Operations of Guinness & Mahon to be wound down

Irish Life and Permanent is to wind down Guinness & Mahon, its private banking subsidiary which is at the centre of the ongoing Ansbacher account scandal. The 164-year-old bank has quietly closed its office on St Stephen's Green in Dublin and transferred operations to the nearby head office of Irish Permanent.

The business of Guinness & Mahon, which is centred on providing banking services and investment advice to high net worth individuals will be incorporated into Irish Permanent's private banking operation, said a spokesman yesterday.

Irish Life and Permanent continues to hold a separate banking licence for Guinness & Mahon but will not be writing any new business under the Guinness & Mahon name, the spokesman added.

Guinness & Mahon, was originally a subsidiary of Guinness Mahon & Co, the London bank run by an arm of the Guinness brewing family and has had a presence in Dublin since 1836. For many years it occupied an impressive banking hall fronting onto Dame Street in central Dubin.

Following its takeover by Irish Permanent in 1994 for £6.7 million it moved to a new £3.4 million premises on St Stephen's Green.

At the time of the takeover, Mr Roy Douglas, the chief executive of the building society said that it was prepared to pay a premium over net assets of £5.5 million for the bank because it wanted to use the Guinness & Mahon name as "a vehicle for future expansion in the niche private banking market".

A few years later in 1998 it emerged that the bank had been central to the operation of a massive tax evasion scheme for wealthy Irish people masterminded by Mr Des Traynor, its former executive chairman. Mr Traynor, an accountant, had effectively taken control of the bank after he joined the board in 1969 and elbowed out John Guinness and his partner Sir George Mahon, both descendants of the bank's founders. Under Mr Traynor selected clients of the bank were offered access to a sophisticated tax evasion scheme.

They lodged their money with Guinness & Mahon's offshore subsidiary Ansbacher Cayman, where it was safe from Irish tax, but had access to it in Dublin via Guinness & Mahon through a number of mechanisms including bank loans. Mr Charles Haughey, the former Taoiseach, was one of the individuals who availed of the facilities offered by Mr Traynor.

Following the exposure of the Ansbacher scheme by the McCracken tribunal, the Revenue Commissioners began an investigation of the bank as did the Department of Enterprise and Employment.

A report on the bank from the Department's inspector, Mr Gerard Ryan is expected shortly and the Tanaiste, Ms Harney, may seek the appointment of a High Court inspector on foot of it.