Amendment No. 1 is out of order as it involves a charge on the Exchequer.
Private Members' Business. - Comptroller and Auditor General and Committees of the Houses of the Oireachtas (Special Provisions) Bill, 1998: Committee and Remaining Stages.
SECTION 1.
Amendment No. 1 not moved.
Question proposed: "That section 1 stand part of the Bill."
The Minister had a short time to reply. He seemed to take offence that I had argued that the Bill should have been presented to the House in sufficient time to allow a proper Second Stage debate with an interval in the normal way so that we could consider amendments for Committee Stage. That my colleague, Deputy Jim Mitchell, who is Chairman of the Committee of Public Accounts, was in consultation with the Minister's officials does not meet the point.
Deputy Mitchell, as Chairman, has a role to play. We, as members of the Opposition, have a different role altogether in the House. That we are from the same party and good colleagues is just a coincidence. There is no point in the Minister or his officials pretending that we are following best practice by putting this through tonight without proper examination. There is no point in getting offended about the criticisms we made earlier.
Perhaps I should not be offended. An extraordinary number of man-hours have been put into this Bill by officials in my Department, the office of the Attorney General, legal advisers to the Chairman of the Committee of Public Accounts and me. I would accept what Deputy Noonan says, that it is not satisfactory that in a few hours on the last day of this session we are trying to put through a complex Bill such as this. However, it was the desire of everybody, none more so than the Committee of Public Accounts, that this Bill would be enacted before we rise at the end of this session and that it be signed into law by tomorrow evening in order that the resolution could be passed in the House on Thursday morning. Certain other arrangements had to be made also to ensure that it would be signed into law tomorrow because I understand the President is not available tomorrow and the Commission must sit to sign this into law.
It has been the desire of everybody to have it done as quickly as possible. I accept the point of Deputy Noonan, that it is not satisfactory that we put through legislation such as this in this way but such are the exigencies of time. Everybody wants it to be put into effect.
Of all the legislation with which we have dealt in my time as Minister and in Opposition, this is as complex a Bill as we have ever attempted. Deputy McDowell might have put his finger on it when he stated that it was a hybrid Bill. That is a fair summation of it. It is trying to marry a number of competing principles which are complex and tied up in legal, constitutional, parliamentary and other issues. It has not been easy.
Perhaps I was reflecting the frustrations of some of my officials who have spent upwards of 18 hours per day and weekends trying to get this into its present form.
The Minister's officials are to be congratulated but the Opposition, in all its humility, is facilitating the Minister tonight. My criticism is not that the Minister, his officials and the Attorney General's office and the draftsmen did not work hard last week. No doubt he was up all night. I do not think he worked hard at the beginning of the process. A couple of weeks were lost at the start which would not have pushed us up against this deadline.
What the Minister says is true on both counts, that his people have been working immensely hard and it was imperative that it be enacted before Christmas because of the time schedule set out for the Comptroller and Auditor General's work and the subsequent hearings by the Committee. Having said that, if there is established to be a constitutional infirmity in this Bill which we might reasonably have foreseen, we will look very silly indeed, more silly than is normally the case.
The Minister has not satisfactorily or adequately answered the central point which only came to light today in respect of section 2(1)(c) whereby the Comptroller and Auditor General is not being enabled to do the investigation himself but must in all cases have it done on his behalf by an auditor.
(Carlow-Kilkenny)): Deputy Rabbitte, you may deal with that on section 2.
I will. I am just warning the Minister that it is a central point and we did not get an answer in his reply to Second Stage.
Acting Chairman
There are many amendments to the Bill. If we spend all the time discussing an amendment to section 1, we could be here all night.
I am conscious of that and I will not delay on this. An obvious question occurs to me. Perhaps the answer is obvious also but I do not know it. In circumstances where the President is out of the jurisdiction, is the power under Article 26 conferred on the Commission?
I moved an amendment to section 1 but the Ceann Comhairle informed me that it is out of order as it involves a charge on the Exchequer. Will the Minister consider it as a Report Stage amendment because it is an important power? Amendment No. 22 is consequential.
There is a similar subsequent amendment in my name which has the same effect, which is to give the same power to other committees to require advice or to allow advice to be given, again, with the consent of the Minister. It seems to me that this is a perfectly reasonable amendment which the Minister could accept. My amendment has also been ruled out of order.
When we come to deal with this broader issue of advice to committees I will be willing to consider those matters. In my time as Minister for Finance I have been possibly the most generous Minister in allowing a number of facilities to Deputies and the same applies to committees. I am dealing with this Bill tonight and we will deal with other matters as they arise. We will deal with them when people put propositions to me. This Bill is a specific measure to deal with this item.
There is at least one other provision which allows the utterances or documents provided to other committees and not just this Committee to be kept quiet unless the chairman agrees otherwise. That applies to all committees.
I will deal with this Bill as it is.
Question put and agreed to.
SECTION 2.
I move amendment No. 1a:
In page 7, subsection (1)(a), line 1, to delete "section 175" and substitute "sections 175, 344 and 358".
I spoke briefly on this on Second Stage. It has been widely and publicly acknowledged that if a body which has been granted tax exempt status decides to operate marginally or substantially outside the terms of reference on which its special DIRT free status in tax law is based, there are inadequate controls in place. I take the view that ultimately a comprehensive charities Act is required alongside the publication of a compendium of all bodies which have been granted that tax exempt status since the Income Tax Act, 1967. We have formally requested that from the Taoiseach. The Revenue Commissioners have told us that it is not available. There are about 6,000 involved, not many of whom are in the public domain. It is a matter of grave public concern and we have received a great deal of correspondence stating that this area has to be examined. The Public Accounts Committee should be able to examine this issue in some detail.
Section 358 refers to a charity's ability to go to the US to raise funds. This area also needs to be examined. It is scandalous that we have not had the transparency required. I am sure there has been a lot of hookery in this business and, unfortunately, many people who enjoy charitable status have abused it. This issue should be examined.
I regard this amendment as vexatious and irrelevant. It is highly political in the context of this legislation and makes allegations about a particular party. It would be easy for Members to make allegations about the Green Party, the sources of its funding world-wide, what charitable trusts are involved and how it is structured to support furry animals.
I do not recall making allegations about any party. The Deputy must be paranoid.
The proposal is to add sections 344 and 358 of the Income Tax Act, 1967, to the reference in section 175(2)(i)(a) relating to returns of interest paid growth, that is, without deduction of DIRT. Neither of the proposed additions appear relevant. Section 344 was repealed in 1996 as part of the pre-consolidation amendments. Section 358 relates to the tax convention with the US. I cannot accept this amendment.
I am aware that Deputy Gormley has a number of parliamentary questions tabled for later this week concerning charities. I will deal with those questions on Thursday. The Deputy has tabled a large number of questions on charities in the past few months.
I do not know what Deputy Lenihan is going on about. I did not make a charge against any party. He must be paranoid.
Acting Chairman
The Deputy should stick to his amendment.
The Minister is correct in stating that I have tabled a number of questions, as has Deputy Sargent. This is because we believe this matter is of public interest. Charitable status has been abused and that is why we are asking that the matter be investigated. This amendment would enable the Public Accounts Committee examine this matter in greater detail.
I have written to Deputy Mitchell, but I suspect his reply will be that this matter does not come within the terms of reference of the Committee and it will not, therefore, be able to get to the bottom of it. However, we are not going to stop at that. We will pursue this matter until the end.
I have no difficulty with the Deputy pursuing the matter to the bitter end. He may unearth some of the difficulties and he is entitled to pursue the matter. However, the purpose of this Bill, as envisaged by the Dáil resolution of some months ago, is to investigate the controversy relating to the conflict of evidence, other matters arising at the Public Accounts Committee and the matters relating to DIRT. It would hardly be germane to insert a section concerning the wide remit of charities. That may be a matter for another day. I am sure that Deputy Mitchell may consider Deputy Gormley's request on another day. However, this is not the purpose of this Bill and I cannot agree to the amendment.
Amendment, by leave, withdrawn.
Acting Chairman
Amendment No. 3 is related to amendment No. 2 and they may be taken together by agreement. Is that agreed? Agreed.
I move amendment No. 2:
In page 8, subsection (1)(ii), line 14, to delete "tax aforesaid" and substitute "amounts aforesaid representing income tax".
These are technical amendments necessary to ensure consistency in the terminology of the Bill.
Amendment agreed to.
I move amendment No. 3:
In page 8, subsection (1)(iii), line 20, to delete "tax" and substitute "amounts representing income tax".
Amendment agreed to.
I move amendment No. 4:
In page 8, subsection (3), lines 34 to 36, to delete all words from and including "and" in line 34 down to and including line 36 and substitute "who shall forthwith lay the report before Dáil Éireann, and who may furnish a copy to the clerk to the Committee.".
The purpose of this amendment is to elucidate the exact position. I tabled the amendment before I received a copy of the resolution this evening. The resolution has to be put before the House on Thursday. Will the Minister clarify whether it is intended to allow for, or to oblige, the Clerk of the Dáil to effectively sit on the Comptroller's report for a fortnight while it is considered by the committee? I am not sure that is the right way to proceed. We could have a more meaningful debate if the Minister clarified if that is the intention. As currently formulated, the provisions of the Bill permit that to happen.
The Clerk of the Dáil will be able to issue the report as soon as is practicable. The report will be given to the Clerk and as soon as practicable after that he will give it to the chairman of the Public Accounts Committee and, presumably, to Members of the Dáil. I do not know from where the idea of a long delay came.
Before the circulation of the resolution this evening, it was indicated that the intention was that the committee would have access to the report a fortnight before the Clerk acted on it and placed it before the House. My understanding is that this is intended to facilitate the committee. It seems that would place the Clerk in an invidious and unusual position and I am not convinced that is the way to handle matters. I need to be sure that is the intention before we pursue a pointless debate.
The committee sought that we would have an advance copy of the report. That is the case in any analogous situation. For example, if an inspector is appointed by the High Court under the Companies Act, the inspector goes to the High Court confidentially and the court decides what parts of the report are to be published and when.
If the person concerned is an authorised officer of the Minister for Enterprise, Trade and Employment under the Companies Act, the authorised officer reports to the Minister who decides what is to be published and when. In the case of value for money reports by the Comptroller and Auditor General — a role given to him under the 1993 Act — he liaises with the Department which has three months to lay it before the Dáil.
The committee wants some advance notice so as not to be at a disadvantage or, at least, to have prepared its consideration of what it should do with the report before it appears in the media. It thought it prudent to seek that provision, but it does not appear to be provided for. It has been stated that the formulation in subsection (3) allows for that possibility. However, that is not my reading of it and I regret it does not make such a provision.
On the suggested operation of this subsection, the proposed subsection in section 2, I have some doubt as to the constitutional validity of this procedure. The Comptroller and Auditor General is responsible to the Dáil. He is a high constitutional officer and the obligation on him under the Constitution is to report to the Dáil, not to the Clerk of the Dáil. Has the Minister sought the opinion of the Attorney General on this issue? I would be concerned that we are changing that relationship in this subsection.
There seems to be a duty to report to the Clerk of Dáil Éireann and there is some discussion as to the type of resolution that will be adopted by this House on foot of that subsection and on what we will direct the Clerk of the Dáil to do. We are free by resolution to direct the Clerk to do various things. However, it is not clear that we are free by enactment to tell the Comptroller and Auditor General to do something other than what he is directed to do by the Constitution, namely, to report to this House. I am somewhat confused on this point and perhaps I could be assisted. There is a point of substance in this sub-section in that the position of the Comptroller and Auditor General is that he now reports to the Clerk of the Dáil rather than to the Dáil itself. There is nothing to stop us passing a resolution telling the Clerk what to do. My doubt is as to whether we can tell the Comptroller and Auditor General what to do in this subsection.
While the Minister is reflecting on that point, which has come up in the discussions we have had, the answer to which I also look forward, let me explain the practical problems that the committee is facing and that it seeks to have resolved. Most reasonable people would agree that it is important that the members of the committee should have sight of the report in time to give some measured and considered response before it gets into the public domain. As I understand it, laying it before the House means effectively that it will simultaneously come into the public domain, and neither the chairman nor any member of the committee will have a greater opportunity than anyone else to consider the report. Quite separate from the point Deputy Lenihan makes, it is a serious practical problem which, if the Minister were willing, could be met by a requirement that the Clerk of the Dáil should lay it before the House not later than seven days from its receipt, or something like that. That would give an opportunity to the committee to consider it. Whether the Clerk may give sight of it to the members of the committee without it being expressly provided for in legislation is something I am not clear about. It seems that he cannot do that, that he has to treat all Members of the House similarly.
I would have thought that the Clerk was obligated to circulate it to Members immediately on receipt of it and that precedent and practice is that the Clerk of the Dáil circulates immediately all appropriate correspondence or reports to all Members of the House and not just to committee members.
The point being raised by Deputy Brian Lenihan is germane, and it is something that was considered. I did put the point to the Attorney General quite recently and I am advised that no constitutional difficulty arises. Deputy Lenihan is quite correct in saying that the provisions of the Constitution are very explicit in that they provide that the Comptroller and Auditor General reports to Dáil Éireann. It does not say he has to report to anybody else. The advice from the Attorney General is that no constitutional difficulty arises because the Clerk of Dáil Éireann will act as a conduit. He is not asked to examine or read the report but just to pass it on.
Does that not imply that he has to pass it on immediately, because if he delays, he exercises a function?
The resolution that we are going to pass on Thursday provides that the Clerk of Dáil Éireann should, as soon as is practicable after receipt by him of any such report of the Comptroller and Auditor General, lay it before Dáil Éireann. So the resolution will cover that point.
I recall the late Deputy John Kelly being asked about that in terms of the resignation of a Taoiseach in 1989, and he said that the Taoiseach ought to present his credentials to the President as fast as was consistent with not breaking the traffic lights. How soon is "as soon as is practicable"— immediately? It seems to have the same meaning as Deputy Noonan ascribes to it, which leaves the committee with the problem we are seeking to resolve.
We are talking about two different people. We are talking about the Clerk of Dáil Éireann and Deputy Mitchell is talking about the clerk of the committee.
The clerk of the committee is bound by Standing Orders to circulate any document he receives as soon as he receives it. He cannot withhold any document from the committee. I assume there is a similar obligation on the Clerk of Dáil Éireann in relation to the Members of Dáil Éireann. The committee has considered this in great detail. It has been very careful about what is being sought. We are merely seeking a few days advance notice so that we will have time to give some consideration to our next steps before the inevitable media frenzy on the publication of the Comptroller and Auditor General's report and the instant demands to know what we are going to do next. All analogous situations allow for this.
Regarding Deputy Brian Lenihan's point on its constitutionality, this is giving additional functions to the Comptroller and Auditor General in the same way as the 1993 Act did. Section 11 of the 1993 Act provides that the Comptroller and Auditor General shall first supply his report to the Department which gets three months in which to consider it. I know a value-for-money report cannot be seen in the same light as a report of such importance as this, but nonetheless it is an analogous situation. All we are looking for is that some practical way be found to give the committee a few days notice.
(Dublin West): I am in the company of experienced politicians, and I am sure they do not mean this, but what they are suggesting would be a “leaker's charter”. Does anybody seriously think that a group of politicians, experienced ones at that, would have a report that could be quite sensational in their possession for, say, three days and it would not be leaked to the media? Why should people not have the right and have it at the same time as the Members of Dáil Éireann? Having it laid before the Dáil means that it is laid publicly and everybody is on an equal footing.
On the point raised by Deputy Mitchell, let me seek some clarification. The word used is "may", and the Comptroller and Auditor General has a constitutional position of independence. Is it implicit in this section that the Comptroller and Auditor General can decide whether or not to report, as he deems appropriate, to the committee, as Deputy Mitchell seems to be requesting? Can he, as a matter of discretion, request that the report be furnished to members of the committee and then pretty much immediately, to all other Members of the House? It is important to get clarification on that. I presume it is a legal drafting clarification that we are seeking, whether it will be at the discretion of the Comptroller and Auditor General to circulate a report to whomsoever and whenever he deems fit?
There seems to be a misunder-standing about the meaning of lines 34, 35 and 36. These words provide that the Comptroller and Auditor General may, at his discretion, furnish a report to the clerk of the committee. The purpose was to provide that there would be no impediment if the Comptroller and Auditor General wished to give an advance copy to the committee, as was sought in the interim report. Deputy Joe Higgins, by his intervention, summed up the dilemma of trying to get the right balance. What this Bill is asking the Comptroller and Auditor General to do is a once-off measure. The Comptroller and Auditor General reports to Dáil Éireann, but this Bill, and the pursuant resolution that will be put through on Thursday, is a special hybrid, to use Deputy McDowell's description. The purpose of lines 34, 35 and 36 is to allow the Comptroller and Auditor General, at his discretion, to furnish a copy of the report to the clerk of the committee. The clerk of the committee may give an advance copy to the committee if the Comptroller and Auditor General gives it to him in advance.
If that is teased out, it does not address the situation. What specifically do the Minister's notes say about the points raised by Deputy Mitchell? If this were a tribunal of inquiry set up by this House, the tribunal would report to the Minister who sponsored the resolution in this House, and the Minister would have time, as happened in a very celebrated case that we know of, to formulate a response. If it was an authorised officer under the Companies Acts, the Minister who appointed the authorised officer gets the report and there is time to consider it before it enters the public domain, if it does. Third, if one goes to the High Court and an inspector is appointed under the Companies Acts, the inspector reports to the Minister who has time to consider it.
All that is being submitted here is that it is important, given the gravity of these issues, that the Chairman and members of the Committee have an opportunity to look at the report. It is not the laying of it before this House which causes problems, it is the fact that there is simultaneous publication. It may be said that it is at the Clerk's discretion. However, the resolution we will take on Thursday morning is very specific and states "as soon as practicable", which means immediately. Our opinion is that the Comptroller and Auditor General would not be minded to give a copy to members of the Committee or even the Chairman in advance. That has not been his practice.
I do not want to take up all of Committee Stage on this amendment. However, I wish to clarify the purpose of my amendment. This problem arises precisely because the Comptroller is a constitutional officer and because there is a constitutional obligation on the Comptroller to report to Dáil Éireann. The various possibilities which apply to other bodies do not apply to the Comptroller. We are grafting additional non-constitutional powers on to the Comptroller's role. We have to assume the responsibility of the Comptroller to report to this House still applies, even to these additional powers.
My amendment specifically requires the Clerk to report forthwith to Dáil Éireann. The Minister is right in saying the members of the Committee are taking a different view to those who are not on the Committee — perhaps that is in the natural course of things.
Deputy McDowell anticipated what I was going to say. I take the practical point made by Deputies Rabbitte and Jim Mitchell. However, the legal point is that there is no analogy between a tribunal of inquiry or an inspector under the Companies Acts and the Comptroller and Auditor General. I thank the Minister for his reply to my earlier query. If the section is to enjoy a presumption of conformity with the Constitution, it has to be interpreted in a light that conforms with it. One cannot oblige the Comptroller and Auditor General to report to a section of the House — his obligation is to report to Dáil Éireann.
I find myself, strangely, in agreement with Deputy Higgins on this point. News being what it is, it is inevitable this matter will emerge in any event. I find it hard to see why the point is being pressed so much by the Committee, although I understand the practical point raised.
Deputy McDowell ignored the provisions of section 11 of the 1993 Act where specifically by law, the Comptroller and Auditor General is required to report to Departments first who were given three months. That is extra to the Constitution and gives additional duties by law, as is provided for. There is that precedent. We have discussed this enough. If there is a practical problem we will have to deal with it.
I welcome the Minister's clarification that the timing of the release of a document and to whom it should be given is at the discretion of the Comptroller and Auditor General. Within the ambit of the word "practicable" the Comptroller and Auditor General can make allowances for the report to be given to the Committee a day or a couple of hours beforehand — whatever is required.
Amendment, by leave, withdrawn.
I move amendment No. 5:
In page 8, subsection (6), lines 50 and 51, to delete "an auditor appointed under subsection (1)" and substitute "by an auditor appointed under subsection (1) (otherwise than for the purposes of subsection (7))".
This is a technical amendment to clarify that notwithstanding the restriction on him referring to persons who held accounts or deposits in a financial institution an auditor may disclose such details to the Comptroller in cases where prima facie evidence of tax irregularities have emerged in the course of the auditor's examinations. This will be necessary to enable the Comptroller pass on such details to the Revenue Commissioners under section 7. This also covers in essence Deputy Joe Higgins' amendment but does not specifically refer to criminal activity.
Amendment agreed to.
(Dublin West): I move amendment No. 6:
In page 8, subsection (6), line 53, after "owners" to insert ", except in cases where the Comptroller has established that the accounts were structured in such a way as to evade tax or were found to contain the proceeds of criminal activity".
We are now on amendment No. 6 of 27 amendments and we are more than halfway through the time allocated. It is ludicrous that such a short amount of time was provided for this debate on complex issues. Public servants worked hard on this. However, the legislators are supposed to have the time to dissect and tease out legislation.
Acting Chairman
Perhaps the Deputy will discuss amendment No. 6.
(Dublin West): Governments, this one as much as previous ones, have an extraordinary obsession that when questions are raised relating to bank accounts, particularly those held by wealthy individuals, secrecy is always insisted upon. I want to know why. Where tax evasion has been found to be the reason for accounts being structured in such a way, why should secrecy be enshrined in law to protect those people?
The Government went to extraordinary lengths to prevent the establishment of facilities for the investigation on the Ansbacher accounts and the publication of the names of those involved. The chairman of the tribunal said accounts were established for not very honourable purposes, to put it mildly. We have had the extraordinary situation of Allied Irish Banks where in one town — Tralee, I believe — about 14,000 accounts were bogus offshore accounts. Irish residents conspired with the bank to most likely evade taxes, using false identities. Why does the Minister say these people should not be named once it has been established by the Comptroller and Auditor General?
Similarly if accounts are found in the course of an investigation to be the result of criminal activity or the proceeds of heroin dealing or other nefarious activities, why should they not be named? An unfortunate heroin addict was sentenced to nine years in prison for stealing a handbag. She was named in every newspaper in the land and on radio and television. Her sentence was reduced to six years on appeal and she was named again. She was vulnerable, defenceless and in trouble. Why should the rich be protected in this way?
Deputy Higgins has made a good point. I understand why innocent holders of bank accounts ought to have their confidentiality protected. However, if it is established that an account has been opened for the purposes of evading tax or to hold the proceeds of criminal activity, I do not see why it ought to be maintained as a secret. As I understand it, under later sections of the Act, the Comptroller and Auditor General can pass this information on to the Revenue Commissioners. As a result, can I presume the Revenue Commissioners, in its report for that year will publish the names?
As regards the points made by Deputy Higgins, my knowledge of Kerry people is confined mainly to footballers. Coming from County Kerry, he would know why there were 14,000 such accounts in that branch in Tralee. He probably knows the vagaries of Kerry people better than I do. I bow to his superior knowledge on that matter.
Regarding secrecy and people being secretive about their bank accounts, I read in one of today's newspapers about a survey done by the Data Protection Commissioner which found that people were more secretive about their financial affairs and records than about their health records. This may be a uniquely Irish phenomenon, but is not confined to people who have loads of money stacked away in bank accounts of which the Revenue Commissioners are unaware. People are secretive about their financial affairs even if they have no money and have a big liability to the banks, as most people have.
I have covered the substance of Deputy Higgins's amendment in amendment No. 5 in my name. This also answers the point raised by Deputy Rabbitte. Amendment No. 5 deletes the words "an auditor appointed under subsection (1)" and substitutes "by an auditor appointed under subsection (1) (otherwise than for the purposes of subsection (7))". Subsection (7) says "the Comptroller may furnish to the Revenue Commissioners. .. particulars of the persons concerned, including their names, addresses and occupations, trades or professions". The reason I inserted amendment No. 5 was to ensure there is no ambiguity and that the provisions in subsection (7) could not be frustrated, something the alternative form of words achieves. My advice was that there was no need for amendment No. 5 and that subsection (7) was correct.
There is no need for Deputy Higgins's amendment. The only difference in substance between amendments Nos. 5 and 6 is that my amendment does not refer to criminal activity. However, criminal activity would be picked up if detected by the banks or the Comptroller and Auditor General and is a totally separate matter. I have dealt with the question raised by Deputy Higgins in amendment No. 6 through amendment No. 5.
The Minister has dealt with the issue as far as I am concerned.
Perhaps I am a bit slow, but I have not quite got it yet. I understand the Minister is saying the report given to the Revenue Commissioners may contain details of names, professions, etc. of people who hold accounts which have irregularities of a tax nature, but that the report provided by the auditors and subsequently by the Comptroller and Auditor General will not include such names whether there is a Revenue offence or not. Is that correct?
If in the course of the investigation by the Comptroller and Auditor General or the independent auditor on behalf of the Comptroller and Auditor General references are made to individual accounts and possible tax offences, the names will not comprise part of the report given to the Committee of Public Accounts and/or Dáil Éireann. However, the Comptroller and Auditor General will be in a position under subsection (7) to refer the names, addresses and the occupations of those people to the Revenue Commissioners.
Am I correct in saying, therefore, that the Minister does not feel it is appropriate to identify individuals in the report who may be guilty of Revenue offences, but that he sees no difficulty identifying, for example, the banks if they are collectively guilty of Revenue offences?
The purpose of the Bill and the request of the Committee of Public Accounts was not to turn the committee or this investigation into an investigation of tax offences by individuals. The question to be decided by the committee is that referred to in my speech on Second Stage, namely, the conflict in evidence presented to the committee between the AIB and the Revenue Commissioners. If in the course of investigation the Comptroller and Auditor General or the independent auditor on his behalf come across tax offences in the case of individual accounts, these will be referred to the Revenue Commissioners for further investigation. The Revenue Commissioners is the appropriate State agency charged with this task.
Am I correct in saying it is open to the auditor to report on what he might see as a pattern of offences in terms of individual accounts, which may be facilitated by the banks and be the subject of investigation by Revenue or the authorities charged with investigating criminal matters, and that the Comptroller and Auditor General could provide a commentary without naming individuals on such a pattern in his report to the Dáil?
Amendment put and declared lost.
I move amendment No. 7:
In page 9, lines 14 to 20, to delete subsection (8).
This is a probing amendment. It seeks to delete section 2(8) which confers absolute privilege on the utterances of the auditor and any employee or agent of the auditor or any document or report produced by the auditor. I wonder whether it is necessary to confer absolute privilege on any report produced by the auditor. Absolute privilege is an extraordinary privilege and allows one to say anything about anybody and not be called to account, whether there is malice involved or not and whether one is completely negligent in the discharge of one's duties or not. Clearly, if the auditors discharge their duty with due diligence and set out facts which they believe in good faith to be true, without malice, then it is right that such material be privileged and that they should not be called to account for it. However, I am not convinced it is necessary to go a step further and confer on the auditors or the Comptroller and Auditor General absolute privilege which is impregnable. My understanding is that the Comptroller and Auditor General in the discharge of his normal duties does not enjoy absolute privilege — perhaps the Minister will clarify this.
This section gives privilege to utterances or reports of an auditor appointed under section 2(1). This is necessary to enable the auditor to operate without fear of litigation in the course of an investigation. I have some sympathy with the point made by Deputy McDowell but can see no way out of it other than to give absolute privilege to the auditor and to assume the auditors will be professionally qualified and will act ethically. I often see barristers and solicitors in court making allegations and proceeding in a way I think is very poor. However, on balance the system works pretty well. I cannot see how I can remove this provision. I have some sympathy for Deputy McDowell's point of view and I see the point he is making about the committee or the Comptroller and Auditor General going too far. However, I cannot see how I can do other than give the auditor absolute privilege in the performance of his duties. We will have to assume the professional auditor appointed by the Comptroller and Auditor General will act ethically. I think this is a reasonable assumption.
The auditor's report will be private to the Comptroller and Auditor General.
Amendment, by leave, withdrawn.
Question proposed: "That section 2, as amended, stand part of the Bill."
This is the most significant section in the Bill. It will not worry us much if we do not discuss other sections as they are borrowed from other legislation. It is the most extraordinary section I have ever seen. It starts off by giving powers to the House, by way of resolution, to request the Comptroller and Auditor General to investigate matters where there is prima facie evidence of substantial risk to the revenues of the State and it is couched in general terms. It goes on, in effect, to make this a once-off provision in respect of the DIRT scandal. One would have thought at that stage that the resolution could have been incorporated here rather than going through this mechanism of having an empowering section which will be triggered by a resolution of the House. It looks as if it started off in one direction at the conception level but got pulled back.
The other area which is extraordinary is that the Comptroller and Audit General and his staff will not carry out the investigation and examination of documents in the financial institutions. He and his staff have all the skills but the mechanism here means that an auditor will be sent in. The only justification the Minister gave on Second Stage for sending in an auditor was that some type of legal buffer can be established so that the Comptroller and Auditor General will operate at a remove because there seems to be legal advice that there will be a challenge and that this would be a defence in such an event. That is what the Minister said on Second Stage, that is, that an auditor will be sent in to provide a defence in the event of a court challenge.
It is extraordinary legislation. I have never seen anything like section 2, and I have been here for a long time. I wonder what is going on, it is couched in such absolute terms, and that arises from something Deputy Joe Higgins said about secrecy. The activities of the auditor under this section are so ringfenced from the man who appoints him, the Comptroller and Auditor General, that it reaches the point of absurdity where the Comptroller and Auditor General could be inhibited from carrying out the functions ascribed to him by Dáil Éireann under section 2(1) because of the way the powers of the auditor are ringfenced from the Comptroller and Auditor General.
If an amendment was accepted at the end of the section and words such as "for the purpose of this paragraph the auditor shall produce to the Comptroller such supporting documents as the Comptroller requires", at least we would be providing a loop back from the auditor to the Comptroller. It seems the Comptroller will appoint the auditor who will be statute barred from providing documents to the Comptroller and Auditor General even if he believes he needs them. There must be a type of loop back if we are to go this way. I find the way section 2 is constructed an extraordinary mechanism. I fear it will not work in practice.
The main reason for this Bill is to examine Revenue, the banks and the procedures adopted by Revenue in relation to banks and the way they calculated interest on DIRT. That individuals are involved is secondary in this case as regards the requirements of the Committee of Public Accounts. This also is a protection to the banking system. This investigation is about how Revenue proceeded with the various banking institutions in relation to DIRT. It does not relate to individual taxpayers' problems. Section 2 effectively means that if something comes to light, it will be fully reported to the Revenue Commissioners together with the particulars of the item involved along with the names and addresses of those involved.
Deputy Rabbitte mentioned that it was only this evening he saw that outside auditors would come in and do the job of the Comptroller and Auditor General.
For individual accounts.
Yes. Members of the Committee of Public Accounts had the heads of the Bill for quite a while and it was my understanding for a number of days that outside auditors would do the minutiae on individual accounts.
The point is that the auditor will now do all the examination.
I do not believe that is the case. I understand the Comptroller and Auditor General will do the substantive work on the banking system and the procedures involved. I stand to be corrected on that.
As Deputy Noonan said, this is the main section which I would like the Minister to clarify. My understanding at all stages was that the Comptroller and Auditor General would have direct access to all the general files of the institutions but that when it came to individual accounts, he had discretion and that if he felt access was necessary, he would go through an auditor. It has now been presented that as the Bill is drafted, that is not the case and that in practice, the Comptroller and Auditor General will have to get all reports on financial institutions from the auditor. He will not be able to access reports such as the auditors reports, the board minutes or any such general documents. Will the Minister clarify that? Will he accept an amendment along the lines indicated by Deputy Noonan?
I am worried that this may prohibit the Comptroller and Auditor General getting access to documents.
(Dublin West): This is extraordinary and ties the Comptroller down in bureaucracy instead of setting up a crack team which could go in and get first hand knowledge. It is compounded in section 2(3) where the only matter which may be reported by the auditor is the numbers of and the total amount of money held in deposit accounts. All these powers to require documents to be produced, etc. may not be directed at the account holders. It is extraordinary.
Deputy Mitchell and other Deputies raised this point on Second Stage. The Deputy suggested section 2(1)(c) prevents the Comptroller and Auditor General from looking at any papers in the banks because they might refer to individual accounts. Our legal advice is that this does not preclude it as references to individuals can be blocked out. The possibility that he might stumble on them is not a barrier to him looking at audit reports, etc. Our legal advice is that Deputy Mitchell's amendment is too wide and unnecessary.
A Deputy raised the point that the auditor would be working independently of everyone else. Section 2(1)(c) states:
if the Comptroller considers it necessary to do so for the purpose of the performance of his or her functions under this Act, appoint an auditor to carry out on his or her behalf and subject to his or her control and supervision and upon and subject to such other terms and conditions (if any) as the Comptroller may determine or the High Court may specify.
I highlighted this fact this evening. The auditor will work under the control and supervision of the Comptroller and Auditor General.
The fundamental point is that the purpose of this legislation is not for the Comptroller and Auditor General or the auditor on his behalf to go about assessing the tax liability of those people whom Deputy Joe Higgins may want him to assess. Deputy Jim Mitchell has made that quite clear on a number of occasions.
Are we absolutely clear that according to the Minister's advice the Comptroller and Auditor General will be able to send for such files directly, as he sees fit, from the financial institutions for the purpose of this inquiry other than individual accounts and that the addition of the words proposed are not necessary?
Yes.
(Dublin West): Why not individual accounts?
The Comptroller and Auditor General may carry out an examination under the existing provisions of the 1993 Comptroller and Auditor General Act, including whether systems in the banks were adequate. My legal advice is that this section does not prevent him looking for an audit report, etc. If such reports include individual names, they may be blocked out if necessary.
I am now required to put the following question in accordance with an order of the Dáil of this day: "That amendment No. 12 and the amendments set down by the Minister for Finance for Committee Stage and not disposed of are hereby made to the Bill and, in respect of each of the sections undisposed of, the section, or as appropriate the section as amended, is hereby agreed to in Committee, the Title is hereby agreed to in Committee, the Bill, as amended, is accordingly reported to the House, Fourth Stage is hereby completed and the Bill is hereby passed."
Question put and declared carried.