Gambling on libel

Had she not sued RTÉ, Beverley Flynn would probably be a cabinet minister by now. Her involvement in the NIB tax fraud would have been brushed off. By Vincent Browne

Beverley Flynn was not the focus of the RTÉ investigation into malpractices at National Irish bank (NIB). Her name was first mentioned only in passing with one of Charlie Bird's  contacts, that she had won a trip to Australia for reaching sales targets in relation to Cerical Medical Insurance (CMI). In early January 1998, Charlie Bird phoned Beverley Flynn but she refused to answer questions on the grounds that these related to matters that were confidential to the bank.

Then in March 1998 Charlie Bird was contacted by a Cavan man who said she had sold his family this CMI scheme and told him the “taxman” would never know about it. Other people made contact with RTÉ and told similar stories.

Shortly afterwards, a retired Meath farmer, James Howard, made contact and said Beverley Flynn had sold him into the CMI scheme into which he put undeclared income. He said she later advised him not to avail of the 1993 tax amnesty.

Charlie Bird travelled to the Slieve Russell Hotel in Cavan where the Fianna Fáil parliamentary party was meeting. He made several unsuccessful efforts to meet her there and left a letter for her.

RTÉ broadcast a report on 19 June alleging Beverley Flynn had encouraged people to evade tax by investing in the CMI scheme. It made reference to James Howard but did not name him at that stage. Beverley Flynn issued a statement categorically denied that at any time during her seven years at NIB did she ever encourage people to invest in a financial product as a means of evading tax. RTÉ followed up this – and the disclosure in the Sunday Independent of James Howard's identity – with an on-camera interview with James Howard. This caused Beverley Flynn to respond that NIB records showed it was not she but another employee of NIB, Patricia Roche (she was not then identified) who had dealt with James Howard.

Had Beverley Flynn left the matter stand at that, it is likely the impression left in the public mind would have been that she had been unfairly and wrongly traduced by RTÉ. No adverse consequence would have followed to her political career, indeed she might have profited from a perceived wrong. Further allegations concerning her involvement in assisting tax fraud could have been shrugged off.

But in an error of judgement, matching the error of judgement of her father in his remarks on The Late Late Show in 1998 about Tom Gilmartin, she opted to institute libel proceedings against RTÉ and James Howard. She could and did win the libel action concerning James Howard, but her mistake lay in the failure to appreciate that the libel action would open up all her dealings while with NIB, an institution known at the time to have been compromised in relation to many of its financial dealings at the time Beverley Flynn worked for it.

In 1991, NIB started to market Clerical Medical International (CMI) personal portfolios, an insurance product suitable for investment by non-residents. CMI was based in the Isle of Man. The following year it established a small team, including Beverley Flynn, to handle the CMI scheme. In 1993 the tax amnesty was introduced, allowing tax defaulters to settle their tax affairs in return for the payment of 15 per cent of the tax owed, but it emerged NIB officials dissuaded many of its customers from availing of the amnesty and instead advised them to invest their “hot” money in the CMI scheme. All of the major financial institutions were engaged in similar practices at the time, notably in relation to the DIRT tax.

Aside from James Howard, four NIB customers gave evidence and all four said Beverley Flynn had encouraged them to invest in the CMI scheme and no one would know about it. One of them said Beverley Flynn told her that her money would be placed in a numbered account on which her name would not appear and the Revenue Commissioners would not have access to this account. Others gave similar evidence.

There was controversy over a document prepared within NIB referring to “hot money”. The document was  not circulated to the CMI staff because of a change in the external financial situation but, it was claimed, it reflected the disposition of officials in the bank at the time.

In the High Court libel action Beverley Flynn took agasint RTÉ in February 2001, four questions were put to the jury:

1. Had RTÉ and James Howard proved Beverley Flynn had induced Patrick Howard to evade tax (if the answer to that question was yes, then RTÉ and Howard had won the case but if the answer was “no”, the jury had to go on to answer the next question)?
2. Had RTÉ proved Beverley Flynn had encouraged others to avail of illegal investment schemes (if “no”, then the jury was to move to question 4 to assess damages, if “yes”, proceed to question 3)?
3. If RTÉ and James Howard have failed to prove Beverley Flynn induced James Howard to avail of an illegal investment, was her reputation materially damaged, give that the jury had found she had sold illegal products to others?
4. If the answer to questions 1 and 2 is “no”, assess damages
5. If the answer to question 1 is “no” and to questions 2 and 3 is “yes” assess damages.

The jury returned with answer “no” to question 1, answer “yes” to question 2, answer “no” to question 3 and answer “nothing” to question 5.
The case had lasted 28 days. It was appealed to the Supreme Court (unsuccessfully) where it lasted two further days.

Beverley Flynn was “fixed” not just with her own costs but the legal costs of RTÉ and James Howard. One of the peculiarities of this centers on why she should have had to pay costs for that part of the libel proceedings related to the section of the trial that went in her favour – the jury found in her favour concerning the initial RTÉ allegation about her, that she had sold an illegal financial product to James Howard.

There is also the issue of the scale of the RTÉ legal costs. How could the legal costs have amounted to €2.3 million?

Granted the case lasted 28 days in the High Court and two days in the Supreme Court, and, presuming that the preparation for the case involved a further 20 days, a total of 50 days. How could the costs have amounted to €2.3 million for three barristers and one solicitor (it is not at all clear why three barristers were required or certainly why Beverley Flynn should have had to pay for the fees of three RTÉ barristers).

Allowing for four lawyers, and a total of 50 days each, that is a total of 200 days, the cost per day comes out at €11,500. It is not at all clear how the law requires a plaintiff, trying to vindicate their good name, should  have to pay, in the event of failure, costs at such an exorbitant rate.

But in assessing the issue concerning Beverley Flynn, regard has to be had to the report of the High Court inspectors that reported on NIB practices in the early 1990s. This report found:
• She was one of a number of NIB executives who sold the controversial Clerical Medical Insurance (CMI) policies, which were underwritten in the Isle of Man, as a secure investment for funds which had not been declared to the Revenue.
• She and others gave an assurance to prospective investors that their investment would be confidential, and that the Revenue would not become aware of it.
• She and others told prospective investors that if their investment was made the subject of a trust it would pass to the beneficiaries on the production of a death certificate. This avoided the necessity for probate, and made it possible for the funds invested to be kept hidden from the Revenue even after the investor's death.