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Authors: Fintan O'Toole
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Accounts Committee, in its report on the scandal, concluded baldly that âThere was a particularly close and inappropriate relationship between banking and the state and its agencies. The evidence suggests that the state and its agencies were perhaps too mindful of the concerns of the banks, and too attentive to their pleas and lobbying.â
Thus, for example, when DIRT was being introduced, the Irish Bankers Federation lobbied the Department of Finance to ensure that the powers of the Revenue to look into the status of bogus accounts would be limited. The banking lobby was particularly concerned that the Revenue might inform foreign tax authorities about Irish accounts held by people claiming to be their citizens. It received an assurance from Maurice OâConnell, a senior Finance official who was later to become governor of the Central Bank, that âthere would be no âen blocâ disclosureâ.
Beyond this tendency to see the interests of the banks as a paramount concern, however, there were broader assumptions at play. Deeply embedded within the state were two related beliefs. One - never openly articulated but clearly assumed at the level of unconscious instinct, and therefore especially potent - was that the rich in Ireland could not be expected to have any sense of social or patriotic responsibility. Misty-eyed nationalism may have come easily to the Irish high bourgeoisie, but the financial policy-makers knew better. They assumed that the Irish rich were similar to the elites of developing countries in Latin America or Africa. Given any level of pressure, they would evade their taxes and salt their money away offshore.
Secondly, the conclusion to be drawn from this was not the obvious one that the law would therefore have to be enforced
with rigour and consistency. It was, rather, that the lawlessness of the rich would have to be indulged. Enforcement would become another art of avoidance, steering clear of anything that might scare them into hiding their money. Maurice OâConnell, then governor of the Central Bank, told the Comptroller and Auditor General that âWe were broadly aware of the fact that people were avoiding tax. And all this had to be corrected, this was wrong. Everybody agreed it was wrong. [But] for Godâs sake, whatever you do, donât rock the boat.â
If keeping the boat steady meant winking at widespread and flagrantly criminal tax evasion, then the winkers were serving âthe national interestâ. Here, for example, is the general secretary of the Department of Finance from 1987 to 1994, Seán Cromien, explaining to the PAC why, in spite of knowing about the large-scale evasion of DIRT, he never recommended that the tax authorities be given more powers to deal with the problem:
CHAIRMAN: The question which you didnât answer, Mr Cromien, was - did you do anything, did you make any recommendations? If so, will you tell us briefly what they were?
MR CROMIEN: I realised that there was no point in recommending to Ministers that Revenue should be given these powers and if I were to do it, I think I would be worried myself that they would cause the outflows [of capital].
CHAIRMAN: So you made no proposal?
MR CROMIEN: I found it wasnât in the national interest to make proposals.
In this bizarre logic, the ânational interestâ came to be identified with the interests of those who were fleecing the
nation. The way to get the rich to pay their taxes was to make it easy for them to evade their taxes.
Given the close relationship between the Department of Finance and the Central Bank, it is unsurprising that these assumptions should have been held in common. Maurice OâConnell, who had discussed the banksâ concerns about DIRT and disclosure in his role as a senior Department of Finance official, became the governor of the Central Bank. In that role, he oversaw a virtually complete failure to pursue the widespread criminality
Thus, for example, when DIRT was being introduced, the Irish Bankers Federation lobbied the Department of Finance to ensure that the powers of the Revenue to look into the status of bogus accounts would be limited. The banking lobby was particularly concerned that the Revenue might inform foreign tax authorities about Irish accounts held by people claiming to be their citizens. It received an assurance from Maurice OâConnell, a senior Finance official who was later to become governor of the Central Bank, that âthere would be no âen blocâ disclosureâ.
Beyond this tendency to see the interests of the banks as a paramount concern, however, there were broader assumptions at play. Deeply embedded within the state were two related beliefs. One - never openly articulated but clearly assumed at the level of unconscious instinct, and therefore especially potent - was that the rich in Ireland could not be expected to have any sense of social or patriotic responsibility. Misty-eyed nationalism may have come easily to the Irish high bourgeoisie, but the financial policy-makers knew better. They assumed that the Irish rich were similar to the elites of developing countries in Latin America or Africa. Given any level of pressure, they would evade their taxes and salt their money away offshore.
Secondly, the conclusion to be drawn from this was not the obvious one that the law would therefore have to be enforced
with rigour and consistency. It was, rather, that the lawlessness of the rich would have to be indulged. Enforcement would become another art of avoidance, steering clear of anything that might scare them into hiding their money. Maurice OâConnell, then governor of the Central Bank, told the Comptroller and Auditor General that âWe were broadly aware of the fact that people were avoiding tax. And all this had to be corrected, this was wrong. Everybody agreed it was wrong. [But] for Godâs sake, whatever you do, donât rock the boat.â
If keeping the boat steady meant winking at widespread and flagrantly criminal tax evasion, then the winkers were serving âthe national interestâ. Here, for example, is the general secretary of the Department of Finance from 1987 to 1994, Seán Cromien, explaining to the PAC why, in spite of knowing about the large-scale evasion of DIRT, he never recommended that the tax authorities be given more powers to deal with the problem:
CHAIRMAN: The question which you didnât answer, Mr Cromien, was - did you do anything, did you make any recommendations? If so, will you tell us briefly what they were?
MR CROMIEN: I realised that there was no point in recommending to Ministers that Revenue should be given these powers and if I were to do it, I think I would be worried myself that they would cause the outflows [of capital].
CHAIRMAN: So you made no proposal?
MR CROMIEN: I found it wasnât in the national interest to make proposals.
In this bizarre logic, the ânational interestâ came to be identified with the interests of those who were fleecing the
nation. The way to get the rich to pay their taxes was to make it easy for them to evade their taxes.
Given the close relationship between the Department of Finance and the Central Bank, it is unsurprising that these assumptions should have been held in common. Maurice OâConnell, who had discussed the banksâ concerns about DIRT and disclosure in his role as a senior Department of Finance official, became the governor of the Central Bank. In that role, he oversaw a virtually complete failure to pursue the widespread criminality
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