Flynn aware of ‘improper activities’

Harry McGee, Political Career

The inspectors conclude that Ms Flynn, along with three other financial services managers who sold Clerical Medical Insurance (CMI) policies, were aware the money being invested was “undeclared to the Revenue”.

“All four assured their customers that their investment was completely confidential from everyone, including the Revenue,” state the inspectors, accountant Tom Grace and former Supreme Court judge, Mr Justice John Blayney.

They further find that Ms Flynn and her colleagues, Patricia Roche, Charlie McCarthy and Alistair Stewart, told investors that if they made their investment the subject of a trust, it would avoid the necessity of probate being obtained, thus making it possible for the funds to be kept hidden from Revenue even after the investor’s death.

The CMI product - sold by Ms Flynn and eight other financial services managers - was introduced by NIB through its financial advice and services division (FASD) in 1991. Ms Flynn was an employee of the bank from September 1989 until her election to Dáil Éireann in 1997.

The inspectors, in their conclusions, found the bank targeted customers who held bogus non-resident accounts and fictitious accounts. Moreover, NIB promoted CMI policies as a means of investing funds that had not been declared to Revenue, thereby facilitating tax evasion.

Most of the customers were identified at NIB branches and referred to FASD financial service managers, including Ms Flynn.

According to the inspectors, the practice arose after a decision taken by the bank to close or regularise all fictitious and bogus non-resident accounts. However, to avert the possibility of business being lost, one solution was to propose to customers to invest in CMI. “In the opinion of the inspectors, these ‘solutions’ were improper because they served to encourage customers to continue to evade tax,” the report concludes.

The inspectors also found that Nigel D’Arcy, the head of the FASD was “primarily responsible for the continuation of the practice” in relation to CMI policies. “The responsibility of the financial service managers has to be judged against this background,” they state.

In the only portion of direct evidence from Ms Flynn included in the report, she is asked if she was aware of the source of funds for CMI policies.

She replied: “Not generally but, at times, it did become apparent. Source of funds really wasn’t an issue for me. I was an investment adviser.”

Ms Flynn was not available for comment yesterday.