Taoiseach reversed move to tax CFDs while minister

TAOISEACH Brian Cowen played a key role in preserving the legislation that ultimately allowed the Quinn Group to build up a e1.1 billion destabilising stake in Anglo Irish Bank, it has emerged.

Last night Mr Cowen confirmed he was lobbied by various groups in the financial services sector two years ago regarding the preservation of tax-free status for those trading in Contracts for Difference (CFDs).

The Taoiseach said he went ahead with the preservation to protect the Irish Stock Exchange.

CFDs are a device used by investors to gamble on the performance of a company using largely borrowed money and was the mechanism Sean Quinn used to build up his stake.

In a statement, Labour leader Eamon Gilmore asked Mr Cowen to confirm if the lobbyists he named in his statement were a complete list.

“Nowhere in the statement does the Taoiseach claim that this is a complete list of all those who made representations to him or his department. The questions I raised are matters of legitimate public interest and are not going to go away,” he said.

The two men had been involved in pointed exchanges during Leaders’ Questions in the Dáil earlier in the day.

Mr Gilmore said the actions of Mr Cowen on the subject of CFDs had contributed to the collapse of the banking sector.

He was referring to a incident in March 2006.

At that time Mr Cowen, who was minister for finance, intervened to stop the Revenue Commissioners cracking down on CFDs. Revenue wanted to charge stamp duty on their holders.

Mr Cowen was lobbied by the Irish Stock Exchange (ISE) and the London Investment Banking Association. Davy Stockbrokers and PricewaterhouseCoopers also raised issues.

Mr Cowen, and Kevin Cardiff in the Department of Finance, were told 30% of the ISE e108bn value in 2005 was tied to CFDs.

Brian Healy, ISE’s director of trading and regulation, said Revenue’s move on stamp duty could lead to an exodus of London-based investors and weaken the stock exchange.