Irish Furious Over Shady Politicians’ Pot o’ Gold

The Ireland of the tourist books may be a land of saints and scholars, but these days it’s the sneaks and scoundrels who are the talk of the nation.

For months, three investigations into alleged tax evasion and bribery within Ireland’s powerful elite have been chronicling a culture of corruption that many citizens always suspected but never thought would be exposed.

Former Prime Minister Charles Haughey, Ireland’s dominant politician in the 1980s, has admitted receiving huge secret payments from businessmen at a time when the country was in dire economic straits.

Haughey already is awaiting trial on charges of obstructing justice, but his lawyers are trying to block a tribunal investigating his murky cash flow and its influence on his decision-making.

A second tribunal is probing alleged bribes of politicians and officials by property developers. One of its targets, retired Dublin planning officer George Redmond, has admitted holding 33 bank accounts in three names totaling $900,000. His explanation--that he simply was “a very heavy saver”--is fast becoming a Dublin catch phrase.

Most explosively, a Cayman Islands bank founded by Haughey’s accountant has been characterized as an illegal front for tax evasion involving 120 investors, among them a who’s who of Irish politicians, bank directors and other corporate kingpins.

That discovery was made by the aptly named DIRT Inquiry, which refers to the country’s often-evaded “deposit interest retention tax” levied on bank accounts.

Parliamentary hearings on the tax evasion case have been televised live to a captivated audience.

“They need theme music, though,” quipped Patrick Strong, a student watching a session from a Dublin pub. “Maybe you could combine the theme tunes from ‘L.A. Law’ and ‘Riverdance.’ There’s some very fancy legal footwork on show.”

The government is resisting opposition politicians’ calls to publish the names of suspects, but many already have been leaked. And Prime Minister Bertie Ahern, who served as Haughey’s finance minister, has said he is certain many of the investors in the Cayman enterprise will be prosecuted for tax evasion and other crimes.

The revelations--which have come during an unprecedented sixth straight year of economic boom--are fueling grass-roots resentment and fears of a winter of labor strife that could maim, if not kill, the Celtic Tiger economy.

“Haughey and his pack of sycophants lectured us about the need to tighten our belts for the good of the country,” said Bernie Shiels, one of 27,000 state-paid nurses seeking better wages and benefits who went on a nationwide strike in October for the first time in Irish history.

“These same people--these crooks--all the while were taking back-handers, dodging the taxman, ignoring the rules they set for us,” Shiels said.

Ireland’s low-inflation boom is underpinned by a string of wage-restraint pacts agreed on jointly by the government, unions and business leaders beginning in 1987.

In that year, Haughey’s government was struggling to cope with 17% unemployment, a $1.35-billion budget deficit and out-of-control inflation. The top income-tax bracket--the one affecting many of those linked to today’s scandals--had been raised to an emergency 65%.

The current four-year wage deal, called Partnership 2000, has limited hundreds of thousands of workers to annual 3% pay raises, but times have changed beyond recognition and the partnership is giving way to a competitive free-for-all.

Unemployment is 6.2%, inflation is 1.4% and the government’s budget is a record $10 billion in the black. Salaries have been soaring in the professions and for executives at high-tech multinational companies beyond Partnership 2000’s reach.

Already threatening strikes are doctors, police, teachers, bus drivers and train conductors. Like the nurses, their union leaders cite the expanding allegations of high-level tax dodging as justifying their wage demands.

Some politicians and observers say the only way to stem the rising anger is to secure quick convictions for tax fraud and confiscate any ill-gotten gains.

The corruption soap opera had an unlikely origin: a family feud within Ireland’s dominant retail chain.

As part of a boardroom battle for control of Dunnes Stores, Margaret Heffernan hired auditors to document the profligate spending of her brother, Ben Dunne, who had a habit of handing out cash and had been arrested in Miami in the company of prostitutes and a mound of cocaine.

When the auditors’ report was delivered in 1996, it proved political dynamite.

Leaks revealed that Dunne had given at least $1.8 million to Haughey, whose millionaire’s lifestyle--he owns a landmark country mansion, a horse stud farm, a yacht and his own island--could never be reconciled with his modest prime minister’s salary.

The scandal might have stopped with Dunne, except that one of his checks destined for Haughey had been made out to a mysterious John Furze.

Investigators found that for more than a decade, Haughey financial advisor Des Traynor had been funneling money given to the prime minister by businessmen through a bank that Traynor founded, Ansbacher Ltd. Its Cayman Islands representative was Furze.

Though distancing himself from Haughey, who was his political mentor, Ahern led a successful push to restrict the Dunnes Stores tribunal from further investigating the shadowy Cayman bank.

But Ahern’s deputy prime minister, Mary Harney, who leads a party founded in 1986 to expose corrupt practices within Ahern’s Fianna Fail party, appointed her own investigators.

Harney’s team discovered that Traynor, who died in 1996, used Ansbacher as a vehicle for wealthy people to keep their money deposited tax-free--officially in the Caymans, but actually in Ireland.

“The people who got involved in the Ansbacher scam knew that its fountainhead, Des Traynor, was Haughey’s bagman. That knowledge created a sense not just of impunity, but of a kind of unofficial legality,” said Fintan O’Toole, Ireland’s most respected social commentator.

The DIRT Inquiry has revealed that tens of thousands of less high-flying Irish people similarly lied to banks about their residences to dodge taxes.

Ronan Fanning, professor of modern history at University College Dublin, said much of the public anger “is not so much outrage at tax evasion.” Instead, Fanning said, it is “outrage that we do not all have an equal opportunity to evade.”