Former AIB chief executive Mr Gerry Scanlan, who was named as one of the beneficiaries of an offshore company that was found to have breached tax law, has said the money invested in the company belonged to his wife.
He is the second top-ranking executive to confirm a link with the Faldor offshore fund. It came as the Revenue Commissioners said yesterday that it had begun a full investigation of all tax matters arising from recent disclosures regarding the AIB group and related entities and individuals.
In a statement, Mr Scanlan said he and his wife had found themselves to be "indirect and unknowing" beneficiaries of Faldor, the British Virgin Islands-registered company that was managed by AIB Investment Managers. This investment had resulted in an "unexpected" tax liability, he added.
"Until contacted by AIB compliance staff in relation to this matter in October 2003, neither my wife nor I had ever heard of Faldor Limited and we were unaware of any of its activities".
The statement added that as far as the Scanlans were concerned, their funds were placed with AIBIM "in good faith" to be managed in a proper and lawful manner in a taxed fund.
Mr Scanlan said they have since made a full payment to the Revenue Commissioners in respect of all tax, interest and penalty liabilities.
Another beneficiary of Faldor, the outgoing chairman of Irish Life & Permanent, Mr Roy Douglas, has said that he was "invited" to join the scheme once he joined AIB's senior ranks.
He said he had regarded this opportunity as a "benefit" of his senior position at the bank and understood that it had been in existence for some time. AIB said last week that this scheme had operated between 1989 and 1996 to the benefit of five former senior executives who they refused to name.
The other beneficiaries were AIB former deputy chief executive, the late Mr Patrick Dowling; the bank's former director of strategy, Mr Diarmuid Moore; and Mr David Cronin, the former AIB executive who worked at its Allfirst Bank in Baltimore, Maryland.
When this scheme was investigated, AIB disclosed that five other senior AIB executives were discovered to have invested in unrelated schemes that also breached tax law. Another former chief executive, Mr Tom Mulcahy, was one of the beneficiaries of these arrangements.
Yesterday, Mr Mulcahy, resigned as a director of the Cavan-based building materials company, Kingspan, in light of the controversy. At the weekend he resigned his position as chairman of Aer Lingus.
The publicly-quoted fruit company, Fyffes, where Mr Scanlan, is a director has said that he will remain on the board for the foreseeable future.
Mr Douglas' claims suggested that such schemes were routinely offered to AIB's senior executives, and may have existed before 1989, the date on which Faldor became active.
Yesterday, AIB confirmed that its investigation did not examine any possible tax evasion vehicles used by the bank's top executives before 1989.
IFSRA, which last week indicated that its investigations into these matters were virtually complete, said it would be examining all issues that have now been raised.
AIB chief executive Mr Michael Buckley, who was attending a function in Dublin last night, refused to comment on the revelations.
The Revenue Commissioners said its investigation will be led by its investigations and prosecutions division and will include officers from the large cases division.
Notwithstanding the revelations, AIB shares rose 2.3 per cent in Dublin yesterday to €11.87 with the bank braced for the reaction of overseas investors when world stock markets open today.
Meanwhile, Bank of Ireland shares were also stronger in Dublin, rising by 3.6 per cent to €10.45. The bank's directors met yesterday to consider the appointment of a successor to Mr Michael Soden, who resigned as its chief executive.
Bank of Ireland is expected to appoint an insider to replace Mr Soden, with senior executives Mr Brian Goggin and Mr Des Crowley said to be the leading contenders. Mr Soden resigned after he was found to have visited a website that had links to material of an adult nature that breached the bank's Internet policy.