The Secretary General of the Department of Finance has said that the Department could have taken a more pro-active role in ACC bank. Paddy Mullarkey said that as a result of the DIRT inquiry, the Department of Finance would be reviewing its procedures. The inquiry also heard that the Department of Finance and the Revenue Commissioners discussed allegations made by the Midlands and Western Building society in 1985 about widespread abuse of non-resident accounts in the main banks.

It has emerged that National Lottery Chief Executive Ray Bates, who was then with the Department of Finance, received the letter from Midlands and Western and sought the opinion of the Revenue Commissioners. He was told that the allegations were probably true. However, Committee chairman Jim Mitchell said that Mr Bates did not reflect this in his report to other officials in the Department of Finance. Mr Bates said that he had been told by Revenue that there had been no new reports of problems with forms relating to non-resident accounts in the previous two years and he was reflecting that in his replies.

A former deputy Chief Executive of ACC Bank earlier denied that he misled the Revenue Commissioners at a key meeting in 1993. Billy Moore said that an estimated liability of £17.5 million in a report by the bank's auditors was not disclosed to Revenue because it was an "off the wall" amount. The report was prepared in 1992 by Ernst and Young when the Government was considering selling off the Bank. Mr Moore said that the figure was never a realistic one and was not extracted from correct statistical analysis of branches. Deputy Pat Rabbitte said that he was horrified at the image being portrayed about Ernst and Young through Mr Moore's evidence. Mr Moore said that it was the only occasion he was ever in dispute with the firm and the figure was subsequently disowned by Ernst and Young. He said a subsequent figure of £700,000 was estimated as the DIRT liability.

During the morning session, the Public Accounts Committee heard that IBI, the investment wing of Bank of Ireland, set up a committee in 1986 to devise ways around DIRT tax which was introduced that year. An internal document said that the committee would find mechanisms and instruments to allow the bank to pay gross interest to clients without deducting tax. The Public Accounts Committee also heard about a practice within the Bank which involved moving interest between accounts to reduce DIRT payments. The Committee then heard that auditors had recommended that the Bank should not use a practice of transferring interest between different accounts for the same client to avoid DIRT tax. The Bank's current auditors, Price Waterhouse Cooper, gave evidence that at the time the bank was concerned about corporate clients and pension fund investments and DIRT tax was later abolished for these types of accounts.