How Haughey taxed the Revenue

`I agree with myself," said Mr Seamus Pairceir at the Moriarty tribunal on Wednesday with a show of confidence that probably …

`I agree with myself," said Mr Seamus Pairceir at the Moriarty tribunal on Wednesday with a show of confidence that probably goes with the job: he was chairman of the Revenue Commissioners from the end of 1983 to September 1987. Chairmen of the Revenue are not given to self-doubt. But on this occasion Mr Pairceir must have had at least a niggling suspicion that he was in a minority of one.

The subject was Mr Charles Haughey's tax and the way the Revenue Commissioners had (or hadn't) handled it. Mr Pairceir and his erstwhile colleagues, Mr Christopher Clayton and Mr Robert Harrington, explained to Mr Justice Moriarty how it was done.

Sensitivity was the key: "As you know," said Mr Clayton, "the tax liability in question (£52,330 excluding interest) has been handled sensitively and as quietly as possible on our side. We have no wish to change that position."

As the lawyers are given to saying: quite. The date was February 1987. Mr Haughey had just been elected Taoiseach for the third time. It would have been - well - awkward if his case were to turn up in the courts as he settled into office.

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"Nevertheless," Mr Clayton continued sternly, "the tax liability and its collection cannot be suspended by us and the realities of the collection process cannot be ignored on our side." Of course not. Realities must always be respected, some more than others.

So the Revenue sought a response from Mr Haughey within one week. And they got what they wanted - more than 10 years later, after a litany of scandals, months of fiercely resisted questioning in the Dail, a lot of publicity and eventual exposure at the McCracken tribunal.

Which goes to show that, if you're powerful and well-placed, in the usual democratic course of events it takes a long time to discover how you came to be rich as well - and whether there's a connection between the sources of your wealth and power.

As Colm Keena wrote here on Wednesday: "Everyone knew about Mr Haughey's progress from a semi-detached house in Raheny to a Gandon mansion in Kinsealy in 1969. We now know that at no stage did the Revenue hold an inquiry into where the money for this came from."

That doesn't mean the Revenue didn't know or suspect what was going on. Mr Clayton was to recite the list of scandals from the late 1980s and early 1990s on Thursday.

But the chairman, who'd retired in 1987, doesn't appear to have seen the point of following up a curious arrangement made when Mr Haughey became leader of Fianna Fail and Taoiseach for the first time, in 1979. The Gallaghers (builders, bankers and friends) gave him £300,000 as a deposit on land.

The deal wasn't completed, the Gallagher group went into receivership and the deposit wasn't returned. Had the Revenue thought of looking into the matter?

"It never came into my mind that I should send in the investigation branch," Mr Pairceir replied. "And even if it had, I don't see what the investigation branch could have done."

Why was that?

"It would be subjected to what I now know (to be) the extraordinary powers of resistance that the particular taxpayer is able to display and they would have just got themselves into various court actions."

It was when he was asked if he now had second thoughts on that score that the former chairman replied: "I agree with myself."

So, for all its self-confidence and authority, which has reduced many another citizen to misery and penury, one of the most influential agencies of the State was reduced to quivering impotence by Mr Haughey's intimidatory powers.

And Mr Pairceir's colleague, Mr Harrington, sounded shocked: "Here was somebody very important in society, an apparently wealthy man. . . it would not have been appropriate that such a person should not be reasonably up to date with their returns."

Appropriate or otherwise, it was what happened. And it continued to be the case for a very long time. Incomplete returns, questions unanswered, one of the best-known mansions in the State grossly undervalued until Mr Justice Brian McCracken reported.

Mr Pairceir got to know a little more of the Haughey way of doing things when he retired from the Revenue and became chairman of the Custom House Docks Development Authority, director of United Property Holdings (UPH), chairman of an advisory committee on the development of the International Financial Services Centre (IFSC) and a consultant with the IDA on the promotion of the IFSC.

He was one of those asked by Mr Haughey to "step aside" from public positions when questions were raised about controversial issues including the Johnston Mooney and O'Brien site in 1991. The site, in Ballsbridge, Dublin had been bought by UPH and sold at a handsome profit to Telecom Eireann.

It was, by general consent, rough justice - or no justice at all - in Mr Pairceir's case. The bigger, political lessons being taught by the tribunals and the public accounts committee have yet to be learned by Mr Haughey's successors in office.

Business and politics must be kept at arm's length. Independent agencies must work without fear or favour. Politicians offending against the ethics of office must be excluded from office.

dwalsh@irish-times.ie