Revenue not taxing itself over prosecutions: Colm Keena

This article in the Irish Times (subscription only) is reflecting the fact that Irish authorities are not serious about dealing with white collar crime. In effect, it again confirms that corruption is endemic in Ireland. Over recent years Revenue have been given many extra powers to deal with tax cheats but have failed to use these powers. This is not because of any legal or constitutional constraints but simply because Ireland is a totally corrupt state or in other words a banana republic.

The recent revelation that the Revenue Commissioners are not currently working on prosecuting anyone for improper use of the 1993 tax amnesty is stunning. Hopes that the tax collectors’ pursuit of tax dodgers might dramatically improve following the 1997 announcement professing a more vigorous prosecution policy appear to have been misplaced.

The Garda-run Criminal Assets Bureau (CAB), on the other hand, is showing itself to be more capable.

Perhaps what is needed is the transfer of responsibility for prosecutions to that agency or to a new agency headed by the Garda rather than officials from the Revenue.

In the past three years, despite the scale of its operations, the Revenue has secured only 12 convictions, while the CAB, although not primarily interested in tax issues, has achieved roughly half that number of tax convictions in the last five years.

The 1997 McCracken (Dunnes Payments) tribunal made it clear that Mr Charles Haughey and Mr Michael Lowry had not been paying their due taxes. Yet, despite that very public finding of malfeasance at the highest level, no prosecutions have been taken against either man. The failure in relation to Mr Lowry is particularly noteworthy.

In his report Mr Justice McCracken observed of Mr Lowry: “It is an appalling situation that a government minister and chairman of a parliamentary party (Fine Gael) can be seen to be consistently benefiting from the black economy from shortly after he was first elected to Dáil Éireann. If such a person can behave in this way without serious sanctions being imposed, it becomes very difficult to condemn others who similarly flout the law.”

It would be very damaging, the judge said, “if there was a public perception that a person in the position of government minister and member of Cabinet was able to ignore with impunity, and indeed cynically evade, both taxation and exchange control laws of the State”.

The 1993 amnesty, introduced by the Taoiseach, Mr Ahern, then minister for finance, contained stiff penalties for people who availed of the amnesty but failed to declare all their hidden income.

However, the legislation barred the Revenue from access to any information submitted by the taxpayer availing of the amnesty. For all the huffing and puffing in the Dáil at the time by Mr Ahern, and the harsh penalties in the legislation, the law itself undermines the Revenue in attempting to prove that someone had misused it.

Notwithstanding that reality, however, Mr Lowry’s case is striking. He told the Dáil in December 1996 he had availed of the 1993 amnesty but now accepted “that some of my tax obligations are still outstanding”. Speaking of the infamous extension to his Co Tipperary home, paid for by Dunnes Stores, he said it “was not designed by me as a tax evasion measure … If someone was trying to hide income, would they not be more likely to put it in, say, an offshore account?”

To which Mr Justice McCracken would observe in his report: “In the light of the fact that Mr Michael Lowry had had two off-shore accounts in his own name, one in the Bank of Ireland in the Isle of Man, and the other in an AIB subsidiary in Jersey, and had held money in an Isle of Man account in the name of Badgeworth Ltd, this part of his (Dáil) statement can be viewed with some astonishment.” Some years later, in 2001, it would emerge via the Moriarty tribunal that Mr Lowry had opened another offshore account – with the Irish Nationwide on the Isle of Man – in September 1996, just months before his Dáil statement.

That account had nothing to do with the 1993 amnesty, but the offshore accounts identified in the McCracken report were used to lodge tens of thousands of pounds in the period before the amnesty. There were other dodgy payments as well, not forgetting the extension on Mr Lowry’s house.

Commenting on the fact that no criminal prosecutions were being prepared in relation to breaches of the amnesty, a spokesman for the Revenue told The Irish Times that such convictions required a burden of proof significantly higher than in civil cases and was simply not available. This does not seem like much of an excuse.

Moreover, a general prohibition in tax law on indictments for offences more than 10 years old probably means that no prosecution will ever be brought by the Revenue in relation the the 1993 amnesty.

The fact that the CAB is taking a criminal prosecution against former Fianna Fáil minister, Mr Ray Burke, serves to further highlight the Revenue’s failure. Mr Burke availed of the 1993 amnesty and is being prosecuted (by the CAB) for allegedly making an incorrect return while doing so.

The CAB only becomes involved in a person’s tax affairs if it has already begun investigating the suspected accumulation of assets by that person by way of some non-tax crime (such as suspected corruption in Mr Burke’s case).

Yet the CAB seems less reluctant to get involved in criminal prosecutions than the Revenue. The Office of the Director of Corporate Enforcement has a number of gardaí working with it. So, too, has the Competition Authority.

For some reason the same is not the case with the Revenue. Perhaps it is time a few gardaí were assigned to it. They could even be given total charge of its prosecution role.