Haughey is let off $2m tax liability

GHOSTS OF Charles Haughey scandals past returned to haunt Taoiseach Bertie Ahern yesterday when it emerged that the former premier had had a tax liability on pounds 2m of secret gifts reduced to zero.

Mr Ahern became implicated when opposition deputies (TDs) discovered that the extraordinary concession was overseen by his own brother-in- law, Ronan Kelly, a tax appeals commissioner. The finance spokesman of the Democratic Left party, Pat Rabbitte, asked Mr Ahern if he accepted that it "gives the wrong impression to the public, without reflecting in any way on the man's competence, that the brother-in-law of the present leader of Fianna Fail should adjudicate on the tax affairs of a former leader of Fianna Fail?"

Mr Haughey's liability was dropped on the technicality that tax authorities had not conclusively documented the identity of the donor. The total liability is believed to have been close to pounds 2m.

Amid rowdy scenes in the Dai, opposition critics alleged that Mr Ahern had himself appointed Mr Kelly to his present post without advertisement. Mr Ahern replied that he first heard of Mr Kelly's involvement when he read about in yesterday's Dublin newspapers.

The latest escape by Mr Haughey, whose skill in eluding previous icebergs earned him the nickname "Houdini", was greeted with general disbelief.

Some of the gifts - three bank drafts totalling pounds 210,000 - were handed to Mr Haughey at his Georgian mansion by supermarket magnate Ben Dunne in 1991 with the words "Here's something for yourself." The politician replied "Thanks Big Fella," the McCracken tribunal investigating payments to politicians was told in July last year.

Mr Haughey, who finally admitted this payment, faces prosecution next year for obstructing the tribunal's work.

Labour leader Ruairi Quinn said it was "simply incomprehensible" to ordinary taxpayers how an appeals process could doubt the payment when it had been admitted by Mr Haughey. He said it was "incredible... when a tribunal set up by this house that found that a man was corrupted while in the office of this country" should not be required to pay tax due even on the pounds 210,000 he specifically confirmed receiving.

Mr Ahern said the Department of Finance could appeal against the decision to either the circuit, high or supreme courts. Later, the Finance Minister, Charles McCreevy, told the Dail he would not comment on individual cases but insisted the appeals avenue was open to all. His response was greeted with calls of "outrageous" from opposition benches. Mr McCreevy also confirmed that Mr Ahern appointed Mr Kelly during an interregnum between governments on 9 December 1992.

Last night, pressure on Mr Ahern increased as his Progressive Coalition partners demanded the publication of the Haughey appeal. Despite possessions including a 280-acre Dublin estate, a private island, racehorses, a yacht and a family helicopter company, Mr Haughey told the McCracken tribunal "I want to say I did not have a lavish lifestyle."