An investigation by the Revenue Commissioners into "a scheme of tax evasion" involving Dunnes Stores is likely to lead to prosecutions, a tax inspector said yesterday.
Mr Brendan Crawford, a member of the Revenue's investigation branch, said misleading invoices issued by Kildare construction firm, Faxhill Homes Ltd, were part of a tax evasion scheme. The invoices were issued to Dunnes Stores. While the documents described the work by Faxhill Homes as being on business premises belonging to Dunnes Stores, the work was in fact carried out on the homes of Mr Ben Dunne and Mr Michael Lowry. The payments, totalling £1.4 million (€1.78 million), were made by Dunnes Stores Ireland Co in 1992 and 1993.
Asked who put the scheme in place Mr Crawford told Naas District Court he was involved in an ongoing investigation "and it is likely there will be proceedings".
He was giving evidence on the sixth day of a case where the Minister for Enterprise, Trade and Employment, Ms Harney, has brought 26 charges under the companies acts against Faxhill Homes and its directors Mr John Tierney and Ms Jennifer Tierney. The accused have pleaded guilty to a further three company law offences. Mr Crawford was asked by Mr Colm P Condon, for Faxhill, whether he agreed with authorised officer to Faxhill Homes, Mr George Maloney, that Dunnes Stores had issued instructions as to how the invoices should be filled out.
"It was a very unequal relationship," Mr Crawford said. "It appeared that if Faxhill Homes and Mr Tierney wished to get paid they were required to issue invoices in that form, but that doesn't take from the fact that the invoices were incorrect."
The court heard the Revenue has taken possession of files belonging to Faxhill Homes, Peter Stevens & Associates, Eugene Beglan & Associates, quantity surveyors engaged by Dunnes Stores, and Dunnes Stores.
It was also stated that Faxhill Homes issued an invoice to Mr and Mrs Charles O'Brien. Mrs O'Brien is a daughter of Ms Margaret Heffernan. There was no inference that the invoice was anyway untoward.
The court heard that invoices describing work as having been carried out for Dunnes Stores Ilac Centre and Newbridge Foods, both part of the Dunnes group, were sent to Dunnes Stores former chief accountant Mr Michael Irwin. The court also heard that covering letters identified the work as having been carried out on the homes of Mr Dunne and Mr Lowry.
Mr Crawford said that looking at the Faxhill files with his "tax inspector's hat on", he had to conclude the invoices were part of a tax evasion scheme.
He said the method whereby Faxhill was paid by Dunnes Stores was "unusual to say the least". There was a "very loose arrangement" between the quantity surveyors on both sides, Eugene Beglan & Associates and Mr George Fitzpatrick. When Faxhill needed to be paid the two quantity surveyors would agree a price. The invoices and architect's certificates would then be sent to Dunnes Stores.
In substantial building transactions such as the ones being considered it was usual for the cost to be agreed in advance, he said.
The court heard no contracts were ever drafted between Dunnes Stores and Faxhill Homes despite the firm doing business worth more than £6 million for Dunnes Stores. The case continues today.
