The charity sector thread

Great stuff from the Sunday Business Post. Proper investigative journalism.

All over the 9pm RTE News also. This will hopefully get somewhere. There’s too much money at stake for either side to give up easily here.
Though, I’d imagine the Dept of Finance, and Revenue, would love the “move along, nothing to see here” approach. It’s going to get uncomfortable for a few people.

My poor faith in Irish Gubbernment & Politics means I only hold out a 25% chance of this getting beyond “an investigative group” that’ll last about 12-18 months, or just enough time for these companies to get a reasonable restructure on.

Still think this is all ok, Cordyline?


Very good summary of section 110 on Morning Ireland this AM at about 7.40AM.
Still about 1,500 organisations in place (controlled by Charitable Trusts) from the over 2,000 that applied to come under this heading back when the Act came into being in 1997.
Big Assets, big payouts, negligible tax liability.

From looking at the dates etc, am I right to say this was a Rainbow Coalition creation?

Irish Independent: Revenue probes 40 ‘tax-neutral’ companies for suspected abuse

Irish Independent: Stephen Donnelly: Tax avoidance anomaly means pain for taxpayers

Sunday Business Post: Speedy probe into vulture funds’ tax urged

Lots of coverage on the use of Section 110 Companies, owned by Irish Charities, to take Irish sourced profits out, gross, to offshore locations like the BVI etc. Heartening to see this as the Government / Dept. of Finance has been successful at burying this story to date (and in particular, that they directed Revenue to issue “letters of comfort” to vultures to use Section 110 schemes).

Couple of comments:

  1. Fair play the Sunday Business Post who seem to have grasped that this is “big”. Unlike all other journalists they at least did some investigation and downloaded the accounts of other vulture Section 110s (there are only a handful). It was comic to see the €250 figure re-appear across them all (i.e. the fingerprint of the same group of Dublin advisers who have the same cover letter from Revenue guiding them on how their Section 110 should be structured to avoid all Irish taxes. Would have been cleverer to pay a tax figure in the tens of thousands here, however, when you have the Irish Revenue helping you structure your tax avoidance, it makes you complacent). The tax avoidance the SBP highlights is only the tip of the iceberg here (only the tax avoided on interest income).

  2. Dearbhail McDonald gets the wooden spoon for buying the spin that the Dept of Finance have been furiously putting out. The DOF is going to broaden this to QIFs (i.e. how doctors and dentists avoid Irish taxes) so that they can carry out a few people to flog in public (but not the 5 vulture funds that have bought almost all the distressed loans to date). If you are not a vulture fund, and have been advised to use Section 110 (your advisor’s firm was probably advising the vultures), I would bury it fast, as they are coming for you (and the much smaller amounts in tax that you have been avoiding). Dearbhail has also swallowed the other part of the DOF’s current spin (there have been meetings in the DOF on this), that these are “loopholes” that need to be closed. Per my earlier posts, Section 110s are deliberately loosely worded vehicles. Section 110s “are” the “loophole”. It was Revenue’s job to police access to the Section 110 “loophole”, but in the case of the vultures, they were clearly guided not to.

DMcD also confuses what is “legal” in a corporate sense (anybody with an Irish resident trading business can apply to use Section 110 status) vs. what is “illegal” in a tax sense (the Revenue will prosecute you if you are using Section 110 to re-route Irish profits offshore). It is THE CRITICAL goal of the DOF strategy to spin this as something that CANNOT be prosecuted under anti-avoidance (even though it blatantly is). This is because the vultures will start waiving Revenue “comfort letters” in court that will lead to the end of several Irish political / public servant careers. Every time the Government has answered a Donnelly or Sinn Fein question re Section 110s, they open it with a small prepared intro statement (probably written by a Dublin tax adviser) which basically confirms the status of Section 110s for “qualifying assets”. They are implicitly re-affirming to the vulture (whose advisers are reading these answers) that their use of this form of tax avoidance still has the full support of the Irish Government. Clearly the “comfort letter” the Revenue gave the vultures (under the Government’s direction) uses / echoes this language.

The DOF is afraid that Sinn Fein will prompt the EU to force all of this out (and will force the vultures to repay the taxes as being illegal state subsidies). The EU uses anti-competition Law to tackle cronyism and corruption with domestic tax regimes. They will effectively force the domestic revenues to apply their own anti-avoidance laws where the domestic revenue authority doesn’t want to due to political interference. This is ultimately how these vulture fund taxes are going to be retrieved (regardless of whether the vulture has a Revenue “comfort letter”). The EU is already coming to the end of another such case in Ireland which will rule shortly.

  1. Stephen Donnelly still gets the prize for being the person who can do the sums on how big this scandal is (the vulture deals that I am familiar with will earn returns well in excess of Stephen Donnelly’s 15% over 10 years). What I think Donnelly is missing is that there are only about five vultures that are responsible for almost all the tax evasion (I won’t name the names here, but we all know them). Donnelly also gets to a key point that Revenue would never have allowed this to happen without being directed to.

  2. No mention by any journalist of the fact that NAMA is still actively selling to vultures using Section 110 status? (again, it shows how involved NAMA is in this scandal, and that if NAMA cracked down on the vulture Section 110 schemes, they would have some very angry vultures waiving their Revenue letters, and suing to protect their existing tax avoidance schemes and/or they have been misled by Revenue in trying to avoid all Irish taxes; what irony). Today, there are NAMA loan sales going on, where all of the vultures are using Section 110, owned by an Irish Charity, as their bid vehicle. That is happening today.

  3. And most importantly, no mention of the handful of Dublin law and accounting firms that have been advising these vulture firms (our own Mossack Fonsecas), and who ultimately got the “comfort letters” from the Revenue which are going to cost the state billions in lost taxes. There are lots of Dublin law and accounting professionals that are sick to their stomach over what has happened with vulture funds avoiding all Irish taxes on distressed Irish borrowers. It is a shame on all of them.

Remember this image next time you see one of them at your child’s sports match …

You can only dream of this …

Wow - prime time special tonight on vultures and their Section 110 tax avoidance schemes.

Again, great to see this being elevated and, most importantly for resolving this, FF seem to have copped it.

Couple of points on it:

  1. Prof Eamonn Walsh was a low point, and clearly does not understand this area (or worse, is trying to help Noonan).

He reminded me so much of this blast from the past …

Anyway, just to cover his sheer stupidity (his points in bold)…

  • These vehicles are common all over the world. They are, but not for what these vultures have done with Irish distressed loans. I would love to see Eamonn try to use a Section 110-type vehicle to suck US sourced profits out of the US and route them to the Cayman Islands. He would end up in jail (as you would expect, as it is evasion of US domestic taxes). These type of vehicles are NOT allowed to suck domestic profits out of the domestic economy and re-route elsewhere (Cayman or other). Not for any class of investor (pension fund or other), and not in any jurisdiction. As Section 110 type vehicles are available almost everywhere in the world, you would see all domestic corporate taxation systems would collapse in almost every jurisdiction if Eamonn was right.

  • The vulture investors are US pension funds who don’t pay tax. If a US pension fund (or any other US investor) invests in an Irish company (who generates their profits in Ireland, like Bank of Ireland), they will incur 12.5% tax inside the Irish company AND 20% withholding taxes on the dividends that the Irish company pays to them. There is no way around this. If the California State Teachers Pension Fund (Calpers) but bought Kerry Group shares, KG will incur 12.5% corporate tax on Irish profits, plus KG will deduct the 20% Irish withholding tax on dividends. That is Irish tax law. Doesn’t matter what class of investor you are. You have to pay all your valid Irish corporate taxes (12.5% corp + 20% withholding).

  • This is all to do with avoiding being double taxed. Double tax treaties mean the investors’ home Revenue will give a tax credit for the valid taxes they paid in other locations. When an Irish pension fund (or any other class of Irish investor) invests in a US domestic business, they pay US corporate taxation inside the business (35% rate) PLUS more US withholding taxes (at the 15% or 30% rate) on all their after-tax profits before bringing the cash back to Ireland. The Irish double tax treaty will prevent them from paying any more taxes in Ireland on top of this, however there is no “clawback” of these US taxes paid. You must pay them. Basic tax law. Works the same for US pension funds (or other US investors) in Ireland. You can’t avoid domestic corporate taxes.

  • The vultures will pay tax in their home country. Walsh’s “highbrow” backstop argument is that vultures will ultimately pay tax in their own home country and that this normal double taxation avoidance. Per above, it is not. The double tax law is that you pay all valid corporate taxes in the country you are investing in, and then get credit for them against your home country’s taxes. However, as Donnelly has shown with Mars Capital, vulture Section 110 profits go to offshore locations (and not back to the US). The Irish Revenue has fixed it so that the vultures can not only avoid all Irish corporate taxes, but can re-route them to the Cayman to avoid all US taxes (this is why the equity shares of the vultures Section 110 companies are owned by Irish Charities, to give the vulture cover against the US IRS - take this away, and the US IRS steps in).

  • Sure, they will find a way to avoid taxes regardless. Walsh’s “lowbrow” backstop argument is that the vultures will ultimately find a way around paying Irish corporate taxes anyway. They are rich and can afford the lawyers to do it. There are many large - and much richer than any vulture - companies in Ireland - Ryanair, Kerry Group, Bank of Ireland - earning billions p.a. in cash profits, who cannot find a way to get out of paying Irish Corporation tax of 12.5% and core Irish dividend withholding tax of +20% (and Michael O’Leary uses every legitimate trick possible). The Irish tax code is not a piece of fiction. It works. That is a shocking argument to hear from Eamonn however - more like something you would hear in tin-pot country.

  • the most naive part of Eamonn’s “apologia for vultures” however is that Walsh does not make the basic connection that if a vulture can legally avoid all Irish taxes on Irish domestically generated profits, then every Irish corporation can do the same. Bank of Ireland, or Tesco Ireland, or the Point Theatre, could all convert to Section 110 status (and just wrap their business in a securitization structure - it is very easy to do), and do the same thing as the vultures. However, under Section 811 of the Irish anti-avoidance law, they would be prosecuted by Revenue for tax evasion. That is how naive Prof Walsh is in this area. That is how shamefully biased his piece was in defense of the tax evasion schemes of the vultures in Ireland.

Professor Eamonn Walsh joins the group Dublin law and accounting firms fronting this scandal.

I hope it is the last we hear or Walsh, putting on the “green jersey” - not for Ireland, but for his pal Noonan.

  1. There was nobody there from the Irish Government (and certainly no Dublin tax partner was going to appear on this). Noonan and the Dept of Finance has their hands all over this one and they are terrified to stand up in front of it. The paper trail of Revenue Guidance issued over the last 2 years, explicitly amending core Irish tax law, to fit the vultures Section 110 schemes, into the Irish domestic tax system (which they were never supposed to be able to do) without affecting Irish domestic anti-avoidance rules (they violate several), is there for all to see. The April 2016 Revenue rulings on dropping withholding tax requirements on interest payments to vultures, to dropping CG50 forms (section 980 of the 1997 tax acts) for the vultures’ Section 110 schemes, are just the tip of it. Ironically, the new breeches that these Revenue Guidance notes have created, will lead to further future scandals from other types tax payers. In addition, the paper trail of NAMA sales (which have extensive documentation and filing requirements) will show that they knew that almost the bidders were all Section 110 schemes (and have been for almost 4 years now), will also be equally damning.

  2. Donnelly was good again. I love the way that the interviewer had no interest on engaging with him on his point that this would run to tens of billions ? Donnelly needed to clarify that he wants to shut down the Section 110 schemes that the vultures are doing in Ireland, and not all past valid international securitization Section 110s. However, fair play to him and he has really opened the lid on this scandal and pushed it way ahead of what Sinn Fein were trying a months ago (although I believe that Sinn Fein are progressing the EU anti-competition case I mentioned earlier, which would blow the thing up to another level).

  3. Michael McGrath was also very good. FF clearly get this. FF have a deep network in the Dublin law and accounting firms and no doubt have been briefed privately on the inside story on what exactly has been going on here (there are many senior law and accounting people in Dublin who are FF and are disgusted by this abuse of Section 110 for domestic tax evasion by vultures). McGrath clearly understands the difference between legit Section 110 firms (i.e. GE aircraft leasing), and not-legit firms (i.e. vultures with Irish sourced profits), and that some Dublin advisor partners (the ones that are listed on the opening pages of the accounts that the Sunday Business Post downloaded), have been abusing Section 110 for Irish tax evasion.

Seems FF are waiting for the Revenue’s investigation to complete and will then act. Although I side with Donnelly who warns that this investigation is going to take a long time (plus how can we trust Revenue when we have Revenue issuing so many rulings over last 2 years to help the vulture’s tax avoidance schemes over come domestic anti-avoidance law?). I suspect however that FF have the further documents and files that would nail Noonan, and show that he directed Revenue to give the vultures Section 110 status on Irish sourced profits (in contravention of Irish anti-avoidance tax law). They are waiting for the right time.

Hate FF for what they did in creating the crisis, but respect for MMcG, who seems to understand what it going on here (he was really well briefed on this), and are clearly going to shut it down and give FG a bloody nose in doing so.

In a strange way, the lack of a full majority by any political block is probably what is going to get this massive tax evasion scheme shut down. In the past, Noonan’s stonewalling would have worked, and the Prof Eamonn Walshs “green jersey mis-information” would have killed it. Perhaps our current system of no majority, or even a strong coalition, is not so bad after all?

Candidates like Stephen Donnelly can really push issues (as long as they have merit).

Thanks for this, i note that Arthur cox appear to have removed the link to their document on how to establish spv … e-2012.pdf

Good posts Observer.

Now call me naieve, but why would any Irish Govt allow this assuming they are not getting backhanders/brown envelopes. There’s no extra employment, no votes, no headlines.
Why would they let their Country lose out on so much for no apparent gain, personal or otherwise?

Supidity? Duped by the Law/Accounting firms? Playing up to the Law/Accounting firms who’ll sponsor a table at an FG/FF fundraiser (could it be that base!)

Allows the vultures bid higher on what NAMA is trying to offload.

No it doesn’t. Bank of Ireland, Ulster Bank and AIB are all NAMA bidders and all pay their full corporation taxes and withholding taxes and regularly win NAMA (and Danske, and BOS) distressed loan sales.

Per my earlier posts, ironically, if NAMA took taxes lost to the state into account due to the vultures’ tax avoidance scheme (NAMA demand full visibility on the corporate structures of all final bidders to check for collusion with borrowers), then no vulture would win any bid, as the Irish taxes that the vulture will avoid equals the total equity cheque they bid.

That is how f**ked up this is.

The “word” (don’t ask me to back this up) is that two of the major Dublin tax firms (the usual pair) went to Noonan in 2012 to lobby on behalf of their clients (clients before country). Noonan discussed with Dept of Finance and Revenue was instructed to issue confidential letters back to the tax firms to clarify the position regarding Section 110s buying Irish distressed loans from NAMA (and effectively rule that vultures could use Section 110s). That is how it started.

In the following years, the vulture’s Section 110s began to trip into all types of Irish domestic anti-avoidance rules (because they are so “alien” to the domestic Irish tax code, i.e. they are meant to be for “international” securitization business only), which required a series of additional Revenue Guidance Notes, to protect the vulture’s tax-free status in Ireland.

(as per this funny Irish times article, where we have Revenue quoted on an Irish newspaper, saying they will fix another anti-avoidance issue, which they did in an April 2016 Guidance Note, vs. prosecuting a tax-free vehicle operating in domestic economy).

Again, this is why a Revenue investigation into Section 110 tax evasion by vultures is so compromised - Revenue have spent the last 4 years supporting the evasion, and bending their own core anti-avoidance rules to defend it.

Why did Noonan / Dept of Finance agree to this?

God knows. Guessing they wanted to make NAMA / IBRC wind-down a success (the political objective) and threw everything at the vultures to “make it happen” (ignored the economics of it). Problem, as per my earlier posts, is that the Irish taxes avoided by the vultures will probably exceed the total equity cheques the vultures invested in Ireland.

That is how big a scandal this is.

Watching Prof Eamonn Walsh (a.k.a. Comical Ali) rolled out on Primetime to give such mis-leading information to the public on this (per my post above), is the lowest point - so far - in their shameful attempt to cover it up. You can be sure that all Dept of Finance calls to Dublin tax partners - and particularly the ones who lobbied for this - met with deaf ears. The Dublin tax partners who did not lobby for this scandal, want nothing to do with it, and are not prepared to mis-lead like Prof. Eamonn Walsh did.

Thanks and sorry for such long posts on this, but wanted to get it out there (I think that most of the media outlets, and even Donnelly, have failed to cover the facts fully to date, and give people the full meat of the scandal).

Re Irish Charities angle, this is an interesting note written by a partner in Maples and Calder.
(Dublin office of law firm who do lots of international structuring and have offices in all the offshore locations).

Go to the section titled Irish Loan Sales – Capital Gains Tax in the article:

In this section you will see another of Revenue’s domestic anti-avoidance laws - CG50 certs for sale of Irish land - becoming a problem for the vulture fund Section 110 vehicles. Buyers of Irish assets / loans off the vultures which relate to Irish land would have to hold back 15% and give it to the Revenue (it is like Revenue’s “schmuck insurance” to at least get some tax back from Irish land sales that they might not pick up in any audit.). This is obviously a problem for vultures. Can’t have them loosing 15%.

Revenue therefore issued new guidance that “investment vehicles” would not need CG50 certs. However a vulture’s Section 110 is not an “investment vehicle” (and is not regulated in Ireland as such). Therefore, you will see from the article, that Revenue also included “charities” as also being exempt from needing CG50 certs.

Any Irish tax advisor will tell you that the reason why charities have never lobbied for this exemption from CG50 is that they don’t care (CG50 certs have been around for a while). They don’t pay Irish taxes, and therefore they can claim it back (plus, they are very sporadic sellers of assets so very infrequently encounter this). Revenue added the “charities” to CG50 clearance institutions, because the vulture’s Section 110 vehicles are all owned by Irish “charities” (and therefore can avoid the 15% charge through this exemption). This is how detailed - and devious - Revenue’s support for the vultures Section 110 vehicles has been for 4 years.

What is very important to understand is that there are loads of ways - regardless of what letters and/or guidance the Revenue has given the vultures tax advisors - to kill an existing Section 110 scheme. Withdrawing its ability to be “owned” by an Irish Charity is a major one. It is very hard for the vulture’s Section 110 scheme to survive - particularly with the US IRS looking at it - without the structure of its equity owned by a separate Irish Charity. The irony of US IRS challenges to US MNCs managing taxes in Ireland, is that when Uncle Sam puts the pressure on them to pay 35% US taxes, the MNCs defend themselves by committing even more to “normal” Irish structures and pay fuller Irish taxes (happening with Google and Apple currently). When Uncle Sam sees a US H.Q client, paying zero Irish taxes and owning the equity of the vehicle, they will demand full US 35% taxes (ouch !).

Again, the fact the Irish Charity Regulator has not been instructed to issue an order to cease any ownership by Charities in Irish distressed debt Section 110 vehicles (never mind stopping the ongoing NAMA loan sales that are all to Section 110s), is that the Dept of Finance is terrified of the vultures getting rattled and starting to sue. To protect their existing Section 110 schemes (on which the level of taxes they will avoid over the next ten years will run into billions) they will threathen to waive their Irish Revenue “comfort letters” in Irish courts (written to their Irish tax adviser in all cases). That is why the Government and Dept of Finance is terrified of taking the immediate action that would fix 95% of this evasion (in quantum terms).

Noonan is hoping that the Government will fall anyway and he can retire before this gets out (the Bertie plan).

Super posts observer35.

This is the end for Noonan.

If the hepatitis victims or the pension raid weren’t the end of him I doubt this will be.

Last week, we had Professor Eamonn Walsh doing his best “Comical Ali” impression to mislead the Irish public on RTE’s primetime covering vulture fund tax evasion, that nothing was wrong with how vultures use Section 110s in Ireland.

Sure it is all high-finance IFSC type stuff (you just can’t stop it), according to Prof. Eamonn (covered on this post).

However, as also noted in the above post, FF / Michael McGrath have copped on to this scandal and their understanding of it has moved on materially from a few weeks ago. There are many Dublin law and accounting partners disgusted at what has happened (and who like myself, understand this area in detail), and no-doubt their own FF network has gone to FF / Michael McGrath to brief him on the scandal, and the paper trail around it (which links Revenue, NAMA and Dept of Finance in it).

Anyway, you know this is really starting to blow up when we have John McManus, Business Editor of the Irish Times, also called on to “wear the green jersey” by the Dept of Finance (who are terrified of standing in front of this, but who can’t get any Dublin professional to do so for them, as they all know what was done here).

Rather than Professor Eamonn Walsh’s (a.k.a. “Comical Ali”) “no scandal here” routine, John McManus goes for the “A Few Good Men” routine of “you can’t handle the truth” - i.e. we are are country built on global tax evasion, so we can’t complain when it comes back on us. i.e. these poor Dublin law and accounting firms are “on that wall” doing what we asked them to do in 1997 (when Section 110s were set up), and now that it has come back on us, we can’t handle it.

Let’s go through the facts:

  1. Plant Article. First, you can always spot the “plant” articles by the inclusion of lines such as “…we get investment, jobs, downstream tax revenues such as income tax and VAT”. I don’t think the term “downstream tax” and such a high awareness of VAT as a contribution, would normally be associated with John’s writings. This article was drafted by someone else.

  2. Warning to FF. Of course, in a plea (or threat) to FF / Michael McGrath, is the line “high level of buy-in right across the political spectrum”. i.e. we will take FF down as well. Unfortunately (and surprisingly, in this case), FF did not direct Revenue to bend Revenue’s own anti-avoidance rules to help the vultures evade domestic Irish tax via Section 110s. Nor did FF direct NAMA (and IBRC) to sell tens of billions in distressed Irish loans to vultures with the zero-tax Section 110 schemes. As we saw on RTE primetime, FF have woken up to this scandal (with Noonan’s fingers all over it), and are starting to mobilise.

  3. Core Fallacy of John McManus Argument. The crux of John’s argument (similar to Comical Ali’s) is that this is IFSC type structuring, and while distasteful, is the quid-pro-quo for having an IFSC empire. This is false. Section 110 type structures are available all over the world (one of the few true lines in Professor Eamonn Walsh’s shameful RTE piece). However, they are NEVER (ever) allowed to suck domestic profits, gross, out of any economy (without paying domestic corporate or withholding taxes) to re-route elsewhere. That is tax law everywhere. It is the law in Ireland too (until Revenue began to issue rulings to fit the vultures Section 110 zero-tax schemes into our own domestic economy). It is the law in the US. Everywhere.

  4. Fallacy of the Icelandic Angle. John alludes to Irish Section 110s being used to house Icelandic bank loans in the GFC. What John (or more correctly, the writer of John’s plant article), forgets to mention, IS THAT THE ICELANDIC REVENUE WOULD BE TAKING ALL VALID ICELANDIC DOMESTIC TAXES DUE OFF THE PAYMENTS OWNED ON THOSE BONDS BEFORE THE CASH IS ROUTED TO IRELAND. Again, that is the law John. Perhaps you can’t handle the truth of it?

Just to re-iterate the simple truth that shows how stupid John McManus and Professor Eamonn Walsh (a.k.a. “Comical Ali’s”) arguments are. If you can use a Section 110-type vehicle (and these are available all over the world), to extract domestic profits - gross - out of a country, and re-route to the Cayman (per the Oaktree / Mars Capital / Matheson Charity Structure), then all domestic corporation taxation will cease all over the world (it takes an afternoon to “securitize” a business into Section 110 structure). Of course, domestic corporation tax has not collapsed, because tax law all over the world would trap this as under anti-avoidance law (i.e. it would be classed as tax evasion). That is the tax law John and Eamonn. And it works (until the anti-avoidance laws are deliberately bent, as in Ireland’s case by Revenue, to deliberately stop them working).

  1. Why John McManus side-steps the Irish Charity angle. There is a very subtle point regarding the use of Irish Charities in owning the Section 110s (the vulture never “owns” their own Section 110) that John (and his ghost writer) forgets to mention. Irish Charities give the vulture additional protection from Irish anti-avoidance tax laws (as per my earlier posts on CG50 certs), but more importantly, they shield the vulture from the US IRS. As Facebook is finding out, the US IRS is formidable machine (more so than the FBI). Ironically, the reason why we have seen a dramatic uptake in Irish corporate taxation of 2bn (as well as the 26% GDP growth), is because the US IRS is cracking down on such “sham” structuring in Ireland by US MNCs. The ironic consequence is that the MNCs are dropping the “sham” zero-tax structures like Irish Charities, and becoming proper legit Irish corporates (why our GNP also shot up 18%). The US IRS is the reason why our MNCs are becoming more legit in Ireland (sadly, not our Irish Revenue). It will be the same with the vultures. If they lost their ability to use Irish Charities to hold all their equity, then their scheme collapses. They either face Uncle Sam (whose tax rate starts at 35% and rises), or Ireland (where the worst case is a 30% tax take). Killing the Irish Charity scam, where an Irish Charity “owns” the Section 110, would force the vulture funds to go legit.

The Smoking Gun of Revenue’s Involvement in this Scandal

As per my earlier posts, we now have a paper trail of the Irish Revenue issuing rulings over the last 4 years to help the vultures Section 110 zero-tax schemes, overcome our own Irish domestic anti-avoidance tax rules (which Section 110 violate in several areas). The Irish Revenue has been working hard to protect the domestic Irish tax evasion schemes of the vultures. That is how high this goes. (and why it is so ridiculous having Revenue conduct an investigation on a scheme they were supporting).

What next

John McManus now joins Professor Eamonn Walsh (a.k.a. “Comical Ali”) and the few Dublin law and accounting partners behind this scandal, as well as the Dept of Finance, NAMA and Michael Noonan, in the hall of shame. This scandal runs into billions (and potentially tens of billions), and all comes from distressed Irish families.

To quote Enda Kenny, “it was not your fault”. This is not IFSC-type business coming back to haunt us. It is domestic tax evasion aided and abetted by the Irish Government / Dept of Finance who directed the Irish Revenue to abuse an IFSC type structure (set up for a different purpose), to enable the vultures to do it. IFSC-type structuring is available all over the world, but cannot suck domestic profits out of any economy with it. That is the law. In this case, the Irish Revenue is are the heart of breaking our own domestic tax laws and NAMA (and IBRC) has consciously, and with full visibility, sold tens of billions of Irish loans to it.

I wonder who they will put forward next?

My money is on this guy. The only way out (in the court of public opinion) of this scandal, is to keep trying to connect it with an “inevitable” consequence of our IFSC empire. Distasteful, but inevitable (per Professor Eamonn Walsh and John McManus “green jersey” pitches above). John Bruton is just about mad (and arrogant) enough to stand up in front of this huge scandal for FG (who got him his many international roles, and will want pay-back). This will be their final card to protect Noonan’s reputation (they only real asset left to FG post the electoral collapse).

The word will go out to all Dublin law and accounting partners that anybody leaking info / making statements that highlights this scandal is a marked man (or woman). However (and I never thought I would hear myself saying this), the rise of FF will make hiding this scandal very difficult, and if FF play their cards right, the consequences for Noonan will be serious.

This kind of serious (unfortunately not for Noonan, but for the foot-soldiers involved who helped him):

Starting to love our new “political reality” where no one party / coalition has a stranglehold on power :smiley:

Jack Horgan / Sunday Business Post continues to be well ahead of the rest of media in understanding this issue.
(perhaps because the SBP is a specialist business paper and has better contacts / sources to understand it, and are clearly able to quote from more than one source that are involved with NAMA bids?)

SUNDAY BUSINESS POST: What did Noonan know about vultures’ tax?

SBP are following the NAMA / IBRC paper trail (NAMA sold, and is currently selling today, loans to vulture bidders with Irish tax avoidance Section 110 schemes). The great thing about the NAMA / IBRC trail, is that it is truly rich in paper. All NAMA / IBRC bidders have to give full disclosure on the structure of their bidding vehicle. NAMA / IBRC has complete visibility into the Section 110 status and that the equity owner is an Irish Charity. This is to vet and police any conflicts or links with the source borrower, who is not allowed to be involved in any way with the vultures bid. And of course NAMA Chairman, Frank Daly, is the ex. head of Irish Revenue? And of course the IBRC Liquidator, Kieran Wallace, was a KPMG partner, the Irish tax gurus?

Pity the SBP failed to do the sums here. If they did, they would also show that when NAMA sells to a vulture with Section 110 status, the taxes the vulture will avoid, will equate to the equity cheque paid to NAMA.

Also, from mid 2013, Bank of Ireland began to appear in all IBRC / NAMA loan bids. From late 2013 onwards, Bank of Ireland, AIB and even Ulster Bank and KBC Bank, have been bidders on almost all NAMA / IBRC loan bids. If NAMA / IBRC had checked the tax structuring in assessing bids, they could have sold to any of BOI, AIB, UB, KBC for 1 euro, and the state would still been better off financially. How can NAMA / IBRC claim that they were dumb to this angle (given Frank Daly is ex. Head of Revenue and Kieran Wallace is KMPG?

SBP is also reporting that FF are now looking for Noonan to make a statement on this and may recall the Dail to force it.

I’m guessing FF have the evidence here, but need Noonan to formally deny all responsibility, before revealing it.

Nothing on the real “smoking gun” of this scandal - that Irish Revenue (obviously under direction from Dept of Finance), has been making constant rulings over the last 4 years to help the vultures Section 110 schemes (equity owned by Irish Charities) overcome Irish anti-avoidance tax law. Section 110 schemes are so “alien” to domestic Irish tax law that they fall foul of several Irish anti-avoidance provisions. Revenue have even leveraged the fact that they are owned by Irish Charities to fix some of the issues (i.e the CG50 certs, per posts above). Of course, these “fixes” by Revenue have caused such fundamental breeches into our core domestic tax law, that other entitles, are bound to use them for their own Irish tax evasion schemes in the future. Watch this space however…

Knives being sharpened, election posters being dusted off as we tweet?

Summer holidays may be shorter than expected. . .

Stephen Donnelly asked this question of Michael Noonan on July 21, 2016

Michael Noonan gave this formal answer:

This is the link to the official answer on the Dail questions site - look for Q 136

I know this answer is a lie.
The sources from the SBP article (above), also agree that this is a lie.
Why is Noonan lying at such an early stage in this scandal?

I would say because he can claim he was “advised incorrectly” at a later date if needs be.

I also think it may be because 21st July was before the last two Sunday Business Post editions, and before FF seem to have been advised that this is worth pursuing.

An attempt at disruption by introducing ICAV?

ICAV structure rivals Section 110s in popularity, say Central Bank stats - Gavin McLoughlin → … 25142.html

Government faces tricky task swooping on vulture funds - Cliff Taylor → … -1.2740830

This link disappeared from Arthur Cox not before google cache caught it.