I welcome Mr. Paul Appleby, Director of Corporate Enforcement, and his colleagues, Mr. Adrian Brennan and Mr. Kevin Prendergast, to this meeting. I invite Mr. Appleby to make his presentation. Before doing so, I draw his attention to the fact that while members of this committee have absolute privilege, the same privilege does not extend to him. Members are reminded of the parliamentary practice that they should not comment on, criticise or make charges against any person outside the Houses or an official either by name or in such a way that would make him or her identifiable. Members who wish to make a declaration on any matter before the committee should do so now or at the commencement of their contribution.
Corporate Enforcement: Discussion with Director of Corporate Enforcement.
Mr. Paul Appleby
I am joined by two colleagues, Mr. Adrian Brennan and Mr. Kevin Prendergast. I hope we have a useful discussion on the role of our office.
As this is my first occasion appearing before the joint committee, I propose to outline my role as Director of Corporate Enforcement and to provide the committee with an overview of my office's impact since its establishment five years ago under the Company Law Enforcement Act 2001.
I regard my office, ODCE, as having five primary goals as follows: to encourage compliance with the Companies Acts; to uncover suspected breaches of company law; to prosecute suspected breaches of the Acts; to sanction improper conduct with respect to insolvent companies; and to provide quality customer services.
Companies are central to the conduct of many forms of economic and social enterprise. Public confidence and our international reputation requires that we have an effective, open and reliable company law framework supporting investment and facilitating commerce on a fair basis. Those leading companies must act and be seen to act responsibly and this involves their being accountable for their actions and omissions to their auditors, creditors, investors and other company stakeholders.
It is the job of my office to ensure as best we can that the balance of responsibilities and rights distributed among company stakeholders operates as the law intends. We see ourselves as helping those who want to comply to do so; discouraging misconduct by those who may be tempted not to comply; and pursuing those who breach their duties and obligations under the law.
A precondition for a reliable corporate environment is that those involved with companies know what is expected of them and are aware of what opportunities they have to assert their rights and help protect their interests. Since our establishment, we have published some 30 guidance documents and have always tried to do so in an accessible form. Our information books on the duties of companies and company directors remain popular as do the equivalent books for other company stakeholders. Our recent draft guidance on the governance of property management companies has also attracted favourable comment for its success in informing and empowering people to improve corporate performance in an area of significant public concern. Our publications effort is underpinned by a programme of regular presentations by office staff to people involved in business, the professions and relevant public sector and voluntary organisations.
When it comes to non-compliant behaviours, we are in the main reliant on third parties to inform us of potential misconduct. Auditors are required to report to us where they form the opinion during their audit that an indictable offence under the Companies Acts may have been committed. We also encourage the public to make known their concerns to us and we have arrangements in place with other public bodies enabling us to share information on matters of mutual concern.
Most of the 700 cases we receive annually are dealt with administratively. Many problems are corrected voluntarily or following our intervention. For example, we will not usually prosecute a failure to hold an annual general meeting, rather, we will require the holding of that meeting so that the members of the company are given the opportunity to question the company's directors on its financial and operational performance and to take such remedial action as they deem necessary.
In the enforcement area, I have civil and criminal enforcement powers. I may prosecute company law offences summarily in the District Court, and my office has secured the conviction of some 220 companies, company directors and others over the past five years. Many of these convictions have been obtained against persons acting as directors and auditors while not entitled to so act; companies and directors for failing to keep proper accounting records; and directors for providing false information or for falsifying company documents.
My civil enforcement powers include the right to seek the disqualification of company directors and others from continued involvement in a company for a certain period. I have used this facility against those who have been criticised in the National Irish Bank and Ansbacher reports and against company directors whose behaviour indicated a serious abuse of their company law responsibilities.
Insolvent companies leave many creditors, including Revenue, nursing financial losses and the 2001 Act provides a means by which the responsibility of the relevant company directors for creating those losses is assessed. The liquidator of an insolvent company must report to my office on the company's affairs. He or she must also apply to the High Court to restrict all of the company's directors, unless relieved by my office of the obligation to do so. In most cases, we have granted that relief, but the court has nevertheless found it necessary in recent years to restrict some 700 directors for irresponsible behaviour in this area.
We also have a role in the area of unliquidated insolvent companies which can include phoenix-type company practices. Directors of unliquidated insolvent companies which are struck off the companies register for failing to file annual returns are liable to be disqualified and we have successfully piloted action in this area in recent years. More than 40 directors have been disqualified under this provision or as a result of the other enforcement actions which I mentioned a moment ago.
I am satisfied that the continuing growth in the popularity of our website is tangible evidence of an increasing interest in company law compliance and enforcement and in corporate governance matters generally. Visits reached some 244,000 in 2006 which was more than one third higher than the preceding year.
In terms of the impact of the office, market research undertaken on our behalf in late 2005 indicated that 74% of company directors believed that the company law compliance environment had improved in the preceding five years. The corresponding result for accountants and liquidators was almost 95%. A total of 68% of company directors also rated the office as effective in discharging its remit.
While these results are positive, there are areas of our remit which need, in my view, greater attention. For instance, I want to devote more resources to our compliance work, particularly in the SME sector and in other areas such as property management companies where the various stakeholders require a basic understanding of the law if the companies are to perform well.
I am also anxious to invest more resources in investigating the complex or difficult case and in tackling areas of potential misconduct like phoenix-type company practices. These areas by their nature require commitment, expertise and time. In this context, I welcome the recent decision of the Minister for Enterprise, Trade and Employment, to provide my office with eight staff this year additional to my current staffing complement of 37. These new staff will be assigned to increase our existing work in those priority areas.
The 2001 Act has served its purpose well and, at an annual average cost of approximately €3 million, my office has delivered significant results in improving market conduct and in reducing the risks of consequential financial loss for business and other company stakeholders. More remains to be done on a number of levels and we want to extend our impact over time and continue to support responsible corporate conduct in the public interest.
I will be happy to answer as best I can the committee's questions about the work of the office, with assistance as necessary from my colleagues. I can speak in general terms about issues affecting the office but I hope the committee will appreciate that I may need to be circumspect in dealing with individual cases for fear of prejudicing any ongoing investigations or any court actions.
I wish to acknowledge apologies from the Chairman and Deputies Hogan and Pat Breen.
I welcome Mr. Appleby and his colleagues to the meeting and compliment them on the important role of the Office of the Director of Corporate Enforcement. I have four questions to put to the delegation. My first relates to the complexity of company law. I am aware a company law review group has been established. Is it the experience of the delegation that many people inadvertently commit mistakes because of the complexity of company law? Has the office a recommendation to make on consolidation and clarity?
Mr. Appleby referred to the National Irish Bank and Ansbacher reports and other reports have been published which have revealed certain malpractices. Is the office currently investigating these malpractices or does it intend to do so?
If the main sanction at the disposal of the office is to prevent an individual from acting as a company director, how do I as a consumer know if Joe Bloggs has been struck off the list? Is the information regarding those deemed to be unfit available on the office's website? Where is this information stored and how can it be accessed by the public?
I am familiar, as a result of my background in the construction industry, of the practice in that industry whereby companies are set up to develop a particular site or building and then dissolved when that project has been finished. The same directors tend to go from company to company. The legal entity that was responsible for building the first housing estate in an area might not be the same entity that builds the second, third or fourth housing estates in that area, even if the same personalities are involved. They are not acting in a dishonest way because this is the most effective and efficient way for them to do their business. Will Mr. Appleby comment on that?
Mr. Appleby
The company law review group has been working for five years on developing a simplified and modern company law framework. Much of the group's work has been completed. The Office of the Director of Corporate Enforcement has helped the group with its work. I understand that the general scheme of the Bill is likely to be published over the next few weeks. A case can be made for the consolidation of current company legislation, which is spread over 12 Acts and many more statutory instruments. It is hoped that a single Bill can be published to make it much easier for practitioners and the public to comply with their obligations.
I was also asked about other reports which are in the public domain. The office starts an examination every time a suggestion is made in the public domain that there may have been a breach of company law. It undertook a fairly lengthy company investigation of a number of matters relating to the report of the Flood tribunal, which was published in 2002. As a result, there are ongoing High Court proceedings in relation to directors of Bovale developments. That is just one example.
The register of disqualified and restricted people is publicly available in the Companies Registration Office. Details of people who have been convicted, disqualified or restricted are published on the website of the Office of the Director of Corporate Enforcement, as well as in its annual reports. The office was rather unhappy two years ago when it found that the register of disqualified people was incomplete. There were just ten names on the list at the end of 2004. It worked with the Courts Service and the Companies Registration Office to secure the substantial completion of the register. The register now includes, as it should have from 1990, the names of everybody who has been convicted of fraud by way of indictment or of any other offence relating to companies. As the register now lists approximately 1,600 names, it is a much more complete document than it used to be.
Individual directors are responsible for conducting their commercial affairs, as they see fit, within the law. People are entitled to establish companies for the purposes of a single development. The Office of the Director of Corporate Enforcement might need to get involved if the companies in question were in breach of the law or the directors were in breach of their duties. The office relies on the information it gets on foot of complaints from those who are affected by such activity. It is prepared to investigate any instance of suspected malpractice.
My experience has been that a company tends to go into liquidation after it has completed a housing estate. A new company with virtually the same name then starts construction on a new project somewhere else. When a consumer, such as the person who purchased the building, tries to take action against the company that built his or her house, he or she finds that the company has been liquidated and no longer legally exists. I appreciate that there is more consumer law than company enforcement law.
I welcome Mr. Appleby and his colleagues. I compliment them on their work. There is no doubt that they have contributed significantly to improvements in the company compliance environment. The Office of the Director of Corporate Enforcement is doing well and its publications are excellent.
There has been massive abuse of the section 31 loan system. The cases of a number of people have been passed on to the relevant authorities on foot of the actions of the Office of the Director of Corporate Enforcement. Do cases involving the abuse of loans by directors comprise a dominant proportion of the office's overall work?
I welcome the decision to sanction eight additional staff for the Office of the Director of Corporate Enforcement. How many extra staff did the office need? When did it apply for permission to recruit additional staff? Is it likely that there will be further improvements in that regard? Much more needs to be done, as Mr. Appleby pointed out.
I would like to speak about people who may have been conflicted. I refer to the issue of tenability. We acknowledge that the culture in that regard has changed in recent years, partly as a result of the work of the Office of the Director of Corporate Enforcement. How serious does the office think that issue is? I refer to people who engaged in wrongdoing and may continue to be connected with or involved in companies.
Mr. Appleby rightly stated that in starting inquiries, the Office of the Director of Corporate Enforcement depends on third parties to draw its attention to potential misconduct. I take it that such people are in the know, by and large, although they might not know what section of the relevant Act applies. Does the office, which is naturally concerned about the bona fides of such people, help them? They might not know how to frame what they want to tell the office. How strict is the office in defining certain things? It is natural that it is best facilitated by getting presentations which are as good as possible. A third party might know about a wrongdoing or potential illegality, but if he or she is a layman he or she might not be able to give the office the details of the section of the Act that is being breached. I accept that the office would be helpful in such circumstances, but I would like Mr. Appleby to give some details of how it operates in such circumstances.
Mr. Appleby mentioned some cases which have arisen from the report of the Flood tribunal. In one of his reports, Mr. Justice Flood specifically mentioned 19 parties without passing judgment on them. It was found that named people had hindered or obstructed the work that was being done. Does the office have other cases in the pipeline on foot of that report?
Some of the work done in the past involving companies under the control of semi-State organisations, or companies whose directors or trustees were appointed by such enterprises, was slipshod. Do many of the cases turning up in that area relate to semi-State companies?
Mr. Appleby
Directors' loans comprise a significant area of non-compliance. It is the most frequent offence or issue which is now reported to us by auditors. We undertook a great deal of work in this area, initially in late 2003, to produce guidelines on the area in order to help people to comply. That almost served to draw more attention to the matter and we continued to get substantial numbers of issues which we are processing. Last year we had to invest extra resources in dealing with the several hundred cases which we had received at that stage. We cautioned some 900 directors last year, purely on an administrative basis. In fairness, as soon as people became aware of the problem, many of them acted to correct matters. As far as we are concerned, that was a satisfactory result.
We sought 20 extra staff in May 2005 and we have received a commitment from the Minister for eight staff this year. The 20 extra staff included gardaí. Arising from a meeting we had last week with the Department, I am now in a position to write to the Garda Commissioner in regard to the additional Garda staff sought. I will pursue that matter this week. The appointment of eight extra staff is an interim measure and I will pursue matters further.
In terms of public complaints and how we deal with them, we have what might be termed a public complaint form which is readily available on our website. People can complete that form as best they can. We do not insist on people knowing section X of the 1963 Act when they make a complaint to us. In many cases, people may suspect there is a problem but may not be able to define it by reference to a particular company law obligation. We endeavour to take the complaint at face value and apply our own expertise to its evaluation. We will contact the complainant for additional information, as and when the need arises. We endeavour to obtain good quality information, in so far as we can, from the individuals in question. I believe we are helpful and approachable in dealing with complaints.
The issue of the 19 parties identified in the Flood tribunal report which hindered or obstructed the tribunal is not a matter for my office. That is probably an offence under the Tribunals of Inquiry Act, and it would be a matter for the Garda or the DPP—
I mentioned a small number of cases that involved companies.
Mr. Appleby
In terms of other matters arising from the Flood tribunal, there are no active issues other than the one which I identified as ongoing.
From time to time we do receive complaints about semi-State bodies from State companies or public sector bodies. They are treated in the same way as any other complaint we receive from a private company. Issues arise and we either deal with them on an administrative basis or, if need be, on a legal basis, as circumstances require.
I should declare a potential conflict. When I chaired the audit review committee, Mr. Appleby was head of the secretariat and we are both directors of the Irish Auditing and Accounting Supervisory Authority. I do not feel a conflict in any way but I say this just in case anybody asks a question in this regard afterwards.
I wish to refer to the lack of staff. This was a matter of major concern to Members of the Oireachtas in recent weeks. It is good to hear progress has been made and that eight staff will be appointed this year. How long will it take before these staff are operational, given that many of the people being appointed will require specific skills and it may be difficult to fill the positions? Mr. Appleby stated up to 20 staff are required and that the extra gardaí will fill some of the gap. What impact will the lack of these new staff members have on the work of the office?
I compliment Mr. Appleby on the documentation that his office has prepared. I agree the website is most helpful. I have looked at it and it is first class. Does the question of independent directors fall completely within Mr. Appleby's remit? Does he have any views as to the type of checklist that should be put in place and how they fit into the scheme of things? The importance of audit committees appears to be ignored in terms of company law legislation. I am looking back in particular to the problems with AIB and the lack of contact with the internal auditor and the genesis of Mr. Appleby's office. Is he happy that area is now tied down in a way that allows him to access the necessary information?
Mr. Appleby referred on several occasions in his presentation to the flow of information. One of the major problems faced by the Committee of Public Accounts and this committee is the lack of a flow of information from the appropriate authorities. Coy phrases were used such as "sharing information on matters of mutual concern". Is Mr. Appleby happy that is happening in the way it was intended? Is any reticence apparent from bodies which previously did not need to share information? Apart from a consolidated companies Act, to which reference has already been made, should any amendments be made to the legislation governing the Office of the Director of Corporate Enforcement?
Mr. Appleby
In terms of staff, the timeframe I have been given is that an additional four staff will be made available by June, followed by another four by the end of the year. As they will be new to the office, there will be a training period but I would hope that within three to six months each new member of staff will be fully operational in terms of dealing with case issues.
Is it correct that the selection is carried out by the office and not the Department? Is staff assigned to the office?
Mr. Appleby
I sought staff at particular levels and they would be staff of the general service grade. Staff would be assigned at this level by the Department.
Can the office recruit directly?
Mr. Appleby
I do not recruit directly. When the office was set up, we worked through the commission for public service appointments.
Were all professional staff recruited through the commission?
Mr. Appleby
Yes.
General service staff would be assigned by the Department.
Mr. Appleby
Yes.
Are all eight members of staff in question general service staff?
Mr. Appleby
Yes.
It sounds like there are to be four this year and four next year. Is the Department playing tricks and giving approval at the end of the year so that the allocation can only be counted as part of the allocation for the following year, such that one will hear of four of the allocated staff again?
They shall arrive in time for Christmas.
Mr. Appleby
The eight staff are for this year and I hope that the Department will honour the commitment.
It is clear that some matters with which we wished to deal have been delayed. Others have been postponed but we have tried at all times to focus on the priories. In 2004, for example, we did a lot of work on developing guidance on directors' compliance statements. The work we wanted to do on audit committees was postponed until 2005 and 2006. Nevertheless it was done last year and is certainly helpful in terms of explaining the relevant provisions in the 2003 Act.
It is established in case law and elsewhere that independent and executive directors have the same sorts of responsibilities and we have adopted this position. It is clearly more difficult for the non-executive director to have detailed knowledge of what is taking place in a company and allowances must be made for this in making judgments on his responsibility in individual instances. The courts have taken the view that, where there have been omissions by non-executive directors, such as their not having demanded to see annual financial statements, they stand culpable. This is as it should be.
We have proposed a number of legal changes concerning the Department and the company law review group, and they will be considered later this year. A number are designed to improve regulation or reduce regulatory burdens. A formal High Court order must be obtained before a person is restricted or disqualified, but directors or other relevant individuals frequently do not contest the restriction or disqualification. In this instance, we see no reason to go to court, incur legal costs and take up legal time, and there should therefore be a regime of consensual undertakings whereby the directors or individuals in question could simply consent to the restriction or disqualification, thereby avoiding the necessity for legal action.
Some of our other proposals are more minor or technical. We occasionally find ourselves taking the same case in different District Court areas simply because the directors are residing in different areas. In this regard, we have proposed that a case should be heard only once, in one District Court area, and that the necessary arrangements to achieve this should be made.
There are one or two areas in which we feel there are gaps in the law. The audit exemption regime is a case in point and it would be very difficult to police unless we were in a position to know that companies actually qualified for the exemption. If a complaint is made to us that company X does not qualify for an audit exemption but is claiming it nevertheless and not filing its accounts, it would be very difficult for us to check this without being granted the information on which the claim was made. We will need a little extra power to enable us to assess those sorts of issues. I have outlined a selection of some of the proposals we put to the Department recently.
I welcome Mr. Appleby and his staff. He works in a very complex area and by and large looks after those who invest money. How many auditors have reported offences under the Companies Act to the Office of the Director of Corporate Enforcement since it was set up? Auditors are usually appointed to protect the shareholder but, in many cases, chief executives of boards recommend auditors to their shareholders. How legal is this practice?
What has happened across the world in recent years has been very interesting. The Enron case in the United States is a case in point. I was in the United States last year as part of a delegation that visited the Internal Revenue Service and its representatives stated it had failed to detect the irregularities and discrepancies evident in the accounts of Enron and that it had all the information available to it until the scandal was revealed. One of the world's major auditing companies, Arthur Andersen, was crippled, had to be brought to heel and was broken up. It was the model auditing company across the world and had extensive operations in Dublin. Since the break-up, we have witnessed the Parmalat scandal in Italy. We are, therefore, in a very complex field and living in a world in which there is a lust to become wealthy very quickly.
Auditors, directors and chief executives of companies have share options and all sorts of dealings, and we have seen companies break up to accumulate further wealth. There is much financial skulduggery taking place in this area and the unfortunate shareholder or pundit in the street is at risk all the time. How is this policed? Mention was made of the practices of phoenix companies. Will the delegates elaborate on this?
Mr. Appleby
The decision on auditors is made by the shareholders of the company on the recommendation of the directors. It is the shareholders who appoint them and the auditor essentially reports back to the shareholders on the veracity of the annual accounts and financial statements.
The work auditors do and the value of auditing is a very important area and auditors themselves will be very clear in telling us and everyone else that the audit is not a 100% assurance that all is OK. It is based on risk analysis in terms of the major risks within companies and their assessment, based on the work they do. The audit is a very useful but not absolute assurance that all is in order. The work we are doing in terms of investigations and court actions is designed in part to deter possible misconduct in the future by directors and others.
Yesterday's High Court decision in relation to Mr. Barry Seymour, a former executive director of National Irish Bank, has reinforced the imperative which rests with directors to ensure they comply with the law and that they act promptly and effectively to address any areas of non-compliance. Clearly these decisions are necessary to deter directors from any temptation to play fast and loose with the law or their company's financial statements. If we as an office have hard evidence from auditors' reports or otherwise of non-compliance or misconduct we will certainly investigate the matter.
The assessment and oversight of the quality of auditing are functions of the Irish Auditing and Supervisory Authority which commenced operation a year ago. It has been very heavily engaged with professional bodies in ensuring that the whole regime of investigation and discipline that applies to auditors and accountants generally is of the highest quality. We will continue to work with the authority in our areas of remit.
Quality is one thing but information can often be suspect. Auditors work very much on a whim. There are many auditors in the market and if they are independent they are in danger of being shafted by the chief executive, the financial controller or the board. There is no great protection for them in doing their work in a free and fair way. A chief executive or a board recommends an auditor of their choice to the ordinary shareholders, although corporate shareholders will vote en bloc. This area must be examined, especially in the light of what has happened across the world in the past few years. The US Revenue failed to identify the problems of Enron. The head of the Inland Revenue Service met us in Washington and told us they were appalled at what had gone on and shocked that their own controls were so lax.
Mr. Appleby
The whole concept of auditor independence in its effect has improved significantly in recent years. The mere fact that auditors are now obliged to report company law offences to us has essentially put them potentially at odds with their client and given rise to a situation where auditors have to engage actively with the directors of the company and management to deal with situations which they discover. The mere fact that they are having to report has improved auditor independence. An auditor would be foolish to run the risk of not reporting for fear of the consequences for his or her own professional reputation. That has improved the quality of audit work.
I accept that there will be instances where audits, whether done by professionals or by Revenue, may not uncover issues unless a very thorough forensic examination is undertaken. It may be the case that frauds will not be uncovered. Fundamentally we have to rely on the probity of the leaders of those companies. I come back to the court decisions and the duties which apply to directors. We as an office continue to impress upon people the need to act legally and with probity and we will warn of the consequences of breaching the law through court action.
Mr. Kevin Prendergast
I want to make one or two brief comments on the international developments in accounting and auditing. As has been pointed out, we have a role but in some respects it is only a partial role in this area. Accountants and auditors have a significant role to play. Since the high profile demise of a number of entities to which reference has been made, there has been a sea change within the accountancy and auditing profession. New international accounting standards have been developed, attempting to deal with many of the complexities, behind which company executives may have tried to hide. These new standards run to several thousand pages in an attempt to clarify what in the past some people have tried to hide. Simultaneously there has been a move to international standards on auditing. International accounting standards now run to several thousand pages in an attempt to clarify what in the past some people have tried to hide. Simultaneously, there has been a move to international auditing standards which require more documentation of risk and the various areas on which auditors should focus creating a new comprehensive approach to auditing that may not have existed in the past. That has driven up the cost of auditing for many companies. Our position is that this is a good move because auditing is necessary. The demise of Arthur Andersen sent shock waves through the accountancy profession and showed people that not only their personal and professional reputations were at stake but also their livelihoods.
I concur with the director's comments on the position of auditors with regard to their clients. The events of the past five to ten years have re-emphasised the independent role of auditors. We will continue to police the area within our remit but the accountancy profession has its own role to play and it is more cognisant of that role since the events to which the Deputy referred.
I can see why the office wants extra staff. I support that request and hope it gets the staff. Many companies have broken up to form subsidiaries and in many cases the prospectuses are vague in legal and accountancy terms and in their detail. Some are above board but others are not. This is done to generate wealth for a few people, the chief executive and maybe the financial controller, which I do not like because it is not good for society. I do not know what role the Director of Corporate Enforcement has in that respect.
A few years ago The Financial Times published a series of articles on management taking large dividends and payments, following which the practice stopped. If company prospectuses are not in line with good accountancy and legal standards the director has a role which would involve significant work. That is why I sympathise with his request for extra staff. If anything happens to the economy many people will be ripped off because their shares will have little or no value while others will get away with a lump sum.
I have recently spoken about Reox, an organisation in my area with a very vague prospectus which broke up and showed a profit of €9 million in nine months. I do not know how that was accumulated. Accountants in the company have said in the gossip circle that they were embarrassed about how this sum was made. That should be investigated because the organisation is in the grey market which is not as transparent as the public market. Five people will accumulate €16 million if the break-up works right. If there are fewer than five in the management, directorship or executive, it will fall to four, three or two to divide that sum.
Many irregularities and difficulties are not being identified. While the tribunals have been taking up our attention there is a great deal of work to be done on the other side. This must be tackled to be fair to the small investor. If I am entitled to do so here, I ask that this company be investigated. I have the balance sheet but that is all that is available to me in the public domain. I am convinced that there has been very little transparency there. The company had the same auditors when it split into two companies and the same chief executive but a new company secretary because the first one would not play ball with what was going on. I would like Mr. Appleby to investigate Reox. He has ability and great knowledge and the media acclaims him, which means that he is doing a good job.
I will give Mr. Appleby the annual report and statement of affairs for Reox. I am an ordinary man but have been in public life for 25 years and know the value of a euro and have discretion. It is necessary to investigate this case, and on behalf of the people I represent in that area, I ask the director to investigate it.
Mr. Appleby
If the Deputy has any information suggesting non-compliance with company law requirements he could make that available to us and we will examine it. Overall I need to distinguish the role of the office. A football analogy might be useful. The office is the umpire policing the rules of a football match but it does not get involved when one member of a team passes the ball to the opposition or scores an own goal. Once a company operates within the law, the team or its individual members can do as they wish. There might be public comment on, and criticism of, individual transactions which has been the case for a long time in many areas, but once the law permits those transactions to take place, and it is the democratic wish of shareholders that they do so, the law facilitates those arrangements. If there is any suspected breach of the law we would be prepared to consider any case that the Deputy or anyone else wishes to send to us.
The office is the only vehicle to which we can complain because there is no relevant ombudsman. On page 2 of his submission, Mr. Appleby made a point about auditors and detection. Without wishing to be unfair to auditors, awaiting detection by them could take a long time. Meanwhile, many people would be left without money and in difficulties. I have little trust in auditors because they are too close to management and depend on that closeness. In my experience they can adjust their fees if they are not satisfactory and they depend on consultancy work within the company to survive. Mr. Appleby has seen this too. We need to be practical and people will be ripped off in the present climate.
In the presentation there is a line to the effect that the office helps those who want to comply to do so. That is an important point and the Director of Corporate Enforcement is to be complimented on including that line. It is good to see that any agency exists to help those who want to get things right.
I did not realise at the beginning of the meeting that this was Mr. Appleby's first appearance before this committee. I thank him for all his information on company law enforcement and for being so forthcoming in his answers to all the committee members. He is welcome to return to the committee at any stage. I thank the delegation for its presentation.
The joint committee adjourned at 10.40 a.m. until 9.30 a.m. on Wednesday, 28 March 2007.