Chances are that people who used the Ansbacher deposits to hide money from the Revenue Commissioners will not go to jail, writes Colm Keena
Being named and shamed and having to make a tax settlement is most likely the extent of the punishment which will be meted out to those tax-dodgers exposed in the Ansbacher report due to be published next week.
The chairman of the Revenue Commissioners, Mr Frank Daly, was less than gung-ho yesterday about the chances of landing a successful prosecution against an Ansbacher client. "We will try for prosecutions but it will be more difficult" than with other categories of tax-dodgers, he said.
The Ansbacher operation dates back to the early 1970s. It is a lot more complicated than cases involving a simple bogus non-resident account. Ansbacher involved banks in the Cayman Islands and the Channel Islands and the keeping here of coded memorandum accounts, the records of which in many instances have been destroyed or brought back to the Cayman Islands.
It also involved offshore trusts, foreign registered companies, and complicated financial manoeuvrings by the late Des Traynor.
The bar is set very high for securing tax-evasion prosecutions, Mr Daly said. When crucial evidence is held outside the jurisdiction, it obviously makes matters all the more difficult. Despite this, however, Mr Daly did not call for changes to the law in relation to prosecutions. He believes a balance has to be struck between the need to collect revenue and the rights of citizens.
The Ansbacher investigation is proving a difficult one for the Revenue. Many of the people involved are understood to be fighting their corner. An indicator of this is the relatively small amount which has to date been paid on account, €17.3 million.
Obviously a lot of Ansbacher account-holders believe they can still beat the Revenue; in time, who knows, they may be proved to be right.
The extent to which the general tax-dodging population fears the Revenue is perhaps indicated by the relatively small number of persons holding bogus non-resident accounts who have come forward under the special voluntary disclosure scheme set up by the Revenue.
The scheme brought in €227 million from 3,675 account-holders but Mr Daly believes there are "thousands of others" out there. He was surprised that more of these did not opt for the voluntary disclosure scheme. Under the scheme, reduced interest and penalties are paid and the names of those who come forward are not published in Iris Oifigiúil.
That so many people are still holding out against the Revenue is surprising, given the wave of inquiries currently under way which have netted almost €500 million already. However, while people have gone to jail for tax-evasion, the number is still in single figures.
Seven cases arising from the Revenue's NIB investigation are coming down the line. This compares with the more than 400 NIB customers who are known to have availed of its unauthorised offshore bonds schemes. Clearly the chances are still good of not been charged with tax-evasion, even when you're caught.
The inspectors who wrote the Ansbacher report, due to be published next Tuesday, were given terms of reference which included examining whether the Companies Acts were breached by Ansbacher Cayman, its officers, agents or customers and to identify the possible breaches involved and the persons concerned in each case.
Although tax-evasion is at the heart of the whole Ansbacher controversy, the inspectors who wrote the report do not express opinions as to whether particular customers were involved in tax-evasion. They decided that such a move would be beyond their remit.
They have stated in their report that it would be wrong to presume that everyone named in the report as having been a customer of Ansbacher was involved in tax-evasion.
Details contained in the report may make it obvious that certain people were involved in tax-evasion. Likewise, details contained in the report may make it clear other customers of the bank were not.
Over the coming months and years, names contained in the report will no doubt appear in the lists of tax-defaulters published by the Revenue Commissioners in Iris Oifigiúil every quarter. The amounts involved will be listed, as will the fact that Ansbacher was involved.
Also, in what could turn out to be an interesting aspect of the overall affair, the US and British revenue authorities are to be given copies of the inspectors' report. A prosecution in either of those jurisdictions would look bad if nothing similar had occurred here.
In relation to non-tax matters, it is expected that particular individuals and companies will be linked in the inspectors' report to possible offences. The inspectors use the phrase evidence "tending" to suggest the commission of offences. They were of course appointed under the Companies Act 1990 to investigate a company (Ansbacher Cayman) as against being appointed to investigate tax-evasion by individuals.
During the application to have them appointed in July 1999, the then senior civil servant, Mr Paul Appleby, listed some of the offences which he said the Tánaiste, Ms Harney, believed may have been committed.
The offences listed included:
That the company (Ansbacher Cayman) and certain of its officers, agents and Irish clients were knowingly a party to the carrying on of the business of Guinness & Mahon (G&M) or IIB bank with intent to defraud creditors of other persons or for any fraudulent purpose. Creditors in this instance would include the Revenue;
That officers of the company destroyed, mutilated or were privy to the destruction and mutilation of the company's books and documents contrary to the Companies Act 1990;
That the company operated a banking business without a licence contrary to the Central Bank Act 1971, for a period of some 20 years;
That the company solicited deposits, by personal canvassing or otherwise, in contravention of the Central Bank Act 1971;
That certain Irish limited companies which obtained loans negotiated by Mr Traynor from G&M and IIB bank which were secured on cash deposits provided by the company did not disclose the existence of such security in their accounts as required by company law.
The findings of the inspectors in relation to any matters cannot be used in criminal prosecutions.