Ansbacher showed that in Ireland taxes were just for the ‘little people’
This offshore illegal scam showed that, in Ireland as elsewhere, taxes really were for the “little people”.
The facts emerged as a by-product of the tribunal directed by Mr Justice Brian McCracken in 1997. It was set up to trace payments by supermarket magnate Ben Dunne to Fianna Fail’s Charlie Haughey and Fine Gael’s Michael Lowry.
We were later to learn, thanks to the Oireachtas DIRT tax inquiry in 1999, that bogus offshore accounts were operated by all mainstream Irish banks.
Middle class people, just ahead of covering their costs, were salting the few extra thousands in bogus offshore accounts.
Ansbacher put all of that in the halfpenny place. The main man was Des Traynor, a close associate of Charlie Haughey, who died in 1994.
Traynor, long-time chairman of Cement Roadstone Holdings, put the money in the Ansbacher deposits in the Cayman Islands, a British territory located in the western Caribbean Sea. But he organised a “mirror account” in the private Guinness & Mahon bank in Dublin to give his clients access to their money.
Mr Justice McCracken’s inquiries put the amounts involved in 1989 at IR£38m or just under €50m. Later estimates put the amounts at twice that amount.
The straight tax dodges were enhanced by other devices like back-to-back loans. These allowed the depositors claim tax relief at home on money, which they borrowed from themselves, and upon which they were already dodging tax.
Ansbacher was structured for an estimated 120 elite Irish people.
It availed of top-of-the range computer technology and every effort was made to eradicate “footprints” and fox the taxman.
At the heart of it all was an assertion that for the given period, the money was owned by Ansbacher Cayman and beyond the Irish taxman’s reach.
It was sold as legal tax avoidance – never tax evasion, which is illegal.
Without the drug and prostitution scandal, which Ben Dunne notoriously revealed in Florida in 1992, it is unlikely that Ansbacher would have come to popular attention.
By any standards, James Desmond Traynor was a remarkably unremarkable character.
When he died, the Revenue Commissioners deemed his personal and business finances were impeccably conducted and, in the wind-up, his estate got a €7,000 tax rebate.
In the ensuing years, many of his clients argued that they believed they were availing of a perfectly legitimate tax avoidance scheme.
These people insisted they did not know the details of Mr Traynor’s actions and took his assurances at face value.
The difficulty was that Ireland, then as now, was groaning under a huge debt burden which was swallowing up the bulk of working people’s tax revenues.
People on relatively ordinary wages found two-thirds of their income swallowed up by PAYE and PRSI.
Government revenue was never enough to maintain public services, as the bulk of it went to service the national debt.
A miserable time was made even more dispiriting by the revelation that people with serious money were not paying anything like their share.
In fact, the more sophisticated elements of Ansbacher syndrome revealed that wealthy people were in fact taking benefits out of the system and adding to the working people’s burden.
But despite the strong and persistent revelations after 1999, there was also a whiff of unfinished business surrounding Ansbacher.
We had found out so much but there was much to be investigated.
Many financial commentators felt that the intricacies of Ansbacher had never been fully probed.
And they also felt that the existence of spin-off and related schemes was inevitable.
The revelations surrounding the Ansbacher Deposits lifted a veil, rather comparable to the fall of Berlin Wall.
But for many people it was just the opening of the doorway into a labyrinth of financial scams as yet un-probed.