public Accounts as defined for the purposes of the investigation. When the committee completes its report to Dáil Éireann the special provisions lapse unless the precise terms provided for them are replicated.
I can accurately describe section 2 as the core of the Bill. The Comptroller has an existing right to examine papers in Government Departments and to probe the background to public spending. The role which the Bill foresees is somewhat different but the powers are germane to his statutory functions under section 3(7) of the Comptroller and Auditor General Act, 1993. Section 2, therefore, provides for the examinations and investigations which the Comptroller will carry out, defines the relevant areas of tax law and specifies the purposes of the investigation. It also provides that the Comptroller may appoint independent auditors to examine the accounts of private individuals held by financial institutions if necessary. The section also makes provision for the preparation of interim reports where self-contained elements of the investigation have been completed and finalised.
The arrangements for the presentation of the Comptroller's report to the Clerk of Dáil Éireann are analogous to the arrangements for the reports of tribunals and will be supported by a resolution to be moved in Dáil Éireann. They also permit the Comptroller, at his discretion, to make a copy available to the Committee of Public Accounts.
Provisions empowering the Comptroller to gather the evidence are modelled variously on the compellability Act and, where appropriate, are analogous to the powers of an inspector appointed by the Companies Act. They are set out in sections 3 to 10 of the Bill. Using these powers the Comptroller may request witnesses to present evidence or give documents in the knowledge that the privileges and immunities of a High Court witness will apply to them. If a witness refuses to co-operate, the Comptroller has the power to compel them to give evidence, administering an oath if necessary. The Comptroller also has powers to seek a direction of the High Court in this matter.
The Bill has specific provisions for the payment of reasonable expenses from public money to certain persons giving evidence. In addition, section 18 allows the Minister for Finance to seek a direction of the courts in relation to the recovery of costs from a financial institution.
Section 11 is a permanent provision which provides for absolute privilege for the Chairman and members of the committee for the purpose of the performance of their functions. Such protection was specifically requested in the interim report of the committee. However, this privilege does not cover interviews or comments made by them on television or radio or in the print media. Section 12 is also a permanent provision which gives absolute privilege for the performance of functions by the Comptroller and his officers.
Section 13 removes restrictions on the disclosure of information imposed by law or contracts. For example, this section will lift obligations of confidentiality on former employees of companies for the purposes of this investigation. This removal of confidentiality will not apply to the obligations imposed by EU directives and double taxation agreements with other states. However, if the Comptroller is already exempted from confidentiality provisions in EU directives, this remains subject to any conditions set, for example, professional secrecy.
Section 14 allows the Comptroller to seek directions from the High Court to obtain clarification as to how he should exercise his powers and to resolve quickly any potential constitutional conflict.
In carrying out its examination, the committee will be able to appoint experts to give advice, guidance or other assistance during its proceedings and its discussions at private meetings may not be disclosed without the consent of the chairman. There are other permanent amendments to the compellability Act to clarify the granting of a "block consent" to the use of the compellability powers for a full investigation. Section 20 temporarily removes the restriction on investigations in relation to the tax liability contained in the compellability Act. This is crucial in facilitating the thorough examination of this controversy by the Committee of Public Accounts.
I present the Bill to this House as a balanced and carefully structured arrangement to bring this investigation to a satisfactory conclusion as quickly and efficiently as possible. Public representatives have a duty to seek the truth and inform the public. I have tried to balance this duty in the Bill with the natural and constitutional rights of citizens to fair and due process. We are pressed for time. It may be that a longer period of reflection would have improved the details of these complex arrangements. Nevertheless, in the short time available the Bill now presented will meet the needs of this inquiry and will provide an effective means of advancing the investigation. I commend the Bill to the House.