Bertie Ahern: The Man Who Blew the Boom: Power & Money (21 page)

One of the more notable and controversial initiatives of Ahern’s career during this period was the introduction of a tax amnesty in the early months of the Fianna Fáil-Labour coalition. The measure allowed people with tax debts to settle their liability by paying 15 per cent of the amount owed, and it also provided for elaborate measures to ensure the right to secrecy of those who availed of the amnesty. The legislation creating the amnesty made it a criminal offence for anyone to avail of the deal without declaring all their liabilities; but, as it later transpired, the secrecy measures made it all but impossible for an offence to be proved.

Ruairí Quinn’s explanation of how the amnesty got through a Government that included the Labour Party is surprising. ‘Bertie wasn’t going to allow it to happen, and then he just announced it at the cabinet.’ This is similar to the account given by the Labour Party adviser Fergus Finlay in his book
Snakes and Ladders
(1999). He wrote that the party had been given the impression that, although Reynolds wanted the amnesty, Ahern wasn’t going to go along with it and had assured the Labour Party that it would not go ahead. Then, when the matter came up at a Government meeting, Ahern presented the amnesty proposal, and it went through without debate. Greg Sparks, a principal with the accountancy and financial consultancy firm
FGS
, acted as an adviser to Dick Spring during that Government. He recalled getting a phone call from Ahern at about 1 a.m. on the Tuesday morning the meeting was to be held. Ahern was seeking to ascertain the Labour Party stance on the proposed amnesty, which, of course, was being kept secret. At the time the Labour Party had a system whereby measures due to come up at Government meetings would be considered beforehand by the party advisers and programme managers and then discussed with the Labour Party ministers before the meeting. Sparks recalled one minister, Mervyn Taylor, banging the table and saying ‘over my dead body’ in relation to the amnesty proposal.

Then off they went into the cabinet meeting and there was total surprise when they came out four or five hours later and it had been passed. Now, there is cabinet confidentiality, but, from what I can make out, Albert was the main advocate for it. Bertie didn’t want it, and we didn’t want it. Dick was waiting for Bertie to object to it, and Bertie was waiting for Dick to object to it, and neither of them objected to it, and, because of that, it went to the cabinet and it was passed. I have to say it seems very, very strange, but that is the way it was explained to me.

Sparks thinks that, perhaps because it was early in the lifetime of the Government, neither Ahern nor Spring wanted to expend political capital going up against Reynolds, and so each held back. He does not believe that Ahern was in fact in favour of the measure, while presenting himself to the Labour Party as being against it. ‘I have no doubt but that Bertie was against it. No doubt at all.’

Pat Rabbitte, who was then a member of Democratic Left (the breakaway group from the Workers’ Party) and on the opposition benches, is not so sure. He believes that Ahern had no principled objection to the measure.

If Bertie had meant anything of what he pretended about his empathy with the trade union movement he could not have promoted the tax amnesty . . . Ruairí Quinn has gone on the record to say that Bertie gave them to understand that he would stop it. Then it was suddenly proposed at the cabinet and it was through. I don’t understand that.

The Labour Party successively opposed changes to the capital acquisitions tax regime that their coalition partners wanted to introduce. It was while reading through Government papers one weekend that Sparks noted a short passage regarding the tax, which applies to gifts above a certain value. The proposal was that the tax would be capped, that is, that there would be a threshold above which increases in the value of the asset or money received would not increase the associated tax bill. Sparks and Fergus Finlay flew down to Co. Kerry and had a meeting with Spring in a hotel in Tralee to discuss the matter. Ahern, who was in the area, turned up, and he and Spring went to a hotel room to talk. The measure was dropped, and the media never got to hear what had happened.

Another issue that arose when Ahern was Minister for Finance involved planning and tax concessions. In an effort to stimulate building in blighted urban areas there was a scheme whereby identified urban areas could be ‘designated’ so that developments in those locations could benefit from tax concessions.

The department responsible for overseeing the scheme was the Department of the Environment, where Michael Smith was minister and Emmet Stagg of the Labour Party was minister of state. Ahern, as Minister for Finance, had an ancillary role. Neither Smith nor Stagg would speak to the present writer about an episode in which plans associated with prospective designations were moved from the Department of the Environment to the Department of Finance. The Mahon Tribunal conducted private, confidential inquiries into the matter as part of its intended module on allegations relating to the tax designation scheme. Evidence was never heard in public because of a ruling of the Supreme Court. Although evidence on the matter will not now be heard, Stagg, who gave a statement to the tribunal, would neither talk about the matter nor explain why he didn’t want to. ‘I just don’t,’ he said.

According to one of Stagg’s party colleagues, his statement to the tribunal was that ‘the maps had gone up to the Department of Finance; the maps showing the areas that were going to possibly be included, key insider information. These had disappeared.’ The issue for the tribunal was whether confidential information might have been made available to persons who should not have had access to it.

When Stagg discovered that the files had been moved from the department, he contacted Smith, who in turn had to take steps to have the documents returned to his department, which they were. Another source, who does not want to be identified, has also confirmed that the tribunal inquired into this matter in private.

The reason public hearings into the tax designation allegations were never heard is worth noting, since it is not the only private inquiry concerning Ahern that did not go ahead. In 2004 the tribunal, responding to the concerns of the Oireachtas about the growing scale of its costs, drafted a list of matters that could be the focus of future public inquiries. No new items were to be added to the list. This became known as the
J
2 list.

The tribunal drafted a list of items it
might
hold public inquiries into in the future rather than a list of items it
would
hold public inquiries into. Later, in a case taken by the Fitzwilton Group, which was seeking to prevent the tribunal conducting public inquiries into a payment to Ray Burke, the Supreme Court ruled that, because the tribunal had drafted a list of items it might, rather than would, inquire into, it was now barred from conducting public inquiries into the items on the list or into any new allegation.

The
J
2 list was never published, but in July 2007 Ahern’s senior counsel, Conor Maguire, in the course of making an argument that the tribunal should not be holding public inquiries into Ahern’s finances, mentioned it. An edited version of it had been supplied to Ahern by the tribunal, and it included items that it felt might be relevant to him. The first of these was the most strange.

The tribunal, Maguire said, had listed a possible public inquiry into the affairs of fourteen people, including Ahern, and ‘all matters involving separately or together, directly or indirectly’ these fourteen people and ‘persons, companies, trusts or entities controlled or operating for any of their benefits, individually or otherwise.’ The names of the other thirteen people were not disclosed, and Ahern would not comment on it at the time.

The other allegations Maguire mentioned related to tax designation and ‘Green Property Group/rezoning or tax designation’. Maguire’s submission was unsuccessful. The public inquiry into Ahern’s finances was a subset of the tribunal’s inquiry into Quarryvale, which had begun before the instruction from the Oireachtas that the tribunal draft a list of allegations it would be inquiring into in the future.

The Reynolds Government eventually fell apart because of the bad relationship between Reynolds and Spring. The final break was a complicated scenario involving the extradition of a paedophile priest, Brendan Smith, the appointment of the Attorney-General, Harry Whelehan sc, to the High Court, and concerns over the reasons for the extradition of Smith to Northern Ireland encountering a months-long delay, despite a series of warrants being submitted to the Attorney-General’s office.

The tensions within the coalition and within Leinster House reached hysterical proportions, with rumours flying and with a growing conviction that the Government was about to fall. At one point Pat Rabbitte referred in the Dáil to a new revelation that would ‘rock the foundations of the state.’ This never emerged, but the coalition Government did sunder. Reynolds resigned as Taoiseach and party leader, saying he did not want to do anything that might destabilise the fledgling Northern Ireland peace process. Ahern replaced him as party leader. Máire Geoghegan-Quinn had thrown her hat in the ring in an attempt to win the leadership but withdrew before a vote, and Ahern was appointed unopposed.

The Dáil was not dissolved. Reynolds remained as acting Taoiseach as Ahern worked to see if he could negotiate a new coalition with Spring. Matters progressed to the extent that a draft list of ministers in the new Government was agreed between them. According to Sparks, Spring and Ahern got on well, and a Labour Party-Fianna Fáil coalition with Ahern as Taoiseach might have worked well. Ahern, in his memoirs, wrote that he was very angry that the Reynolds Government had been allowed to collapse in the way it did, because of the amount of good work he believed the Government was achieving. Going on his subsequent attitude to presiding over a coalition Government, it is fair to presume that, if a Government had been formed, Ahern would have used his considerable political skills to maintain good relations with the Labour Party.

Sparks said he had a very good experience working with Ahern and with Ahern’s adviser, Gerry Hickey. Ahern, as Minister for Finance, had agreed to the establishment of a tax strategy group, which came up with policies based on a more long-term view of taxation policy. The work of this group also, for the first time, involved the Revenue Commissioners being consulted on changes to the tax code. Sparks felt that Ahern had taken a political risk in supporting Labour Party policy on a residential property tax. ‘That blew up in his face. There was fierce opposition.’ However, he said it showed that Ahern was ready to take political risks for policies he believed in.

Sparks felt Ahern was determined to work with the Labour Party and was essentially sympathetic to many of his coalition partners’ ambitions. From his dealings with Ahern, Sparks felt that he did not have strong political convictions and that this made him receptive to the arguments of others.

Fianna Fáil is not a policy-driven party. Bertie was more the type of person who is open to views being given to him and being selective as to whether they were runners or not. I think it is his strength and ended up becoming his weakness.

It was while Ahern was negotiating a new coalition deal and his first Government with Spring that he was involved in his dealings with Michael Wall concerning the house in Beresford Avenue. It appears that, having become party leader unexpectedly early, Ahern was bounced into dealing with his unresolved living arrangements. The need to have a home became an immediate political imperative.

The Mahon Tribunal was later told that the house was selected by Michael Wall and Celia Larkin. Michael Wall, a squat, bearded Irish emigrant with a successful coach business in Manchester, said that he selected the house because it was near the airport and he was considering setting up a new business in Dublin. The solicitor who acted in the purchase of the house was Ahern’s solicitor, Gerry Brennan, and later Brennan drafted a will for Michael Wall that would have left the house to Ahern. (If Ahern predeceased Michael Wall, it would be left to Ahern’s daughters.) It was for this and other reasons that the tribunal investigated whether or not Michael Wall was in fact acting as a nominee for Ahern when the house was purchased in Michael Wall’s name.

Michael Wall travelled from Manchester to Dublin two-and-a-half weeks after Ahern became leader of Fianna Fáil, carrying a briefcase filled with cash, which, he told the tribunal, he had taken from his office safe. He said he did not know exactly how much was in it but that it was approximately £30,000 sterling, though it might have included some Irish currency. He said he went to the Ashling Hotel near Heuston Station, checked in, took some cash from the briefcase, put it in his hotel wardrobe and went off to the Royal Hospital nearby for the annual fund-raising dinner for Ahern. The dinner was usually attended by more than three hundred people, and there must have been a particularly excited atmosphere on that night, as everyone expected that Ahern would be anointed Taoiseach the following Tuesday.