The chairman of the Public Accounts Committee, Jim Mitchell, has said there was reckless disregard for the requirements relating to non-resident and special savings accounts at National Irish Bank. The former chief executive of the branch, Jim Lacey, today began answering questions on the state of the bank's tax compliance during his term of office. Deputy Jim Mitchell was commenting on the results of an internal audit of NIB in 1994. He said it showed quite incredible statistics relating to accounts at the bank just after Jim Lacey's departure and that the bank showed reckless disregard for the legislation.
The audit showed 40% of non-resident accounts had incomplete documentation. Last year this figure was at 18%. The committee also heard that in many cases, NIB had no correspondence addresses for their non-resident account holders. Jim Lacey said for confidential or other reasons, such account holders did not want correspondence from the bank. He said it was not something he liked, but customers wanted that facility. NIB has set aside up to one million pounds for DIRT tax arrears. However, the figure has not yet been agreed by the Revenue Commissioners. The bank is also under investigation by the High Court, the Revenue Commissioners and the Gardaí over its administration of off- shore investments, which may have been funded from re-classified non-resident accounts.
Senior officials from National Irish Bank began giving their evidence to the enquiry this afternoon. In an opening statement the chief executive of the bank Don Price said NIB had the lowest risk of bogus non-resident accounts in the industry. However he admitted there had been shortcomings in the bank's administration of non-resident accounts in the past.
Earlier, the PAC heard evidence from Ulster Bank officials. The committee heard that an inspection carried out by the Ulster Bank in May 1991 showed there was inadequate documentation for 75% of the bank's non-resident accounts. The committee also heard that the bank carried out what were described as two "clean-ups" of non-resident accounts in 1993 and 1994. But bank officials said only five or six accounts were actually bogus and these were closed after their discovery.
Throughout their evidence, officials from Ulster Bank stressed that their problem with non-resident accounts was mainly due to administrative errors. The chairman of the bank, George Quigley, said he believed only half a dozen accounts were found to be bogus. These were immediately closed and the bank said it did not want business from people who opened bogus accounts. In other cases, where documents could not be found, they reclassified the accounts and paid the tax. Arrears were not paid, but today George Quigley said he now believed it was only right that back tax should be handed over.
Audits suggested the bank could owe up to £900,000 in DIRT tax but the Ulster Bank chairman says he believes the figure is much lower. Two clean ups of non-resident accounts took place in Ulster Bank in 1993 and 1994 after which less than 150 accounts were reclassified. However last year the problem with documents arose again. The bank's chief executive, Martin Wilson, said the lack of experienced staff contributed to this. He said they were operating in a tight labour market with high levels of staff turn over - and that was due to the Celtic Tiger.
