Goodbody used haven ‘to save clients millions’

GOODBODY Stockbroker routed its clients’ money through a Caribbean tax haven in an effort to save millions of euro in stamp duty, according to the Financial Regulator.

It was claimed that the extraordinary share dealings which involved routing AIB shares through a company based in the island of Nevis, “was designed to maximise stamp duty reclaim”.

Representatives from the Regulator’s office appeared before the Oireachtas Committee on Economic Regulatory Affairs yesterday to answer questions on alleged money laundering involving AIB and its stockbroker subsidiary, Goodbody.

The Regulator and the Central Bank were both made aware of the trading before it took place, it emerged yesterday, and had set out terms and conditions for the trading which were in compliance with the Companies Act.

But the Regulator said yesterday that Goodbody breached these terms and information the stockbrokers supplied in relation to the dealings was “misrepresented”.

Details of the irregular share dealings were revealed to the committee in recent weeks by a former auditor at AIB, Eugene McErlean.

For a period in 2001, shares purchased in AIB by clients of Goodbody were put in the name of a company in Nevis. When Goodbody were asked to sell AIB shares on behalf of its clients, it sold shares held by the company in Nevis, which was then listed as a “black spot” with which Irish financial institutions were not allowed to trade.

Goodbody claimed it was dealing in shares through the German beer company, Furstenberg, but was using the account of a customer named Furstenberg who was no relation to the beer dynasty.

The Regulator told the committee yesterday that when full details of the dealings emerged it reported the matter to the Garda. However, the information was not passed on to the Department of Finance or made public because of confidentiality reasons.

Chairman of the Financial Regulator Jim Farrell called for a change in the law to allow his office to be more transparent.

He told the committee: “We must operate within the law. If the law is changed and we are permitted to make additional disclosures, then of course we would do so.”

He said: “Both ourselves and previous regulators should not be blamed for what is, in essence, compliance with the law.”

Earlier Mr Farrell defended the Regulator against claims by Mr McErlean that the watchdog knew about an overcharging scandal at the bank for several years.

“I and my colleagues have nothing to hide,” he said.

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