It appears to me that since it will be a criminal offence to be involved in any of these activities, there is no legal basis on which a person should be entitled to retain any of the money he made out of the criminal activity and the court should be allowed to assess the degree to which the person has benefited from these illegal activities and should be allowed to confiscate the proceeds of such illegal activities. We would not countenance persons who robbed a bank being able to hold onto the money. Neither should we countenance persons who robbed the community by insider dealing holding onto their profits. Therefore, the simple solution would be to insert a provision, similar to that which applies in other areas of illegal activity, for confiscation of any proceeds from such activity. We rushed a Bill through this House not many years ago dealing with the proceeds of certain illegal organisations and allowed the accounts to be frozen and various other things to be done. A similar provision here, in addition to a fine, that where the court deems it appropriate all profits from such illegal activities shall be forfeited seems to me to be consistent with other areas of legislation and would meet the problems Sentor Ross has addressed.
Companies (No. 2) Bill, 1987: Committee Stage (Resumed).
We could argue at length about whether £200,000 is high enough. I still hold the view that the ten year jail sentence alongside it will be the real deterrent at the end of the day because I do not think it is the money involved that will deter them. What will really deter them is the prison sentence. I want to remind Senators of one other area which I did not refer to when I was speaking a few moments ago. In bringing in this criminal remedy there is also in place a civil remedy which we are bringing into this Bill for the first time ever. There is also now a civil remedy.
If you made £5 million on a killing, you could go to jail for ten years, pay a £200,000 fine and then all of that £5 million could be taken from you in a civil action because a victim, either an individual or the company if it suffers, can take a civil action to seek compensation from you up to the £5 million. If you make £5 million on a killing, you could to to jail for ten years, pay a £200,000 fine and you could have to pay over the total of the profit you made on the deal to a person who takes a civil action against you.
Recently I read that the DPP actually said in a speech or a lecture — he floated the idea of the benefits from crimes being paid over to the victim — that the concept which is a new one in this country is one which we have not really grasped. It is interesting that he should float that. I will certainly have a close look at it, although that is more a matter for the Minister for Justice obviously. In the example I have given that is quite a hit on the person who made that £5 million killing. The only area on ahich we differ perhaps is that the £200,000 is not high enough but if those three things hit you, you will certainly be very sore indeed.
The other point I want to make for the benefit of Senator Ross is that, if we raise the maximum penalty, say, o £1 million from the £200,000 figure, we might run the risk of the courts taking the view that we expect them to have a financial remedy only for this crime. The courts could say there is plenty of scope to take the money back and, whether or not you are institutionalising your feeling in the courts, you do not go to jail for this kind of problem. Because the maximum penalty is so high we can hit them for a fortune and therefore you do not go to jail. If the court considers that £200,000 is not enough the jail sentence can be imposed. This is an attempt to get a balance between the more normal penalty for criminal offences and the fine.
Regarding Senator Ryan's point about the confiscation of money, obviously the Senator did not address it until recently either, because his amendment suggested much lower penalties. I have not addressed that problem. We examined it from the point of view of getting a jail sentence, a substantial fine and a civil remedy. You could, of course, argue that you could go much further and take all the money back, and so on, but you are dealing here with a new type of crime. It may be very close to robbing money from a bank, but it is not quite the same. There are similarities. It may not be quite the same and, therefore, the confiscation area has not been probed yet. If Senators feel it should be probed we will certainly probe it as much as we can.
I want to say also that another of our amendments will ban a convicted person from dealing for 12 months after the conviction, so that might really hit his pocket if he is successful at it. The balance is right between the prison sentence, the fine and the civil remedy. Anyone could come in with a different package and as we discuss the matter I will certainly give serious thought to what Senators have been saying about the limits.
I understand what the Minister is getting at. In many ways it is a good balance. I am not sure whether the civil remedy has been thought through by the Government and by those who drafted this Bill. The theory is clever and apparently it is fair but it is very difficult in this case to prove who the injured party is. I also do not see how you can prove that the injured party was injured by the person insider dealing.
In the transfer of shares — say the insider is buying the shares — is the injured party the seller of the shares or is he not and does he have an action against the buyer? Presumably that particular seller would have sold anyway, so he has not been induced to sell shares by the insider. Had he not sold them to the inside dealer, he would have sold them to somebody else in the market. I would have thought it was very difficult for anybody to prove a civil liability in this case. I will be very interested to see what happens when these cases come before the courts. If I sell to Senator Ryan who is the buyer, it is very difficult for me to maintain that he has injured me because I would have sold these shares to somebody else at the same price——
He would have bought them from somebody else at the same price anyway, so he would not have a genuine claim of injury against me. I think the market is too big to pin one transaction down like that. I suspect this sort of civil liability is absolutely full of difficulties.
I agree that this whole area is a maze of difficulties because of the rather ephemeral nature of it and the difficulty of proving it. Regarding the civil remedy all you have to do is show that you have suffered and that you are a victim. If you sell your shares and subsequently they go through the roof, that would obviously be public information. If you then feel that that very action happened because of an insider trader who had this information and went pumping the shares, the person who sold the shares could go to court and claim that he would not have sold the shares if he had access to the information. If you sell shares on a Wednesday and on the following Monday they double or treble——
They rarely do things like that.
If you are selling shares on a Wednesday at £100 and on the following Monday they go up to £1,000, on the Monday when you discover what has happened you can sit back and say: "Hold on. I am a victim here and I will take a case." Obviously, you have got to find out who caused this to happen. Once you know who caused this to happen — obviously something caused it to happen because somebody bought the shares — you could then claim in court that you were a victim, that you had suffered that £900 loss, for example, because you sold without information which was available to another person at that very time and was not available to you. The court may conclude that you did not really lose because there was not an inside trader operation, or whatever, but it can also conclude that you were right. You could have said: "If I had known that last Wednesday I would not have sold but what I did not know was that there was a person inside the company who knew that information and was a trader and I can now prove that there was an insider trader. The shares were bought. Therefore, I lost because of that inside trader." It works the other way as well. I would speculate that that is the view a court would take. In any civil action for damages or compensation you must show you lost and that you lost because of an insider trader.
It is incredibly difficult to prove that because there could be a completely innocent transaction. You could have sold to another party who did not have any inside knowledge at all and then you would be maintaining that you were deprived of information while there were other parallel deals going on between insiders and other innocent parties. I suggest it will be impossible to prove. If anybody maintains this and takes a civil action the defence will be that this person took the initiatve in selling. Nobody will have been persuaded by an insider to actually sell direct to them. That is not how the market works. They will be selling to a market maker because of a voluntary decision of their own. If you take a civil action when you have made a voluntary decision and have not been induced and, indeed, had no contact at all with the insider, which is how it will happen, it will almost certainly fail.
If you took a certain course of action without the knowledge that there was an insider trader who was about to cause a heavy loss because of thier inside information a court could conclude that you lost. The other point is that it is not a matter of linking the buyer and seller. I know that is not the way the market works because you sell to a pool. The onus would be on the person taking the case (a) to show that they lost and (b) to show that they lost because there was an inside trader at work. It is a matter of satisfying the court that you have suffered a loss because of this kind of activity. There may not be a direct link obviously when you take the case. The onus is on you to show to the satisfaction of the court that there is a direct link and that, had that person not been operating as an inside trader, you would not have sold those shares and, therefore, not have suffered that loss. It is a civil action.
It is a very difficult area because you are dealing with knowledge and state of knowledge and proving people had knowledge. Other jurisdictions have somewhat similar ways of dealing with the problem. It may not be that impossible in the sense that, if you demonstrate to a court of law that you have suffered a loss and you can further demonstrate why you suffered that loss and you can further demonstrate the person who was behind the loss, you are getting close to making a very good case.
I see the Minister's point. I do not think there is any further we can go on this. It should be impossible to prove a civil case if there is a case. There is no point in arguing about it. That is a matter for the future.
Before we leave the section I am not clear on how it operates. I am worried about the level or the power of discovery that a court in a civil action would have in this kind of situation. Would the insider trading have been proved by the internal investigation of the Stock Exchange and would that be the evidence of insider trading? I agree with what Senator Ross has said. There seems to be a very tenuous link between the person who is responsible for the change in price and the taking of a case against someone who might not even be known.
The only way I can see this happening would be if there was an internal investigation of the Stock Exchange and they found that that person was guilty of insider trading. Having established that fact through the internal operations of the market, somebody might be in a position to take a case. If I were to take a case against a named person working in the Stock Exchange, or working in a company which deals in the Stock Exchange, could I or the courts have access to the information? Can they seek disclosure? Can they seek discovery? Is there a power of discovery or how does that legislation work?
There is one point I want to make which also refers to Senator Ross's point regarding the question of a civil case being difficult. It would clearly be much easier if there had been a criminal conviction. Civil cases will come up in the next section but I suppose there is a link there. If a criminal case is taken and proved, obviously a civil case would be an easier arrangement for anyone to consider taking because they would have a lot of the evidence. In the absence of a criminal case I want to stress that the civil case is totally parallel and is a matter for the individual citizen. I would imagine that the usual discovery orders which are available in any civil action would be available here also. When taking a case you would be entitled to seek certain information but I will double check that. I am reasonably certain that the normal discovery orders which you can make in a civil case would apply here.
There is a problem because I do not see any way in a civil action in which the buyer and the seller will be connected because they will be dealing through an intermediary and they will have no direct contact whatsoever.
They would not need to have direct contact. If you can show that you have suffered a loss because of an action by another person and you can satisfy the court that that is the position, you have a case. You do not have to have direct contact. I do not think it is envisaged that you would buy X's shares specifically but if you held shares in a company and certain things happened to those shares because of an inside trader, you might have grounds for a civil case.
The important thing here is that all we are talking about is a person who has shares in a public company and feels that has suffered loss because of the actions of an inside trader. It is entirely a civil case. That person has got to to to court and has to prove that to the court. I take the Senator's point that that is an impossible thing to prove to a court. Obviously we have got to take that on board. It is something that I would like the lawyers to look at again for me. I would be surprised if some of our legal people were not able to make a very strong case in the event that I suffered a loss and could then subsequently show that I lost that money because of the activities of somebody inside the company.
I am not so sure it would be as difficult a case to make as the Senator might think but I will consult the lawyers again on the point. It is very much a tight legal question, a question of establishing that you have suffered damage. I am not clear on whether you have to show directly that you suffered it in a direct link with the individual. It is enough at this stage to show that you suffered it because of an individual and his actions. I will double check that point for the Senator.
The real point is that in a transaction of this sort almost inevitably the initiative for buying or selling from the innocent party will come from himself and he will only be an innocent party because he is a participant in that large market out there. I suspect that, in nearly all cases of insider dealing, those who are exploited by the insider dealing are only exploited because they are in the market and they would have taken that action anyway. A civil action is impossible to take or to prove in this case because the initiative comes from the innocent party who would have done that whether the insider was in the market or not.
Did the person know at that time that the insider trader was in the market? It would be up to the court to decide. You might say you would have sold earlier but if you can prove to the court that you would not have sold because you had not information which was at that moment available to an inside trader — say there was going to be a takeover bid next Monday and on the Wednesday you sold your shares and the insider trader knew about the takeover deal——
That would be up to anybody who sold at all.
Yes, anybody who sold and lost money and at that moment there was an insider trade at work. If you could show to the court that perhaps you would not have sold had you the information which that inside trader had, you are in a very difficult legal area and I better be careful about speculating on the record.
I intended to bring this up on section 92 (1) (a), that is where it is dealt with. I can see the argument on both sides. It will be very difficult to determine the loss incurred and to identify each and every individual shareholder who may be affected. I was going to question whether it should be actually left in place because of this and whether it had a worthwhile part to play in the Bill but, listening to the arguments, I can see that these civil cases will be very rare and few and far between.
As Senator Ross said earlier, the size of the transaction and the amount of money that can be made on these transactions in a very short time can be enormous and possibly, if there is a very substantial amount of money and if somebody feels he has lost millions because of an insider dealing in the market, he might welcome the fact that this has been left in the Bill and gives him recourse to the courts in that instance. I can see these cases being brought very rarely. As I say, somebody who has lost that substantial amount of money would be glad that it had been left there. I can see the difficulties in identifying it. It might be easier to identify millions rather than thousands.
Amendment No. 122 to section 92 has been discussed. Is the amendment being pressed?
This is a straightforward drafting amendment. Section 91 (6) prohibits a company dealing if any of its officers are themselves prohibited. The effect of the present section 93 (1) (a) is, among other things, to exempt the obtaining by a director of his share qualification in his company from this general prohibition. This obtaining of a share qualification is a common stipulation in a company's articles of association. However, an exemption from subsection (6) is not necessary in this case since the director of a company could not be a body corporate anyway under section 176 of the 1963 Act, so it simply could not arise that a body corporate would have to obtain a director's share certificate. The net effect of this amendment, therefore, is to make the obtaining of a share qualification by a director exempt from subsections (1) and (3) only of section 91.
Will the Minister explain in English that I can understand, which probably means something close to mono-syllables, what paragraph (b) of section 93 means. I have read it a few times. I am not speaking speculatively. It appears to me that it would be possible that the pensions funds in particular would be able to use information which nobody else would be allowed to use simply because they were acting on behalf of the employees of the company. Let us not pretend that pensions funds operate in a totally benevolent atmosphere for the benefit of the people on whose behalf they manage the funds. They are in it to make a few bob and if they can make a few bob they will. Paragraph (a) as amended states "the subscription for and acquisition pursuant to that subscription of securities ..." I would like to know what it means.
I am trying to make sure that I do not interfere with ordinary investment by workers in legitimate pension arrangements. I am trying to make sure that we do not deliberately interfere with workers' shareholdings, workers' investments and pensions funds in the ordinary sense of the word. Is that what is worrying the Senator?
Subsection (1) of section 91 says that it shall not be lawful for any person, etc., if by reason of his so being or having been connected with a company he is in possession of information that is not generally available. It appears to me that what that is saying is that, if it is being done on behalf of the employees of the company, the person who does it may use insider information to make investment decisions. I would not for one second argue with the Minister about it if he can tell me what it means. When I read it and reread it, I could not put any other interpretation on it. First of all, I am not sure that either of us will agree that even employees of the company should be able to make their investment decisions for a pension fund on the basis of improperly acquired information. Most definitely pension funds should not be entitled to do it.
It is not my intention to permit pension funds to in any way sponsor insider trading. That is certainly not the intention. If that is the effect of that, I will certainly make sure it is changed.
I am drawing the Minister's attention to it.
The idea is to make sure that we do not interfere in the ordinary pension fund activity of workers. That is the only thing I want to be sure about. I will look again at the wording at that because I am with the Senator on the intention. I have no difficulty in principle with what the Senator is saying. It is not the intention to exempt——
I appreciate that it was never the intention to leave a deliberate loophole and I appreciate that presumably the intention was that, because people were employees of a company and, therefore, one might presume that they might have access to information, that should not prevent their pension funds being invested in the shares of that company. One presumes it was the intention that employees should not be precluded from investing in the shares of the company either for one reason or another. As it stands, it appears to say that they can use information that other people would not have to make investment decisions. It appears to me to say that from my reading of it.
I think the Senator is right and I will see if we can change it.
This is one of the major amendments which, as I mentioned at the outset of today's preceedings, provide for the criminalisation of insider dealing and the introduction of an enforcement role for the Stock Exchange. This is very much the kernel of this whole Part of the Companies (No. 2) Bill. Taken together, they will greatly improve and strengthen the effectiveness of Part V of the Bill which deals with insider dealing. The amendments concerned are a considerable response to the commonly expressed view that the present civil proposals do not go far enough.
I would like to say that the section introduced by this first new section will simply make unlawful dealing within the meaning of section 91 a criminal offence. Because of the nature of insider dealing, however, there is no real point in criminalising it without devising an enforcement mechanism and this is provided for in the other new sections which I am proposing today that I should add to Part V of the Bill. This very much is the core Government amendment which, in fact, criminalises the insider dealing.
I have no objection to the amendment at all. Section 91 (6) says among other things that it shall not be lawful for a company to deal in any securities at a time when any officer of that company is precluded by subsections (1), (2) or (3) from dealing in those securities. Is there not need, therefore, to have a reference in amendment No. 125 to a company which deals in securities as well as to a person?
I see the point but it is not necessary because a person here can be either a corporate person or a natural person. It is normal in legislation to use the word "person" and it is deemed to be either a corporate person or a person in the ordinary sense. Does the Senator want some references for that?
I welcome very much this new amendment and it is certainly something that will be welcomed by he trade union movement in general which has been pushing in this direction for quite a period of time. It really gives a lot of new muscle to the Bill. I certainly support it.
This proposed new section provides for certain automatic consequences where a person has been convicted of an offence under this section or, indeed, the preceding one. These automatic consequences arise in two situations. First of all, where a person has been convicted of insider dealing under this part of the Bill, he will be prohibited from any further dealing, as defined in section 90, for a period of 12 months from the date of his conviction. Secondly, if, despite such a prohibition, such a person does deal and is convicted of an offence under this new section for doing so, he will be automatically prohibited from dealing for a further 12 months from the date of the second conviction.
The risk of the sanction I am proposing here would be quite a significant extra deterrent to insider dealing and that area. It is one thing to be fined heavily for such dealing, but it is quite another to face automatic disqualification from dealing in the market for a year. I suppose what I am trying to do here really is to hit the insider where I know it hurts, which is in the pocket.
This is a very fine amendment. I have not thought about it before. I am just thinking about it now. Will this apply in cases where the person is holding rights, warrants and options at the time of conviction, in other words, transactions which may have to be closed at a certain time, where he will have to take up an option within a certain time afterwards, or whether he has warrants to subscribe the shares? I am literally just thinking on my feet at this moment. You can prohibit him from dealing but he will possibly hold rights or receive rights in the meantime. What happens in that case?
That is a pretty technical one. The definition of dealing on page 79 says, "‘dealing' in relation to securities, means... acquiring, disposing of, subscribing for or underwriting . ." If you have an option at a certain point, then you will be prohibited from subsequently acquiring the benefit of that option. That is my thinking on it just now, but I will have to come back on it.
Could the option collapse?
Yes. That is the way I would interpret it right now. If I find that not to be the case, I will make sure the record is properly corrected. Our intention in regard to "acquiring" under section 90 is that the acquiring is from the date that you acquire the shares. You do not acquire them when you get the option. You get the option to acquire.
We may have a problem here.
The Minister may have a problem too.
What happens if the particular individual is short of stocks which is the type of situation he might be in? This type of individual could be short of stock at the time. He would be under an obligation to buy that stock back and to forbid him to deal in this situation seems completely unreasonable because he would have to buy stock back to square the situation. It is the first time I have looked at this amendment, but I suspect a blanket deal will close off options for him which would make it more difficult for the Stock Exchange and for himself.
We had better look at the words here again. The clear intention is to stop automatically dealing. We are talking here about at what point can you stop the dealing. One view which makes some sense but may not be legally the right thing to do is to say you allow people to complete a transaction which they are legally bound to complete. If you are legally locked in, perhaps you should be allowed to complete that transaction legally. Against that you have to be careful that that is not used as a loophole out of the 12 months business, that people start devising legal situations where they are legally imposing restrictions on themselves to complete a deal. The Senator and I have exactly the same intention here which is to make sure that urgently and immediately we stop the dealing.
There are all sorts of technical problems going through my mind at the moment. There are all sorts of uncompleted situations which would have to be completed and to put a blanket on dealing will make life much more difficult for all the parties involved.
Dealing is defined here as acquiring, disposing of, subscribing for, making or offering to make, or inducing or attempting and so on. The acid test is acquiring and disposing. If we can tidy up the long tails on those, we will have to try and find a way to do it.
It might be easier if we made it illegal for him to initiate any transactions at that stage. An individual of this sort will have all sorts of loose ends around the place which may have to be completed legally.
It might be a case for a phrase like "commencing to deal" or something like that. We want to do the same thing, so I will see if I can find a way of making a crisper line between it but I do not want to leave any loopholes there either.
I want to put something on the record. Am I to believe that the stock buying community are of a kind who would entrust a person who had been convicted once of insider trading to deal with their business again?
Even if it is a success.
Now the Minister has further problems. I see Senator Robinson has arrived.
Will Senator Ryan let Senator Robinson speak for herself?
It is as well there is an Opposition here today.
Will a person be entitled to buy shares in any circumstances? If that is true, how does the bank manager in Ballydehob know that the individual who comes in to him is precluded from buying shares?
The person is prohibited from buying shares. The offence is on the person.
I suppose what I am saying is that this issue arises at a later stage about people who are prohibited from holding directorships. It comes at a later stage about companies that are wound up. Is there a case to be made that a register of persons who are prohibited from dealing should be available to all outlets where people could be envisaged to be buying shares? If both Visa and Access can supply every retailer in the country with a list of the numbers of cards that are stolen or lost, it seems to be not impossible to provide every outlet for the purchase of shares with a list of persons who are prohibited from dealings.
This is aimed at the person who is convicted and the prohibition on that person is 12 months and, following on from that, if such a prohibition exists an automatic second 12 months period starts. It affects the convicted person. That is the intention of this section.
I am trying to understand how this would operate in practice. My first instinct is the same as Senator Ryan's in that if somebody is found guilty he should not be back in the market place ever again. The more I think about it the more I figure that it may be in some sense unfair. There should be a punishment to fit the crime but when people get through their period of punishment they should be in a position to rehabilitate themselves.
I am trying to establish whether there is a danger that by saying this person will only be prevented from dealing for one year, you are actually protecting that person? Could that be interpreted as a restriction on the internal controls of the Stock Exchange? The Stock Exchange might want to say in certain instances of insider trading, assuming that they would not all be of similar severity or that the offences could be judged by the amount of money involved, "having examined the case in front of us we do not think this person is a fit person ever again to deal in the Stock Exchange".
A person can seek access to or redress from the law. Under the terms of this Bill the maximum period for which a person might be deprived of dealing is one year. Therefore, the Stock Exchange or other control could not implement a more serious restriction. If that is the case I would be very worried about it. The market might have its own levels and find its own controls and it would be a pity if the one counteracted the other. I suspect that, should it go through a court of law, people would interpret what was enacted as being the criterion by which it should be judged. If the law says, "We forbid a person from dealing for a full year"., could the domestic remedy that might be available within the Stock Market impose a longer period of expulsion?
I see no reason why it could not. The Stock Exchange can do their own thing in this regard if they wish. This is the legal situation, so they could impose a much longer period. This is part of a package of punishments and, when you take the whole lot 'together, it is a tough package.
I accept that.
This is the new section 99 which is available. This is the sixth new section which we are proposing to add to Part V of the Bill. Since we are proposing in the previous new section to create an enforcement role for the Stock Exchange under this Part, we then have to give the exchange a statutory basis to establish the information on which it might ground its referral of suspicious cases to the DPP. This section enables the exchange, with the concurrence of the Minister, to appoint authorised persons to investigate suspicious cases and give such people the necessary powers to establish the required information. Of course, if a case is sufficiently clearcut, there may be no need to appoint authorised officers but it is likely, in the vast majority of cases, that some inquiries will have to be made.
However, because this approach of giving investigative powers to a non-State authority is a bit unusual and to avoid any suggestions of abuse of power by such a body, we though it prudent to build in a kind of referral role for the court. Subsection (4), therefore, allows either the authorised officer or the person who is the subject of his investigation to apply to the court for a decision as to whether the exigencies of the common good require that the information should be given. If the court decides that the common good does not require the information to be given, the request must be withdrawn — that is in subsection (6). On the other hand, if the court upholds the request as being in the public interest the person concerned must give the information — subsection (7) — and will be subject to contempt of court if he does not — subsection (8).
The authorised person will be empowered by subsection (2) to require information from any person whom he or a relevant authority of the exchange considers may be able to help him in regard to dealings in security. He can acquire information in regard to the securities concerned, the companies which issued the securities, a person's dealing in such securities and any other related information. There could be situations where a person under investigation refuses to give information to an authorised person within a reasonable time despite a court direction, thereby frustrating the whole intention of this section. Subsection (8) provides, therefore, that the authorised person can come back to the court and that the court can treat the refusal as contempt. This is a much better approach than making the refusal an offence punishable solely by fine and/or imprisonment.
This section which covers authorised people means, so far as I can see, a person who is appointed by the Stock Exchange. In effect, it is a person who is appointed by the relevant authority who are in one way or another, arms of the Stock Exchange. It would be very helpful if this person was not a member of the Stock Exchange and was not in any way connected with the company and the transactions involved. In order to protect the Stock Exchange, this person should be seen to be at arm's length. We have already touched on the subject of self-regulation and the Stock Exchange being defensive about insider dealing, about the Stock Exchange protecting itself.
It seems very logical that this person who is going to investigate this should not be a member of the Stock Exchange and should have as little connection with the financial world as possible. In other words, he should be seen to be impartial. We have only had these amendments for a day, so I have not put down an amendment to this amendment. I ask the Minister to consider whether it is possible to put certain restrictions on who this person should be so that he will be seen to be unconnected with those who appoint him.
Has the Minister or the Government given any thought to who would pay the salary of an individual such as this? With whom would the person's contract be? Would it be with the relevant authority? Would the person himself or herself be precluded from dealing in stocks and shares? It appears to me that in many other areas of life an investigator would be precluded, because of a possible conflict of interest, from dealing in the business which he or she was supposed to examine. I can think of a number of areas where people are precluded because of a possible conflict of interest. Even in trivial things such as the competitions which are run on the backs of cornflakes packets the employees of the sponsoring company are precluded from participating. I would find it rather peculiar if somebody who had the major job of investigating the proper behaviour of the Stock Exchange was permitted to participate in the activities of the Stock Exchange.
Can the person be dismissed and, if so, by whom and in what circumstances? If the Stock Exchange chooses to dismiss the person, what can the Minister do about it? He may choose to refuse to employ another person. I do not want to accuse people of too much but, if the Stock Exchange does not like the way the authorised person is doing his or her business, it may choose to get rid of him or her. What can be done about it? I would like the have answers to these questions because this authorised person is central to the whole situation. His role needs to be defined and teased out in greater detail.
I appreciate that the Minister has the power to make supplementary regulations. It would be useful if the Minister, either now or when we come to amendment No. 132, were to explain some of this thinking. It is extremely important that the authorised person should be seen to be independent and secure. For instance, he should not be capable of being dismissed by the revelant authority without the approval of the Minister. Otherwise, the person will feel permanently under threat. Far be it for me to be the author of a revamping of the image of the Stock Exchange, but if we are endeavouring to create the public perception that the Stock Exchange is operated according to a reasonable set of standards, it is extremely important that the person who is given the basic role of regulating the behaviour of the Stock Exchange should be seen and should be perceived to be separate and independent. We have provided in our Constitution that the Judiciary may not be put under any pressure by the Executive in order to ensure their independence. A similar protection ought to be given to this authorised person in the legislation if he or she is to be seen and perceived by the public to do the job they are expected to do.
I see the Senator's points. I think they are covered to the extent that the section clearly states that in this section "authorised person" means a person authorised in writing by a relevant authority or recognised Stock Exchange and approved by the Minister. So the Minister would have to approve formally an authorised person. I make that very clear. It is not left entirely to the Stock Exchange. I think the Minister would take into account the views expressed by the Oireachtas now that the person should be as independent as possible. The Minister would be watching out carefully. The reason we have the provision here is to make sure that there is no "old pals" act in the business.
With regard to the terms, the payment of expenses and the termination of a person's job in that area, Senators can see that the section says "a person authorised in writing". My own assumption would be that in that writing the terms of the engagement would be laid out, which would cover items such as expenses, remuneration, possible termination and any other conditions which the exchange wanted to lay down before submitting it to the Minister.
I propose Senator Ross for the job.
The Minister has to sanction that.
That guarantees he will not get the job. It appears from the way subsection (1) of what is to be section 99 is written that the authorised person means a person authorised in writing by a relevant authority and approved by the Minister. If the person authorised in writing by a relevant authority has that written authorisation withdrawn by the relevant authority, is there anything the Minister can do about it? It appears that as it stands, there is not. It seems to frustrate the intent if the Minister cannot say to the Stock Exchange: "No, I will not approve of your withdrawing this person's authorisation". Apparently, as it stands, the Minister cannot do that.
Further, to clarify the position of the authorised person for the purpose of this section, it is a novel position. Under this section a person can be appointed in writing to carry out the purposes of the section and that is to obtain information. It does not, as the Minister has conceded, relate at all to either the terms and conditions under which an authorised person would hold the position. Senator Ryan has raised an important question in that regard. Nor does it deal with the question of the necessity to apply to court for a declaration. Who would bear the costs of that? Is it the Stock Exchange? Is it the Minister because he has approved the authorisation who would bear any costs that might be incurred? I do not quite understand the circumstances in which an authorised person might apply to the court for a declaration under the section. Is it envisaged that an authorised person would apply if somebody refused to co-operate? Or, would an authorised person apply, if it became necessary to exercise the powers, for a declaration that these were necessary or the exigencies of the common good warranted them being exercised?
I can foresee circumstances where the authorised person might look for information from somebody who was completely innocent of any possible allegations being made and pursued and who would submit or furnish the information requested. I would have thought that, if anybody was the recipient of a letter, or a request, or whatever form the matter might take, from an authorised officer seeking the type of information set out in subsection (2), the likely result would be failure to respond. Is it in those circumstances that the authorised officer would seek a declaration? It is easier to see a situation where somebody would seek a declaration that the exercise by the authorised person was not in fact warranted by the exigencies of the common good. One could see somebody going to court to protect himself from having to respond to the request for detailed information from the authorised officer.
What I am not as clear on is how the Minister envisages that the authorised officer may find it necessary to go to court and get a declaration in order to exercise the powers. It would be helpful to clarify that because that would again tease out the actual working conditions of an authorised officer. It is necessary for the Minister, if he is going to have an entity like an authorised officer of this kind, to take on to himself the statutory power to describe the conditions under which authorised officers may be employed. It seems as though it is going to be necessary to have power to regulate that, perhaps by statutory instrument, so that there is a standardising in relation to the terms under which an authorised officer could then be authorised in writing by the Stock Exchange and approved by the Minister. Such an officer would then hold the position on whatever terms were prescribed by the Minister under the section. Without that, there is going to be a great deal of confusion about the role of the authorised officer. What happens if the Stock Exchange no longer authorises in writing? What happens if the person has incurred expenses in going to court for declarations and so on? There are some points to be clarified.
There are certain extremely good reasons why it is appropriate that we should break at this point, one of them——
An Leas-Chathaoirleach
I do not wish to interrupt the Senator but that is a matter for the Leader of the House.
I know it is really a matter for the Leader of the House to give his opinion. We have sat for three hours on this. We only got these amendments yesterday. I ask the Acting Leader of the House to comment.
There has been a very detailed consideration of this section for an extensive period. There seems to be an interest in adjourning at this point. I propose that we do that and resume at 6.30 p.m. on the next business.