Mr Kyran McLaughlin, the joint managing director of Davy Stockbrokers, who resigned from the board of the company yesterday, paid about £250,000 into a Liechtenstein-based trust for his children in 1986, the Irish Times has learned.
This investment is now the subject of discussions with the Revenue Commissioners. But Davy - a subsidiary of Bank of Ireland - has emphatically denied that the company itself either promoted or participated in any of the offshore schemes which have embroiled it in controversy.
Mr Tony Garry, Davy joint managing director, said last night: "I'd like to make it clear that Davy Stockbrokers did not participate in or promote any so-called tax schemes at any time in the past or the present. We have a wide customer base throughout the country who can attest to that."
The Liechtenstein tax scheme in which Mr McLaughlin personally invested £250,000 - about £340,000 in today's money - was devised for Davy itself in 1984. In that year the owners of the broking firm, including Mr McLaughlin, were preparing to sell 29 per cent of the company to the American bank Citicorp for an estimated £5 million.
Davy did not proceed with the Liechtenstein scheme and says all appropriate tax was paid to the Revenue Commissioners.
But two years later Mr McLaughlin decided to invest £250,000 of his after-tax income in the Liechtenstein scheme for the benefit of his children. It is understood that the proceeds of this trust have not yet been distributed.
In a statement announcing that he was resigning as joint chief executive and as a board member at Davys - but was remaining as an employee - Mr McLaughlin said that he was in contact with the Revenue Commissioners to resolve outstanding tax issues.
It is understood that these discussions with the Revenue have got under way only in the past week, since Mr McLaughlin and Davy were first linked with the Ansbacher Cayman and Liechtenstein tax schemes. The discussions are understood to centre on whether income from the funds deposited in the Liechtenstein trust was declared to the Revenue for tax purposes, while there may also be questions to be answered about possible breaches of exchange control regulations.
These links became public only after a person with access to Mr McLaughlin's personal papers gave relevant documents to the Moriarty tribunal and to the media. Mr McLaughlin was interviewed by the tribunal's legal team last Friday about a document prepared for Mr John Furze, the late Cayman Islands banker who was central to the operations of the Ansbacher deposits.
Mr McLaughlin is understood to have denied being its author.
"I have taken this decision [to step down] because it has come to my attention that a number of my personal papers from the 1980s have been distributed to the media and to other parties. This has resulted in my being invited to meet the Moriarty Tribunal in relation to the John Furze document, which I did not write.
"It has now come to my attention that other documents were also circulated to the media. These include details of the establishment by me of a family trust for the benefit of my children, contributions to which were out of after-tax income.
"I am in contact with the Revenue Commissioners to resolve outstanding tax issues, if any, which may have arisen from this arrangement or any other matters," he said.
Mr Garry told RTE News last night that Mr McLaughlin had difficult family circumstances around which the issue revolved. Mr McLaughlin was not available to comment beyond his brief statement.
This is the second financial controversy in which Mr McLaughlin has been involved in the past seven years. In 1992, Davy was involved in selling 25 million Greencore shares held by the State for £70 million.
But when it emerged that Davy could find buyers for only 17.5 million of the shares, rather than inform the Stock Exchange, Mr McLaughlin and three of his colleagues in Davy - Mr Brian Davy, Mr David Shubotham and Mr Garry - bought 4.5 million of the unsold shares themselves.