Old Soldiers of Destiny don't fade away, they just come back to spoil the party. On Wednesday, Fianna Fail woke up to its 75th birthday only to find that Ray Burke had come back like an unwelcome ghost to grab the headlines from his former colleagues.
Once again, Burke's ever-so-close relationship with his builder friends Tom Brennan and Joe McGowan was under the microscope. This was a story that was first written about before Fianna Fail even reached its 50th anniversary, and it's still news today.
In 1974, the Garda Fraud Squad interviewed Burke over a newspaper claim suggesting he had received a payment of £15,000 from Brennan and McGowan. No prosecution resulted, but 27 years later, the same allegation has resurfaced at the Flood tribunal.
Burke is suffering death by a thousand cuts, with the harshest attacks coming at the end of his marathon run-in with the tribunal.
He came through the Gogarty and Century modules without losing his usual ebullient self-confidence, but on his personal finances, he has been run ragged. After an extraordinary retraction of earlier evidence, and further damaging revelations from the tribunal this week, Burke will have serious questions to answer when he takes the stand shortly for a fourth time.
But the issues raised this week are bigger than just one man, even if he was a senior politician. After all, Burke hasn't been a minister now for over 3-1/2 years. Brennan and McGowan, too, were Ireland's biggest housebuilders in the 1970s and 1980s, but today they do what every other successful builder seems to do - ride, breed, train or bet on horses.
What emerged this week is the antithesis of the patriotism so vocally espoused by Ray Burke and others in Fianna Fail. In the same week as Senator Joe O'Toole called into question the patriotism of our current crop of tax-exile millionaires, the tribunal laid bare a whole industry devoted to ensuring that an earlier generation of tycoons paid as little tax as possible, regardless of their income.
Lawyers and accountants beavered away diligently and ingeniously to find new ways for their clients to avoid the taxes that you and I could never think of ducking. In return, this army of professionals was rewarded with "hefty fees", in the words of one accountant. So everyone was happy, and the taxman was nowhere to be seen.
But what was a public representative doing consorting with people who harvested so much money in the Republic and then salted it away in offshore tax havens? And what was Burke doing, getting into the act and setting up his own secretive arrangements in Jersey and the Isle of Man? Burke shared the same legal firm in Jersey as Brennan and McGowan and, for a short period, the same bank in London. He can hardly claim to be unfamiliar with the two builders' practices.
The public is familiar with offshore tax havens by now. But seldom have we heard such detail as at the tribunal this week. The first requirement was secrecy. Burke, as a junior-league player, opened an offshore account using an unusual form of his name (P.D. Burke) and a relative's address in England. Brennan and McGowan set up family trusts, run by expert lawyers. The auctioneer John Finnegan seemed to operate a trust within a trust, and availed of the services of Charles Haughey's bagman, the late Des Traynor, for tax advice. As we well know, wherever Traynor went, Ansbacher was sure to follow.
The tax schemes devised by accountant Hugh Owens, whose evidence next week should be fascinating, were ingenious. Subsidiary companies were set up at the drop of a hat. Intercompany transactions, shuttling money back and forward between Ireland and the offshore tax havens, were commonplace. The beneficial owners of companies were nigh impossible to trace, as the only names appearing on official documents were those of trustee or nominee directors in offshore law firms. Entire series of correspondence were "orchestrated", in the words of the tribunal, to give the appearance of normal business activities. A common feature of the schemes was the acquisition of lands in Ireland by offshore companies. The money to buy the land came from Ireland but first passed offshore to maximise tax efficiency.
Here's an example. Brennan, McGowan and Finnegan set up a shelf company in Jersey which bought some land in Monks town for about £10,000. Normally, the subsequent sale of such lands would attract capital gains tax. However, if a nonIrish company wants to sell the lands, there is no requirement to pay this tax provided its principal assets are not lands in Ireland.
So in this case, the company concerned obtained a loan of £20,000 from a Jersey bank. It then obtained an audit which, of course, showed that the land was not the major asset. Tax was therefore not due. Within a fortnight or so, the bank loan was repaid.
Another loophole exploited by Owens was the "distribution in specie" of a company's assets. Thus, in the above case, the offshore company owning the Monkstown land was bought by an Irish-based company also controlled by Brennan, McGowan and Finnegan. The original company was dissolved into the Irish company and its assets distributed by a liquidator. In such a case, no stamp duty or capital gains tax is payable because this distribution is simply the giving back of property by a company to its shareholders in a liquidation.
It's easy to forget today that the 1980s, when these practices were rife, were marked by high unemployment and massive emigration. Public services were stretched and underfunded, and the Exchequer kitty was frequently bare. Taxation was high, which is probably why so many wealthy people moved their funds overseas. The burden of the tax base thus fell on the PAYE sector.
Only a tax expert could properly judge if the practices above fall into the category of tax avoidance or evasion. The accountants who set up the schemes were exploiting loopholes in the law, but what of their clients? The question of intent is surely relevant here; were these real business activities or merely fronts for diverting funds offshore?
The Revenue Commissioners, who have taken a lively interest in the tribunal's work, will undoubtedly reach their own conclusions.
Mr Ray Burke: after damaging revelations at the tribunal this week he will have serious questions to answer when he takes the stand shortly for the fourth time