Dáil Éireann Debate, Tuesday - 23 November 2004
95 Ms McManus asked the Minister for Finance the progress in regard to any action taken by his Department and the Revenue Commissioners arising from the report of the High Court inspectors on a bank (details supplied) which was published on 30 July 2004; and if he will make a statement on the matter. [29853/04]
Amharc ar fhreagraI am advised by the Revenue Commissioners that they had commenced an investigation in January 1998 when information indicating serious tax evasion on the part of customers of the financial institution in question had been made known to them. As a result of the subsequent investigation they had become aware of the magnitude of the investments made by individuals through the financial institution.
The investigation is largely complete and settlements made to date with individuals amount to €48.12 million in respect of tax, interest and penalties, with a further €4.7 million received as payments on account of the individuals' final liability. The investigations into the tax liability of the remaining cases are continuing.
As indicated, much of the information in the report of the High Court inspectors was known but some additional matters concerning the activities of the institution itself came to light and have been the subject of further consideration by Revenue in the context of establishing whether there is evidence that criminal offences under the Taxes Consolidation Act 1997 have been committed and, if so, whether admissible evidence can be obtained. In particular the "aiding and abetting" offence under section 1078 of the Taxes Consolidation Act is being considered but, as indicated by Revenue in other situations, it is very difficult to prove.
Apart from the tax matters, the behaviours outlined in the report may suggest weaknesses or failings in relation to compliance with certain other regulatory and legislative requirements, such as those relating to money laundering, exchange controls and notification of fees and charges. The findings in the report and the bank's response are being examined in detail by the Irish Financial Services Regulatory Authority, IFSRA, which has already stated that any actions or measures that are required will be taken. In light of this and other widely reported issues, IFSRA is engaged in an industry-wide exercise focusing on appropriate systems and controls to ensure that all credit institutions are fully in compliance with all relevant laws and requirements. IFSRA is also making sure that there is proper monitoring of the fee and interest reimbursement programme, which has been commenced by the bank.
The role of the Minister for Finance in relation to financial regulation is to bring forward legislative proposals whereby a duly empowered financial regulator can regulate and supervise the financial sector in accordance with those powers. The necessary legislative framework has been put in place and day to day responsibility for the supervision of credit institutions is a matter for IFSRA. IFSRA is independent in the exercise of its supervisory functions and my Department does not get involved in its day to day activities. I should point out that the regulatory structures governing financial institutions have changed enormously in recent years, taking into account many of the lessons already learnt from this case and others. However, if further examination by IFSRA or my Department indicates that additional powers are required to prevent a recurrence of similar practices, I will address that as a matter of priority. In any event, the proposed consolidation and simplification of financial services legislation will provide an opportunity to carry out any necessary strengthening or rationalisation of the regulatory framework in this regard.
The exchange control implications of this case were first raised in early 1998 and, as the House has previously been informed, were investigated by the Central Bank at the request of the then Minister for Finance. The bank's interim report to the Minister for Finance in May 1998 was not conclusive and the bank indicated that it would defer concluding its consideration of exchange control matters pending the finding of other investigations. Legal advice at the time was that the report was not sufficient to warrant its referral to the DPP. It should be noted that exchange controls were phased out progressively, especially from 1988, and were finally abolished on 31 December 1992. My Department has written to the Governor of the Central Bank asking him to arrange for a review of the situation having regard to both the recent High Court inspectors' report and the 1998 report of the authorised officer.
I should point out that the report has been referred to the DPP, and criminal charges might therefore follow. While it would not be a matter for me, the behaviours reported in this case are of a type that could also have potential implications for individuals both from a company law and a financial services regulatory point of view.
