Category: Haughey

More on Haughey:

Charles Haughey lost £520,000 (€660,264) when the Ansbacher Deposits were discovered by the McCracken (Dunnes Payments) tribunal in 1997, it emerged yesterday.

Accounts within the secret deposits coded S8 and S9 belonged to Mr Haughey and were frozen along with the rest of the deposits when they were discovered. The money in Mr Haughey’s accounts was subsequently used to settle the tax liabilities of another unnamed taxpayer, the tribunal heard.

The tribunal heard that during negotiations with Mr Haughey’s tax advisers in 2002, the Revenue was told that Mr Haughey did not have access to the accounts, that they were not in his name, and that they should be considered dormant.

On Thursday, principal officer with the Revenue, Norman Gillanders, said the money in the S8 and S9 accounts had been used to settle the tax affairs of another taxpayer. A document shown yesterday stated that the balance in the accounts in September 1997 was about £520,000.

The tribunal was yesterday hearing further evidence in relation to the performance of the Revenue in raising taxes from Mr Haughey. As part of its negotiations with Mr Haughey’s agents in 2002, the Revenue drafted a schedule of known expenditures and receipts by Mr Haughey over the period 1977 to 1997.

Principal officer with the Revenue, Brian McCabe, told Jacqueline O’Brien SC, for the tribunal, that the Revenue wanted to calculate a figure to assess Mr Haughey’s liability to gift tax.

Accountancy firms ran a bill paying service for Mr Haughey since the 1970s but he also spent money through other channels. The Revenue’s calculations arrived at various figures for total expenditure between 1977 and 1997, from a maximum of £9.9 million to a minimum of £6 million. The Revenue and Mr Haughey’s agents, in negotiations, arrived at a “core” figure of £6.9 million in expenditure and agreed this figure could be viewed as representative of the total gifts received by Mr Haughey over the period. Mr Haughey’s salary from politics over the period was not included in the calculations as Mr Haughey cashed his monthly cheques since the 1970s and did not bank the money.

Mr McCabe said accounts received by the Revenue had indicated that “severance payments” received by Mr Haughey when he retired from politics, were used to buy deer worth £71,000 in 1993. In fact, the Revenue now believed, the money for the deer came from the S9 Ansbacher account.

As part of the 2002 negotiations, Mr Haughey’s agents were asked how he had funded his purchase of a boat and a holiday island in Co Kerry in the late 1970s. They suggested the money could have come from Mr Haughey’s borrowings from AIB.

The agents also said they did not know how Mr Haughey funded his holidays and whether he had received any gifts since 1997. They also did not know how Mr Haughey funded his expenditure during the period 1977 to 1984. The agents also had no information about a sterling £400,000 loan Mr Haughey took out from Guinness Mahon Cayman Trust in the early 1980s.

The Revenue calculated that the total amount received by Mr Haughey in the 20 years from 1977 included £2.12 million from Ben Dunne between 1987 and 1992.

Mr Haughey agreed to pay £3.94 million in settlement and the money was raised by the transfer of lands at Kinsealy, Co Dublin, back to Mr Haughey from his children and its subsequent sale.

Mr McCabe said that from the perspective of the Revenue, the outcome was satisfactory.

Have a think about these figures, and think about how much houses and living cost and during those dates. These were massive sums of money. In 1985 you could buy a large house for £30-£40k. Charles Haughey spent £4.1 million through his bill-paying service in the years 1977 to 1997. And yet we are told nothing was given in return.

The spending through the service for the following years was:

1985 -£189,000

1986 -£176,000

1987 -£203,000

1988 -£232,000

1989 -£325,000

1990 -£264,000

1991 -£342,000

1992 -£336,000

1993 -£302,000

1994 -£316,000

1995 -£441,000

1996 -£274,000

1997 -£118,000

Perhaps most interest, RTE TV news failed to report on the Moriarty Tribunal, it features no where in their archives. It finally was dealt with on Prime Time last night. Watch it here.

The IT front page from Friday:

Former taoiseach Charles Haughey told the Revenue in 2003 that he had not received any gifts of money since 1997 and was living on borrowings from the Irish Nationwide Building Society, it emerged at the Moriarty tribunal yesterday.

It also emerged that in 2002 Mr Haughey’s accountant, Des Peelo, told the Revenue that Mr Haughey was “dying” and wanted to settle his tax affairs.

The tribunal yesterday resumed hearings into the Revenue’s performance in raising tax from Mr Haughey.

Im going to quote a large exerpt here and highlight interesting bits:

The Revenue accepted a payment of £3.94 million (€5 million) from Charles Haughey in 2003 in settlement of an estimated tax bill of £5.5 million (€6.98 million), the Moriarty tribunal heard yesterday.

At the time the settlement was the largest ever made by a taxpayer, but Mr Haughey’s name did not appear in the quarterly list of tax defaulters.

Jacqueline O’Brien SC, for the tribunal, said this was because Mr Haughey’s settlement did not include penalties valued at greater than 15 per cent of the overall settlement. She said the Revenue applied a 100 per cent cap on the amount of interest Mr Haughey paid.

The Revenue has told the tribunal that the application of the cap was the “invariable practice” of the Revenue in Capital Gains Tax and gift tax (CAT) cases.

Ms O’Brien said the tribunal believed there was no obligation on the Revenue to apply the cap.

She said the gifts being taxed dated back to 1977, the “receipt of the gifts was shrouded in secrecy”, and not one gift tax return had been made.

Also, during this period Mr Haughey had the benefit of the gifts received, including the increase in the capital value of his lands at Kinsealy.

Ms O’Brien was reading an opening statement during resumed hearings into the performance of the Revenue in relation to raising taxes from Mr Haughey. An earlier £1 million settlement had been made in relation to payments identified by the McCracken (Dunnes Payments) tribunal.

She said a special Revenue team had been set up to deal with Mr Haughey. In 2001 the team conducted an intensive analysis of the information that was emerging from the tribunal. The first issue to be decided was whether the funds received by Mr Haughey should be subjected to CAT (40 per cent), or income tax. The Revenue decided that CAT was the appropriate tax. It also decided it would seek a negotiated settlement.

Mr Haughey had tax agents Paul Moore and Terry Cooney working for him, as well as accountant Des Peelo and Gore-Grimes solicitors. Mr Haughey’s agents said no tax should be sought until the tribunal had reported but the Revenue did not agree.

The tribunal heard that the Revenue looked at the period 1977 to 1997. It decided that as it did not know all the gifts of money Mr Haughey had received, it would use his estimated expenditure over the period as a “proxy”. It estimated the expenditure over the period at £6.9 million. It did not take Mr Haughey’s income from politics into account (an estimated £600,000) as he cashed his pay cheques and did not bank the money.

Different, higher expenditure estimates led to different higher estimated tax liabilities, but the £6.9 million figure was eventually agreed with Mr Haughey’s agents.

The Revenue noted the possibility that Mr Haughey could be prosecuted for failing to file certain returns. During the negotiations Mr Haughey’s agents said he had been under no obligation to keep books of account as he had not been conducting a trade.

Also, he was in poor health. For these reasons, it was hard to analyse Mr Haughey’s finances over the years. At one stage the agents offered to settle for £2 million. The Revenue estimated that Mr Haughey may have spent £9.9 million over the period in question, making for a potential tax bill of £6.5 million. However it did not think this was achievable. A settlement of between £3.25 million and £3.8 million was more likely, it decided.

On October 8th, 2002, an all-day meeting between the Revenue and Mr Haughey’s advisers took place. It agreed a “core expenditure” figure of £6.9 million. This would lead to a tax bill of £5.5 million, including 100 per cent interest.

After a break for lunch the negotiations resumed and Mr Haughey’s side made a final offer of £3.85 million. This offer was taken back to the board of the Revenue Commissioners. Mr Peelo was subsequently informed that the Revenue would settle for £3.94 million (€5 million) and this was agreed.

A deal was signed in March 2003.

And the question asked on Prime Time was why Haughey was treated with ‘kid gloves’. Why indeed, especially given the sale of lands at Kinsealy. Some of the payments to Haughey included:

A £300,000 “forfeited deposit” on a supposed land deal, from the developer the late Patrick Gallagher (left), in December 1979.

A further £516,000 from donors unknown at around the same time, used to clear Mr Haughey’s debt with AIB.

£170,000 from the hotelier, the late PV Doyle, between 1983 and 1986.

£50,000 from the wealthy Saudi diplomat, the late Mahmoud Fustok, in 1985.

Sterling £282,000 from Ben Dunne (left) in 1987, by way of a cheque made out to a company called Tripleplan.

Lodgments totalling £354,000 made to an NCB investment account from sources unknown.

Payments to Mr Haughey’s bill paying service totalling £100,000 that came from the Fianna Fail party leader’s account in 1986 and 1989.

£180,000 from Ben Dunne in November 1992, the so-called “Carlisle cheques”.

Three “interest free loans” from Dermot Desmond, for sterling £145,000 in total, given in the period September 1994 to September 1997.

Apparently the Revenue felt ‘weak’

The Revenue was “acutely aware” of the weakness of its position when seeking to raise taxes from Charles Haughey, a senior Revenue official said at the Moriarty tribunal yesterday.

Norman Gillanders, assistant secretary at the Revenue Commissioners, told John Coughlan SC, for the tribunal, about seeking to raise taxes from Mr Haughey arising from millions of pounds worth of payments to Mr Haughey identified by the tribunal.

Mr Gillanders said that what might appear to be common sense to the general public might not be the case in tax law. “Different conditions mean different payments are subject to different taxes.”

He said having considered the payments revealed in the tribunal, it was decided, with legal advice, that the payments did not give rise to income tax. Income tax is raised on income that arises from the conduct of a business or a profession, the rendering of a service, or income such as rent.

It was decided to seek to raise gift tax, or Capital Acquisitions Tax (CAT), on the money received by Mr Haughey. “If the money given to Mr Haughey was not amenable to gift tax, it would not be amenable to tax at all.” In order for a gift to be amenable to CAT, it must come from a donor who is domiciled in the State or be property that is in the State. The Revenue needs to know who gave the gift and on what date.

“Given the money trails revealed by the tribunal, it was clear enough to me that demonstrating [ the payments eligibility to CAT] would be no easy task,” Mr Gillanders said. He said the Revenue’s prospects of success would be “limited to a minority of the payments revealed by the tribunal” if it had to go to court.

There had earlier been a “dramatic demonstration” of the risks involved when the Appeal Commissioners had ruled for Mr Haughey in relation to CAT on the payments identified by the 1997 McCracken (Dunnes Payments) tribunal.

He said the Revenue drafted a “worst-case scenario” from the point of view of Mr Haughey when going into negotiations, but knew Mr Haughey’s agents would know such a settlement was not achievable. “You have to have a choreography of compromise,” he said. In a “doomsday scenario” where the Revenue had to go to court against Mr Haughey, it was confident it could procure “maybe a little bit more than £2 million”.

So I guess we have some idea of the payback Dunne may have got for giving Haughey the £1.9 million in donations. But then Dunne can’t recollect any of these events anyway. And Haughey is too ill even to instruct his lawyers now, despite sunning himself on his yacht in France.

But let’s break this down a little. In 1987, Charlie Haughey, as Taoiseach arranged a meeting between the Head of the Revenue Sa©amus Pairca©ir, and Ben Dunne. The purpose of the meeting was to arrange a settlement.

Pairca©ir has now said that he didn’t think this information was relevent to the Moriarty Tribunal’s predecessor, McCracken.

Mr Pairca©ir had told the tribunal, in a statement of intended evidence, that he did not view a request from Mr Haughey that he meet Mr Dunne as a representation or submission on behalf of Dunnes Stores.

Maybe we all live on a different planet then. How could Dunne Stores possibly be related to Ben Dunne in 1987?

Indeed now it appears that:

the total amount that has been identified as being paid to Mr Haughey, by various parties, is approximately £8.5 million.

What could a reasonable person assume from these details? Answers on a postcard please.