Seanad Éireann - Volume 157 - 16 December, 1998
Comptroller and Auditor General and Committees of the Houses of the Oireachtas (Special Provisions) Bill, 1998: Second Stage.
Question proposed: “That the Bill be now read a Second Time.”
Minister for Finance (Mr. McCreevy) Minister for Finance (Mr. McCreevy)
Minister for Finance (Mr. McCreevy): Members of this House will be aware that the events giving rise to this Bill have been the subject of extensive coverage in the media. Indeed, the articles in the October and November 1998 issues of Magill magazine significantly influenced the overall pattern of the controversy. The basic elements of the matter are relatively straightforward. Serious allegations were made regarding the collection of deposit interest retention tax. The revelations raised questions in particular about the actions of one of the main banking groups in the country. By implication, other banks were caught in the shadow cast by the media reports. Moreover, the efficiency and  effectiveness of the systems and procedures operated by the Revenue Commissioners in relation to the administration and collection of deposit interest retention tax were severely questioned.
Public opinion demanded that, as far as is practicable, all available facts should be brought into the public domain. This is entirely understandable. This controversy affects areas central to our economy and society, and citizens look to the Houses of the Oireachtas to ensure propriety, efficiency and effectiveness in both financial management and public administration. Our primary duty is to ensure that the citizens of this State will have all pertinent information made available to them in a timely and effective manner.
In this regard, I believe that the response from the Houses of the Oireachtas has been rapid and appropriate. The examination of the appropriation accounts of the Office of the Revenue Commissioners by the Committee of Public Accounts focused on the core issues exposed by the media coverage. In particular, the committee highlighted the fundamental conflict in evidence about the administration of deposit interest retention tax between the Revenue Commissioners and AIB bank.
Arising from these deliberations, Dáil Éireann passed a resolution on 21 October which put in place the first important elements of the investigative process. The Committee of Public Accounts was requested to examine and report inter alia on “any purported settlement between the financial institutions and the Revenue Commissioners in respect of undeclared DIRT” and on information known to the financial institutions and regulatory authorities concerning the use of bogus non-resident accounts. I am also aware of and welcome the positive response of Members of this House who have expressed their support and commitment to facilitating by all appropriate means the furthering of this investigation.
As events unfolded towards the end of October, it became increasingly clear that the existing powers available to pursue this matter were not sufficient. New arrangements were needed to bring the investigation to a satisfactory conclusion. Accordingly, recommendations were made by the Committee of Public Accounts setting out key requirements for advancing the inquiry into the central issues.
The arrangements envisaged in the first interim report of the Committee of Public Accounts form the essential basis for the particular approach to this investigation made under this Bill. The process begins with the passage of this legislation to empower the Comptroller and Auditor General to conduct a comprehensive fact finding investigation. The Comptroller and Auditor General will then be requested to prepare a report to Dáil Éireann. Having received and examined this report, the Committee of Public Accounts will continue its examination of the key issues. In undertaking this examination, the committee will use enhanced powers under the compellability Act. It will then proceed to draw conclusions,  determine findings and make recommendations for further action.
The drafting of the Bill to satisfy the specific circumstances arising from this controversy is crucial. The inquiry will look into the administrative arrangements and procedures of the Revenue Commissioners relating to DIRT. It will also address how the relevant financial institutions exercised their duty of care in relation to this tax. It is not our intention to construct unnecessarily complicated or bureaucratic procedures. A central feature of the arrangements under the Bill is that the special provisions will, in the main, cease when the inquiries of the Comptroller and Auditor General and the examinations of the Committee of Public Accounts are completed.
Moreover, it is important to acknowledge that the Bill owes its genesis to a proposal put forward by Members of Dáil Éireann drawn from across party lines. There is a genuine will to proceed as rapidly and as comprehensively as possible. There is a shared determination that the process of investigation should be driven by elected representatives.
The compellability Act, introduced by the previous Government, was supported on all sides precisely because it promised to meet a long standing aspiration to give committees of the Houses of the Oireachtas powers to conduct meaningful examinations of matters of pressing public interest. There is also a common concern that other methods of public inquiry imposed very substantial costs on the taxpayer and that Oireachtas committees could provide more cost effective means of managing inquiries.
In evaluating our approach to this investigation, it has been recognised that certain modifications are needed to the compellability Act. These have been provided for in the Bill. The arrangements also acknowledge that the scope and range of the investigation needed would impose such demands on time that it would be unrealistic to expect parliamentarians themselves to undertake the “nuts and bolts” of the inquiry. A commitment of that nature would put pressure on their wider legislative duties and the care of their constituents. It is proposed, therefore, that the initial process of investigation should be conducted by the Comptroller and Auditor General. However, it is necessary to expand his statutory powers on a temporary basis in a manner that is germane to his constitutional role.
These difficult and complex arrangements have been fairly described as a “hybrid” mechanism of inquiry. Indeed, the two tier arrangement — in which the Comptroller and Auditor General will present the relevant facts and identify areas of dispute and the committee would reach conclusions, determine findings and make recommendations — draws on different legislative backgrounds. Senators will see in these arrangements precedents in the statutory provisions for committees of the Houses of the Oireachtas, the functions of the Comptroller and Auditor General  and the Companies Act. This diverse grounding is a source of strength in the Bill.
Moreover, the fact that support for this investigation crosses party political boundaries also bodes well. There appears to be general agreement across the spectrum in relation to the following: the serious matters to be investigated; the essential arrangements for the investigation; the Comptroller and Auditor General should prepare a fact finding report; to carry out his investigation he must have new powers of direction to compel the giving of evidence and confer privilege; the Committee of Public Accounts should examine his report and, if necessary, hear further evidence; the committee should have enhanced powers under the compellability Act in furthering its inquiry and, finally, the committee must draw conclusions, reach findings and make recommendations on further action. These core elements of the investigation are provided for in the Bill.
I wish to emphasise the key questions to be addressed in this investigation. Was there an agreement between the Revenue Commissioners and a financial institution, in particular AIB bank, in relation to undeducted deposit interest retention tax during the early 1990s? If so, what was the basis and nature of that arrangement? Were the systems, practices and procedures of the Revenue Commissioners adequate in relation to the administration of the deposit interest retention tax? Were those systems properly implemented during the relevant period? Did the financial institutions exercise their statutory duty of care in satisfying themselves that relevant accounts were genuinely non-resident? Were the financial institutions aware of the existence and extent of bogus non-resident accounts? If they knew, what did they do about these bogus accounts? If not, why not?
Members of the House will appreciate that in seeking answers to these questions we will inevitably get into an area of conflicting interests, rights and entitlements. Therefore, I have worked closely with the Office of the Attorney General and the legal advisers of the committee and the Comptroller and Auditor General to ensure that the arrangements we will put in place avoid, as far as possible, foreseeable constitutional or other legal difficulties.
The Comptroller and Auditor General is an independent constitutional officer with functions defined in statute to control and audit accounts administered by or on behalf of the Oireachtas. In order to ensure that the arrangements being made in this Bill are sound, we have provided that the Comptroller and Auditor General will have discretion to appoint independent auditors in certain circumstances during his investigation. These may arise where the Comptroller and Auditor General decides that he needs to have access to information contained in the accounts of private individuals held by the financial institutions.
This will not preclude the Comptroller and  Auditor General looking at books and documents in the financial institutions that might refer to such individual accounts. The possibility that he might inadvertently come across these accounts is not a barrier to his examination of relevant documents of the financial institutions, such as audit reports. If necessary, details of individual named account holders can be blacked out of such documents. He will have adequate powers to compel the presentation of evidence and documents in this regard under section 3 of the Bill.
In co-operating with the Comptroller and Auditor General in this investigation those who have evidence to give are not at risk of criminal prosecution on foot of what they say or give as evidence. However, should the Comptroller and Auditor General come across prima facie evidence of non-payment or underpayment of tax, he can draw that information to the attention of the Revenue Commissioners. The names or any other means of identifying individual account holders cannot be published in his report to the Dáil. The point of this investigation is to concentrate on the core issues and to seek answers to the pressing questions of public concern. I am satisfied that the statutory arrangements being provided for in the Bill will enable this to happen.
The Bill is complex in its construction but straightforward in its objective — to present the truth as fairly and as quickly as possible. I now propose to give a brief summary of some of the specific provisions. With the exception of a limited number of matters, the special provisions of the Bill are temporary. This is provided for in section 1 by attaching the special provisions to the Committee of Public Accounts as defined for the purposes of the investigation. When the committee completes its report to Dáil Éireann the special provisions lapse unless the precise terms provided for them are replicated.
I can accurately describe section 2 as the core of the Bill. The Comptroller has an existing right to examine papers in Government Departments and to probe the background to public spending. The role which the Bill foresees is somewhat different but the powers are germane to his statutory functions under section 3(7) of the Comptroller and Auditor General Act, 1993. Section 2, therefore, provides for the examinations and investigations which the Comptroller will carry out, defines the relevant areas of tax law and specifies the purposes of the investigation. It also provides that the Comptroller may appoint independent auditors to examine the accounts of private individuals held by financial institutions if necessary. The section also makes provision for the preparation of interim reports where self-contained elements of the investigation have been completed and finalised.
The arrangements for the presentation of the Comptroller's report to the Clerk of Dáil Éireann are analogous to the arrangements for the reports of tribunals and will be supported by a resolution to be moved in Dáil Éireann. They also permit  the Comptroller, at his discretion, to make a copy available to the Committee of Public Accounts.
Provisions empowering the Comptroller to gather the evidence are modelled variously on the compellability Act and, where appropriate, are analogous to the powers of an inspector appointed by the Companies Act. They are set out in sections 3 to 10 of the Bill. Using these powers the Comptroller may request witnesses to present evidence or give documents in the knowledge that the privileges and immunities of a High Court witness will apply to them. If a witness refuses to co-operate, the Comptroller has the power to compel them to give evidence, administering an oath if necessary. The Comptroller also has powers to seek a direction of the High Court in this matter.
The Bill has specific provisions for the payment of reasonable expenses from public money to certain persons giving evidence. In addition, section 18 allows the Minister for Finance to seek a direction of the courts in relation to the recovery of costs from a financial institution.
Section 11 is a permanent provision which provides for absolute privilege for the Chairman and members of the committee for the purpose of the performance of their functions. Such protection was specifically requested in the interim report of the committee. However, this privilege does not cover interviews or comments made by them on television or radio or in the print media. Section 12 is also a permanent provision which gives absolute privilege for the performance of functions by the Comptroller and his officers.
Section 13 removes restrictions on the disclosure of information imposed by law or contracts. For example, this section will lift obligations of confidentiality on former employees of companies for the purposes of this investigation. This removal of confidentiality will not apply to the obligations imposed by EU directives and double taxation agreements with other states. However, if the Comptroller is already exempted from confidentiality provisions in EU directives, this remains subject to any conditions set, for example, professional secrecy.
Section 14 allows the Comptroller to seek directions from the High Court to obtain clarification as to how he should exercise his powers and to resolve quickly any potential constitutional conflict.
In carrying out its examination, the committee will be able to appoint experts to give advice, guidance or other assistance during its proceedings and its discussions at private meetings may not be disclosed without the consent of the chairman. There are other permanent amendments to the compellability Act to clarify the granting of a “block consent” to the use of the compellability powers for a full investigation. Section 20 temporarily removes the restriction on investigations in relation to the tax liability contained in the compellability Act. This is crucial in facilitating the thorough examination of this  controversy by the Committee of Public Accounts.
I present the Bill to this House as a balanced and carefully structured arrangement to bring this investigation to a satisfactory conclusion as quickly and efficiently as possible. Public representatives have a duty to seek the truth and inform the public. I have tried to balance this duty in the Bill with the natural and constitutional rights of citizens to fair and due process. We are pressed for time. It may be that a longer period of reflection would have improved the details of these complex arrangements. Nevertheless, in the short time available the Bill now presented will meet the needs of this inquiry and will provide an effective means of advancing the investigation. I commend the Bill to the House.
Mr. Coghlan Mr. Coghlan
Mr. Coghlan: I welcome the Minister to the House and thank him for his fair summary of the situation in relation to this Bill. The Minister has cut to the core of what needs to be done. As he said in his concluding remarks, it is in everyone's interests that this matter be brought to a satisfactory conclusion as quickly as possible while balancing citizens' rights to fair procedure and due process.
The Bill is welcome, coming as it does in the wake of the first interim report of the Committee of Public Accounts, the appropriation accounts 1997 and the non-resident accounts deposit interest retention tax controversy. It is a balanced and fair response to the need, recognised by the committee, for the Comptroller and Auditor General to carry out an investigation, with appropriate new powers to pursue the matter in order to prepare a report for Dáil Éireann setting out the full facts of the situation. The Bill properly provides for enhanced compellability powers for the committee which will better equip it to examine the reports and thereby draw the right conclusions and make consequent recommendations.
This House appreciates all of the time and effort devoted to this matter by the Chairman of the Committee of Public Accounts and its members and by the Minister and his departmental officials. It is important that the Bill allows the actions and documents of the chairman and members of the committee to be protected by privilege between meetings of the committee and that the same privilege is extended to the Comptroller and Auditor General and his staff. In that regard, I was horrified to learn that an honourable Member of the other House was in some difficulty in regard to the business of that committee during his tenure as its Chairman. For that reason I welcome the permanence of the provisions which the Minister has incorporated in sections 11 and 12. They are long overdue and will be welcomed by all Members of Oireachtas Éireann.
The Minister has got right the balance between the appointment of auditors to access bank  records in regard to individual accounts and the citizen's rights..
There is no doubt that the key questions to be addressed were outlined by the Minister in his speech this morning. We now realise that this does not involve just one financial institution, but perhaps all of them and that the scope of the committee's work must extend to all of the financial institutions necessary. The Minister asked if the financial institutions exercised their statutory duty of care in satisfying themselves that relevant accounts were genuinely non-resident. I always believed that the official before whom the declaration of non-residence was signed would have to satisfy himself as to the bona fides of the person in front of them.
In spite of all the alleged transgressions in the past, we are now informed there is a very compliant culture in the financial system. Hopefully that is so. I hope the financial institutions are conscious of their obligations and that their statements in that regard are true and fair. The public expects the highest standards of behaviour in its institutions, and banks, no less than anyone else, must now cope with the new unprecedented level of examination from the Committee of Public Accounts and the Comptroller and Auditor General as provided in this Bill.
We live in an age of openness, transparency and accountability and none of us would wish the clock to be turned back on this. Ireland can be thankful it has a competent, reliable, well regulated and innovative financial sector. There is no doubt banks have improved since the early 1990s in their customer service and best practices. The matter we are now discussing, which is necessary and properly provided for in this Bill, relates to the early 1980s and 1990s. None of us believes those alleged practices are prevalent now. Today's banking industry is dynamic and forward looking.
Mr. Ross Mr. Ross
Mr. Ross: Rubbish.
Mr. Coghlan Mr. Coghlan
Mr. Coghlan: I look forward with interest to the Senator's contribution as I respect what he has to say in the financial area. I am sure we can discuss some of these points in — as the Cathaoirleach might say — a more appropriate place. I have been more than a little amazed with the Revenue Commissioners as regards the deposit interest retention tax controversy because I always believed that, with regard to declarations of non-residency which must contain the name, address and country of tax residence of the person entitled to the deposit interest, the financial institution had a duty to satisfy itself that a deposit was exempt from DIRT before it paid interest gross. I am sure that is true and perhaps the Minister could respond to this. Despite the Revenue Commissioners having that power, I believe it never exercised its right to examine those declarations, at least not before April of this year. That amazes me.
 I compliment the Minister on the Bill and on addressing the key questions. I fully agree with his concluding remarks that we quickly, expeditiously and efficiently put this matter to bed once and for all. For the sake of the country we need to fully restore faith and confidence in the Revenue Commissioners' tax collecting ability and in our banking system.
Mr. Finneran Mr. Finneran
Mr. Finneran: I welcome the Minister to the House and I welcome the Bill. I compliment him on acting speedily in bringing this legislation forward. It is less than two months since the resolution was moved in the other House.
This has been a bad year for the public image of banks. They may have made a lot of profit but they have reached the nadir of their standing in public opinion. Earlier this year a bank was found to have overcharged its customers by imposing inappropriate interest and had to pay back the money. This was a totally inappropriate action by a financial institution. Then there was the situation which prompted this Bill, the abuse of the non-resident accounts system. There were tens of thousands of bogus non-resident accounts. We now must establish if the bank was involved. Perhaps others were but in particular we must establish if that bank was. We must establish if it was a willing partner in this scam and if it eventually struck a sweetheart deal with the Revenue Commissioners when they complained.
This legislation and investigation are necessary on the basis that the public are very unhappy with our financial institutions. They believe they are at the mercy of those institutions, that the institutions have the upper hand at all times and that they are the victim of the practices of the institutions. Our banks and financial institutions have creamed Irish society for years. I respectfully disagree with Senator Coghlan. I know he has reason for saying what he said, but any person on the street today would say the level of profit being made by our financial institutions is immoral. I have seen banks and financial institutions make profits of £500 million in a financial year. That is wrong. Excessive interest rates have been set and are still being set. Those who have overdrafts or credit cards or who got into difficulty with the bank know the penalties, referral and other charges in place to cream off as much as possible from the customer. It would seem they stay up at night looking for schemes to dig into the customer's account. It costs to withdraw £20 of one's own money. Our financial institutions and banks are not in good standing with the public.
Returning to the Bill, it is necessary that it be enacted. The Committee of Public Accounts was doing a good job but found it did not have the powers to continue. It recommended the Comptroller and Auditor General be given powers to investigate and be brought into the system. This is a new area for the Comptroller and Auditor General as he is now being brought into the private sector. I am pleased at the mechanism the  draftsmen and the Attorney General have put in place. He is the appropriate person to do this work. This legislation, when coupled with the compellability legislation enacted in 1997 and the enhanced powers of the Committee of Public Accounts, should get to the bottom of this matter.
The Comptroller and Auditor General will do his own investigation and report to the Committee of Public Accounts. It can then use its new powers to advance the investigation further and make recommendations. The Bill is necessary as we need to investigate the serious allegations and conflicting statements of the Revenue Commissioners and Allied Irish Banks. However, it is also necessary to address public concerns.
The public view is that there was an understanding between certain individuals with money and the AIB to evade paying tax. The public believes that the bank involved was a willing partner in this scam in arranging bogus non-resident accounts, and when the matter was dealt with by the Revenue Commissioners, it appears that a sweetheart deal was done between that body and AIB, though the Revenue Commissioners deny this. Ordinary PAYE workers, owners of small businesses and farmers feel very aggrieved that they must meet the full rigours of tax legislation, while those in very powerful positions in financial institutions who had wealthy clients seemed able to get around that legislation and evade their responsibilities to the country.
There seems to have been an acceptance over the years that tax evasion was no great crime. It was a crime to break into someone's house or not to tax one's car, but tax evasion seemed a lesser crime. In fact, it seemed a person was getting one up if he or she could evade income tax. However, it is an equal crime; a person is denying the State what rightfully belongs to it and by doing so the State is denied the chance to put supports and services into the system that the public needs.
The appointment of an independent auditor to examine the accounts of private individuals held by financial institutions is very necessary, and I am pleased it is provided for in the legislation. I hope it will be successful. Certain other powers are provided under the legislation in the event of a person not complying, but I hope that does not lead to cumbersome legal battles in the future. The legislation gives the Comptroller and Auditor General the power to compel people to give evidence by administering an oath, which is also very important.
Investigations cost money, and that cost is met by the taxpayer. However, under section 18 the Minister for Finance has the power to recover costs from financial institutions, which is an important provision.
This legislation is acceptable on the basis that it came from a committee of the House, and not from an individual, party or Government. That is a good basis for the legislation, and those who watched the initial investigation by the Committee of Public Accounts on television would have been impressed by the serious attempt that committee  made to get to the bottom of this. Television commentators and print journalists felt the committee was serious about its business. This is good, because often during investigations the public believes a cover-up or paper exercise is taking place. On this occasion the public felt that a serious attempt was being made by the committee, which immediately came forward to say it did not have the powers to proceed further. Absolute privilege for the chairperson and committee members is also very welcome. I concur with the previous speaker and found it very disturbing when a former chairman was brought into question for doing his public duty. That threat should not hang over the chairman or members of the Committee of Public Accounts. Absolute privilege is vital if we are to get to the bottom of this matter.
Section 13 of the Bill refers to contracts and the disposal of information imposed by law or contracts. When I was on the then Joint Committee on State-sponsored Bodies, it could not establish the salaries being paid out of the public purse to people working in RTÉ. I found it very disturbing that people who were earning up to £250,000 per year in a public broadcasting service refused to disclose the income they were receiving for carrying out a public duty. RTÉ and their employers, attended the committee. They indicated they would not disclose the information because they had entered into contracts with well known presenters whose salary details would remain confidential. I find that quite extraordinary. Not alone are the salary details of Members of this House available to everyone, we almost have a situation where the chickens they might have in their gardens are counted. If a Member's neighbour buys him or her a double whiskey in the local pub, he or she is almost obliged to disclose that. Yet people working in the public service who are in receipt of inflated salaries and who, in some cases, use their position to tell elected representatives what to do, do not disclose their salary details. That is inappropriate.
I welcome the fact that section 13 addresses the issue of contracts. If I am reading the section properly, I understand that people will not be able to hide behind such contracts. Perhaps the Minister might explain the paragraph in section 14 which refers to the High Court. It states that the Comptroller and Auditor General may seek direction or clarification from the court on the manner in which he should exercise his powers should constitutional conflict arise. Has the Attorney General advised that there might be an opportunity for a constitutional challenge to delay and frustrate matters?
Section 20 removes the restriction on investigations relating to tax liability contained in the compellability of witnesses legislation. I do not fully understand the situation which pertains in this regard; perhaps the Minister will shed some light on it.
 I welcome this legislation. It is very important we examine the whole area of resident and non-resident accounts, bogus accounts, DIRT and so on. There is a great deal of public concern about the manner in which financial institutions have been operating over a number of years. I hope this legislation will reveal even more information than it is intended to. We have only scratched the surface on what has gone on behind the closed doors of financial institutions for many years.
Mr. Ross Mr. Ross
Mr. Ross: I welcome the Bill although I regret it has taken so long for it to be introduced. Speed is of the essence in regard to this issue. We must continue to concentrate on the banks and the problems they have created and there should not be any loss of momentum or interest. In that context, I apologise to Senator Coghlan for interrupting his somewhat irrational contribution.
Although this issue was initially greeted with a great deal of outrage in these Houses and among the public, there are signs, which I also detected in Senator Coghlan's contribution, that strong lobbying by the banks, particularly among Members of this House, is beginning to bear fruit. There are signs of a softening in people's attitudes in regard to banks and apologists for the banks are appearing out of the woodwork. I have detected that on all sides of the House.
We are dealing with financial institutions with vast funds which have used those funds since this crisis broke to pay enormous amounts of money to public relations people to lobby Senators, Deputies and particularly the Minister, in the hope of softening the blow which I hope will crash around their heads at some stage in the near future. Some people in this House have obviously spoken to people acting on behalf of the banks. I am not saying they should not do that but there are signs that the banks are using their shareholders' money to employ lobbyists to convey a dishonest message.
Senator Coghlan stated that the banks behaved very badly in the 1980s and early 1990s but that they are improving now. I would compare the difference in their behaviour with poisoning people and killing them by euthanasia. It is a matter of actual and moral corruption. In the late 1980s and early 1990s, banks openly broke the law. They are still as morally corrupt although they have probably found more subtle means of robbing their customers and the State. Banks are tough operators which possess greater muscle than any other business. They are using their funds to promote themselves and get individuals off hooks.
We are dealing here with the largest public company in the State. That is why the matter is so serious. The problem does not relate to a small number of people failing to pay small amounts of tax. Nobody in the country could put his hand on his heart and say he paid every penny of tax he ever owed, be it plumbers' VAT or whatever. The problem here is that institutionalised corruption is being carried out in a methodical way by the largest public company in the State. The signs of  lobbying are apparent in these Houses on a daily basis and the impetus is being lost on this issue. I see signs of it in the Bill and in the speeches being made in this House.
I am determined that when a report is finally published on these matters, it will be acted on. It should not be used, like so many other reports, as a delaying tactic for failure to take action against the rich, the powerful and the useless. This report will be of no value whatsoever if the Minister or Government comes forward in six, eight or 12 months' time to say they know what happened and that is an end to the matter. Action must be taken. It is not sufficient to expose wrongdoing. Given the size and scale of this operation, remedies must be put in place.
I am one of the most enthusiastic proponents in the House of the profit motive. I am an unapologetic promoter of private enterprise and low direct taxation. However, the profit motive is a little different when it comes to the banks because there is no risk attached to what they do. They are not ordinary businesses — they are not making things. It is not as simple as the Minister has said on occasion that they are just buying and selling money. They take virtually no risk personally.
Banks make money very easily. One has only to look at the criminal difference between normal retail deposit and lending rates to see this. If one asks the Bank of Ireland what it will give on a small deposit it will offer about 0.2 per cent per annum. It would take a person 500 years to double the capital.
Mr. Ryan Mr. Ryan
Mr. Ryan: The Department of Finance operates on a long-term basis.
Mr. Ross Mr. Ross
Mr. Ross: However, they charge about 24 per cent on a Visa card. It is not difficult to make money on that basis because there is not much risk involved. That is how the banks make their money. They are ripping off their customers. Whereas the State was their victim in the 1989-91 period, their customers are now their sole victims because the State has rumbled them. They rob their customers left, right and centre. It is an easy business. Having heard some of the evidence on this matter and seen some of the figures for bankers' earnings, I wonder for whom the institutions are run. The banks will say they are run for the shareholders and that is partly true. Their shares have done extremely well, as have banking shares around the world. There is very little evidence to suggest that any of the Irish banks have been better run than any others. They are run in the interests of those who control them and who are the directors.
The Minister will be aware that the people who really benefit from the success of banks in this country are the directors, the executive directors in particular, who enjoy an orgy of options which are unrelated to the risk they take. One will not find that the executives on the boards of banks  have a great number of shares. One or two have bought large amounts of shares for themselves. However, most of them get very rich by getting free options, risking no money, cashing them in for millions of pounds, running institutions which are in no danger themselves and ripping off the public.
Who benefits? When the market goes down the shareholders will lose money but the directors will not. They will still get vast salaries, cars and everything going and they will still have options to cash in when business is good. It is a myth that options are related to performance; they are related to market performance which is completely different.
I would like to see this inquiry broadened. There should not just be a committee looking at the financial institutions but a permanent body of the Oireachtas examining the behaviour of the financial institutions. What we have discovered to date on the DIRT issue is but the tip of the iceberg. There have been too many instances of absolute corruption and banks robbing customers unknown to them for anyone to suggest that what we are examining is the full story.
I do not understand the way in which the matter has been turned by some to focus on the Revenue Commissioners. There is clearly a conflict of evidence between the Revenue Commissioners and the banks. The strong lobbying by AIB, using who knows how many PR people from outside AIB, has sought to imply an equality of blame. There is no equality of blame whatever. There is no doubt that there is a guilty party and there is little for which the Revenue Commissioners must answer. This will be resolved by the inquiry. The Revenue Commissioners have little motive to lie in this case. There is very little reason for them to do so. However, I will not express any further view on that conflict, except to say that I cannot understand how there can be two opposing corners when AIB is so obviously culpable.
The dissembling of information and the language used by AIB when it came before the Committee of Public Accounts should be examined. AIB talked about the matter as an “industry wide problem” which is an amazing admission. They are saying in effect that the banks were all at it; that everybody was breaking the law and somehow that was all right. That is not the case. If anything, it makes it more serious in the case of such a large institution.
The arrogance of one particular past member of the board of AIB who said that he would not come to give evidence to the committee was typical of the attitude of bankers to the Oireachtas and to their customers. For a former executive of the largest such institution in the State to say he had better things to do than attend to answer questions shows a contempt for the customers, shareholders and the Oireachtas which is typical of the institutions.
I welcome the Bill. It is important that the Minister gives a commitment that the inquiry's findings will be followed by action of a punitive  type against the offending banks which will see that the public purse is not left short. There must also be action to ensure that not only is everything known about what happened but that it will not happen again. It would be wrong and disingenuous for the Government, the Opposition or Independent Members to cry for accountability or the punishment of former Members of the other House who have apparently offended against the Revenue laws while allowing the banks, who have offended far more, get off scot free.
Mr. Ryan Mr. Ryan
Mr. Ryan: I welcome the Minister; it is the first time I have seen him since the unfortunate tragedy at the end of September, but he seems to have recovered. I heard a colourful account from someone who ran into him a week after that event, when his form was not as good as it usually is, but then neither was mine.
It is not often I agree with Senator Ross but I concur with most of his contribution. I have a minor correction to his figures; an interest rate of 0.2 per cent would double one's money in 350 years, not 500 years. The rule of thumb is to divide 70 by the interest rate to get the time in which the money will double.
Mr. Ross Mr. Ross
Mr. Ross: That is true but the Senator has forgotten to subtract the DIRT.
Mr. Ryan Mr. Ryan
Mr. Ryan: I forgot the ravages of the Department of Finance.
A phrase which is widely used in mainstream media in the USA is “corporate welfare”, about which Time magazine ran an extraordinarily revealing series in the last few months. It refers to the degree to which the state subsidises big business — this is in the US, the home of free enterprise and privatisation — to no great benefit to the state. Individual states of the Union use sweeteners to compete for the corporate sector, to persuade companies to invest in one state rather than another. Even corporate jets are subsidised by the state and pay lower than the commercial rates for the publicly or privately owned airports they use. Everything corporations do is subsidised, protected and mollycoddled because of the apparent capacity of these bodies to create employment. The myth is that corporate welfare encourages such employment creation; the conclusion of Time is that it is done to make people and corporations rich.
Everything starts in the US but we can also see signs in Germany and France of the beginnings of a reappraisal of the myth of corporate welfare. In the US, the state spends six times as much on corporate welfare as on social welfare, with no greater benefit to the state. At least social welfare gives people the chance to live; corporate welfare makes already wealthy people spectacularly more wealthy to no great purpose.
If ever there was an example of corporate welfare in this State, it can be seen in the banking  system. On any index of what it is supposed to do, it fails; the only way it is spectacularly successful is in enriching its executives and shareholders. Most assuredly the banks do not enrich their customers or serve them well. They have developed a remarkable capacity for glossy public relations and extraordinary inefficiency and rudeness on a personal level. Everyone I know has experience of the ignorance of the banks.
It is time their greed was called into question. Why does the Minister think the senior executives of all our banks are worth a salary three times as great as that of the Taoiseach? What risks did they take to justify such sums? What contributions did they make to the social, political or economic welfare of this State? I am no great supporter of the Taoiseach but he takes enormous risks, his career could end at any time and he could literally be out of a job. He works long hours, has no share options, and cannot sell off an interest in Ireland Incorporated when it has done so extraordinarily well as it has in recent years. Yet these people award themselves, subject to no accountability, salaries which are multiples of what we believe the Taoiseach is worth. The irony is that many of these salaries are fixed by a bank executive who regards himself as being worth three times what the Taoiseach is paid.
The Bill is welcome but I have a couple of questions. I must repeat a phrase of Senator Ross because it was wonderful; he described the banks as rich, powerful and useless. I compliment him for that and would love to have thought it up because it is a great description of our banking system.
I have a question for the Minister about him and his predecessors; I pursued this matter at an earlier date and sent a letter to The Irish Times in October which produced no response. The historical figures for the revenue from DIRT are hard to find because, for some mysterious reason, the annual reports of the Revenue Commissioners do not show a separate figure for this tax, it is incorporated into the sum for income tax, but when one asks the information is provided.
The initial estimate for returns from DIRT was £78 million; in the first full year, which was 1987, the revenue was £296 million, almost four times what was estimated. In 1988, the return dropped to £200 million; in 1989, it fell to £185 million, and in 1990, it rose spectacularly again to £270 million. The trite explanation is that this correlates with interest rates but it does not; some of those figures went down when interest rates when up, and vice versa. Nor is the trend connected with changing tax rates. It has to do with the peculiarities of the amount of money on deposit in the financial system.
There is no simple explanation for the figures, particularly of the fact that the Department of Finance underestimated the amount of money on deposit in the Irish banking system by a factor of four in 1986. In 1987, the first full year in which the tax applied, interest rates were lower than the year in which the estimate was made, so the  Department's figures were probably out by a factor of five.
The interesting thing about the fluctuations of DIRT revenue since then is that it appears, once people realised they had to pay it, money disappeared out of the system, because the drop in DIRT relates closely to the great orgy of offshore and non-resident accounts. Returns increase again in 1990, which was about the time the Revenue Commissioners began to throw their weight around and come to settlements with the banks.
We are talking about this in 1998 but there was prima facie evidence ten years ago that something funny was happening, that is, in 1987, when revenue from DIRT was up to five times larger than the Department estimated. Why was this step not taken then? It was for the reason Senator Ross so eloquently outlined — the banks are big, rich and powerful, and no one likes to tangle with them. In the late 1980s we had to bail out a bank, and one of the peculiarly Stalinist qualities of our banking system is that the bank now denies that that ever happened. If you actually dare to refer in public print to the crisis in AIB in the late 1980s its public relations firm will write indignantly to the papers and, in the words of a former Fianna Fáil Minister, will say “What crisis? There never was a crisis”. That is the official line used by AIB. That is as wonderfully a Stalinist view of history as one could ever imagine. They get away with this sort of approach because they are so big and powerful.
They have obviously given up on me because on this occasion I was not lobbied at all. Back in the 1980s I had the privilege of being brought to lunch by the Governor of the Bank of Ireland and the Chairman of AIB simply because I wrote an article in a magazine about the banks which was rather rude. As an obscure backbench minor Senator with no great influence I was assiduously courted to try to persuade me not to be so unpleasant about them. It was a very pleasant occasion and one bank was considerably more hospitable than the other. One served sandwiches while the other served a most spectacular lunch, after which I slept for two hours. It would appear the more generous, the bigger the bank.
Mr. Costello Mr. Costello
Mr. Costello: They are not used to that.
Mr. Ryan Mr. Ryan
Mr. Ryan: They are very good at entertaining but I was tickled, and still am, at the fact that their lobbying effort extended to myself. I wondered what lobbying they did with people with considerably greater influence. On this occasion they must have given up on me or just forgotten about me.
This legislation is long overdue. Somebody might ask the banks why they tout so heavily the confidentiality of bank accounts. The question I have asked repeatedly in this House is confidential from whom? When a bank advertises so vigorously that my account is confidential, what are they telling me? Are they telling me that they will  not tell my wife or my neighbour? We all know it is confidential from the Revenue Commissioners. That is what they mean when they say my account is confidential; normal commercial rules means they are not going to tell anyone else. I am fascinated by the use of this word “confidential”. It obviously means they are signalling quite explicitly to people to put their money into their banks where the Revenue Commissioners will have a damn hard job finding it.
Similarly I have come across banks in Cork city touting for non-resident accounts miles from an airport and miles from a car ferry. Who are the non-residents for whom they are looking? They are people residing in Ireland whom they can facilitate with non-resident accounts. I would be glad to be convinced that we are beginning to tackle these institutions because they have behaved badly in so many ways. I remember the way they introduced exploitative labour contracts in the 1980s when we had an unemployment crisis. They gently eased out large numbers of their experienced employees and brought in young people on exploitative terms of insecurity and low wages. They actually had to reverse that much to my delight because of the change in the labour market, but they were one of the first to demand the right to exploit young people in order to further enrich their grossly overpaid executives. I regret that such people were rewarded by this Minister by being able to have the capital gains tax they paid when they exercised their share option. It was not a particularly wonderful incentive to any kind of enterprise, imagination or risk taking. It was a reward for inertia and for self preservation.
In conclusion, I would like to hear what the Department made out of the strange figures on DIRT over the years and why section 22 is necessary. This specifies that “Any record relating to an investigation or examination carried out under this Act is not covered by the Freedom of Information Act”. The Freedom of Information Act contains proper and universal exemptions and if there is anything sensitive in these reports then it would be covered by the existing exemptions in that Act. This provision is unnecessary and I am afraid that from now on everything sensitive will have a clause at the end saying the Freedom of Information Act does not apply to this. If the Freedom of Information Act is inadequate to cover sensitive information, then let us amend the Act because it should not be possible to disclose information that is either commercially or personally sensitive under the Freedom of Information Act and nobody ever thought it should. A blanket exemption like this is a very bad idea. It is contrary to the spirit of freedom of information and it also undermines the role of freedom of information in making our institutions accountable.
I welcome the Bill and look forward to a successful outcome to the first attempt to bring power and wealth in this country to some sort of accountability.
Mr. Costello Mr. Costello
 Mr. Costello: I welcome the Bill. This is an appropriate time to deal with this legislation because all over the newspapers and the media today is the account of unpaid tax and how a wide range of pillars of society have had to answer to the Revenue Commissioners in terms of tax unpaid, with interest and with various penalties being added on. Interestingly enough, a large percentage of them seem to be in the service industry — hoteliers, restaurateurs and publicans. I wonder why that particular industry is named so often in the list of people with whom the Revenue Commissioners have problems. Today the decision was announced that the former Taoiseach's tax bill, which was determined by the Revenue Commissioners, on appeal to the assessment officer was reduced to zero. That certainly raises major questions in terms of the public perception about how we do our business in relation to tax matters. I understand the matter was raised in the Dáil earlier and it now transpires that a close relative of the Taoiseach was the assessment officer. I have absolutely no reason to question the bona fides and I understand the person is of the very highest calibre in every sense, but surely in circumstances of that nature the person——
Mr. Finneran Mr. Finneran
Mr. Finneran: Why mention it?
Mr. Costello Mr. Costello
Mr. Costello: I mentioned it for this reason.
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: Senator, I would like you to keep to the terms of the Bill before House.
Mr. Costello Mr. Costello
Mr. Costello: Surely it would have been appropriate that the person would have absented himself or ruled himself out in those circumstances from making the adjudication.
Mr. Finneran Mr. Finneran
Mr. Finneran: Is the Senator questioning his professionalism?
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: Senator, I do not think what you are referring to relates to this Bill.
Mr. Costello Mr. Costello
Mr. Costello: I am referring to the general context and the backdrop under which we are discussing this matter. We are talking about institutions and taxes unpaid.
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: Senator, we are dealing with the Bill before the House.
Mr. Costello Mr. Costello
Mr. Costello: Had I not been interrupted by Senator Finneran I could have continued. The Bill before us is good; it is appropriate and necessary legislation. All of us remember seeing senior officials of the Allied Irish Banks before the Committee of Public Accounts and all of us in public life will have experienced some degree of shock in seeing how they behaved towards that committee, the condescending attitude, the arrogance, the absolute statement that this was part and parcel of the industry, that this was the manner in which the industry operated, the wider ethos of the industry, all without batting an eyelid.  At the same time, they stated categorically they were in no way at fault in relation to the major queries about bogus offshore accounts and the payment of DIRT tax. They effectively admitted it — without admitting it — and then blamed the Revenue Commissioners. It was the most unbelievable case of denial I have ever seen. It was fascinating that adults, in receipt of huge salaries and with responsibility for billions of pounds belonging to taxpayers, consumers and institutions, could act in that fashion. One can understand why the public becomes so cynical when people in positions of power and privilege, who are put forward as pillars of society, behave in such a fashion.
The proper proposals were put forward by the Committee of Public Accounts. It would have been impossible for it to have conducted the investigation thoroughly and it sought the giving of extra powers to the Comptroller and Auditor General, who would then produce his report and the Committee of Public Accounts would then have sufficient powers to continue its investigation and finalise the matter. I think that is the proper approach.
The only aspect about which I am hesitant is that we seem to lay all the responsibility on the Comptroller and Auditor General when a crisis arises. Perhaps we expect too much from that office and it might be difficult to keep using it to that degree in the future. It is essential to provide the Comptroller and Auditor General with the necessary resources to carry out investigations fully and adequately. We are breaking new ground here and it is exceedingly important that we do it in the proper fashion and that it has proper credibility.
It was revealed by Magill magazine that AIB was up to its neck in terms of unpaid tax on offshore accounts. Before that, we saw how NIB was effectively stealing from its customers, in terms of the charges it was deliberately imposing in a number of its banks. No one has been brought to justice for this.
The Labour Party has tabled a motion, which sums up how the ordinary citizen sees this whole matter. It states:
That Seanad Éireann condemns the practice by financial institutions of facilitating the defrauding of the State of millions of pounds through bogus offshore accounts; further condemns the practice by the Revenue Commissioners of accepting derisory sums of money to settle outstanding liabilities; demands that those responsible be pursued and prosecuted and that the misappropriated moneys and taxes be paid in full to the State; and, finally, that new regulatory and enforcement procedures be put in place to ensure that financial institutions cannot operate outside the law in the future.
We believe that all these elements must be dealt with effectively. Financial institutions must be brought to book for their facilitating of the defrauding of the State of millions of pounds. The  importance of this legislation is that it will allow these matters to be properly investigated and the gathering of hard evidence.
We must examine how the Revenue Commissioners do their business. Is there a nod and a wink between the Revenue Commissioners and certain financial institutions? It was astonishing to hear the descriptions by AIB of the deal it had done with the Revenue Commissioners. It was all done by telephone and there was not a scrap of paper to indicate any deal was done. However, quite clearly, the banks were not paying the full DIRT that was due and, equally clearly, the Revenue Commissioners were not demanding the full tax due. There is a clear conflict of statement there which must be resolved. There can be no solution unless that core area is resolved.
When the matter is resolved, we must examine the whole question of penalties. If we are to have hard evidence of very serious defrauding of the State at the highest level of money to which it was entitled by the use of offshore bogus accounts, in the clear knowledge of those who are responsible for making decisions on this matter, the State must act in an appropriate manner. That appropriate manner must be similar to what would happen at other levels of society, which must mean prison sentences as well as financial sanctions.
The day when someone who has defrauded the country of a large amount of money due to the State ends up in the prison, will be the day that the rich, powerful and privileged will be seen to be dealt with adequately. It is probably wishful thinking that that would be the outcome, but the public wants this matter cleared up and for the banks to be dealt with in a proper and serious way. They want to see people taking the rap for the misappropriation and misconduct which has taken place.
Someone must be at fault and we must be able to determine who it is. We were unable to get at the major heroin traffickers until the death of Veronica Guerin. Very quickly after that we established the Criminal Assets Bureau and enacted anti-drug trafficking legislation. Now there is not a single major drug trafficker operating in this country as they have all disappeared — some of them are offshore with their offshore accounts. Effective action was taken in that case.
Those are the points which this legislation must prove. There are also a few actions the Minister can take. For example, he should have indicated in his budget speech some progress towards imposing a levy on the banks which have been beneficiaries of the reduction in corporation tax. This would be a wonderful opportunity to ensure they pay back some of the money they take from their customers.
The banks are making exorbitant profits. The Bank of Ireland made in excess £0.5 billion in its half yearly accounts, which is £1 billion in a year. That is as much as the Minister has in his budgetary surplus — or, at least, it was until the NTMA suggested there might be another £1 billion somewhere.  The AIB is making similar profits. We are talking about enormous sums of money.
The Minister has both the opportunity and the duty to ensure the banks are examined very carefully in terms of what the State is doing to increase their profits through the reduction in corporation tax. I would like the Minister to do this in the next budget as I do not think he can do in the Finance Bill; or perhaps he can. I do not know how long it will take for the report to be compiled and addressed, but the Finance Bill is usually not enacted until late spring, so there may be an opportunity there.
The Central Bank has been lethargic in the fulfilment of its duties. It has stated it does not have a hands on role in the dealings of the financial institutions, but it has a broad supervisory role. With the establishment of the European Central Bank, the bank has been effectively deprived of any major role in the regulation of Exchequer funding, etc. In view of this, it has a much greater opportunity to provide a supervisory role to the financial institutions.
The Bill is welcome. It is specifically targeted and I hope this ensure an effective report within a short period which will then enable the Committee of Public Accounts to complete its business, also within a short period, thus ensuring that early in the new year there will be a definitive resolution of this matter and that an effective standing mechanism will be established to deal with serious matters of this kind which are of public interest.
Minister for Finance (Mr. McCreevy) Minister for Finance (Mr. McCreevy)
Minister for Finance (Mr. McCreevy): I thank Senators for their contribution to this debate. It is clear there is a consensus on the need to act quickly and effectively on the matter and that it must be resolved.
The public concerns about the administration of DIRT and the conflict of opinions that arose during the hearings of the Committee of Public Accounts cannot be ignored. The first interim report of the committee and the 1997 Appropriation Accounts recognised the need for the following: an investigation to be undertaken by the Comptroller and Auditor General, new powers for the Comptroller to pursue the investigation: the presentation of a report to Dáil Éireann setting out the facts as far as possible, an examination of the report by the Committee of Public Accounts using enhanced compellability powers and a report to the Dáil drawing conclusions and making recommendations.
All these matters and many other crucial elements requested by the committee are effected in the Bill, which is a considered and balanced response to these recommendations. The Government has made every effort to ensure that the arrangements being put in place are the right ones. We have covered much ground in a short period. I have been greatly assisted in framing this legislation by my consultations with the Chairman of the Committee of Public Accounts, the Comptroller and Auditor General and their  legal advisers. I appreciate the time and commitment they have given to this matter over the past few weeks.
This has been a difficult exercise. The matters to be investigated are very important. The Comptroller and Auditor General is an independent and constitutional officer and the request to him to prepare a special report of this kind breaks new ground. However, I ask the House to take into account the pressing need to progress this Bill as quickly as possible.
Senator Coghlan raised a number of interesting matters concerned with non-residency. The onus was on financial institutions to satisfy themselves about declarations. If there was — doubt for example, if a person in a financial institution had doubt about the status of the non-resident — he or she was to seek an affidavit from the account holder. The investigation to be proposed on foot of this Bill will address the matter raised by the Senator, that is, whether Revenue checked on the operation of the DIRT tax by the banks in an appropriate way consistent with its powers.
With regard to the issues raised by Senator Finneran, the Bill breaks new ground for the Comptroller and Auditor General, which is why it is complex legislation to frame. A Deputy rightly described it as hybrid legislation. The Comptroller's functions are specific and are laid down by the Constitution, and to ask him to enter a new area has proved difficult. There have been difficult legal and constitutional issues to address. That is why the Bill is so complex. An extraordinary amount of time has been given by officials in my Department and in the Office of the Attorney General, by the Attorney General and by the Chairman of the Committee of Public Accounts and their legal advisers to try to produce appropriate legislation.
The further we move away from the traditional constitutional role of the Comptroller and Auditor General, the greater the risk of challenge, especially where large amounts of money are involved. This is why the Bill provides that he may seek the direction of the High Court in the exercise of his functions and that he may use auditors to investigate the accounts of private persons.
Senator Finneran also raised the culture of cheating. I am afraid there was a culture of cheating on the Revenue in the 1980s. I hope we have moved on. However, to try to eliminate the number of people who do not pay the correct amount of tax is equivalent to trying to eliminate sin; I am afraid it will always be with us.
Ireland is not unique in this regard. I have read a number of reports over the past six months or so on the various estimates by German economists of the size of the black economy in Germany and the estimates by various independent institutes of the number of German residents who have non-resident accounts and who use accounts in nearby countries. This has considerably exercised  the mind of my German counterpart, Mr. Lafontaine.
While there was a different culture in the 1980s, the change in tax compliance and in Revenue practice from the 1980s to the 1990s are two of the reasons we are enjoying such large Exchequer surpluses in recent years. As somebody who has practised in the accountancy profession for the best part of 30 years, I can confirm that the Revenue has changed its way of doing business. Most people in the business will know that its professionalism, more modern communication systems and sheer efficiency, which has occurred over the past ten to 12 years, have helped to increase the largesse to the Exchequer.
I hope the culture that prevailed in the 1980s has now changed. There is a greater degree of compliance in the 1990s, but let nobody be under any illusion that for as long as income tax remains — it was introduced first as a temporary arrangement to last only a year — there will be a degree of evasion. It is the job of Revenue and the law makers to make efficient law to ensure that everybody pays their taxes according to the law.
Senator Finneran also raised a question about section 14. The Comptroller and Auditor General needs recourse to the High Court to resolve a constitutional challenge. This is a support to him as he enters into a new and novel area.
The Senator also questioned the purpose of section 20, which amends the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997. This Act contains a specific provision which does not allow the investigation of taxation affairs. To enable the Committee of Public Accounts exercise the functions of this Act it was necessary to change the provisions in that section.
The question of privilege was raised by a number of Members. The Constitution gives Members of the Houses of the Oireachtas privilege in respect of utterances and some years ago this was extended to cover utterances in committees. When I came here in the 1970s and there was a heated debate in the Dáil where Members hurled insults at each other, the common retort was “say that outside the House”. This phrase was also used in the 1960s but it is not so frequently used nowadays.
Mr. Ross Mr. Ross
Mr. Ross: That phrase was used this morning.
Mr. McCreevy Mr. McCreevy
Mr. McCreevy: I am glad because when I was a young student, read Dáil debates and visited the House in the early 1970s the phrase “repeat that outside the House” was often said across the floor of the House. That emphasises the absolute privilege which was conferred on utterances within the Houses of the Oireachtas but, as I said, it did not extend to anything said outside the Houses. The conferral of absolute privilege by the Constitution on the Houses of the Oireachtas is very special and is not to be abused. Some years ago this privilege was extended to cover utterances made in committees but today this Bill goes  a step further in giving privilege to utterances between meetings provided they relate to the committee's performance of their duties. Conferral of absolute privilege does not extend to television, radio or printed interviews and I pointed that out in my speech.
Senator Ross made very interesting allegations about the banks and spoke of people being apologetic for them. He is one person in Irish life who has long been a strident critic of the banking system, both inside and outside the Houses of the Oireachtas. The matters he raised with regard to the banks have been debated for some time.
In recent years people have become more cognisant and examine their bank statements to see how they are being charged. About six years ago I discovered a charge on my account which I had not been aware of for the previous 25 years and it resulted in my paying over the odds. I am someone who examines their bank statement because, for most of my adult life, my account has been in the red. The banking system is far better than it was years ago because of the growing awareness among customers and the greater competition between banks.
Senator Ross raised many questions about the banking scene and he has repeated them on many occasions. He is not saying anything here today that he has not said before.
He pointed out that there have to be remedies enforced at the end of this exercise. He said there was little point going through a very difficult task of preparing this legislation without enforcing remedies. He also said it would have been better if we had produced it earlier. The persons that I mentioned earlier worked on this Bill up until last weekend. Some people worked 16 and 18 hours per day over a long period of time. Many consultations also took place between the Comptroller and Auditor General, the Department of Finance, the Attorney General and the legal advisers to the Committee of Public Accounts. With all this work it has not been easy to frame this legislation in the time frame.
If Senator Ross's allegations are borne out by the Comptroller and Auditor General's investigations we will look to the Committee of Public Accounts to make its report and provide workable and reasonable remedies. As the Senator has already pointed out, there is little point in having gone to all this trouble bringing this Bill before the House and waiting for the Committee of Public Accounts to finalise its report if we do not act upon it. The Government will take its report on board.
With regard to the general aspersions made by Senator Ross about the AIB, I am sure the Comptroller and Auditor General will have discretion to give priority in his investigation to the substantive issue involving the AIB.
Senator Ryan referred to corporate welfare issues and to an interesting report released in the United States. He spoke of the enrichment of the banks and shareholders. This Bill deals specifically with the DIRT issue which has been alleged  to involve an attempt by the banks to enrich their customers rather than themselves. This is a general point and one to which Senator Ross also referred. Since this controversy broke, the AIB has been accused, with other financial institutions, of breaking the law. The committee will investigate this and the Revenue Commissioners said something else. One of the jobs of the investigation will be to discover where the truth lies. Whatever about the AIB or other financial institutions breaking the law, that is questionable as the sense as to whether an account was genuinely resident, but, for the accounts that were not genuinely non-resident there is no question that the people who had money there were definitely breaking the law because that money would have been hidden from the Revenue Commissioners, proper taxation would not have been applied to it, and this should not be forgotten.
Irrespective of whether the number of bogus non-resident accounts is 20 or 40 per cent out, we will have to wait and see. Perhaps this matter will never be resolved because of the lack of the actual number of bogus non-resident accounts. Let us say that the number is quite substantial, it is beyond my credulity that this comes as a surprise to many people because, if the alleged numbers are correct it means that people in every party must have known someone involved. I would go so far as to say that perhaps Deputies and Senators knew them as well.
Mr. Costello Mr. Costello
Mr. Costello: We did not.
Mr. McCreevy Mr. McCreevy
Mr. McCreevy: My next comment will bring shock and horror to the Irish nation. I suggest that journalists may have known these people as well because their father, mother, brother or sister may have been involved. I am amazed that, since this scandal broke no one seems to know anyone involved. This type of put on shock and horror does not wash with me. Many years ago I read a book by Flann O'Brien entitled At Swim-Two-Birds. It is a classic and cannot be bought in bookshops but I have a copy at home. It is about 30 years since I read it but I know that the first paragraph began with the words “He was born at the age of 25”. It strikes me that some people seem to be born again in 1998 yet they were not around in 1988, 1978 or 1968. This has surprised me in recent times.
As this is probably the last opportunity I will have to speak on this issue until we receive the final report, I would like to make the following comments. I know Senator Ross has lived in the real world, like myself, in our past lives, we were known to drink, smoke, play cards and place the odd bet but we seem to be the only two people in the country who did this because everyone else is now in a state of virtuousness and will not admit they did all these things. Senator Ross and myself did all those things and we lived in the real world. According to reports there are tens of thousands of these people throughout the country but apart  from Senator Ross and myself, no one seems to have come across this in their past lives if one was to believe what has been said in this House and the other House and written and broadcast in the media over many months.
Mr. Coghlan Mr. Coghlan
Mr. Coghlan: The Minister's candour knows no bounds.
Mr. McCreevy Mr. McCreevy
Mr. McCreevy: Perhaps I will include Senator Coghlan as someone who has joined the real world also. I would not like to offend anyone in the media by including them in this. No journalist who gets a commission outside his normal newspaper would ever enter into an arrangement with the editor of that particular newspaper whereby he would be paid under the counter. If such an allegation were made, I would set up a separate independent tribunal to investigate the matter.
Senator Ryan mentioned that DIRT is not differentiated from other income tax in the annual report of the Revenue Commissioners. There is no simple solution to this. DIRT is determined by a variety of complex factors, including the amount of money on deposit, the rate of tax, the rate of interest and the savings behaviour in the economy. This is very difficult to estimate. However, I accept the Senator's concerns. The matters referred to must form part of the investigations by the Committee of Public Accounts.
I wish to say something to Senator Costello, and I put this down to the party to which he belongs. During the 70 odd years of the freedom of this State, his party has never had a majority in Government. During that period Senator Costello and his party have continually cast aspersions on members of my party. Senator Costello did this in the typical manner this morning. Perhaps he was directed by his leader and his heart was not in it. This was the typical old type of allegation — I do not think this man has anything to answer for but I will throw in the muck anyway. In County Kildare, where Senator Ryan and I come from, if we want to cast aspersions we do it directly, not in a cowardly way. If Senator Costello wishes to cast aspersions against an individual while enjoying the privilege of this House, he should do so directly and in a manly fashion. He should not do it in a cowardly fashion.
Mr. Costello Mr. Costello
Mr. Costello: I did it directly on the Order of Business.
Mr. McCreevy Mr. McCreevy
Mr. McCreevy: People who are not Members of this House are not in a position to defend themselves.
Mr. Costello Mr. Costello
Mr. Costello: It was not appreciated when it was done directly.
Mr. McCreevy Mr. McCreevy
Mr. McCreevy: The Senator raised the question of the levying of banks. I pointed this out in answer to a parliamentary question on corporation tax. The Minister for Finance, and probably his successors, would like to devise some ingenious  system of getting more tax from particular institutions, given that the Government has decided on a single low rate of corporation tax of 12.5 per cent. The reason we got into difficulty in Europe in this regard is that we had a general rate of corporation tax of 36 per cent to 40 per cent, and sometimes higher, and a low manufacturing tax rate of 10 per cent. In 1996 the European Commission decided that was a distortion under the State aid regime. We have now decided on a single low rate of corporation tax for everyone. If I were to devise an ingenious method of extracting money from any sector, I would get into difficulty with the European Commission which would say the same system applies as before, a nominal 12.5 per cent for everyone, but there is a special rate for different sectors. It is not open to me to devise an ingenious solution at this time.
The question of the accountability of banks was raised. I want to draw Senators' attention to the provision in section 18 of the Bill whereby there may be application to the High Court for recovery of expenses from a bank. The Bill provides that the cost of this exercise will be charged to the Exchequer. However, under section 18 money can be recouped from financial institutions when appropriate.
I thank Senators for their contributions and I commend the Bill to the House.
Question put and agreed to.
Seanad Éireann 157 Comptroller and Auditor General and Committees of the Houses of the Oireachtas (Special Provisions) Bill, 1998: Second Stage.