Tax breaches: Some of AIB's most senior executives were among the beneficiaries of Faldor Ltd, the offshore investment company being investigated for breaches of tax law, writes Siobhán Creaton, Finance Correspondent.

Mr Gerry Scanlan, who was the bank's chief executive between 1985 and 1994, was a beneficiary of monies invested in the British Virgin Island-registered company that was a client of AIB's investment management division between 1989 and 1996.

Mr Scanlan appeared before the Dáil Public Accounts Committee investigation into tax evasion in 2000 that was facilitated by the bank through bogus non-resident accounts it opened for its customers.

He told the committee that he knew nothing about AIB's potential DIRT tax liability.

AIB subsequently made the biggest tax settlement in the history of the State after reaching a £90 million (€114 million) settlement with the Revenue Commissioners.

His deputy chief executive, Mr Paddy Dowling, was also one of the senior executives who benefited from the funds invested in Faldor.

Mr Dowling was a former manager of Allied Irish Finance and of Allied Irish Investment Bank.

Mr Diarmuid Moore, the bank's former director of corporate strategy, who retired in 1993, was also linked to Faldor.

These three men were among AIB's most senior executives at that time and were also members of its board of directors.

Another beneficiary was Mr Roy Douglas - who last week announced that he was retiring as chairman of Irish Life & Permanent with effect from June 3rd - joined AIB in 1974 after a 17-year career at the Central Bank of Ireland, the then regulatory body for the financial services industry.

Mr Douglas was appointed by Mr Scanlan as the bank's treasurer in 1981 and in 1989 he moved to the UK where he headed AIB's operations there.

In 1991 he was headhunted to take over the chief executive's role at Irish Permanent and to prepare to transform it from a mutually owned building society to a publicly quoted company.

Irish Permanent floated on the Irish Stock Exchange in 1994.

It was later taken over by Irish Life and Mr Douglas became chairman of the company in 2000.

The fifth beneficiary was Mr David Cronin, the treasurer at AIB's former US subsidiary, Allfirst and who was dismissed from the bank following the investigation into the $691 million (€566 million at today's exchange rates) foreign exchange fraud perpetrated by his colleague, Mr John Rusnak, in 2002.

Mr Cronin, who had worked with Mr Douglas at the Central Bank before joining AIB, moved to the US in 1989.

AIB has stated that some €750,000 was invested in Faldor between 1989 and 1996.

It benefited from what the bank has described as "inappropriate deal allocation practices" to the tune of €48,000 at the expense of the bank's own in-house funds.

Mr Tom Mulcahy, the current chairman of Aer Lingus, who succeeded Mr Scanlan as group chief executive of AIB in 1994, was among the second group of five executives who were found to have "tax issues" in relation to other unrelated investments.

Mr Mulcahy yesterday said that he had no prior knowledge of, or involvement in the investment scheme "outlined in AIB's Group statement of May 27th".

He said he was "fully tax compliant".

Mr Mulcahy added that it would be "wholly inappropriate" of him to comment in any way as the issues were being addressed by AIB Group and the relevant authorities.

Three of the other individuals whose activities came to light on foot of an AIB investigation into Faldor are still working at AIB and are involved in a disciplinary process that has been sanctioned by the board of directors.

Mr Mulcahy is understood to have been the highest ranking member of the organisation to have been identified as having tax problems separate to the Faldor issue.

The three current executives are believed to be within the senior management ranks but below the top management team led by chief executive Mr Michael Buckley.

The fifth individual has left the bank.