Politicians say heads should roll over bank fraud

Some of Ireland’s wealthiest citizens and companies who used an illegal bank to evade tax for more than 20 years must be brought to justice, politicians demanded today.

Members of all the main political parties told a specially-convened sitting of the Dail that some clients of Ansbacher (Cayman) must be prosecuted.

At the same time there were calls for the Governor of the Central Bank to be summoned before the Dail to explain its “systematic failure” in preventing the bank from operating in Ireland without authorisation.

A report last week described Ansbacher’s Dublin operation, which had 190 clients including former Taoiseach Charles Haughey, as “little more than a charade, a sham and a legal fiction”.

Following a three-year investigation, High Court-appointed inspectors detailed evidence “tending to show that Ansbacher was guilty of a number of criminal offences” including conspiracy to defraud tax authorities.

The the Dail returned from its summer recess today for a special debate on the banking system which operated between the 1970s and 1990s.

Tanaiste Mary Harney said: “The Ansbacher report takes us directly to issues at the heart of our democracy. A state that cannot collect taxes, through lack of will, lack of authority or a degeneration of its political culture is a failed state.”

The Progressive Democrats leader said the Government would give “full backing” to the tax authorities which would “pursue the cases of wrongdoing identified with the utmost vigour”.

Not all those who held accounts evaded tax. But Ms Harney said bringing prosecutions against those who did could prove difficult.

She said: “The inspectors said themselves that because of the length of time and the onus of proof that is required to successfully sustain a prosecution before a jury, that is not an easy matter.

“If you were to do that for the sake of it, knowing in your heart of hearts that the evidence was not there to sustain a prosecution, I think that might be quite irresponsible.”

She said the authorities could “at least” get financial settlements from Ansbacher clients. More than €18m has been recovered to date from 55 clients.

But she added: “I do hope there will be prosecutions but it is not a matter for me.”

Fine Gael leader Enda Kenny said failure to prosecute would “increase the cynical belief of many people in this democratic republic of ours that there is one law _ or in some cases no law for the rich _ and another for the rest of us”.

He said the fraud - “on a scale so vast, so ingenious and so brazen that it takes the breath away” - contributed to appalling economic conditions in recent decades.

“If, after due process, there are people on this list found guilty of that offence, then appropriate action must be taken against them – regardless of position or status in society,” he said.

Fine Gael frontbencher Phil Hogan said Ms Harney was “defeatist” for suggesting prosecutions could fail.

He added: “I hope that the gardai will call to these peoples’ homes or places of work and arrest them, bring them in for questioning and if appropriate, charge them.”

Government Chief Whip Mary Hanafin, of the main governing party Fianna Fail, said it would be “wholly unacceptable for any coherent group in society to be placed beyond the reach of the criminal law”.

And she warned accountants and financial advisers with information about the scam not to “engage in a conspiracy of silence” or face tightened regulation.

Labour leader Ruairi Quinn said: “Settlement is inappropriate in these circumstances. Publicity and the naming and shaming, as well as prosecution, is what is required.”

His enterprise spokesman Tommy Broughan called for Governor John Hurley and senior managers at the Bank of Ireland to be called before parliament’s Enterprise, Trade and Employment Committee.

He said the Bank was “terrified” of evidence of tax evasion during the period of the scam which “seems to have created an atmosphere where prudential vigilance was lacking”.

It was guilty of a “systematic failure”, he said.

Ms Harney agreed, saying: “There was a failure by the Central Bank to fully and effectively oversee and regulate the banking sector.”

But Finance Minister Charlie McCreevy said it would have been difficult for the Central Bank to detect “deliberately concealed arrangements, adopted at the highest level.”