Committee Reports::Second Interim Report - Appropriation Accounts 1996::15 October, 1998::MIONTUAIRISC NA FINNEACHTA / Minutes of Evidence


(Minutes of Evidence)


Déardaoin, 18 Nollaig 1997.

Thursday, 18 December 1997.

The Committee met at 11.00 a.m.



S. Ardagh


D. Foley

M. Bell

T. Gildea

B. Cooper-Flynn

C. Lenihan

J. Dennehy

P. McCormack

S. Doherty

P. Rabbitte.

B. Durkan



DEPUTY J. MITCHELL in the chair

Mr. J. Purcell (An tArd Reachtaire Cuntas agus Ciste) called and examined.

Vote 9: Revenue Commissioners (Resumed).

Chairman: The Department of Finance has now agreed to the appointment of a solicitor. We will not detain the chairman for long. We will also discuss whether the Central Bank should report to the Revenue Commissioners.

Mr. Cathal MacDomhnaill, Chairman, Office of the Revenue Commissioners, called and examined.

Mr. Noel Kerins, Department of Finance also present.

Chairman: I welcome Mr. Mac Domhnaill. Perhaps he will introduce his officials.

Mr. MacDomhnaill: I am accompanied by Ms Josephine Feehily, the Accountant General; Mr. Dennis Power, a principal officer in Corporate Management Division and Mr. Paddy O’Shaughnessy, an assistant principal in the same Division.

Chairman: It appears agreement has been reached between the Department of Finance and the Revenue Commissioners on the appointment of a new prosecuting solicitor. Are the Revenue Commissioners happy with this?

Mr. MacDomhnaill: Yes.

Chairman: What does it mean for the Revenue Commissioners in terms of prosecution?

Mr. MacDomhnaill: It means that the Revenue Solicitor will be able to reorganise appeals, other types of litigation and prosecution. There will be one stream - a first assistant solicitor, a second assistant solicitor and a third assistant solicitor - which will deal with prosecutions on the customs and inland revenue side and will liaise with the DPP and investigators to condense the process and eliminate delays.

Chairman: Will there be co-ordination of prosecution and the Revenue Commissioners and consultation with the DPP?

Mr. MacDomhnaill: Yes.

Chairman: Will we see more speedy prosecutions?

Mr. MacDomhnaill: We hope to achieve the elimination of delays, which caused the loss of a number of prosecutions since 1991, by telescoping the process.

Chairman: It will be interesting to see how that has worked in six month’s time and perhaps we will take note of that.

Mr. MacDomhnaill: The results will be included in our annual report.

Chairman: I am glad that is progressing and I thank the Department of Finance for their help.

On the issue of the Central Bank, the brunt of its note is that the present relationship is prudent - where they have confidential information about commercial bank accounts. If that confidentiality is breached the overall impact on the public interest will be negative. Is that a correct summary?

Mr. MacDomhnaill: It is not our area of activity but a balance must be struck between Revenue powers on the one hand and economic essentials on the other. In the Central Bank’s note it is suggested there must be parity of power and disclosure across the EU as Central Banks begin to merge and control a central European currency.

Chairman: Is there a danger that the EU has got this wrong and under a veil of confidentiality we are allowing a major loophole for tax evaders and criminals?

Mr. MacDomhnaill: Criminals and money-laundering are a matter for the police who have strong powers to access banking information. There are also reporting requirements put on the Central Bank and the banking system in relation to any transactions which might be regarded as in that domain.

Chairman: I know money laundering is exempt and there is a method of pursuing that. However, there is a psychological problem in treating tax evasion as a crime, which it is. I am anxious that we are seen to apply the law and pursue it as a crime. This is one of the reasons we strongly supported the Revenue Commissioners having a prosecution solicitor appointed. Is the Central Bank, because of the confidentiality requirement, aware of tax evasion and crime but not permitted to report it to Revenue?

Mr. MacDomhnaill: They are not permitted to report it to us under tax and banking legislation. What they know after that remains a matter of conjecture.

Deputy Foley: It says in the note that if the Central Bank has evidence of tax evasion it will disclose it to Garda authorities and can give evidence as required by a court in the event of criminal proceedings.

Chairman: Am I right in saying that is if it is approached by the gardaí?

Mr. MacDomhnaill: That information can be given to the gardaí for that purpose only.

Chairman: That is only if the gardaí go to the Central Bank when investigating a crime and ask if it has evidence about a particular person.

Mr. Mac Domhnaill: No. I think it goes beyond that. There is a proactive element.

Chairman: In other words they must report to the Gardaí if they become aware?

Mr. Mac Domhnaill: Yes.

Chairman: Why did they not report anything about the Ansbacher accounts to the Gardaí?

Deputy Ardagh: The note says that the bank is obliged to report to the Garda Síochána a suspicion that an entity is money laundering. Money laundering includes tax evasion. It is interesting to note, at the bottom of that paragraph, that in the two and a half years since the Criminal Justice Act came into force no evidence of money laundering or criminality relating to tax matters has been found by the Central Bank. Have the Revenue authorities expressed to the Central Bank the public concern about the Ansbacher accounts? Are they aware of any other body, for example the Department of Finance, which has expressed this public concern to the Central Bank? Taking this public concern into account, did the Central Bank take a proactive approach in looking for evidence in those cases of tax evasion?

Mr. Mac Domhnaill: We have not put any questions such as that to the Central Bank. We were involved in the McCracken Tribunal. We have seen the terms of reference for the Moriarty Tribunal. It is quite clear from those terms of reference that the issue of the powers of the Central Bank will be the subject of examination. I do not think the Central Bank need the Revenue Commissioners to draw their attention to this matter.

Deputy Ardagh: It is a very important item. It seems strange that a definitive statement has not come from the Central Bank or from the Department of Finance to say that, in their view, there is no evidence of tax evasion in relation to accounts which have come into the public domain.

Mr. Mac Domhnaill: You must have regard to the fact that any information disclosed to a tribunal does not constitute evidence for another purpose. Evidence is needed for a prosecution. Any information which has come to light as a result of a tribunal does not constitute evidence either for us or for the Central Bank.

Deputy Ardagh: Are you of the opinion that the Central Bank has taken on board the public concern in relation to the Ansbacher accounts? Are you of the opinion that if there was evidence of tax evasion it would have come to the notice of the Gardaí? The Gardaí would, presumably, then inform the Revenue Commissioners of evasion.

Mr. Mac Domhnaill: The information which the Gardaí can give us is not without limitation. The Gardaí have their own sources of information which they must protect. When you deal with criminal prosecutions you have to be aware of all the niceties of the legal process. I would not think there is any great flow of information from the Gardaí in that area. Their prosecutions generally go into open court and any information which comes from that will be published in the ordinary way. I do not see a need for the Gardaí to have a system of reporting to us. The information will only come to light in the prudent conduct of a case when it is presented in court. Any disclosure beforehand could compromise the whole action.

Deputy Ardagh: Are you of the opinion that if there was evidence of tax evasion within the Ansbacher accounts it would have, by this time, bubbled up to the surface and would be in the public domain? Would the system have allowed tax evasion related to the Ansbacher accounts to come to public notice?

Mr. Mac Domhnaill: I do not think people dealing with the banking transactions could draw any conclusion about tax evasion. They do not know the extent to which we have already dealt with those transactions. Many of the transactions may already be in business accounts which have been examined by us. It is only when the information becomes available to Revenue that you can say if a transaction represents a means of tax evasion.

Chairman: We will leave it at that. I propose that we send the note from the Central Bank to the Department of Finance and to the Department of Justice and ask them to consider if the balance of the law as it stands in these matters is correct or if any revision is justified. Thank you Mr. Mac Domhnaill and we wish you and your staff a happy Christmas. I hope you are even more successful in 1998.

Mr. Mac Domhnaill: I wish you every success.

The witness withdrew.