Dáil Éireann debate -
Thursday, 3 Dec 1998

Vol. 497 No. 7

Other Questions. - Non-Resident Companies.

Pat Rabbitte

Question:

8 Mr. Rabbitte asked the Tánaiste and Minister for Enterprise, Trade and Employment the progress, if any, made in relation to proposals to provide for more effective monitoring and supervision of Irish registered non-resident companies, particularly in view of the recommendations by a British review of financial regulation that registration of companies in places including the Channel Islands should be considerably tightened; and if she will make a statement on the matter. [25992/98]

Jan O'Sullivan

Question:

31 Ms O'Sullivan asked the Tánaiste and Minister for Enterprise, Trade and Employment the plans, if any, she has to tighten Irish regulations governing Irish registered non-resident companies in view of the recent British review of financial regulations on tax havens. [26103/98]

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy)

I propose to take Questions Nos. 8 and 31 together.

The Deputies and the House will be aware from replies to previous questions on this issue that detailed discussions have been ongoing for some time, involving our Department of Enterprise, Trade and Employment and the Department of Finance, the Revenue Commissioners and the Attorney Generals office in particular, which are aimed at developing proposals for addressing the problems arising from the use of Irish registered non-resident companies.

In his budget speech, the Minister for Finance clearly indicated that a package of measures under both company law and tax law, to deal effectively with this problem, is now close to finalisation. This package will be submitted by us to the Government and it is envisaged that it will be announced with the publication of the companies amendment Bill, currently nearing completion, in the near future. As indicated in reply to previous questions, the company law legislative proposals contained in the package will include provisions on directorships and improved enforcement-strike-off procedures.

Mr. Rabbitte

Will the Minister of State provide a precise date on which he expects the legislation to be published? Will he inform the House whether he has in his possession more refined information in respect of the extent of this phenomenon? Has the strengthening of the Companies Registration Office, in terms of the provision of new offices, the appointment of additional staff, significant investment in information technology, etc., enabled the office to diminish the extent of this phenomenon in this jurisdiction?

Mr. Treacy

We hope the legislation will be published shortly. I cannot provide a precise date but I am confident publication will be in the near future, I hope before Christmas but definitely as soon as the Dáil reconvenes after the recess. The sooner we deal with this issue the better.

Mrs. Owen

The Minister of State may have left to begin his European election campaign at that stage.

Mr. Treacy

The Deputy can rest assured that I will discharge my obligations to the House, the State and the Government for as long as I am charged with doing so. I am aware that the Deputy has a constant and permanent interest in European affairs for other reasons and I understand why she is interested in my ambitions in that area.

With regard to the other questions posed by Deputy Rabbitte — a predecessor of mine in office — I must point out that the investment made and decisions taken to provide human resources, IT services and additional resources in the Companies Registration Office have proven of major benefit, not only in terms of managing indigenous companies but also in being able to focus on the issue in question and come to terms with it. As a result of our efforts, we are pleased that the authorities in Britain are also focusing on this matter. The actions taken in this jurisdiction and the actions proposed to be taken in Britain will assist in ensuring that we can expose, diminish and eliminate this problem in so far as is possible.

This is a complex area and great efforts are being made in respect of it. The package of measures to be put to Government will be vital and it will take an in-depth critical analysis on the Government's part to ensure that we get it right. Ultimately, the House will be involved in ensuring that proper legislation is introduced in this area. I hope I have answered all of the Deputy's questions.

Mr. Rabbitte

Does the Minister have any information regarding the extent of the phenomenon?

Mr. Treacy

Is the Deputy referring to the action we propose to take?

Mr. Rabbitte

No, I asked if the Minister of State has any information regarding the extent of the registration of companies in this jurisdiction which are clearly using it as a base of convenience.

Mr. Treacy

I do not have exact information regarding the number of companies involved. However, we have in our possession information to suggest that there are many people who are directors of several companies. That is the most worrying aspect to this problem. I hope to be in possession of comprehensive information on this matter when we address it during the debate on the forthcoming legislation. We are working to achieve this but the information is not to hand at present.

Mr. Broughan

I wish the Minister of State success in his possible European campaign. His mellifluous tones will be missed in the House.

Mrs. Owen

The Deputy should not assume the Minister of State will be elected.

Mr. Broughan

I assume he will. I visited Brussels earlier in the week in company with 13 members of my party in Europe, colleagues of the Minister for Enterprise, Trade and Employment, Deputy Harney, who also happen to be Ministers.

Ms Harney

I heard about the Deputy's trip.

Mr. Broughan

Only I and the gentleman from Spain are not in Government in our respective countries. The group was involved in a discussion on the European statute and there appears to be a tendency among our European colleagues to include Ireland with Guernsey, the Cayman Islands and other jurisdictions. Does the Minister of State agree that this country's reputation is being tainted and that there is an urgent need to resolve this matter?

Has the Department taken any action in respect of company formation agents? When this crisis arose seven months ago, people rushed to the internet to look at the advertisements for service providers and they were struck by the fact that an amazing number of companies offer services of this kind from Ireland. Will the legislation deal with the issue of company formation agents? We should take action on this matter as quickly as possible.

Mr. Treacy

I am always concerned by those who seek to use this country to use companies for illegal purposes, such as laundering money, etc. Public representatives, Members of the Oireachtas and anyone who has served in Government and had dealings with Europe know that Ireland is regarded as a country which operates a strict regime in terms of the law on taxation, etc. In terms of our dealings with the International Financial Services Centre and the provision of State aids to it, the European Commission accepts that Ireland carries out its business in a straightforward manner. The Commission has been flexible with us and has confidence in our ability to discharge our obligations. No one wants the country's reputation to be tainted. We are pleased that the UK authorities have issued a directive to the authorities in Guernsey that action should be taken. This will help minimise the problem here. The Government is committed to tackling it in the legislation which is extremely complex. I hope we will get it right.

Mrs. Owen

It is several months since we first became aware of the abuse of this facility. Is the Minister of State telling us that he is still not in a position to give us the number of Irish registered non-resident companies? To help us understand whether Ireland has acquired a reputation in this area, how many British registered non-resident companies are there?

Mr. Treacy

The Deputy, who is a former Minister for Justice, appears to be very excited about the matter. That Department is involved. We hope to have a figure eventually. Deputy Broughan mentioned Guernsey and Sark on which there are 575 people some of whom hold 3,000 directorships. We are trying to ensure that does not happen here. I have only been dealing with this matter for 12 months in co-operation with the Tánaiste, the Minister of State, Deputy Kitt, and with the tremendous support of the Minister for Finance, Deputy McCreevy, the Attorney General and their officials. With the wisdom of the House, we hope to get the legislation right.

Mr. Rabbitte

With that collection of brains I accept that the matter will be dealt with expeditiously and effectively. I have never heard of so many heavyweight ministerial brains, as well as those of the offices of the Attorney General and parliamentary draftsman, being brought to bear on a problem.

Mrs. Owen

The Deputy is supposed to be impressed.

Mr. Rabbitte

I think Deputy Owen is being unfair.

Mr. Treacy

I am grateful to the Deputy. I thought he dealt with all the brilliant people mentioned.

Mrs. Owen

The Minister of State should first remove the knife from his back.

Mr. Rabbitte

During the debate on the Finance Bill I tabled an amendment on this matter. The Minister for Finance indicated that it would be a worthwhile step towards controlling this phenomenon placing responsibility on the company formation agent to advise the Company Registration Office that he has constituted a new company and to give its address and the names of the directors and secretary. Is this being considered in the preparation of the legislation?

Mr. Treacy

It is. The residency of the director or directors is also being considered. It is not, however, a simple matter. We are working assiduously to get the legislation right. Any amendments tabled following the publication of the Bill will be considered.

Mrs. Owen

The Minister of State should seek the commissionership.

Mr. Treacy

It is too early.