The Clerical Medical Insurance (CMI) personal portfolios sold by Ms Beverley Cooper-Flynn were particularly designed for non-residents, her former superior at National Irish Bank told the High Court yesterday.
Mr Nigel Darcy, former head of the financial advice services division within NIB, said there was some debate at the time as to whether the CMI product was to be sold to residents but the product itself was not designed for residents.
Asked why he thought the CMI personal portfolios were designed for non-residents, Mr Darcy said this policy was introduced in place of the Emerald International policy which itself had been for non-residents.
Mr Darcy, who headed the financial advice services division within NIB from 1989 to 1998, agreed he had written a memorandum to his financial services managers in November 1994 which instructed them to "never ever" give the impression to customers that the bank, directly or indirectly, condoned or promoted tax evasion.
He was not sure why he put this in, he said. In the same memo, he told staff any matters which caused them distress or alarm should be brought to his attention. He was talking about money-laundering. Ms Cooper-Flynn had not come to him with any matters of worry.
He was giving evidence on the 19th day of the Fianna Fail TD's action alleging libel in a series of RTE programmes. Ms Cooper-Flynn claims the words used in the broadcasts meant she had instigated a scheme intended as a means to evade the lawful payment of tax. She has sued RTE; journalist Charlie Bird and a retired farmer, Mr James Howard. On several occasions while giving evidence yesterday, Mr Darcy indicated he did not wish to answer certain questions from Mr Kevin Feeney SC, for RTE, because he feared his answers might incriminate him.
Mr Feeney referred to an internal memo from CMI dated September 28th, 1994. When he asked if this included Mr Darcy's handwriting on the front page, Mr Darcy said he did not want to answer that question. He believed it could incriminate him.
The judge allowed the question and Mr Darcy confirmed it was his handwriting. The handwritten note said: "Bev - for info. This case has taken up a considerable amount of admin's and my time. I've managed to sort this case out."
He sent a copy of this CMI memo to Ms Cooper-Flynn. In one section, it was stated CMI had been put on notice both by the bank and the family of a CMI policy-holder that the Clerical Medical policy proceeds represented undeclared funds.
According to the memo's author, this meant the money had not been and was not intended to be declared to the Revenue.
One of the objections to the personal representatives (of the policy-holder) in dealing with the policy was that it or its proceeds would form part of the estate which would be valued for Revenue purposes, and the memo's author assumed this would cause a tax liability.
The memo stated: "The intention in asking CMI to pay the money to the `nominated beneficiaries' and to take this somewhat unorthodox route is to ensure that the policy proceeds remain undeclared monies and that the Irish Revenue are not informed.
"It seems to be that this may amount to an attempt to defraud the Irish Revenue. Therefore, in CMI agreeing to pay the `nominated beneficiaries' in the manner suggested, and in taking the indemnity from the bank, CMI facilitates this process.
"Accordingly, I am concerned that CMI may therefore be guilty of aiding the commission of an offence. Whilst we may certainly be relieving the embarrassment on the part of one of CMI's premier distributors, if this matter became public and the Irish Revenue decided to take action, CMI's reputation would, I think, be called into question. I would urge you to consider the matter carefully.".
Mr Darcy said he could not recall what his reaction was to the memo, although it was likely he would have discussed it with people elsewhere in NIB. He had sent the CMI internal memo to Ms Cooper-Flynn so she could be informed the is sues had been sorted out.
He was in NIB when matters relating to the CMI personal portfolios came into the public domain in 1998 and for some months afterwards. NIB allocated considerable resources to deal with the problem and set up a separate unit to deal with inquiries. Files were impounded and they did not have access to them for some months.
The case continues today.