MICHAEL Lowry's resignation statement gave the first clue to his defence, when it said the cheque from Ben Dunne was part of a "credit facility". In plain terms Mr Lowry says it was a loan.
Sources close to the former minister point out that Ben Duane used to enter special "exclusivity" arrangements with suppliers. Under these, loans were sometimes advanced, with the idea that they would be repaid later from bonuses paid by Dunnes to its suppliers. In return Mr Dunne demanded that these suppliers deal exclusively with him.
The former minister is thus saying that the deal was not a straight "contra" deal, under which Dunnes paid for his extension in return for refrigeration work carried out by his company, Streamline Enterprises. Such a deal would raise very clear tax questions for both parties.
However, Mr Lowry says the money paid by Dunnes Stores was a loan. His statement indicates that arrangements to repay this loan have not been made because discussions between Dunnes and Streamline on how much Dunnes owes Mr Lowry's company have not concluded.
There are still questions to be answered about the transaction. The central one is why the money was advanced to Mr Lowry personally, rather than to his company. Was interest charged on this loan? And why has the whole deal taken so long to sort out between Streamline and Dunnes following Mr Ben Dunne's departure from a management position?
The whole treatment of Mr Dunne's unusual bonus arrangement from a tax point of view also needs to be clarified. Presumably the bonuses paid were fully declared for income tax. And what was the impact on Dunnes Stores' own VAT payments? Work charged as a business expense is VAT deductible, but the work conducted on Mr Lowry's personal residence would not have been.
Mr Lowry has already spent considerable time with his accountants working out the details. He has promised to provide full answers in a matter of weeks.
Dunnes Stores' business allowed Streamline to build up a turnover of about £5 million a year, making profits of around £0.5 million. The continuation of this refrigeration business from Dunnes' current management is crucial from Mr Lowry's business point of view and from the point of view of Streamline Enterprises.
