Jury in Michael Lowry trial told there is 'an innocent explanation' for missing document

It is the State's case that Mr Lowry's company, Garuda Ltd, received Stg £248,624 (€372,000) in commission from Norpe OY, a refrigeration company based in Finland, in August 2002.

It is alleged that Mr Lowry arranged for this payment to be made to a third party, Kevin Phelan, residing in the Isle of Man, and therefore it didn't appear in the company accounts for that year.

It is further alleged that the accounts were then falsified in 2007 to reflect that the payment was received in 2006.

Patrick Treacy SC, defending Garuda, reminded the jury that the politician's secretary, Aileen Dempsey, gave an explanation for the reason there was no invoice for the €372,000.

He said Norpe told her that an invoice had to come from Kevin Phelan directly rather than Garuda and that was the “innocent explanation” for the fact there was no invoice. “It is no conjuring act,” Mr Treacy said

Mr Treacy said it was “a key moment in the trial”, yesterday when a charge against Mr Lowry of making an incorrect income tax return was dropped.

He said that charge existed because a tax inspector determined that the €372,000 was an emolument, (a wage or salary), and because of that both Mr Lowry and Garuda owed income tax, PAYE and PRSI.

They were assessed as owing a total bill of €1.1 million including interest, fines and penalties. This assessment was later successfully challenged before the appeals commission.

“That was the engine driving this whole case,” Mr Treacy said. “The engine ran into a serious problem in terms of staying on track,” counsel said before he advised the jury that Revenue didn't anticipate that Mr Lowry and Garuda would fight this assessment “tooth and nail”.

Mr Treacy said when this charge against Mr Lowry was dropped yesterday, the prosecution “went up with a puff of smoke”.

“Yesterday the engine got decoupled from the carriages and the whole engine that drove this whole thing to bring it into court is gone. It went because what they thought was their case evaporated,” Mr Treacy said. “The eight carriages remain trundling on,” he continued.

Referring to the opening speech of prosecution counsel Remy Farrell SC, who said Garuda's books were “cooked, not once but twice”, Mr Treacy said “the only cooking being done now is by Revenue and they have overcooked the books.”

“This case relates to the misfiling of an invoice and it is presented to the 11 of you as this gross fraud on the exchequer,” he continued.

Referring to Mr Farrell describing some of the accounting procedures adopted by Garuda as an “attempt to move the body”, Mr Treacy said “This isn't a body case. It is not a murder case. It is a Revenue case.”

He said the charge of returning an incorrect return in connection with corporation tax in 2007 was what the State claim is “the disposal of the dead body”.

Mr Treacy asked the jury to consider the symbol of justice when determining the case.

He said the symbol is a blindfolded woman who holds a sword in one hand and the scales of justice in the other.

“The sword is to cut through and make a decision on what is truth and what is false. The scales represents exercising balance. She is blindfolded. It means you are to be blinded to anything that may be prejudicial. Anything that may colour you from adjudicating properly on the case,” Mr Treacy said.

Mr Treacy described the prosecution case variously as “madness”, “relentless” and “manic” and “a joke”. He told the jury that the law his client is charged under means that you can be convicted by Revenue even if the mistake in the return leads to an overpayment of tax.

“The only way this stops is when an external authority say this has gone too far and this is where it stops. And that authority is the 11 of you,” Mr Treacy suggested.

He asked the jurors to ask themselves a “fundamental question” if it is right that his client should be prosecuted in Dublin Circuit Criminal Court by Revenue in relation to an underpayment of corporation tax of €5,541.

Yesterday Judge Martin Nolan told the jury that a charge of delivering an incorrect tax return for 2002 had been withdrawn.

At the start of the trial, Mr Lowry (64) of Glenreigh, Holycross, Co. Tipperary, pleaded not guilty at Dublin Circuit Criminal Court to four charges of filing incorrect tax returns on dates between August 2002 and August 2007 in relation to a sum of Stg £248,624 received by his company, Garuda Ltd and one charge in relation to failing to keep a proper set of accounts on dates between 28 August, 2002 and August 3, 2007.

He further pleaded not guilty on behalf of Garuda Ltd to three similar charges in relation to the company's tax affairs and one charge of failing to keep a proper set of accounts on the same dates.

The trial continues before Judge Nolan and a jury of three women and eight men.