Former Aer Lingus chairman need not have resigned

The former chairman of Aer Lingus, Tom Mulcahy, who resigned his position in the wake of the AIB tax-evasion scandal in May 2004, was subsequently declared tax compliant by the revenue commissioners.

Mulcahy, a former CEO of the bank, decided to resign after AIB issued a statement claiming two of its former executives had “tax issues” arising from an offshore account. The statement followed immediately upon a much more startling revelation concerning former executives, not including Tom Mulcahy, on the same day. The bank confirmed that five former executives had invested in an offshore investment company, Faldor, which was based in the British Virgin Islands. The investment was in breach of Irish tax laws.

When Tom Mulchahy was informed that he was one of the two former executives with “tax issues”, and following an intervention by then minister for enterprise, trade and employment Mary Harney, he decided to resign as chairman of the state airline. Harney had presumed that the bank's statement about Tom Mulcahy was correct and made it clear that no-one with “tax issues” should be leading a semi-state company.

Several months later, after a trawl through decades of his tax returns, the revenue commissioners determined that no such tax issues arose. Tom Mulcahy, who had been a successful chairman of Aer Lingus, did not, in hindsight, have to resign from Aer Lingus and was unfairly treated by his former colleagues in the bank in their statement relating to his tax affairs.

He has subsequently been unfairly treated in media coverage of both Faldor and the tax controversy, including in a report in Village on 4 January where he was mistakenly reported as one of the executives implicated in the Faldor scandal. He was involved in the earlier ICI scandal involving AIB but only because he was asked by the bank to investigate the affair long after the scandal had occurred.

Frank Connolly