Dáil Éireann Debate, Tuesday - 17 February 2004
101 Ms Burton asked the Minister for Finance the progress made to date with regard to the series of meetings being held by the Revenue Commissioners with chief executives of Irish financial institutions as part of its investigation into tax evasion and offshore accounts; if the meetings have now been reached; if conclusions have been reached; and if he will make a statement on the matter. [4742/04]
View answer106 Mr. Howlin asked the Minister for Finance the nature of the proposed investigation to be carried out by the Revenue Commissioners due to begin on 29 March 2004 into the operation of Irish banks with operations in well known tax havens; and if he will make a statement on the matter. [4752/04]
View answerI propose to take Questions Nos. 101 and 106 together.
I am advised that the chairman of the Revenue Commissioners has concluded his meetings with the chief executives representing ten financial institutions. All financial institutions have advised that they would be co-operating with Revenue's proposed investigation into offshore accounts. The formal investigation is commencing on 29 March 2004.
I am advised by the Revenue Commissioners that this investigation will initially involve ten financial institutions with subsidiaries or branches in offshore locations, including Northern Ireland. The investigation will be intensive and Revenue will seek to use all its available powers to identify Irish residents who hold or have held offshore accounts or investments. This House will be aware that I gave extensive powers to the commissioners in 1999 which enables them to obtain information on a class of persons where the individual identities were previously unknown. I am also proposing in section 84 of the Finance Bill 2004 to extend Revenue's powers regarding information held by a controlled foreign entity of a financial institution.
Of the ten financial institutions to which the Minister referred, he stated in 2003 that three financial institutions had been dealt and clearly the Revenue has met a further five institutions. Does that mean that the Revenue has now concluded settlements with those institutions and their directors on the activities of the subsidiary operations of Irish financial institutions, not in this jurisdiction? If so, has the Minister an estimate of the further tax and penalties that he expects to collect as a consequence of these investigations? Are the directors of these financial institutions secure from further prosecution or penalty by the Revenue Commissioners? Is it the Minister's intention to pursue the directors of financial institutions which may have been in default? I referred previously to the pubic statements by Mr. Fitzpatrick, formerly of Anglo Irish Bank, on the banks coming together to meet with the Revenue Commissioners on these matters. Did the financial institutions meet both individually and collectively, as suggested by Mr. Fitzpatrick in 2003?
The chairman of the Revenue Commissioners has met with the chief executives on an individual basis. All the relevant financial institutions advise the Revenue that they will be co-operating with the proposed investigation into offshore accounts. The formal investigation will commence on 29 March 2004. In the meantime, I understand that the banks, as previously, will write to their customers advising them that this investigation will take place and of the benefits of voluntary disclosure. Hopefully, that will lead to an expeditious investigation of these matters.
I do not have an estimate of the amount that possibly will be collected in this regard. Of course, this is totally dependent on the amount of evasion. As the Deputy will know, not all the money held in offshore accounts relates to tax evasion as there are many good reasons to have offshore accounts. However, these matters will only come to light post-investigation. I have included section 84 in the Finance Bill 2004 to copperfasten the legal position regarding the investigation into these matters. There was some doubt as to whether the Revenue Commissioners would have real power to deal with offshore operations where money was not channelled through an Irish account. I also did it to satisfy the banks that they were correct to give information in this regard.
The question of further investigations or possible prosecutions is a matter for the Revenue Commissioners following their investigations.
Has the Minister seen any prima facie evidence that financial institutions were facilitating tax evasion and that there was an element of collusion in respect of the use of some of these offshore accounts or does he believe that the institutions had legitimate grounds for believing that all this money was for legitimate purposes and that they were only providing a service which they believed to be legitimate? What does the Minister believe to be the legitimate reasons for these substantial amounts of money — a sum of €100 million has been recovered in the case of just one of these institutions to date — and transactions on that scale being offshore?
I do not, and would not, have evidence of how the Revenue Commissioners will deal with these matters. That is a matter for the Revenue Commissioners and evidence is not supplied to me as to the legitimacy or otherwise of the cases. The information will come out when the Revenue Commissioners are investigating these matters.
There are many reasons for having offshore accounts. People have them for legitimate business reasons. Many ex-pats who work abroad on contracts and so forth often use these accounts for a variety of reasons and continue to maintain them when they return to Ireland. However, this will become clear when the Revenue Commissioners conclude their investigation and produce a report on the matter. They also produce annual reports and are interrogated by the press. When the Chairman of the Revenue Commissioners comes before the relevant committee of the House, he may be asked further questions. At present, my concern is to get these investigations started. The more money that is collected for the Exchequer, the better for everybody.
Is it intended to extend the Revenue Commissioners' investigations to other financial institutions not already included in the list of ten? What about other companies which are not recognised financial institutions, for example, the CRH situation? Is the Minister concerned that illicit banking activity might be taking place in other non-financial institution companies that would warrant the Revenue Commissioners' attention? What steps have the Minister and the Department taken since that situation was revealed to ensure such activity is stopped?
Tax evasion is something people do not broadcast too widely. They do not ring up to tell us they are involved in tax evasion. However, should the Deputy or anybody else have evidence of tax evasion practices by individuals or institutions, they should inform the Revenue Commissioners. In this case, the Revenue Commissioners are investigating the activities of the financial institutions to which I have referred.
Has the Minister any such knowledge?
No, people would not ring me up either.
Has the Minister an estimate of how many accounts in Northern Ireland are involved?
No.
The Minister spoke about the reasons people have offshore accounts. Is he aware of any reason for a Minister to have an offshore account? Why does he think a Minister would open an offshore account with a non-existent London address?
I have no idea.
Would the Minister be concerned about it? The Minister condemned tax evasion. Would he be concerned that his colleague had opened an offshore account with a non-existent address? Would he be prepared to say to compliant taxpayers that such behaviour is simply not acceptable and has robbed our health and education systems of the money to fund them?
Tax evasion is, and always has been, an activity in which people should not engage. I have done more than any other Minister for Finance to give powers to the Revenue Commissioners to pursue tax evasion. If the Deputy checks the legislation over the past 60 years, she will discover that more power has been given to the Revenue Commissioners by me to investigate tax evasion than any previous Minister or a combination of five Ministers for Finance. I utterly condemn tax evasion and have taken practical steps to eliminate it as far as possible.
