Up to seven more investors in the Clerical Medical International (CMI) investment scheme offered by National Irish Bank (NIB) are expected to face prosecution for tax evasion. Mr Brendan Galligan's case was the first to be heard in court with other cases expected in the coming months.
To date, the Revenue Commissioners has collected €36 million from 358 individuals who invested in the scheme. The settlements include the payment of whatever taxes were owed on the money originally invested in this scheme together with hefty interest charges and penalties.
Like many of the other more than 400 investors in the CMI scheme, Mr Galligan is suing NIB for advising him to put funds into the unauthorised scheme through which monies were invested by the Isle of Man-based company. His solicitor told Judge Conal Gibbons that his client felt NIB had "led him up the garden path" and was pursing a civil action against the bank. But if he had hoped this would in some way mitigate his wrongdoing, he was mistaken as Judge Gibbons ruled that this information was not relevant to the case. Many of these investors are pursuing legal action against the bank claiming it mis-sold these investment products.
NIB has made provisions for compensation payments to these customers of €18 million, about €38,000 each. This is exactly half the amount collected so far and is unlikely to prove significant in offsetting the large tax liabilities facing these investors.
NIB's role in offering this scheme which customers used to evade tax is being investigated by two High Court-appointed inspectors, Mr Justice John Blayney and Mr Tom Grace.
They have the power to investigate the role of NIB staff in the issuing of these investments, which were insurance policies from CMI. They will consider the purpose for which these policies were sold and the identity of the individuals who sold them.
Regardless of its outcome, individuals who used this scheme to evade tax now have to face the Revenue Commissioners and pay the money now being demanded. Some may recover funds that will partly offset their financial loss, but the Revenue is interested only in recouping lost taxes and will not entertain excuses about receiving bad advice.
Yesterday, Mr Galligan pleaded guilty to two counts of tax evasion. He must settle his affairs with the Revenue in full and will have to wait until at least March or later to find out whether he will face a €12,069 fine and or 12 months' imprisonment.
