Charlie McCreevy Accused Of Bending Tax Rules To Assist Eircom Privatisation

by Robin Pilgrim, LawAndTax-News.com, London

17 February 2004

The Irish Green Party is to question Finance Minister, Charlie McCreevy over claims that he amended the country's tax laws in order to assist in the privatisation of telecommunications service provider, Eircom.

According to the opposition party, documents obtained under the Freedom of Information Act show that Mr McCreevy amended tax legislation to help the Valentia consortium win round the Eircom Employee Share Option Trust (ESOT).

Reports in the Irish media have revealed that in 2001, Valentia made a deal with the ESOT stating that it would effectively double their stake in the company if they agreed to support the Valentia bid.

At that point, the employees had a 15% stake in the company, but Valentia could not afford to buy that stake and still hold control of the company, so it decided to issue preference shares rather than ordinary shares to purchase the stake.

At that point, preference shares were not liable for tax relief. However, the Green Party alleges that following a request from the consortium for the extension of preferential tax treatment to the share class, Mr McCreevy amended the Finance Bill.

Green Party TD, Eamon Ryan has announced that he intends to get to the bottom of why the Finance Minister was willing to "bend over backwards" to accommodate the Valentia consortium.

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