A former Central Bank investigator who examined Guinness & Mahon in 1988 was not informed about the Central Bank's earlier concerns about the merchant bank, the tribunal has heard.
Ms Ann Horan, who investigated Guinness & Mahon as a junior investigator in 1986 and as a senior in 1988, said when she first found evidence of back-to-back loans, she raised the issue with her superiors, only to be told they were aware of the situation.
Back-to-back loans were loans which were backed by funds in offshore deposits, mostly the Cayman Islands.
In 1978, the Central Bank had requested Guinness & Mahon not to issue any more such loans to Irish residents, because it suspected the loans were part of a disreputable tax operation. Guinness & Mahon gave a commitment to accede to the request, but secretly continued to issue such loans.
Ms Horan, who is now managing director of Commercial Finance with the Bank of Ireland, told the tribunal she had limited recollection of the 1988 inspection, although she remembered more clearly the investigation in 1986.
She said she was not aware of a sensitivity regarding Guinness & Mahon, or of any reason to protect it.
Before undertaking the 1988 investigation, Ms Horan told the tribunal she read the 1986 report, as well as recent correspondence. She said she was not informed about the Central Bank's unease about the back-to-back loans in the 1970s.
During the 1986 investigation, she noticed back-to-back loans to non-residents. She said the existence of such loans made "an impression" on her and created some concerns, including matters to do with exchange control.
When she informed her superiors of her concerns with the back-to-back loans, she was told the matter had "already been discussed with the general manager of Guinness & Mahon".
If she had known about the loans before her investigations, "it would have been very helpful", she said.
She disagreed with evidence given by her former colleague Mr Terence Donovan. She said she never ignored his stated concerns or deliberately kept information out of the inspection report.
She said she was not surprised Mr Donovan found the back-to-back loans significant, but was surprised by the extent of his follow-up efforts.
Mr Donovan's evidence was "not consistent with the conduct of the investigation" as she remembered it. Furthermore, his language, where he said she "instructed" him in work matters, was unlike her usual working methods.
Ms Horan referred to comments by Mr Kevin Feeney SC, for Guinness & Mahon, who had said the 1988 examination of Guinness & Mahon took place in a context where the Central Bank had a very real fear the bank would fail. Ms Horan said she felt this was over-emphasised.