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Dáil Éireann debate -
Wednesday, 24 Mar 1999

Vol. 502 No. 4

Priority Questions. - Company Law.

Nora Owen

Question:

3 Mrs. Owen asked the Tánaiste and Minister for Enterprise, Trade and Employment the main findings of the McDowell report into company law compliance; when she received the report; when it was published; her views on the fact that one Sunday newspaper had details of the report on 14 March 1999 before it was made public; the actions, if any, she will take following the report's recommendation; the number of breaches of company law identified by the report; and if she will make a statement on the matter. [8348/99]

There has been significant publicity concerning the report of the Working Group on Company Law Compliance and Enforcement prior to its presentation to me last December, since then and subsequent to its publication on 15 March 1999. This is an indication of the keen interest in the whole issue of badly needed reform on company law. The Government made decisions on foot of the report of the Working Group on Company Law Compliance and Enforcement on 9 March 1999.

The report of the working group has confirmed the worst fears as to the low level of compliance with company law and the extent to which company law is being enforced in Ireland. For example, the group found that in 1997 only 13 per cent of the 136,000 companies due to file their returns on time actually complied with their obligations.

The Government had no hesitation in accepting the thrust of the McDowell group report and decided to establish a new Office of Director of Corporate Enforcement with primary responsibility for the enforcement of company law, and to establish a statutory Company Law Review Group.

In one important respect, the Government decided to go beyond the recommendations of the working group in deciding to transfer from the Department of Enterprise, Trade and Employment to the director primary responsibility for company law investigations. The Government also decided to provide the necessary staffing resources to both the director and the review group.

I thank the Minister for her reply and share her concern about some of the findings in Mr. McDowell's report, that is, that only 13 per cent of companies complied with their obligations to file annual returns on time. How does the Minister envisage the new director of corporate enforcement will interface with the DPP and other agencies, such as the National Bureau of Fraud Investigation, which will be intimately tied in with this new office? What input does she have into the new fraud legislation which is long overdue from the Department of Justice, Equality and Law Reform?

The new director of company law enforcement will have seven members of the Garda Síochána on his or her team assisting in this area. He or she will also have people with expertise in accounting and other professional expertise, which will be necessary. I envisage the director will act very much as the Director of Consumer Affairs does vis-à-vis consumer affairs issues.

In relation to summary offences, it will be the sole function of the director to prosecute in those cases. The director and his or her office will assist in the preparation of cases for the prosecution of indictable offences which is clearly a matter for the Director of Public Prosecutions. The director will also be empowered to seek injunctions against companies, their directors and other persons in order to secure compliance with the companies Acts. The director will be able to apply to the court under sections 150 and 160 of the Companies Act, 1990, for the restriction of directors and the disqualification of persons who act as company director or other officers or promoters or others who discharge important roles, such as auditors, examiners, liquidators or receivers of a company.

The Minister said seven members of the Garda Síochána will be in the office, but the report recommends only that a team of gardaí should work alongside the staff in the enforcement office. Will the Minister clarify that? Is she looking at something similar to the Criminal Assets Bureau where gardaí, Revenue Commissioners and social welfare personnel are seconded into the bureau? Will these gardaí be seconded into the Office of the Director of Corporate Enforcement? How will this enforcement director be accountable to the Dáil? It looks as if the Minister will move the powers which she currently has into this new office. How will we, as Members, be able to question the Minister? Will the answer be that this matter is not the responsibility of the Minister but of the Director of Corporate Enforcement? Will it not be a diminution of the democracy which exists here?

I will respond to the last part of the Deputy's question first. The director will be required to report annually to the Minister. In relation to policy issues, the Minister remains accountable to the Oireachtas and to the public through it. We have not begun to draft the legislation yet but I envisage that a residual power will be held by the Minister like that which the Minister has in relation to the Competition Authority, for example. I envisage that the Office of the Director of Corporate Enforcement will work very much like the Criminal Assets Bureau. It is envisaged that seven members of the Garda Síochána will work on the director's team on a full-time basis, whether they work in the office with the director or elsewhere. That is necessary.

In all, it will cost about £2.5 million per year to run this office and the Government has agreed to make that money available. We hope to have the legislation before the House after the summer because it is urgent in the context of all the inquiries and what has come to light. The Companies Registration Office is writing to 500 companies per day. That is the first step in the striking off procedure. Some 11,000 companies, an enormous number, have been struck off since last autumn.

It is important to enforce company law and corporate governance is important, particularly for an enterprise economy. We need to provide the resources to deal with this issue. We also need to depoliticise the inquiry area, which is not satisfactory. This should be done on an independent basis by an officer who has full responsibility in this area but, of course, the Minister will have to have residual powers on how that will work. I envisage that it will be similar to the Competition Authority but we have not yet begun to draft the legislation and I need to consult with the Office of the Attorney General on that matter.

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