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Naming names

February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN — An exclusive clique within the country’s Golden Circle who had hundreds of millions of pounds concealed in the notorious Ansbacher Accounts are set to have their dodgy dealings exposed by court-appointed inspectors in a process that is expected to see them all publicly identified for the first time.

Led by former president of the High Court Declan Costello, the three inspectors have been appointed by the High Court to investigate the accounts and attempt to unravel what may turn out to be the country’s biggest-ever tax scam.

Also closing in are the Revenue Commissioners, who already have the list of names of those involved.

The taxmen are anxious to dispel the damage to their credibility as a result of the picture of them that has emerged in other scandals as toothless pussycats with a softly-softly approach to wealthy rogues whose arrogant attitude was that taxes were for other people to pay.

About 120 of the Ireland’s richest people had their cash in the private, illegal Ansbacher banking system run by accountant Des Traynor, the former financial advisor to disgraced ex-Taoiseach Charlie Haughey.

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The existence of the accounts emerged two years ago when the tribunal headed by Judge Brian McCracken was investigating Haughey’s affairs. It found money from businessman Ben Dunne was laundered through them to pay for the former taoiseach’s lavish lifestyle.

At that time, however, the accounts were believed to hold about _38 million and involved just a small number of Traynor’s cronies, whose identities were concealed by codes on his special computer software and off-ledger accounting records.

Now in a new development, the High Court has been told that a government official who has been probing the accounts on behalf of Tanaiste Mary Harney estimates that 10 times the _38 million may have been salted away, and that McCracken had only found the tip of the iceberg.

The evidence available so far suggests a carefully designed conspiracy to cheat the taxman a number of times over. Traynor looked after his close-knit clientele for 20 years without any banking license. One transaction alone involved more than _15 million.

The sheer scale of the money sloshing around in the Ansbacher Accounts and the small number of so-called pillars of society involved means the scandal is overshadowing the ongoing DIRT tax-evasion Dail committee hearings and payments-to-politicians tribunals.

These scandals have already caused widespread anger and shaken public confidence in the honesty of business, banking, politics and public servants.

The new revelations could not have come at a worse time for the government as it attempts to negotiate a pay deal based on consensus and equity. The apparently elaborate frauds have prompted a furious reaction from trade union leaders. Their members carried the pay-as-you-earn (PAYE) burden of tax when others used tailor-made schemes to evade it on a mega-scale.

Harney has been hinting for some time that major revelations were in the pipeline as she received reports from Gerard Ryan, an authorized officer from her Enterprise and Employment Department investigating the Ansbacher Accounts.

She said that many people involved in the accounts had refused to cooperate with Ryan when he had been drawing up his report. It had been established that “very serious wrongdoing had occurred. Many efforts were made to frustrate the inquiry over the last two years.”

“There are some very serious matters there that even a former tribunal inquiry wasn’t even aware of.” Harney said she was surprised by the scale of the tax evasion uncovered and there also appeared to be breaches of the companies acts and currency exchange regulations.

Taoiseach Bertie Ahern and Finance Minister Charlie McCreevy have quickly moved to reassure the public that they have “no difficulty” with seeing those found guilty of tax fraud going to jail.

The opposition parties have also expressed alarm. Fine Gael deputy leader Nora Owen described the revelations as “mind-blowing” and Labor Finance spokesman Derek McDowell said it was “absolutely outrageous” that there was a corrupt clique of people who felt they were above the law.

There have been suggestions that some of those involved may have availed of the 1993 tax amnesty. Des O’Malley, former leader of Harney’s Progressive Democrats, wants consideration given to a row-back on the “absolutely disgraceful” amnesty that allowed people to wash their “hot” money back into legitimacy by paying just 15 percent tax.

“I think the Dail should now consider whether or not that amnesty should be set aside in the light of what we now know,” he said. Trade union leaders have accused the Revenue Commissioners of acting “like the three brass monkeys” in the past and called for a refund for indignant taxpayers who were compliant and jail for the evaders.

Powerful inspectors

The appointment of the three inspectors steps up the Ansbacher probe. They have greater powers to subpoena witnesses and documents than Ryan had as an authorized officer.

The inspectors can question people on oath, require them to answer, and their findings are normally published under the protection of the privilege of the court. The court can then refer their findings to the Director of Public Prosecutions office.

Traynor initially operated from the Guinness Mahon Bank and, from 1987 onward, from the offices of Cement Roadstone Holdings.

Traynor was non-executive chairman of CRH and the court was told that in 1987 eight of the 15 members of the board were beneficiaries of Ansbacher deposits.

CRH, now the country’s biggest and most successful industrial concern, has sought to distance itself from the Traynor banking sideline.

“The Board of CRH Plc has never knowingly permitted or facilitated any illegal activities to be conducted by any director or employee from any of its premises,” according to a statement pledging to cooperate with the inspectors.

Traynor, who died of cancer in 1994 at 63, appears to have operated a sweet deal for his clients.

The accountant, who wrote a paper, “Towards Minimizing the Footprints,” dreamed up a win-win-win scheme for his clients in his banking mini-empire. In turn, he earned a substantial income for operating it on their behalf.

The money was hidden offshore from the Revenue in Ansbacher (Cayman), some of it in discretionary trusts. In practice, the money never really left the country for the secretive banking haven of the Cayman Islands. Clients could draw on unidentified funds deposited by Traynor in Irish banks.

Traynor also provided so-called “back-to-back” loans on which clients could claim tax relief again. The tax-avoiding money “offshore” was used to guarantee the loans involved with the result that the Revenue Commissioners suffered a double hit. If the money was “hot” — untaxed before it was deposited in the first place — the taxman was suffering a triple whammy.

Those eventually found guilty of evasion will face demands for back taxes, interest on the back taxes and penalties. What they will end up paying will be many multiples of what they originally stashed in Traynor’s made-to-measure credit union for the very rich.

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