Other Questions.
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.
102 Mr. Quinn asked the Minister for Finance the investigation which has been held into the circumstances in which contracts worth over €800,000 were awarded by the Office of Public Works to a company (details supplied) whose managing director was a business associate of an OPW official; and if he will make a statement on the matter. [4764/04]
View answerThe matter to which the Deputy refers is currently being examined independently on behalf of the Office of Public Works. The purpose of the examination is to establish, in so far as possible, the facts in the matter. I expect the results of the examination to be available shortly.
It is not possible at this stage nor would it be correct for me to comment on the specifics of the situation pending the completion of the examination. However, I wish to clarify one point. The figure of €800,000 refers to the total value of payments to the company in question over a nine year period from 1995 to date. During this period the OPW kept under regular review the prices being charged in the market for the services in question and was satisfied that it was availing of the most cost-effective service.
It is obviously a matter of concern that any suggestion of impropriety should attach to the award of public contracts by the OPW or by any Department or agency. The OPW, through the activities of its various business units, including the Government Supplies Agency, plays a significant role in the procurement of property, construction and other goods and services on behalf of Departments and agencies. Due to the central role it plays in the procurement area, the OPW has consistently strived to ensure that it conforms to the highest possible standards of fairness, transparency, integrity and value in awarding public contracts. I believe it achieves this objective across the broad range of its services.
It is the general policy of the OPW that all procurement activity in the organisation abides by the principles and rules set out in the national public procurement guidelines issued by the Department of Finance and in the EU public procurement directives. In essence, this means that contracts for the supply of goods and services should be awarded by way of competitive tender where practicable. There is also an obligation on all personnel involved in the tendering process to ensure that any potential conflict of interest in that process is disclosed in good time.
When the results of the independent examination become available, I will consider them carefully and take whatever steps I consider appropriate in the circumstances. My sole objective will be to ensure that the integrity of the procurement process in the OPW is maintained to its current high standards and strengthened where necessary.
Who is carrying out this independent investigation, examination or inquiry? The Minister spoke of an independent examination. What are its terms of reference and will the Minister put them in the public domain? The Minister must be aware that the award of contracts with regard to certain elements of audio visual supplies in the OPW, amounting to more than €800,000, has been the cause of serious public disquiet. Is any member of the staff of the OPW subject to the terms of this inquiry, given that a member of the OPW staff is reported to have or to have had a business relationship with the managing director of a company which received contracts worth more than €800,000 in total between 1997 and 2003?
The company carrying out the independent investigation is a well-known management consultancy auditor — PricewaterhouseCoopers — and I expect it will bring forward the report within weeks. In this instance we are talking about the provision of audio technical services in Dublin Castle which is one of our foremost high quality conference centres and is used intensively by both Government and outside agencies. In this situation the services of these audio technicians might be required on up to ten occasions per week and therefore the situation would not require the issuing of a formal tender on every occasion. It has been the case that these services are generally provided on an hourly rate. In this case a number of firms are involved and the overall spend is spread over these. The conditions are reviewed on a regular basis and we deem the prices that we pay to this firm and the others to be reasonable and above question.
On the matter of the named individual, that official is not currently involved in the procurement of services from the company concerned. Steps are being taken to ensure that the supply of all goods and services will be subject to a formal, fair and transparent competitive tendering process.
I am happy to hear that. Will the Minister of State answer my question about the terms of reference of this examination or inquiry? Is he saying that this official has been moved aside while the inquiries are under way? I draw the Minister of State's attention to the fact that there is serious concern, particularly among the businesses to which the Minister of State refers, that a number of contracts are not advertised in the official journal of the EU. Under EU public procurement rules if a contract is in excess of €162,000, it must be advertised in the official journal of the European Commission. However, the value of many contracts start off at approximately €21,000 and climb to way over the tender limit. How does the Minister of State propose to address these matters? Is the Minister aware of the serious disquiet among other tenderers for Government business about how the OPW has done its business in this respect?
Pending the outcome of the independent investigation, the people involved are entitled to natural justice and due process.
Will the Minister of State give us the terms of reference?
I will. They are lengthy and, obviously, all the issues will be investigated. First, on the matter of tenders and limits, I accept there is an issue of whether something is a structure. In this case the issue was the provision of tents and marquees to provide emergency accommodation for the press attending and the definition of a new sprung structure, with which I was not familiar, which would be regarded as a building and what is in effect a marquee. Any of us who have been inside some of these expensive marquees lately would find it hard to tell whether they were a structure.
I thought only Fianna Fáil Deputies got invited into tents.
I have been in several which were provided by the Government for the media etc.
They are part of Parlon country.
Order, please.
If the Deputy is interested in an explanation, I will strive to give one. Perhaps in this case a false assessment was made as to what was a works tender, which would allow a €5 million ceiling, and what was a services tender, which would allow a ceiling of €154,000. Obviously, the report will come forward with some explanation of that issue.
The terms of reference are to assess the procedures applied to the procurement of audio-visual services from this particular company; to assess the procedures applied to the procurement of audio-visual and translation equipment and services for the 2004 EU Presidency; to assess the risks associated with the procurement of other goods and services within Dublin Castle and to evaluate the underlying procedures and controls; to make recommendations on improvements to procedures for the procurement in Dublin Castle to ensure they are conducted in a fully transparent and fair manner and that adequate procedures and controls are in place to safeguard the integrity of the procurement process; to document the outside business interests and relationships, including directorships, of the individual and to consider the extent to which these may have represented a conflict of interest with regard to procurement of audio-visual services having regard to national and EU procurement regulations. The terms are definitive. I await the outcome of the report.
Written Answers follow Adjournment Debate.
