The head of the Central Bank's banking supervision conceded yesterday that a reference to tax avoidance contained in a confidential report on Guinness & Mahon could more accurately have been described as tax evasion.
Mr Adrian Byrne was responding to Mr Jerry Healy SC, for the tribunal, who put it to him that that in reports of this kind the two terms appeared interchangeable.
He referred to a paragraph in an internal Central Bank memo on Guinness & Mahon where the word "evasion" had been scratched out and replaced by "avoidance". Mr Byrne said "evasion" was the word that both he and his fellow inspector, Mr John Rockett, had agreed on when compiling their examiners' report on Guinness & Mahon for the Central Bank. The report's reviewer, Mr Bernard Daly, however, had changed it.
Documents held by the Central Bank showed that loans were being made by Guinness & Mahon, secured by cash deposits in Guinness Mahon Cayman Trust and Guinness Mahon Channel Islands.
From the information they were given, the Central Bank inspectors decided that these were "normal back-to-back arrangements". However, given the degree of extreme secrecy involved to keep these activities from the Revenue Commissioners, they concluded that Guinness & Mahon could be party to tax evasion, or tax avoidance schemes.
The Central Bank could find itself "in a very embarrassing position", its officers concluded, "should the Revenue authorities ever become aware of the situation".