An Irish woman's social, political and domestic commentary
Thursday, June 03, 2004
For those without and Irish Times subscription I have to reprint this for you. Great stuff.
Senior management at United Irish Bank are coming under political pressure as more details emerge about the tax avoidance scandal. "This is the worst financial crisis since the last one," Tánaiste Mary Harney told the Dáil. "UIB must give a full non-resident account of itself."
Five board members are now known to have benefited directly from a share dealing arrangement with UIB's offshore investment division, Share Quota UIB. In 1989 SQUIB moved its headquarters to the Caribbean island of Ansbacher which does not exist and thus offers the world's most liberal regulatory environment.
Bank directors then used SQUIB to set up a front company called Backdor which was given preference in the allocation of newly issued stock over all other bank customers except Charlie Haughey. Lawyers for the five men point out that the scheme was not illegal at the time, but merely dishonest, greedy and incompetent.
In 1996 Brussels forced the Government to outlaw share issue fraud which had the unforeseen side-effect of outlawing most of the government. In the confusion that followed, Backdor ceased operations and UIB brought its procedures up to international corporate standards by simply giving board members undeserved shares in their pay packets.
However participants in the Backdor deal did not pay tax on their profits. Lawyers for the five men point out that this most definitely was illegal at the time but that everybody else was doing it and their clients know where several well-known bodies are buried. Last night Fianna Fáil described this as "an outrageous and completely believable threat".
The Backdor scandal is only the latest in a series of disasters to hit the troubled banking group. In 1985 UIB almost collapsed due to losses at its subsidiary the Insurance Undertaking of Ireland, but a bailout was arranged after the Government mistakenly assumed that the company was insured by Ireland.
In 1995 the Public Accounts Committee revealed that this bailout had cost £400 million, which is coincidentally the average price of a Caribbean island. In 1998 the bank was rocked by the BRIT scandal after thousands of customers tricked it into granting them UK citizenship, but manage-
ment kept their jobs after satisfying a tribunal that they could not have been responsible because they had no idea how to do their jobs.
This was followed in 2002 by the notorious Rucksack affair, when an American employee stuffed €580 million into a bag and ran out of the office. Neither the money nor the rucksack have ever been found. Earlier this year UIB hit the headlines again when it was accused of overcharging for foreign exchange transactions, levying excessive fees on trusts, pressure-selling risky investments to elderly customers and being "generally evil", although UIB accused the media of over-reacting to the story.
"Anyone would think we were mugging old ladies," said a spokesman. "In fact we are only robbing old ladies, which is a completely different product."
It may be possible that the media has over-reacted in this instance as well. Yesterday it emerged that UIB is "underwriting" an €800,000 tax settlement arising from the affair but has refused to disclose the details. Speculation is now growing that the five men took advantage of last quarter's tax amnesty and will thus avoid prosecution.
"At every stage of the Backdor affair all those involved complied with the law just as soon as they were about to be caught," revealed a Revenue source yesterday. "Frankly that's the best you can hope for."
While prison terms seem unlikely, several glittering corporate careers lie in ruins. Former UIB chief executive Terry Scamloan has resigned from the board of fruit company Banana Republic "to spend more time with my wife's money". Former UIB treasurer Douglas Royston has revealed that his current position with Irish Impermanent will be temporary. Former UIB board member David Crony lost his job two years ago over the Rucksack affair but is now being asked to carry the bag all over again.
The most spectacular casualty is former UIB group chief executive Ron Nulcashy who has resigned as chairman of Lyinair. Mr Nulcashy had been credited with turning the troubled airline around after slashing back its loss-making aviation division.
Meanwhile, in a completely unrelated development, First Trust Ulster has announced the resignation of its chairman due to a scandal involving the Internet site British-Virgins.com. "There is no suggestion of any impropriety," said a spokesman yesterday. "The boss was just looking for somewhere to park his assets."
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posted by Sarah | 09:37 1 comments
There's also a pretty good letter:Post a Comment
Madam, - When next I go to confession, should I begin, "Bless me, father, for I have issues"? And should I couch my misdemeanours in guff about lapses of "governance" and "culture"? And should I end with a promise to be good "going forward"? - Yours, etc.,
PAT HUNT, Killarney Road, Bray, Co Wicklow.