I move: "That the Bill be now read a Second Time."
I welcome the opportunity to present the Bill to the House. The Bill was passed in the Seanad in November 2020 and I am pleased that it received general support from the Members of that House. I am hopeful that the Members of this House will be similarly supportive.
It is a relatively short Bill, and its specific and limited purpose is to complete the transposition of EU Directive No. 2017/1371 on the fight against fraud to the Union's financial interests by means of criminal law, which is commonly referred to as the PIF directive. This directive builds on previous measures to harmonise and update the approach across the EU to the criminalisation of fraud affecting the Union's financial interests.
This legislation is particularly time sensitive as the transposition is now overdue, and the European Commission has issued a reasoned opinion to Ireland with respect to it. This reasoned opinion is the final step before Ireland can be referred to the European Court of Justice, ECJ, where a fine will be imposed.
While the legislation is primarily technical from an Irish perspective, it has a particular significance in an EU context in respect of the European Public Prosecutor's Office, EPPO. Although Ireland has not joined the EPPO initiative, transposition of this directive in all member states is being treated as a particular priority by the Commission. A deadline of 3 February applies to responding to the reasoned opinion and we hope to enact and commence this legislation over the coming weeks. This will reduce the risk of Ireland being referred to the ECJ and incurring a substantial fine.
The EU is a unique economic and political union and Ireland, like all other member states, contributes to its budget. That budget is a cornerstone of the Union. The largest share goes on creating growth and jobs and reducing economic gaps between the Union's various regions. Agriculture, rural development, fisheries and environmental protection also account for a major share, while other areas of expenditure include combating terrorism and organised crime.
Responsibility for protecting the Union's financial interests and fighting fraud is a shared responsibility between the EU bodies and the authorities within its member states. Member state authorities manage approximately 74% of EU expenditure and collect the EU's traditional own resources. It is essential that every member state takes the necessary and appropriate measures to tackle criminal behaviour in respect of both EU revenue and expenditure.
The key offence of fraud affecting the Union's financial interests already exists in Ireland and is provided for in section 42 of Part 6 of the Criminal Justice (Theft and Fraud Offences) Act 2001. This was introduced in respect of the 1995 EU convention on the protection of the European Communities' financial interests and the related protocols, which was the first measure to create a common approach to the criminal prosecution of these offences.
The 2017 directive replaces the 1995 convention and establishes minimum rules concerning the definition of criminal offences and sanctions with regard to combating fraud and other illegal activities including corruption and money laundering which affect the EU's financial interests. These financial interests refer to all revenues, expenditure and assets covered by, acquired through or due to the Union budget, the budgets of the EU institutions or budgets directly or indirectly managed and monitored by them.
In order to comply with the directive, it has been necessary to update the key PIF offence and provide for a new offence of misappropriation. We are also applying the freezing and confiscation measures which are contained in the Criminal Justice Act 1994 to the proceeds of criminal offences under this Bill by amending Schedule 1A of the Criminal Justice Act 1994, to enable the freezing and confiscation of instrumentalities and proceeds from the criminal offences in the Bill. Other provisions in the directive are already provided for in existing legislation and therefore do not need to be separately provided for in this Bill. Notably, the Criminal Justice (Corruption Offences) Act 2018 and the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended, apply in their respective areas and satisfy the requirements of the directive.
Another provision of the directive is that committing a serious offence within its scope as part of the activities of a criminal organisation is considered an aggravating factor in the context of sentencing. This provision already exists on a general basis through section 74A of the Criminal Justice Act 2006 as amended.
In a European context, the directive is of particular significance in that it defines the scope of offences falling under the EPPO. While Ireland is not participating in the EPPO, these offences will be prosecuted by the EPPO in other member states, potentially in co-operation with Irish authorities, so I would like to address developments in respect of it. The establishment of an EU-level body with investigative and prosecution powers was under consideration for many years in the EU. The legal basis for it was ultimately included in Article 86 of the Treaty on the Functioning of the European Union, introduced by the Lisbon treaty. The regulation establishing EPPO entered into force in 2017 through a special legislative process, and 22 member states are participating. Ireland, Denmark, Sweden, Hungary and Poland are not taking part. A European chief prosecutor and the 22 nationally appointed European prosecutors are now in place and the EPPO is entering into operation.
In considering Ireland's participation in the EPPO, it is important to note that the development of a supranational investigative and prosecution authority, even one with a relatively limited scope, presented particular difficulties in an Irish context. The fundamental difficulty that arises is that the Irish courts would not be entitled to exclude unconstitutionally obtained evidence. Under the EPPO regulation, evidence would potentially be admissible based on other member states' legal regimes and on the regulation itself. More generally, challenges arose in how the EPPO structures would have interacted with our common law regime and how institutions and practices have evolved. The EPPO built primarily from a civil law base. Nonetheless, while Ireland could not take part, we recognise that the establishment of the EPPO is an important and innovative EU measure, and we have been working closely with participating member states and with the EPPO to look at how co-operation with non-participating members will work.
The approach that has been proposed on an EU level and which is being implemented by participating member states is that the EPPO will be designated by those states as a competent authority within each for the purposes of making mutual legal assistance and European arrest warrant requests to non-participating states. These issues are under detailed consideration. It is important that we avoid conflicts of jurisdiction and ensure legal certainty in respect of requests. We are consulting with and taking into account legal advice on these matters. It is important to emphasise that the fact that Ireland is not participating in the EPPO does not prevent us from prosecuting such crimes here. Such offences will be dealt with by the relevant agencies within the criminal justice system such as An Garda Síochána and the Director of Public Prosecutions.
I will now turn to the content and provisions of the Bill. This is a relatively short and primarily technical Bill comprising 13 sections and a Schedule. Section 1 is a standard provision defining the principal Act as the Criminal Justice (Theft and Fraud Offences) Act 2001.
Section 2 amends section 40 of the Act. This is the interpretation section for Part 6 of the 2001 Act, and the amendment substitutes the definitions which will now apply to Part 6. In particular, it provides that the offences in the Bill have the same meaning as they do in the directive. This means that the offence of "fraud affecting the financial interests of the European Union" has the same meaning as in Article 3(2). The section provides that the offence of misappropriation has the same meaning as it has in Article 4(3). It also provides that "corruption offence" means an offence under section 5 of the Criminal Justice (Corruption Offences) Act 2018 and that "money laundering offence" means an offence under Part 2 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. Definitions for terms such as "national official", "public official", "Union official" and "foreign official" are also included.
Section 3 amends section 42, the existing offence provision for fraud affecting the financial interests of the European Union. It provides that the elements of the conduct which constitute the offence of fraud, when committed intentionally, can be in respect of non-procurement related expenditure; procurement-related expenditure; revenue other than revenue arising from VAT own resources; and revenue arising from VAT own resources in cross-border fraudulent schemes where the total fraud involves a value over €10 million. A person guilty of an offence is liable on conviction on indictment to a fine or five years imprisonment or both.
Section 4 inserts a new section 42A into the 2001 Act which provides for the new offence of misappropriation. Section 2 provides that it has the same meaning as in Article 4(3) of the directive which means the action of a public official who is directly or indirectly entrusted with the management of funds or assets to commit or disburse funds or appropriate or use assets contrary to the purpose for which they were intended in any way which damages the Union's financial interests. A person guilty of an offence is liable on conviction on indictment to a fine, to imprisonment for a term not exceeding five years, or both.
Section 5 inserts a new section 42B into the 2001 Act providing for liability for offences by a body corporate in relation to an offence under section 42 or section 42A and provides for penalties on conviction on indictment of imprisonment and-or a fine.
Section 6 amends section 45 of the 2001 Act and provides for extraterritorial jurisdiction. Following consultation with the Office of the Attorney General, it was decided to extend the jurisdiction provided for. I therefore brought forward amendments on Committee Stage in the Seanad to apply extraterritorial jurisdiction to a person who is resident in the State and a company established under the law of the State. The dual criminality requirement was also removed.
Section 7 provides for a technical amendment to section 58, regarding liability for offences by bodies corporate under the 2001 Act, to exclude the application of section 58 of the principal Act to Part 6 in view of the new section 42B inserted by section 5.
Section 8 provides for the insertion of Schedule 1A in the principal Act containing the text of the directive.
Section 9 adds the offences of fraud affecting the financial interests of the European Union and misappropriation to paragraph 10 of Part 2 of Schedule 1A of the Criminal Justice Act 1994. Article 10 of the directive requires measures to be put in place, in accordance with Directive 2014/42/EU, to enable the freezing and confiscation of instrumentalities and proceeds from the criminal offences in the directive. The principal offence of money laundering and active and passive corruption are already subject to these measures.
Section 10 includes the new section 42A offence of misappropriation in paragraph 23 of Schedule 1 of the Criminal Justice Act 2011.
Section 11 includes the new section 42A offence of misappropriation in paragraph 7 of Schedule 2 of the European Union (Passenger Name Record Data) Regulations 2018, SI 177 of 2018.
Section 12 provides for the repeal of sections 41, 46(4), 47 and Schedules 2 to 9 of the principal Act. These schedules are the 1995 Convention and related protocols on which Part 6 of Criminal Justice (Theft and Fraud Offences) Act 2001 is based. As they are being replaced by the directive, they will no longer be relevant.
Section 13 is a standard provision, providing for the Short Title, collective citation and commencement provisions.
This Bill will ensure that our legislation is up to date with the provisions of the directive. I hope Deputies will facilitate its passage through the House as enactment of this Bill will demonstrate Ireland's continued commitment to tackling fraud which affects the Union's financial interests and address the ongoing infringement proceedings.
There is an amendment on the Order Paper to the Second Stage motion in respect of pet theft. The amendment was tabled by the Regional Group and I look forward to speaking further on it in my closing remarks. As Deputies are aware, this is an important issue for me and one for which I introduced a Private Member's Bill. The crime of pet theft can give rise to incredible trauma. We are all aware of the strong emotional attachment we have to our pets and theft not only leads to their loss from our lives, it also gives rise to a high level of concern regarding their welfare and what happened to them. This is a crime which often affects which is often targeted at older and more vulnerable people, for whom a pet is of significant emotional importance. Since becoming Minister of State, I have committed to addressing this issue. I met with my colleague, the Minister for Agriculture and the Marine, before Christmas to discuss it with him. I have also had discussions with the Minister, Deputy McEntee, about it. Contact is continuing at an official level with the Department of Agriculture, Food and the Marine as we work on options. I look forward to hearing Deputies' views. I recognise and appreciate Deputy Naughten's real and genuine interest in this matter.
I emphasise that while legislative changes may be considered and needed, we must also look at the full range of policy enforcement options to ensure that this very serious matter is addressed. As I have set out, there is a practical issue in respect of the urgency of the Bill before the House, which needs to be passed in the next week to ten days. It is not a suitable vehicle for making changes in the area in question and I cannot agree to deferring Second Stage by a month, as referred to in the amendment. That said, I am absolutely willing to work with the Deputies on the issue of pet theft and to introduce appropriate, well-considered and effective measures. I look forward to considering the Bill further with Deputies and I commend it to the House.