In 1991 a priest in a Co Limerick village suffered great embarrassment. He was named as one of the State's tax defaulters in the 1991 annual report of the Revenue Commissioners. He had underpaid his taxes by £15,524 and the taxman made him pay back the lot, plus a fine of £8,331 - a total of £23,855.
A total of 128 tax defaulters were named in Appendix 5 to that year's report. They included solicitors, a coal merchant cum pig dealer, farmers, doctors, a veterinary surgeon, a consultant surgeon, a bus hire operator, publicans, a gaming arcade proprietor, building contractors, a parish priest in Co Galway, grocers, a concrete haulier, a hardware merchant and draper, a carpet fitter, a retired flag manufacturer, a draining contractor, a landlady and even an accountant.
And along with their names were their addresses, the amount of tax underpaid, the amount of the additional penalties and interest charged and the amount of settlement. No culture of non-compliance spared their embarrassment.
They should have known better, for that year (1991) the Revenue Commissioners arranged for massive billboard posters around the country to scream at the populace: "Dodgers named and fined - £175 million in taxes and penalties - Pay Your Tax Or Pay The Penalty".
In that 1991 report the Revenue Commissioners laid it out fair and square in a thrilling Chapter Two, headed "Deterring Evasion". There was a "Taxes Audit Programme" whose objective was "to ensure that each audit is targeted at the area of business posing the greatest risk to revenue". The "Hawaii 5-0" of the outfit, the Investigations Branch, was reconstituted into "six high-powered operational units, concentrating their attention on investigation and research into key sectors of the economy". One of these "high-powered units" was "specifically geared towards the preparation of criminal prosecution for cases involving serious fraud". A commitment to pursue "entrenched arrears" was proclaimed.
In March 1991 the Revenue Commissioners announced a "major new initiative to tackle tax defaulters". Albert Reynolds, then Minister for Finance, provided £1 million to fund a "co-ordinated programme of measures to identify and confront tax evaders and collect outstanding tax debts". Late payers were identified "for immediate attention".
The Mobile Maritime Unit, which had become operational the previous year had a string of successes in 1991. In a seizure at Waterford, cigarettes to the value of £100 were confiscated. A rubber dingy, valued at £132, was seized in Cork.
And to cap it all, 3,501 cases of attempted smuggling were detected by Customs and Excise staff during 1991.
While all this was going on one of the six high-powered units of the Investigations Branch was dealing with the financial institutions, including AIB.
At the Dail Committee of Public Accounts last week, Tom Mulcahy, the chief executive of AIB, said that in early 1991 the Investigations Branch had been in contact and had said "for the first time the Revenue are very serious about clearing up the position once and for all". The "clearing up" that needed to be done was a massive underpayment of Deposit Interest Retention Tax (DIRT) by the financial institutions over a period of five years. This, according to Mr Mulcahy, was "a major exercise" and because of that it took several months. Indeed the time allocated had to be extended by three months up to September 1991.
In a letter to AIB dated February 15th, 1991 an official of the Revenue Commissioners, Mr D A MacCarthaigh, made the unsettling suggestion that "any cases discovered prior to June 1991 will be the subject of a DIRT payment to be negotiated at this branch without penalty and without publication".
He was swiftly put right by AIB and in a telephone discussion on March 5th of that year (the very time that Albert Reynolds's £1 million "co-ordinated programme of measures to identify and confront tax evaders and collect outstanding tax debts" was swinging into action) the Revenue Commissioners clarified that not alone would there be no penalties or publication or prosecutions, but there would be no payment either.
According to Mr Mulcahy "the arrangement" was "forward-looking". He went on: "At no time during these subsequent discussions [with the Revenue Commissioners officials] was the issue of a monetary settlement ever raised."
Mr Philip Brennan, who is burdened with the title "general manager attached to the office of the group chief executive", said "the idea of making the payment [or the arrears] was never on the cards". It would have been "beyond comprehension" that the bank would have provided for such a liability in its books, he said.
What was there about AIB that enabled them to secure a "forward-looking agreement" and that protected them from the "co-ordinated programme of measures to identify and confront tax evaders and collect outstanding tax debts"? And what would the Limerick curate, the coal merchant cum pig dealer, the gaming arcade proprietor, the concrete haulier etc. have given for such an arrangement?
But, apparently, the real culprits escaped scot-free. No, not the banks, not priests, not coal and pig merchants, not draining contractors, not retired flag manufacturers, not landladies, not even accountants.
Grannies.
Grannies were the problem. They are the ones who opened bogus non-resident deposit accounts in the period 1986 to 1991 and who are responsible for all the fuss now. That is what the then chairman of the Revenue Commissioners, Cathal MacDomhnaill, told the Committee of Public Accounts on April 28th last.
Mr MacDomhnaill said earlier in his evidence that in one bank in that period there were 10,000 non-resident accounts with less than £100 in them. Pat Rabbitte put it to him: "The suggestion that someone would have only £100 in a bogus non-resident account is the type of thing which makes the man in the street ask who do they think they are fooling?"
"They were grannies," he said.
Mr Mulcahy of AIB at times was inclined to agree with the granny alibi during his evidence last week, so minuscule was the amount of the evaded tax. The £100 million estimate was merely a "guess estimate", was an "off the cuff" figure, was "seriously flawed". One of AIB's tax experts had estimated it around £500,000.
Strange that, since Mr Mulcahy also claimed there was a need to deal with this issue "without causing huge waves for the national economy". He spoke of how they "all got a shock when we realised where it [the DIRT evasion] was going and how big it got". How "if one bank decided it was going to sort itself out it would have put itself out of business, it was that serious". It was "growing like a cancer and had to be stopped - if it were not the entire country could have gone non-resident".
Some grannies.