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Banking System

Irish banks told to come clean over tax havens

Revelations that AIB was involved in assisting clients in avoiding tax through offshore tax havens have been described as “deeply disturbing”.

Opposition parties demanded last night that both AIB and Bank of Ireland immediately outline all tax avoidance strategies they have arranged for clients as the fallout from the “Paradise Papers” leak intensified.

Michael McGrath, Fianna Fáil’s finance spokesman, said AIB should clarify whether it actively shifted data and funds to offshore jurisdictions in order to prevent the Revenue Commissioners from accessing the information.

He also said he would be requesting AIB’s appearance before the Oireachtas finance committee to provide answers about its role in the scandal.

Mr McGrath said: “AIB facilitated individuals and companies in avoiding tax, owed to the Irish State, by hiding funds and data in offshore jurisdictions. It is deeply disturbing that AIB seemed to have protected vital data from the Revenue commissioners in jurisdictions like Jersey and the Isle of Man all with the intention of avoiding tax. What is even more shocking is the fact that this was still happening despite the taxpayer bailing the bank out. It is extremely serious that the bank received bailout money from the taxpayer on the one hand and at the same time was actively assisting individuals and companies in avoiding paying tax on the other,” Mr McGrath said.

Pearse Doherty, Sinn Féin finance spokesman, said he wanted to know if the public interest directors at AIB or the finance minister knew about the tax planning strategies offered before they were revealed over the weekend.

Joan Burton, the Labour Party spokeswoman, said the refusal of a state-owned bank to provide relevant information to the Revenue was “shocking”. “It’s time for Irish banks to come clean,” she added.

Papers leaked over the weekend belonging to Appleby, an international law firm, show that AIB offered services to Irish customers who wanted to move money to offshore tax havens in order to avoid their Irish tax obligations. AIB continued to offer the service after it was bailed out by the Irish government following the 2008 economic crash.

The papers also allege that AIB moved data relating to clients who had used these services to servers based in the Isle of Man and Jersey so that they could not be legally accessed by the Irish Revenue Commissioners.

In a statement issued to The Times, AIB said that it does not support or facilitate tax evasion and acts in accordance with all relevant tax and data protection laws. It added that a decision was taken in 2012 to wind down AIB’s Isle of Man and Jersey subsidiaries and all banking operations ceased by November 30, 2013.

It read: “As separate legal entities to AIB plc, data belonging to AIB ISL Limited and AIB CI Limited has always been under their ownership and control. AIB was not legally entitled to hand over data owned by AIB ISL or AIB CI. Any such disclosure would have been in breach of the data protection laws in the relevant jurisdictions.”

The Appleby papers allege that Bank of Ireland used its Jersey subsidiary to encourage tax avoidance activities among its clients. A spokesman for Bank of Ireland said that it closed its Channel Islands operation in 2014 and is “fully committed to maintaining open and co-operative relations” with the tax authorities in all the jurisdictions it has operations.

Paschal Donohoe, the finance minister, is a 71 per cent shareholder in AIB and a 14 per cent shareholder in Bank of Ireland. A spokesman for the minister said it would be up to the Revenue commissioners to decide whether AIB and Bank of Ireland should be investigated and potentially sanctioned over its role in international tax avoidance.

A spokeswoman for Revenue said it could not comment on individual cases, but added: “A full analysis is ongoing of more than 2,700 disclosures to Revenue, with a value of more than €80 million, in respect of undisclosed offshore assets and income.”

Over 13 million documents leaked by an Appleby whistleblower to a German newspaper exposed a huge international network of tax avoidance strategies. Bono, the lead singer of U2, and three members of the cast of Mrs. Brown’s Boys are other Irish names embroiled in the scandal. None of the tax strategies outlined are illegal and the fund was closed down in 2015.

In a statement last night Bono said he was a passive investor in a company based in Malta that invested in a shopping centre in Lithuania. He said: “I would be distressed if anything less than exemplary was done with my name near it. It shouldn’t take leaks to understand what’s going on where.”

The government has said it would oppose the introduction of a common consolidated corporate tax base proposed by the EU saying it would discriminate against the country. Leo Varadkar said it was a red line issue for the government. “We believe that taxes should be set in the Dáil,” he said. “We’re for tax transparency, but we’re also for tax sovereignty.”