The Revenue Commissioners did not take a prosecution case against Charles Haughey as it believed this would be in conflict with its efforts to negotiate a settlement with him, the tribunal has heard.
Principal officer with the Revenue's investigations and prosecutions division, Stephen Treacy, told Jerry Healy SC, for the tribunal, that the Revenue's dealings with Mr Haughey were "unusual in that our queries weren't fully answered and we didn't get to meet the taxpayer".
Mr Treacy agreed with the tribunal chairman, Mr Justice Michael Moriarty, that a "tougher line" might have been taken with Mr Haughey but for the Revenue's awareness of the weakness of its case against him.
In March 2003 Mr Haughey made a €5 million settlement with the Revenue arising out of transactions discovered by the tribunal and covering the period 1977 to 1997.
Mr Treacy said he led a group set up to investigate Mr Haughey's affairs in July 1997. In August 2001, an official formally delivered a request for a statement of affairs from Mr Haughey and his wife, Maureen, to their home in Kinsealy. The couple were away on holiday and the documents were left with Mr Haughey's secretary, Catherine Ward.
Mr Treacy said the documents were hand-delivered, as it was thought that "was the best procedure in case a prosecution proved necessary". He said that the decision to seek the statement emanated from a "high-level meeting" in the Revenue. The purpose of such requests is to get a taxpayer to commit to particular assets and liabilities for a certain date.
Correspondence between Mr Treacy and Mr Haughey's tax agent, former Revenue official Paul Moore, was shown.
In a letter dated September 2001 concerning the request for a statement of affairs, Mr Moore wrote: "My client is in very poor health, despite reports in the press to the contrary. During his recent vacation in Kerry he suffered a medical setback which was life-threatening. We would be extremely reluctant to approach him at this time and subject him to the stress of dealing with such a complex and serious matter."
He said that to avoid a recurrence of his client's "near fatal illness last March", he would be obliged if the Revenue would agree to a postponement of the completion of the statement. Mr Treacy replied that he was sorry to hear of Mr Haughey's poor health, but said: "I cannot accede to your request for a delay."
In November 2001 Mr Moore replied. "My client has been away and spent a week in hospital on his return and was not in a position to attend to his affairs."
He said Mr Haughey had instructed accountant Des Peelo to prepare a statement of affairs. Mr Moore said involvement in the statement's preparation involved "life-threatening pressures and stress" for Mr Haughey.
Mr Treacy granted an extension of the deadline to January 18th 2002. Mr Moore responded that the statement would not be completed by that date, due to Mr Haughey's poor health and the fact that Mr Peelo was away and had a full diary. "I trust you will not find it necessary to impose the penalties provided for in the section." In the event, a statement of affairs was delivered at the time of the 2003 settlement.
Negotiations with Mr Haughey began in 2002. Mr Treacy said he had a discussion with the assistant Revenue solicitor about the statement of affairs issue. However, with negotiations under way, there was "no point in commencing prosecutions".
"There would have been a conflict in trying to negotiate a settlement while at the same time seeking to prosecute the taxpayer."
Mr Treacy said that the Revenue had, since the 2003 settlement, discovered an £11,000 debit from the Ansbacher accounts, in April 1992, which was lodged to the accounts of a party connected to Mr Haughey. This was now a "live issue" and was being pursued.
The chairman of the Revenue Commissioners, Frank Daly, is to give evidence on the Revenue's treatment of Mr Haughey next week as well as on the Revenue's dealings with Michael Lowry.
Mr Haughey was not legally represented at yesterday's hearings, nor last week.
The tribunal adjourned until Tuesday.
