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Dáil Éireann debate -
Wednesday, 24 Mar 1999

Vol. 502 No. 4

Other Questions. - Companies Acts.

Pat Rabbitte

Question:

6 Mr. Rabbitte asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will introduce an amendment to the Companies Acts to allow her to refer the results of inquiries conducted on behalf of her Department to a tribunal of inquiry established by the Oireachtas; and if she will make a statement on the matter. [8345/99]

I am conscious that a Private Members' Bill has been published by the Deputy, which would, if enacted, permit the Minister to disclose certain information, books and documents to a tribunal of inquiry.

Arising from my experience of the operation of the investigative provisions of the Companies Acts, I believe that a number of amendments to them are necessary. The McDowell group on company law enforcement has also identified a number of such changes which I intend to implement.

The amendment proposed in Deputy Rabbitte's Bill could not, I believe, be made applicable to the inquiries that are under way at present. This is because the legislative basis on which they commenced would have changed and my investigations would, therefore, be open to successful legal challenge. I wish that the position would be otherwise but I am constrained by the provisions of the Companies Acts as they stand in relation to the present inquiries.

Will the Tánaiste interpret that for the House? She has said on previous occasions that she has in her possession either completed or draft reports in respect of 11 different inquiries. She said that some of the information in those reports is so serious that she is extremely concerned about the implication that some people – the principals, I presume – feel they are above the law. That is a very serious situation. Does the Tánaiste now believe that if she cannot support the Labour Party Bill she will have to take these reports with her to the grave? We are trying to lessen her load so that she can share this with others. Is there any mechanism open to her to bring this information into the public domain?

The McDowell enforcement and compliance group was established because of what was coming to light. Some of the completed reports have been sent to the relevant authorities, which are defined in the Act and can be a court of competent jurisdiction, the Minister for Finance – who has to authorise the Revenue Commissioners to receive it – the DPP and the Central Bank. They are the only persons or groups entitled to the reports at the moment unless the body being inquired into gives permission. To date, no such permission has been forthcoming.

I accept the thrust of the Labour Party Bill and that the amendment is necessary. However, we need to broaden the groups covered by the Bill. For example, I would like to include the Revenue Commissioners, as of right; the Stock Exchange; accountancy and other professional bodies; over seas recognised authorities, such as the DTI in the UK; and the Director of Public Prosecutions.

The point is that we cannot retrospectively apply it to the information I currently have. The case taken by Dunnes Stores, due to be heard on 13 April, is being made precisely on these points. Information which has been received is being given to authorities. Basically, a section 19 inquiry is a preliminary inquiry and, therefore, one is not entitled to give any information that one receives by way of a preliminary inquiry to any other body, which includes a tribunal.

However, much of the information which has come to light at the Moriarty tribunal, in particular, was brought to my attention because it refers to some of the companies under investigation. It seems that the institutions, banks and others, from whom information was sought have also provided the information to the tribunals of inquiry. The final reports are currently being drafted. When I receive them, it is clearly open to me to petition the High Court to have an inspector appointed in many cases and they would then become public documents. The issues are so serious that they should be in the public domain and not just go to competent authorities.

The Deputies assume that we will oppose the Bill, although the Government has not formalised its view. I will strongly recommend that the Bill is supported and amended but, unfortunately, it cannot apply to the current inquiries. I wish it were otherwise because section 19 can bring a great deal of information to light but the restriction is that the body in question must give permission for its publication.

During Question Time on 16 February, when the Tánaiste replied to questions on this issue, she indicated that she had received the Garuda report and had sought permission to make it available to the relevant tribunal. Has she received a reply to that request. She also wrote to me following that Question Time informing me that the Faxhill Homes report had been completed. Has that company commented on the report or given permission to send it to a tribunal, if it is relevant?

Yes, I sought permission from Garuda Limited to publish the report. In the past fortnight a response was received from the lawyer representing the company which said that the company could not agree to its publication, which I regret. The Faxhill Homes report is very much tied in with the Dunnes Stores inquiry and, therefore, I have not sought the company's permission to publish it because it is relevant to the case that will be before the courts on 13 April. I have not finalised my view on the report on Garuda Limited. It could be sent to the Revenue or the DPP. I hope to have legal advice on the matter later this week.

Does the Tánaiste agree it seems at least wasteful that she has spent an amount of money, quite properly, in investigating these matters of considerable public interest and is unable to bring them into the public domain or make them available to the tribunal? I welcome her commitment to bring them into the public domain. Does she believe that the Labour Party Bill is constitutionally infirm? How does she propose to bring these matters into the public domain?

The Labour Party Bill has a great deal of merit for future inquiries. I was not constrained by the 1990 Act but if it were amended I would be able to bring them into the public domain. However, that Act precludes me from so doing. It defines who are the competent authorities, otherwise one must get the permission of the company in question. Even if it were a favourable inquiry, I wonder whether companies would want these reports brought into the public domain.

However, because the matters which have come to light are so serious they require further examination. For example, the authorised officer in a section 19 inquiry cannot call in third parties. If the parties he has spoken to give conflicting information he cannot call in a third party, for example, an auditor or a professional body. That is a huge restriction along with the restriction on publication. For that reason, and subject to my receipt of the final reports, which are currently being drafted by the officer and which I hope to have before Easter or shortly thereafter, it may well be that these matters will have to be taken further and an inspector appointed under section 8 of the Companies Act, 1990.

With regard to the matters being brought into the public domain or otherwise, we can talk about general matters which have been discovered but the key to what has been uncovered is that leading principals in large organisations have been involved in huge breaches of the Companies Acts. They seem to have felt for many years that the Acts just did not apply to them. That is very serious for corporate governance in Ireland and the economy and it is damaging to enterprise. For all those reasons, if we want to change that culture, in addition to implementing the recommendations of the McDowell group, we must be seen to take action. That is what the public wants.

How will the new Director of Corporate Enforcement interface with such inquiries? Will he be a competent authority to whom the reports can be given or will he carry out the inquiries?

It is envisaged that the director will carry out the inquiries and they will be depoliticised. It is important for the future that inquiries should be conducted on an independent basis. Much of the expense of these inquiries has arisen from legal challenges because in the main they have been carried out by full-time officers in the Department. During some legal challenges, companies which were subject to investigation alleged that the inquiries were under way for political reasons and, of course, that is not the case. However, some people seem to feel that might be the case. It is important that such inquiries are taken out of the realm of what could be broadly called "party politics" and given to an independent officer. From here on in the officer will take care of all prosecutions for summary offences and will assist the DPP in relation to indictable offences. The powers currently held by the Minister will be transferred to the director.

Apart from the Garuda report will the remainder of the inquiries be completed by Easter or soon after?

Yes, perhaps with one exception. Many of the inquiries are tied in together, even though they involve different companies. However, that is the intention because many of the inquiries have been under way since September 1997. We have not gone into Dunnes Stores yet, despite our best efforts over the past nine months and, hopefully, that will be finalised in court on 13 April. Other than the Dunnes Stores inquiry, that is the intention because the inquiries are at the stage where they can be completed.

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