I wish to welcome the Minister of State, Deputy Sean Sherlock, back to the House.
Companies (Miscellaneous Provisions) Bill 2013: Committee Stage
Section 1 agreed to.
SECTION 2
Amendments Nos. 1 to 6, inclusive, are cognate and may be discussed together, by agreement. Is that agreed? Agreed.
Government amendment No. 1:
In page 3, to delete lines 27 to 29 and substitute the following:
“(b) in the case of a company that, in respect of the latest financial year of the company that has ended prior to the date of the presentation of the petition, fell to be treated as a small company by virtue of section 8 or 9 of the Companies (Amendment) Act 1986, the Circuit Court,”.
Amendment No. 1 provides that a company is to be treated as a small company if it qualified as a small company for the most recent financial year ended before the application for examinership. Under section 8 of the Companies (Amendment) Act 1986 a company qualifies as a small company if it meets the qualifying conditions in respect of a financial year. In the Bill, as initiated, the subsection did not reflect that and referred instead to "at the time of the presentation of the petition". There was no reference to a financial year.
Amendment agreed to.
Government amendment No. 2:
In page 4, between lines 7 and 8, to insert the following:
“(8) For the purpose of paragraph (b) of subsection (7), if the latest financial year of the company concerned ended within 3 months prior to the date of the presentation of the petition, the reference in that paragraph to the latest financial year of the company shall be construed as a reference to the financial year of the company that preceded its latest financial year (but that reference shall only be so construed if that preceding financial year ended no more than 15 months prior to the date of the presentation of the petition).”.
Amendment agreed to.
Government amendment No. 3:
In page 4, line 8, to delete “(8) The jurisdiction of” and substitute “(9) The jurisdiction of ”.
Amendment agreed to.
Government amendment No. 4:
In page 4, line 16, to delete “(9) On the making” and substitute “(10) On the making”.
Amendment agreed to.
Government amendment No. 5:
In page 4, line 23, to delete “(10) For the purposes” and substitute “(11) For the purposes”.
Amendment agreed to.
Government amendment No. 6:
In page 4, to delete line 27 and substitute the following:
“(2) The Companies (Amendment) Act 1990 is further amended—
(a) by repealing section 3(9), and
(b) in section 4, by adding the following subsections after subsection (8)—
“(9) The Circuit Court shall only have jurisdiction to make an order referred to in subsection (1)(a) or (b) if the related company is a company that, in respect of the latest financial year of it that has ended prior to the relevant time referred to in subsection (1), fell to be treated as a small company by virtue of section 8 or 9 of the Companies (Amendment) Act 1986.
(10) For the purposes of subsection (9), if the latest financial year of the company concerned ended within 3 months prior to the relevant time referred to in subsection (1), the reference in subsection (9) to the latest financial year of the company shall be construed as a reference to the financial year of the company that preceded its latest financial year (but that reference shall only be so construed if that preceding financial year ended no more than 15 months prior to the relevant time referred to in subsection (1)).”.”.
Amendment agreed to.
I move amendment No. 7:
In page 4, between lines 27 and 28, to insert the following:
“(3) The Minister shall submit to the Oireachtas an annual estimates of savings due to the operation of this amendment.”.
I welcome the Minister of State. It is always a pleasure when he comes to the House. The object of the exercise in transferring the jurisdiction for these procedures of examinership from the High Court to the Circuit Court was to save money. Senator Mary White covered it for the main Opposition party on the previous occasion when she estimated cost savings of about 30%. It would be most interesting if the Minister of State had an estimate himself because that is the object of the exercise, which we support. It was also an objective of the troika which pointed out that we have a problem of excess legal costs in Ireland. Some supporters of the troika think that it left a bit early in not having ensured the legal reforms we hear the Minister for Justice and Equality, Deputy Alan Shatter, wants to bring in.
The purpose of my amendment is to ensure the Oireachtas gets an estimate of the savings because we have a problem of high legal costs. Wearing his other hat, I know the Minister of State promotes innovation and small businesses.
One of the obstacles in this regard, as pointed out by the National Competitiveness Council, is the high level of legal costs. Amendments Nos. 1 to 6, which I support, are an attempt to address this issue. To keep people on their toes, it might be a good idea to set an annual estimate of savings to be achieved.
Another concern is that the savings from the personal injuries system which was established some time ago are being gradually eroded and that legal costs are a major factor in inflating insurance costs in respect of road transport and so on. The Minister of State might re-examine this issue before Report Stage. It would be good to know the Government's estimate of the savings upfront. This is something that needs to be continually monitored lest we drift back into the old high cost mode, which is the purpose of the Minister of State's amendment of this section of the Bill, which we support. My suggestion is that an estimate be made now of the savings to be made and that we ensure they are achieved. In attempting to return the economy to where it was in 2008 we need to tackle the problem of sheltered sector services. Legal costs are at the core of what is being done under this Bill. If we quantify the savings we will know if they are increasing, which I hope they will do yearly, or if the legal profession is clawing back the ground that might be lost through the transfer of cases from the High Court to the Circuit Court. Perhaps the Circuit Court proceedings will cost more than proceedings in the High Court, in which case what the Minister proposes to achieve would be undone. I do not believe savings will be achieved without policing by the Department with the support of the Oireachtas.
I would like to comment briefly on the issue of legal costs and the troika. I am not an expert in legal matters, but it is about time we had a full debate on this situation. Approximately five major firms, primarily based in Dublin, control the commercial law area. Their fees, including to Government and internationally, is €500 per hour. Some of the solicitors in north and west Cork are on the bread line. People tend to forget that more than 2,000 young qualified lawyers, some of whom have masters degrees, are unemployed and cannot access the system. Debate on this issue should not be about the person in Bantry, Mallow, Killarney, Athenry or Donegal who is earning a crust in terms of charging a fee of €50 per hour or less but about the monopoly within the Irish legal structure. These firms will not engage with clients unless they have around €10 million or €15 million insurance cover.
During a conversation with a taxi driver on a recent trip from the airport he told me that he was a qualified barrister but was driving a taxi because he could not get work in that area. People think that if a person is a lawyer, solicitor or barrister he or she is automatically in the big league. There is a premier division of lawyers in Ireland. It is a cosy cartel monopolised by five large firms. The Minister of State, Deputy Sean Sherlock, the Taoiseach and the Minister for Justice and Equality, Deputy Aoan Shatter, know who they are. The debate needs to be about such firms and reducing their fees of €500 per hour. Most solicitors around the country charge approximately €60 per hour. Their situation is akin to that of farmers, the majority of whom, as the Minister of State will be aware, make approximately €9,000 to €12,000 per annum, while the remainder of them make approximately €150,000 per annum.
I would welcome an informed debate on this issue. Perhaps the larger firms are being protected by the Law Society or Bar Counsel. The vast majority of lawyers in this country are on the bread line. I am speaking not about the rogues in the profession who are being weeded out, and rightly so, but about those lawyers around the country who are in serious difficulty, including law students with masters degrees who cannot obtain apprenticeships and so on. I agree with Senator Sean D. Barrett that legal costs is an issue but it is one applicable to a particular cartel that is monopolising international commercial transactions, including to Government. I acknowledge this was also an issue in relation to previous Governments. I will not name the firms concerned. What I say is the truth, namely, there are five firms in this country that are earning more than 60% of all other legal firms throughout the country.
My colleague, Senator Jim Walsh, has often raised the issue of the colossal fees being charged by lawyers and the need to reduce insurance claims. Insurance claims have fallen since enactment of the Personal Injuries Assessment Board Bill. Having recently attended conventions and political gatherings in Kerry and Tipperary, I know there are many solicitors in Ireland who are barely surviving. The notion that they are all creaming it is not true. If we are to debate this issue then let us be honest and take on the cartel. I propose that we also take on the Law Society and whoever else is protecting that cartel. When it comes to dealing with the various issues that arise in Departments, the same firms are hired by Government. No consideration is given to hiring any of the other approximately 10,000 lawyers in Ireland.
I had not intended to contribute on this section, but I felt I had to when I heard Senator Sean D. Barrett speak about legal fees. Let us have an honest debate about who is charging these fees and making the money. Let us commission an audit in this regard and then tackle the people who are charging €500 per hour rather than the people in Dingle or Connemara who are charging €50 per hour and who are barely surviving. We all know there is a cartel operating in this area. It has been referred to previously. Let us be honest in our debate on this issue. The view often in the media is that all solicitors are robust and earning vast sums. This is not true.
On the point made by my colleague on the Opposition side in relation to the disparity between large law firms and the remainder of the legal profession, coming from the legal profession, I can acknowledge that that is the case. Another issue, which may not be one for today's debate but which the Minister of State might bring to the attention of the Government, is the role of the Government and semi-State companies in awarding contracts to the larger firms. In my experience, part of the reason for this is because requests for tender for legal and other services require those tendering to have all sorts of coverage, which to be honest one would want to be digging a well in the North Sea to have. This results in the exclusion of small to medium-sized firms from competing for business. I ask that the Minister of State draw this issue to the attention of the Government. While I accept the concern in regard to the provision of legal services, which is valid, we must ensure that competition is real competition. There should not be false impositions on genuine competition.
I will respond first to Senator Sean D. Barrett's remarks and thank him for his kind words of welcome. The costs of an examinership will depend not only on the capitalisation or book value of the assets of a company but also on the nature and extent of the company's liabilities and the complexity of a particular case. Hence, it would be extremely difficult to estimate the cost of a typical examinership on which to base annual estimates of savings. To draw robust estimates would require information from the individual companies who applied for Circuit Court examinership and require them to estimate the savings from choosing the Circuit Court option over the High Court route. This would be a hypothetical exercise and necessarily subjective. To compel companies to co-operate in such a process would require legislation, which would also add to the administrative burden on companies.
As the House may be aware, Standing Order 141A of the Dáil provides that 12 months after the enactment of a Bill, the Minister or Minister of State, who is officially responsible for implementation of an Act, shall provide a report, which shall review the functioning of the Act and which shall be laid in the Oireachtas Library. A report on the implementation of the Bill before the House today will be required 12 months after its enactment. Therefore, the amendment is not practical or necessary and I do not propose to accept it.
Other Senators spoke about the cost of legal services and the top four that Senator Denis O'Donovan mentioned.
The top five.
Notwithstanding the valid points made, I respectfully suggest that these issues should be dealt with under the Legal Services Regulation Bill, which is before the Dáil. I note the points made and they will certainly be reflected back to the relevant Minister.
I am concerned over what the Minister of State has said. On the previous day I was more convinced there would be savings from going to the Circuit Court rather than the High Court. Now the Department does not know and has given the Minister of State a note indicating that it cannot tell. Too much policy making is not based on evidence. If the Circuit Court is not cheaper than the High Court, we should all vote against the amendment. The Department must have some estimates of saving. I am concerned over the lack of expertise in Departments given that they cannot answer a simple question. We are doing it to save money and I am delighted, but I want to know how much. We are being told they could not do certain things or it would be too difficult to find out. If there are savings, I am sure the troika, the Ministers, Deputies Michael Noonan and Brendan Howlin, and everybody else in the Cabinet would be delighted to hear them.
I hope the Minister of State takes the other point on board more strongly. I applaud the Minister of State and his colleagues, the Minister, Deputy Richard Bruton, and the Minister of State, Deputy John Perry, on being advocates of small and medium-sized enterprises. We repeatedly run into the attitude that people are in favour of small and medium-sized enterprises, but not in their sectors. They will continue to give business to the big four or five, whether it is in accountancy, which we will discuss later in section 6, or in law firms. The Minister for Health protects VHI, which is the biggest company, yet small and medium-sized health insurance companies are not wanted either. In the area of transport, the Minister of State, Deputy Alan Kelly, has indicated that small and medium-sized bus companies are not wanted because he will allocate the subsidy without competitive tendering and give exclusive rights to all the routes to the biggest operator.
This is capture of Departments by vested interests. Even when they venture away from it and indicate they will do something that will cost a bit less, it is clear from the answer the Minister of State gave that the homework has not been done. I ask for that homework to be prepared in time for Report Stage. I should have mentioned the Minister of State, Deputy Kathleen Lynch, who was here the last day and stood in magnificently as we always expect. It must be something about Cork that gives us these Ministers of State to debate these issues. It is disappointing. Is the Department afraid that I will come back later and say that it promised 25% and there is only 22% or does it have no idea what the savings are and refuses to quantify it? The Minister of State should ask the officials to quantify it. We are trying to achieve political reform and get the country out of the mess in which it was in 2008. I object to simple questions from Members of Parliament not being answered.
I hope there are savings and as a Member of Parliament I want to monitor those savings. However, I cannot do it if I get meaningless answers indicating that the Department does not know. Policies that were not properly appraised and analysed got the country into trouble. This is an attempt to correct that situation and we still do not know. Wandering around in the dark on policy is just not good enough these days. I express my surprise that the Department has no idea of the savings for a measure it has proposed. It is unacceptable for a major Department not to be able to answer that question. I am sure the Ministers, Deputies Alan Shatter and Michael Noonan, will also want to know why there is no answer to it.
I return to my response to the amendment. The 30% figure mentioned in public discourse on the issue refers to the estimated Circuit Court costs being 30% lower than an examinership process through the High Court owing to the legal fees element. If we do not know how many companies will go into examinership from today and 12 months hence, how can we reasonably expect to create an estimate of the cost saving? It is a hypothetical exercise. While greatly respecting the Senator's views on the issue, we would create an enormous administrative burden - another administrative layer - in compiling the estimate.
Knowing the Senator as I do, I know he would not stand over creating another administrative layer in the system that would result in Departments going out to individual companies which applied for Circuit Court examinership and then putting a requirement on them to estimate the savings from choosing one court over another. In an individual company's case it would mean in practical terms that company having to get two separate pieces of legal advice which would create an administrative burden for it. It is not reasonable to compel companies to engage in such an exercise because we would need to create a legislative framework for that. Furthermore, as I have said in the response, a report on the functioning of the Act will need to be compiled and laid in the Oireachtas Library, which should be sufficient.
The estimated savings of 30% derive from the potential difference in the legal costs between the Circuit Court and a higher court. That is where that figure comes from. I respect the Senator's views on the issue, but the Government is unable to accept the amendment.
When the Minister of State, Deputy Kathleen Lynch, was here the last day she said:
Access to a more affordable mechanism for restructuring makes it more likely that more small companies will avail of examinership, thus providing them with a greater chance of economic survival. In particular, businesses with potential for growth and job creation, which are being held back by legacy debt problems, are expected to benefit. This, in turn, should feed into an improvement in the general employment and economic situation within the State.
That is what we are trying to do. The Minister of State also said: "This means, for example, that companies based outside Dublin will be able to apply for examinership to their local Circuit Court, thus reducing costs and travel time." The very helpful briefing note we were given the last day stated that going to the Circuit Court would lower costs and provide greater accessibility for small private companies by eliminating the need for High Court involvement. All of those are very desirable as the Minister of State said. The very helpful briefing note we got was over and above what we expect, for which I commend the Department. However, in policy making we need to be more precise than we have been. There is too much wooliness throughout the public sector which gets us into so much trouble. It would be much better to have an estimate and we could then assess whether we got the 25% or 30%.
I do not know why it requires more auditors. There are X cases and a saving of Y percentage. They need to be multiplied together which could be done on the back of an envelope and given to the next Minister to come in.
When we are asked to change policy, in this case, a change from the High Court to the Circuit Court, it would help if the Department had some idea what the savings would be. I am surprised the Department of Finance and the Department of Public Expenditure and Reform have not asked the Department.
We need regulatory impact assessments when we make these types of changes. The Parliament is here to assist in rescuing the country from the situation it found itself in after 2008. We would like to help and the amendment was tabled to assist in that regard. The Minister of State could use it to explain to meetings of the Irish Small and Medium Enterprises Association or whoever that the Government has saved that sector X amount in legal costs. I believe ISME would welcome this, as would I. I am unsure why the Minister of State is running into obstacles within the Department.
I am not going to push it but the Minister of State or the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, might consider the matter before they come back on Report Stage which, I understand, is due this week. It seems that the case for the Bill would be substantially improved by an estimate of the savings. The savings are the reason we made the change in the first instance, and to make the change without any knowledge of what the savings would be is hardly the way to proceed. I believe the Minister of State is correct, but it would be reassuring to have the assessment. In another context we discuss the problems with mathematics in the country. If we put some mathematics in here it would make it far more precise, rather than simply an aspiration that we believe we will save money but with no idea how much. For a country with a debt to GDP ratio of 125% we do not need it, but we need more information supplied to the Oireachtas, especially when the Oireachtas has been on the side of the Minister of State in this matter both the last day and today. I will not push it any further, but I appeal for information to be supplied to the House on Report Stage.
Amendment, by leave, withdrawn.
Section 2, as amended, agreed to.
Sections 3 and 4 agreed to.
NEW SECTION
Government amendment No. 8:
In page 8, between lines 22 and 23, to insert the following:
“Designated officers: provision for certain contingencies that may arise in relation to them
5. The Companies Act 1990 is amended by inserting the following section after section 20—
“Provisions catering for certain contingencies concerning designated officers
20A. (1) If, at any time after a search warrant has been issued under section 20—
(a) the designated officer named therein (including any designated officer who is named therein by reason of any prior application under this subsection)—
(i) has ceased to be an officer of the Director (by reason of death, retirement, resignation, dismissal, reassignment or any other cause); or
(ii) is otherwise unable to perform his or her functions (by reason of absence from duty, illness, incapacity or any other cause);
or
(b) the Director has reasonable grounds for apprehending that any of the circumstances referred to in paragraph (a) is likely to arise,
then another designated officer may apply to a judge of the District Court for an order under subsection (2).
(2) On the hearing of an application under subsection (1) the judge of the District Court may, if—
(a) the judge is satisfied that it is appropriate to do so; and
(b) the date to be specified under paragraph (ii) will fall during the period of validity of the warrant (including, if that is the case, such period as extended under section 20(10)),
make an order directing that the search warrant be endorsed so as to—
(i) substitute the name of another designated officer (the ‘new officer’) for the name of the designated officer who was expressed to have been authorised under the search warrant immediately prior to the making of the order (the ‘previous officer’); and
(ii) specify the time and date from which that substitution is to take effect.
(3) Where an order under subsection (2) is made then, with effect from the time on the date endorsed pursuant to paragraph (ii) of that subsection—
(a) the search warrant shall continue in full force and effect, but shall operate to authorise the new officer to execute the warrant as fully as if he or she had been the designated officer named in the warrant when it was first issued;
(b) the search warrant shall no longer operate to authorise the previous officer to execute the warrant (but without prejudice to the validity of anything done previously thereunder by that officer); and
(c) the order shall operate to—
(i) relieve the previous officer from any duties to which he or she had been subject under section 20(2E) or (2F) (but without prejudice to the validity of anything done previously thereunder by that officer); and
(ii) impose upon the new officer any duties under section 20(2E) or (2F) that have not yet been fully discharged.
(4) If—
(a) the period of validity of a search warrant issued under section 20 (including, if that is the case, such period as extended under section 20(10)) has expired; and
(b) either of the conditions specified in subsection (1)(a) or (b) is satisfied,
then a designated officer may apply to a judge of the District Court for an order providing for each of the matters referred to in subsections (2) and (3), other than those relating to the conferral or removal of the power of execution, and, on the making of such an application, the judge of the District Court may make such an order accordingly and subsections (2) and (3) shall apply for that purpose with any necessary modifications.
(5) For the purpose of subsection (4), subsection (1)(a) shall apply as if for ‘(including any designated officer who is named therein by reason of any prior application under this subsection)’ there were substituted ‘(including any designated officer who is named therein by reason of any prior application under this subsection or subsection (4))’.
(6) An application under subsection (1) or (4) may, if a judge of the District Court directs, be heard otherwise than in public.”.”.
This amendment relates to the power of seizure. It is more of a semantic explanation. The new section will provide for an officer of the Director of Corporate Enforcement to be able to take over the statutory duties set out under sections 20(2E) and 20(2F) of the Companies Act 1990 in circumstances where the incumbent designated officer is no longer in a position to carry them out. The duties under sections 20(2E) and 20(2F) arise if a named officer of the director has been issued with a section 20 search warrant under which "extended powers of seizure" are exercised. The proposed new section will provide that if a designated officer named in a search warrant has ceased to be an officer of the Director of Corporate Enforcement or is otherwise unable to act, then another designated officer may apply to a judge of the District Court for an order that his or her name be substituted for the original designated officer's name on the search warrant.
This section is contained in the Companies Bill 2012 but is being brought forward to ensure that the process is in place should the need arise. Effectively, if a designated officer should pass away or be incapacitated and needs to be replaced, the amendment allows for the procedure to take place and for the application to the court to be provided for.
SECTION 5
Amendment agreed to.
Government amendment No. 9:
In page 8, to delete lines 31 and 32 and substitute the following:
“(d) the Insolvency Service of Ireland;
(e) the Irish Takeover Panel; or
(f) such other authority or other person as may be prescribed,”.
This amendment is effectively the same. Its purpose is to include the Insolvency Service of Ireland as one of the agencies in the list of bodies that may share information with the director. The purpose of the amendment is to ensure that the Insolvency Service of Ireland has the power to share information with the Director of Corporate Enforcement that it considers relevant to an investigation of the director.
It is foreseeable that there will be overlaps between the Insolvency Service of Ireland and the Office of the Director of Corporate Enforcement. For example, the two bodies may be dealing with the same individuals as directors of insolvent companies and as individuals subject to personal insolvency proceedings. The inclusion of the reference to the Insolvency Service of Ireland has necessitated the consequential reordering of the other clauses in the paragraph.
I thank the Minister for his explanation.
Amendment agreed to.
Amendment No. 10 not moved.
Section 5, as amended, agreed to.
SECTION 6
Amendments Nos. 11 and 13 are related and may be discussed together.
I move amendment No. 11:
In page 10, between lines 35 and 36, to insert the following:
“(9) The Recognised Accountancy Bodies remain the oversight bodies for the external quality assurance of audits until the enactment of this Act and shall retain the duties and obligations of such oversight up to and including that date.”.
I have the greatest concerns about this section. I call on the House to reflect on what we have faced since we have come here and since Ireland has been in the financial straits in which it has found itself and which we are trying to sort out now.
The average citizen has borne extreme burdens. Unemployment and emigration have increased and so on. Many of those directly culpable have borne none of the cost of what happened to put the country on the rocks, and they include bankers, accountants and the regulators of banks. That is why I am concerned about section 6. The briefing note says the provision allows for a levy on statutory auditors and audit firms of public interest entities to defray the costs of the Irish Auditing and Accounting Supervisory Authority, IAASA, in carrying out the functions of external quality assurance in respect of these public interest entities. This will enable the IAASA to impose a levy on relevant statutory auditors and on audit firms to defray the cost of carrying out the quality insurance function which, it is proposed, will be transferred from the recognised accountancy bodies to the IAASA.
In this section, as I understand it, we are transferring the responsibility for the conduct of accountants from the bodies themselves to a State body. The hope is that we will be able to defray the costs. I view this with extreme concern because I regard the accountants and the bankers as the key people who got us into this situation. Where they presented accounts which the Government found out subsequently were not a fair and accurate reflection of the affairs of the banks - which we took over at a cost of €64 billion - there should be no question that the costs are borne in any way by the State.
Our function in all parts of the House should be to get better conduct from our auditors. They failed miserably, on which I will present evidence presently. They did disastrous damage to the country, but now they seem to have successfully lobbied to push that function onto a State organisation which, according to its annual report, has 14 staff and permission for 15. There are only 14 staff to assess 28,000 accountants and 19,000 trainee accountants.
The people who got us into this should bear the cost of getting us out. Moreover, this should happen in the legal profession with other cases of white-collar crime and there should be no question that anyone else other than that profession should bear the burden. At the very least, serious discussions are needed about the role of accountants in the collapsing of the economy in the first instance, on which I will present something presently, and second, on the reason the taxpayer is involved at all at this point, because it is the taxpayer who funds the Irish Auditing and Accounting Supervisory Authority, IAASA. The explanatory memorandum states 11 additional staff might be needed to do this, which will be a cost. I acknowledge this may be recouped from the accountancy firms but the record in the field is not the greatest. If the State takes on this function, as proposed in section 6, I am sure it will be a godsend to the lawyers. They will from henceforth suggest that instead of suing the accountant who gave one the wrong advice, one should sue the State, which I note has a debt-to-GDP ratio of 124%. Consequently, to those who have been wrongly and badly treated by accountants, the State will become a far bigger mark than taking on the accountants themselves.
A serious discussion is required on the reason the profession of accountancy has moved itself away from being responsible for its own regulation and for its conduct and the reason this in any way should become a burden on taxpayers, who already have borne enough in this regard. I refer to page 142 of the current edition of Phoenix magazine in which it is noted that Mr. Paul Coulson won a phenomenal €44 million award from SG Warburg, which was blamed for walking Yeoman into the disastrous CLF Holdings takeover in the first place. In fact, he topped it up and the magazine estimates he eventually got approximately €87 million out of SG Warburg, which is far short of our €64 billion.
The reports of the IAASA reveal there have been problems with the manner in which that sector has been regulated and I want them sorted out by the accountants themselves long before they get themselves on the public payroll. In respect of the attempt by the IAASA to investigate such people, I note that on page 24 of its 2011 report, with which Members are familiar from dealing with health insurance, the information is redacted or blanked out. That is not very accountable as to what is going on. Similarly, on page 23, in a table entitled, Summary of Section 23 Enquiry activity - 2011, one sees "Redacted Text" in the middle of it. In the case of the conduct of Ernst & Young in respect of the Anglo Irish Bank case, the matter investigated was described as follows:
Failure to detect the scale of Mr. Sean FitzPatrick’s loans and their systematic refinancing over year ends and the lack of appropriate disclosure in the first set of Anglo’s Financial Statements for the year end 30th September 2008, which were signed on 2nd December 2008, or in Ernst & Young’s audit report thereon. The conclusion of the special investigator was "Prima facie case found".
The next matter to be investigated was, "Failure to refer to the transactions in September 2008 between [Irish Life & Permanent] and Anglo in their audit report on the first set of Anglo’s 2008 Financial Statements, in the absence of appropriate disclosure in those 2008 Financial [accounts]", and the conclusion of the special investigator was "Prima facie case found". As for the investigation into the "Failure to ensure appropriate disclosure of a loan made to Mr. William McAteer, a Director of Anglo, in the first set of Anglo’s 2008 Financial Statements or in their audit report thereon", the conclusion of the special investigator was "Prima facie case found".
This is an area of malpractice from top to bottom with vast amounts of money. If one turns to page 27 of the annual report for 2011 one finds that under investigation are PricewaterhouseCoopers in respect of the accounts of Bank of Ireland and Ernst & Young in respect of the accounts of EBS Building Society and Anglo Irish Bank Corporation plc, which were audited by that firm. Moreover, KPMG were the auditors for Allied Irish Banks plc, Irish Life & Permanent plc, Postbank Ireland Limited and the Irish Nationwide Building Society. Although there have been no penalties on any of those, through section 6 we are getting the State involved with that kind of track record.
This is not a case of Members on the side of the House making a political point. Society needs much tougher regulation of the accountancy firms and as Senator Denis O'Donovan observed about the law firms, it was the major accounting firms that got us into this. They appear to me to be a strange set of people to take into public scrutiny when one could follow the example of Mr. Coulson and force them to regulate themselves and force them to compensate people who have suffered so disastrously from the low standards of accounting that pertained in Ireland.
Since making the annual report of 2008, Karen Erwin, who was then the chairman of IAASA, has stated she is extremely concerned about the loss of confidence in Ireland in both the accountancy profession and in auditing. I do not believe this problem will be solved by taking it over as it is. We have a very serious problem in this regard and in her statement in the 2008 annual report, the then chairperson stated:
The confluence of these factors has significantly increased the risks associated with the preparation of statutory financial reports and, by extension, the risks associated with the audit of those financial statements. These increased risk levels, in turn, significantly increase the risk of serious and lasting damage to public confidence in statutory financial reporting and in the accountancy profession.
That is what she said in 2008 and I discern very little progress by the same body up to 2012 in its annual reports.
While I acknowledge there have been many changes at board level in that authority, are we leaving the State wide open if it takes on the responsibility, as happened with pyrite? The State did not build pyrite in houses - builders did - but because the State was in some way engaged in the planning process to approve such building, the Minister of State, the Deputies and everyone in Leinster House were obliged to vote through money in the recent budget to repair the damage. I would be interested in hearing the views of the Ministers, Deputies Michael Noonan and Alan Shatter, in this regard but I would much prefer that the blame for the accounting failures in Ireland be put squarely on the accountants and not to have the possibility the State would be liable either for their costs of administration or for any damages that might result were these cases to ever reach a conclusion that the authority has here.
Ireland needs something like the Sarbanes-Oxley Act in the United States which provides for a five member board - we have 14 members - that has a commitment to the interests of investors and the public. Our accountants have no commitment to that because they destroyed the shareholders in the Irish banks and cost the public €64 billion. Section 104 of the aforementioned Act provides for annual inspections for each registered accounting firm with more than 100 issuers - which I believe means 100 customers. I do not believe it is possible to do that either with 14 staff members or with an additional 11 staff members as promised in the explanatory memorandum.
On the power to suspend, as far as I can ascertain, no one has been suspended in Irish accountancy since 2008. While the Act provides for $15 million in fines, the highest fine imposed in Ireland that I have been able to find was one of €100,000, for failure to comply with the High Court case and the Institute of Chartered Accountants in Ireland. The legislation also provides for prohibitions on insider trading and a prohibition on personal loans to executives.
That has been at the kernel of how the banking culture in Ireland changed from the responsible approach which I would have known as a younger man to the irresponsible conduct during the Celtic tiger period. There were commitments to honest and ethical conduct. In the United States, the budget for 2003 was $776 million. The other issue it is investigating, which pertains to the point made by Senator Denis O'Donovan, is that an authority in charge of accounting should investigate limited competition in accounting. Rather than give consolation in section 6, now it is to be addressed on Report Stage, the entire House should unite and demand a much sterner deal in remedying what happened in 2008 and in getting some remedies for a public which feels very sore about this issue.
It is now five years later and nothing has happened. I could read some of the findings against the accountancy bodies by the authority. So far as I can see they successfully sold the Government a pup to have this measure included. When we have major disasters involving the Irish banking and accounting system all the talk about the free market and laissez faire is quickly forgotten. This is a huge moral hazard problem. Laissez faire is all well and good until something goes wrong as stated by John Gutfreund, the former chief executive of Solomon Brothers. There is regulatory capture. It is unpunished white collar crime. In regard to nationalising it, I advise the Government not to go near it, make them tidy up their own mess and if the solicitors come in next week looking for their misconduct to be nationalised as well, I advise it not to do that either.
We have to take a far sterner view of what accountants did in this country. I mentioned a fine of €100,000 and there was one in 2009. The Institute of Chartered Accountants was ordered to pay €11,325 to the authority within 14 days of the High Court making an order. There was a complaint by the then Senator Shane Ross and others to the Institute of Chartered Accountants and the fine in that case was €15,000. Why is the taxpayer being asked to take up this burden? What they want from us, as members of Parliament, is that we put the burden firmly back on the accountants and that they pay up, and pay up soon, as we are now in the fifth year since this was done. The major firms which are in the authority's reports are still not answering the questions about how they found banks to be much more profitable than the unfortunate Ministers for Finance. We have a duty to protect the taxpayers against any recurrence of that. At least it should not appear as an amendment of section 6 to the Companies Act that the Government should prepare full legislation on how it intends to regulate accountants, emulate the Americans as in Sarbanes-Oxley, and address a problem between the banks and the builders. As the Minister of State is aware from his constituency in Cork, they have driven this country to the wall and the implications for us of taking on the responsibility for regulating that sector are huge.
I will deal with the individual amendments, but if the advice from the Department is that we have to do this, I ask the Minister of State to ensure everything that happened, until Uachtaráin na hÉireann signs this Bill, remains the responsibility of the accountancy profession and, in particular, the big firms. They seem to have managed to evade the present system successfully and I fear they see us in this House as a soft touch and that they can continue to evade it.
The international implications of having accountants who are not accountable are huge and the burdens on the Irish people have also been huge. Ideally, the Cabinet should reflect on section 6 and work out with all the Members what is the appropriate response to having been seriously misled by the accountancy profession in regard to financial institutions and, perhaps, to call in Mr. Paul Coulsom, whom I quoted. If he extracted €87 million from his advisers in transactions, perhaps it is time the Irish taxpayer got a fair deal.
I am mystified as to how section 6 got into this legislation. Presumably, the accountants think it is urgent - I appreciate what the Minister of State said that the entire Companies Act will be enacted in time. We need to know from the Minister for Justice and Equality, Deputy Alan Shatter, why the present penalties are not working, why the current procedures are far too slow and why nothing has been done to recompense the rest of the economy for what happened in Irish banking and accounting in 2008.
Does the remit of the Bill or the section apply to the co-operative societies? Will the Minister of State please excuse my ignorance in this regard as I am not an accountant and have not dealt in that regard with co-operatives. I know the importance of co-operatives to Irish society. Is there a situation where a co-operative could go into receivership and where an examiner could be appointed to look at its affairs and, if so, what are the implications? If it is not too brazen a question to ask, is it possible, that on Report Stage a suitable amendment to cover that eventuality could be entertained in the Bill?
With the permission of the Chair, may I speak to amendments Nos. 11 and 13 together?
Yes, they are grouped and may be discussed together.
I wish to reiterate the wording of the amendment in order that from my perspective I can stay focused on the amendment. Amendment No. 11 seeks to insert the following:
The Recognised Accountancy Bodies remain the oversight bodies for the external quality assurance of audits until the enactment of this Act and shall retain the duties and obligations of such oversight up to and including that date.
Under Chapter 2, Part 8 of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010, SI No. 220 of 2010, the recognised accountancy bodies have the power and do carry out quality assurance of their members' activities as statutory auditors and audit firms. This will remain the position until the power is formally transferred to the Irish Auditing and Accounting Supervisory Authority, the IAASA. Section 6 of the Bill provides for a levy, this speaks to the points made by Senator Sean D. Barrett, on statutory auditors and audit firms of public interest entities in order to defray the costs to the IAASA for carrying out the functions of external quality assurance in respect of these public interest entities.
The amendment is unnecessary. Additional functions in regard to the EU recommendation on external quality assurance are proposed to be conferred on the IAASA in the Companies Bill 2012 while the balance of the related functions would be conferred on IAASA by amendment to existing regulations. The commencement of section 6 will not occur until all the relevant functions have been transferred.
I believe amendment No. 13 is unnecessary and I do not propose to accept it. The Irish Auditing and Accounting Supervisory Authority produces an annual report of its activities each year, which is laid before the Houses of the Oireachtas. The IAASA can also be called to appear before any Oireachtas committee and it has appeared before the Joint Committee on Jobs, Enterprise and Innovation in December 2012. The provision in regard to quality assurance in this Bill is strictly confined to empowering the Irish Auditing and Accounting Supervisory Authority to impose a levy again on statutory auditors and audit firms of public interest entities to defray the costs to it for carrying out the functions of external quality assurance in respect of those public interest entities. Currently the recognised accountancy bodies, RABs who carry out the quality assurance function have the power to sanction their members, including by withdrawal of the authorisation to audit certificate. It is intended that the Irish Auditing and Accounting Supervisory Authority, IAASA will have equivalent powers of sanctions when the functions are transferred and these powers again will be contained in the Companies Bill 2012 or the regulations, as appropriate.
First, let me speak on the amendment before us and be clear about the Government's position on it. Other points have been made by Senator Sean D. Barrett and we could have a very long debate on the morass in society. I do not think it was only the accountants who were part of the morass. Many others were part of it also.
For the purposes of dealing with some of the points the Senator raised, it is important to address the issue in relation to investigations and proceedings against particular members of those accountancy bodies. Investigations and proceedings against members of accountancy bodies in relation to events at the former Anglo Irish Bank were suspended at the request of the Director of Public Prosecutions in order that such moves would not prejudice forthcoming criminal trials. It is important to state that in response to quite a large component of the Senator's contribution.
The Senator critiqued section 6 in its entirety, but that section gives effect to a European Commission recommendation on external quality assurance for statutory auditors and audit firms. The Minister of State, Deputy Kathleen Lynch, may have addressed this issue during the Second Stage debate, but I want to state again that if we are talking about quality assurance in relation to section 6, it is important we note that quality assurance is the regular inspection of statutory auditors and audit firms to ensure systems are in place that will allow for consistently high quality audits. The transfer of the important quality assurance function to an independent oversight body such as IAASA will strengthen oversight of the audit process in Ireland as regards these public interest entities. This should help to restore confidence in audit in Ireland, which has been dented as a result of the so-called clean audit opinions given to the financial statements of systemically important credit institutions, which as the Senator rightly pointed out, later proved to be near or actually insolvent.
The transfer of the function to IAASA is to be fully funded by the relevant statutory auditors and audit firms with no cost to the Exchequer, apart from once-off start-up costs such as office equipment and so on. This is in line with existing practice where statutory auditors and audit firms pay for this function. The only difference is that this payment will be to IAASA and not the recognised accountancy body of which they are a member. The cost of such reviews under the proposed system is likely to be greater because the quality assurance process will be more thoroughgoing than heretofore. This is understood not to be a difficulty for the statutory audit firms concerned and they do not have a problem with it.
If IAASA is to undertake these additional quality assurance functions, significant additional resources will be required by that entity. Again in June last year, the Secretary General of the Department of Jobs, Enterprise and Innovation wrote to his counterpart in the Department of Public Expenditure and Reform seeking sanction for IAASA to recruit 11 additional staff. This has been proceeded by meetings between officials of both Departments. Again, Senator Sean D. Barrett referred to that issue. I hope this addresses the substantive wording of the amendment as proposed by the Senator.
I thank the Minister of State for his statement. What the Minister of State, Deputy Kathleen Lynch, said was that the Government had decided that Ireland should move to a model of independent inspection of the audit of public interest entities based on the model set out in the European Commission recommendation on this matter. She also said it had decided that the Irish Auditing and Accounting Supervisory Authority, IAASA, should carry out these functions instead of the recognised accountancy bodies, RABs. The RABs currently operate these functions under powers vested in them by regulations transposing various EU audit directives. The Minister of State said international best practice as regards the quality assurance of audits, in particular of those companies classified as public interest entities, was that this should be carried out by public oversight bodies, not by the recognised accountancy bodies of which these audit firms are members. Public interest entities are in broad terms systematic entities, credit institutions and insurance undertakings in combination with listed companies. While it is not required by the current EU legislation that this scrutiny is an obligation, the matter is being considered under other proposals at EU level.
The problem with that is that scrutiny is being considered at EU level but it is not a requirement and we, however, have the worst problem. Nobody produced accounts like the major accounting firms, not just Ernst & Young, which, interestingly, has tried to change its name to EY at this stage, but all the other firms as well that audited the other banks. I do not know why nothing has been done about those procedures, which were mentioned in the IAASA annual report in 2011, but not in the latest one. The supply of information seems to be reduced so that, year after year following this problem, nobody has paid any penalties and there is an attempt to persuade us that it is a good idea that the State should take on these functions, even on the recommendation of the European Union. I think the firms which committed those misdemeanours should bear the burden and there should be no question of the State bailing out anything. The reason I tabled those amendments was that I wanted to be quite sure of this. The Minister of State, Deputy Kathleen Lynch, mentioned the regulatory accounting bodies, but I do not think they are mentioned in the Bill. We must ensure the RABs have responsibility until the President signs this into law. Given their success to date at avoiding penalties and any consequences at all - many of them are still probably working for the State - somebody must say it is time the big accountancy firms performed to the standards we expect. To allow them to shunt it all to the responsibility of a quango with only 14 staff, with the entitlement to recruit another 11 staff, and which is supposed to be policing 28,000 practising accountants and 19,000 student accountants is letting them off the hook. That is my concern. I want the strictest regulation of this sector.
Accountants were not alone in causing the morass. I would rank them and the bankers at 95% in causing the morass. The rest of Irish society has borne the burden and the Minister of State knows it from being a popularly elected person. We did not have a consistently high standard of auditing in Ireland and it will not come in at no cost to the Exchequer. Auditing is substantially enhanced but we have not managed to get any money from the big five accountancy firms up to now; they have managed to get far more out of us. When one sups in such company one needs a very long spoon.
The success of accountants is in manoeuvring this matter without incurring any penalties for what they have done to this country for five years. It is a serious reflection on the elected people in the House, including this one, but I shall speak out against the legislation. Accountants have been getting away with it for far too long. They need much stricter regulation. They need to pay what they owe us for the appalling advice they gave us and for putting the country on the rocks. There are far too many accountants presenting each other with prizes for colour photographs in their accounts, image building, and so on with far too little accountability. I worry about a country where even accountants do not want to be accountable for their actions. We take this burden on with serious trepidation. Why are we being pressurised by the accountants? We heard as much when they appeared before the finance committee. The provision will allow them to walk away. They must send the odd cheque to the regulator but it will be nothing like what they have had to pay Mr. Coulson. We do not need EU standards but the North American standards of probity. The accountants have seriously damaged the country. Today's debate is the first chance I have had since I came to the House to point out that fact. We asked what the Chartered Accountants Regulatory Body, CARB, did but I think the answer was, "Nothing". We asked what penalties the Irish Auditing and Accounting Supervisory Authority imposed but they were minuscule compared with the damage that has been done to the country.
I ask that we protect taxpayers better than we did in 2008 and to protect them from the degradation imposed upon them by accountants in the country. That is their purpose and they must do it. They cannot walk away from those responsibilities. We must, as we will undoubtedly in the Thomas Byrne case and other cases of white collar crime, extract liabilities from the professions. Individual firms should remain liable and the costs incurred should be their responsibility.
As I said on amendment No. 14, I do not want to see the taxpayer yet again being exposed due to low standards in Irish accountancy and at risk of awards from their private clients. I am sorry that the State will not try to recoup from accountants or sue them. In cases where accountants lose against their private clients it is no responsibility of any organisation funded by the taxpayer to help them recoup losses.
I am disappointed that section 6 stands. I do not see any great urgency in it; the urgency was in 2008. We must tidy up all of the events of 2008, 2009 and 2010. We must hold people responsible for chronic under-performance and not just take it into State supervision at this late stage.
As I neglected to respond to Senator Denis O'Donovan's query, I shall clarify the matter. The co-operative movement is regulated by different legislation. It is intended to introduce an amendment to the industrial and providence societies legislation to provide for Circuit Court examinership where it applies to co-operatives.
Is it on the legislative agenda?
Will the Senator allow me to revert to him on the matter?
I thank the Senator. I wish to clarify that the Government will not be accepting the amendments proposed by Senator Sean D. Barrett.
We all need to restore confidence in the system. The points made by the Senator are necessary and we are trying to restore confidence in accounting, auditing and oversight procedures. The legislation provides that the IAASA will have an independent oversight of the process which is a step towards restoring confidence. We need to ensure there is no ambiguity about the quality of the audits and that they stand up to rigorous and independent scrutiny. Essentially, that is what the legislation is about in this instance.
I have just received a note for Senator Denis O'Donovan's benefit. The Bill that he inquired about has been published and awaits Second Stage.
Go raibh maith agat.
Is amendment No. 11 being pressed?
I shall not press my amendment. I have been assured by the Minister of State that the dross that is currently in the system will remain the responsibility of those who caused it and that it will be only on enactment, by the President, that the measure will take effect.
Amendment, by leave, withdrawn.
I move amendment No. 12:
In page 10, between lines 35 and 36, to insert the following:
“(9) A public interest entity is in this section defined to include credit institutions, insurance undertakings and listed companies.”.
As far as I can see - and there is no claim of perfection on this side of the House - "public interest entity" is not defined in the Bill. The definition I used in my amendment was taken from a speech made by the Minister of State, Deputy Kathleen Lynch. If my amendment is of assistance I offer it to the Minister of State, Deputy Sean Sherlock. If my amendment is not of assistance then we can discuss it on Report Stage.
I wish to make a comment before the Senator makes a decision to withdraw or push his amendment. In section 6, "public interest entities" are defined as having the same meaning as in Regulation 3 of 2010, SI No. 220 of 2010, which states:
(a) companies or other bodies corporate governed by the law of a Member State whose transferable securities are admitted to trading on a regulated market of any Member State within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC,
(b) credit institutions as defined in point 1 of Article 1 of Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions, and
(c) insurance undertakings within the meaning of Article 2(1) of Directive 91/674/EEC.
I hope my explanation proves helpful to the Senator.
I thank the Minister of State. The objective is to make sure lawyers do not earn €10,000 a day working out what he has just told us. If it is a help to have the matter defined in the law then I shall see what we can do on the next day. I shall not press my amendment at this point.
Amendment, by leave, withdrawn.
Amendment No. 13 has already been discussed with amendment No. 11.
I move amendment No. 13:
In page 10, between lines 35 and 36, to insert the following:
“(9) The Irish Auditing and Accounting Supervisory Authority shall report annually to the Oireachtas on oversight and compliance in the audit sector and shall be empowered to report more frequently. The Authority shall have the power to suspend and disbar auditors and accountants in breach of its quality assurance standards.”.
Frequently, I find the IAASA reports to be behind the times and there has been more information in 2011 than in 2012. I have tabled my amendment because things may develop again and there may be another Anglo Irish Bank.
There could be another case of money being moved into a firm at 11.50 p.m., being moved out at 12.10 a.m. and of people being persuaded that, for the accounting period, it was in it all the time. Perhaps we need an IAASA which draws the Minister's attention and that of the Oireachtas to it when these problems arise and not wait until the end of an accounting period and the annual report period because these fellows will have made off with the money long before then. That is the purpose of this amendment. Perhaps the Minister of State could do this informally.
I note Professor Brendan Walsh has taken over the chairmanship. If he sees something, he should tell us because this is one repeat show we never want to see again, given the damage it did. As perhaps it is something we can talk about on Report Stage, I will not push the amendment. However, that was the thinking behind it. These things can move so quickly that we need the IAASA to be equally quick in its response.
Amendment, by leave, withdrawn.
I move amendment No. 14:
In page 10, between lines 35 and 36, to insert the following:
"(9) The costs and fines incurred by the Irish Auditing and Accounting Supervisory Authority as a result of a legal action by a counter-party as a result of the inadequate application of quality assurance standards or not-fit-for-purpose standards shall be aggregated and levied on bodies subject to the Irish Auditing and Accounting Supervisory Authority.".
The purpose of this amendment is to try to divert any damages for faulty accounting, of which I believe we have had buckets full in this country, from the taxpayer to the people who carried it out. The criteria for choosing the five member board in the American system was respect for the public interest and in the interest of shareholders. Our 14 member board is very heavily dominated by the accounting industry. The reason I put this forward as a safeguard is that they should not be able to transfer the burdens of the incompetence of their sector to the taxpayer at large. If there is a judgment, because of inadequate application of quality assurance standards, it should be borne by the industry - I think I have the Minister of State's assurance on that - not by the general public or the taxpayer.
Currently, to use the jaded phrase, we have been kicking the can down the road and nobody has borne the burden, or certainly no accountants have - in fact, I think they have prospered in the past five years after the way they conducted themselves in 2008. Justice delayed is justice denied. The Minister of State should make it quite clear that the costs of the authority will not be a charge on the public purse or on the general public but on the firms found to have breached and pursued an inadequate application of quality assurance standards.
I do not propose to accept the amendment as it would not be appropriate for a party which is not privy to a legal action to be required to pay any costs in regard to that action. Cost in any court action are determined by the courts and they fall to be discharged by the parties involved in that action as determined by the court.
The problem is that people who were not party to the legal actions have been bearing the cost. We have all borne the costs because of the incompetence of accountants. The taxpayer is seen by lawyers as an easy mark. In my sector, if a lecturer or teacher did something wrong, it would be a much better mark to say he or she was acting on behalf of his or her college or an even better mark to say he or she was acting on behalf of the Minister for Education and Skills, Deputy Ruairí Quinn, in which case the lawyers have a target fund which is the entire national debt of the country.
Under the system the Minister of State described, the costs always seem to borne by the taxpayers rather than the principals. Perhaps that is what the courts decided but we advise the courts and we set the law. Should the misdemeanours and malpractices which we have seen in this sector not be borne by the people in it? We are trying to protect those who had nothing to do with these transactions but who have borne massive burdens since.
The people want us to do this because they have been taken to the cleaners by accountants and bankers. Any statement we can make that we disapprove of that system and that those involved in malpractice should be held to account, even five years later, would be some relief because people believe they have been made to shoulder all of the burden of this. We have not singled out the three or four groups which imposed most of the misery on this country. If they get away with it again, they will keep coming back which is a problem for the Minister of State as a young Minister, and no doubt a future Minister. This is a chance to spell it out for them on Report Stage. We do not want them coming back. The past five years have been a nightmare which we do not wish to repeat.
I accept what the Minister of State said that the courts will determine this, which I think we all appreciate. However, I certainly have some sympathy with what Senator Sean D. Barrett said. We have accounting firms, auditing firms, etc., which seemed to be part of the demise of the banking situation we had over those long and hard years, but nobody seems to have been brought to account. The same applies in other areas, even in the legal profession. People who signed off on various projects which were found to be less than desirable have got away scot-free. From that point of view, I sympathise with what the Senator stated because the taxpayer cannot foot the bill on all occasions, which seems to be the situation. We should do anything we can do to tighten it.
Having professions, such as the legal profession, accountancy professions and others, policing themselves is just not acceptable anymore. It will have to be done independently in the future. We should examine ways to ensure that happens in many of the professions which police themselves.
Amendment, by leave, withdrawn.
Section 6 agreed to.
SECTION 7
Question proposed: "That section 7 stand part of the Bill."
I would like to give notification of the Government's intention to introduce an amendment on Report Stage. I will read out the substance of that amendment.
To which section?
It will be a new section before section 8. It is what we call "lastminute.com". As indicated during the Second Stage debate, it is proposed to introduce, at the request of the Minister for Justice and Equality, a number of amendments to the Personal Insolvency Act 2012 and the Bankruptcy Act 1988 on Report Stage. For the convenience of Senators, I will circulate an explanation of the amendments.
The Personal Insolvency Act 2012 amendments will involve the insertion of a new section in page 11, between lines 14 and 15. The proposed amendments to the Personal Insolvency Act relate to the debt relief notice process provided in that Act. The process is one of the key judicial debt resolution instruments in the Act and, subject to relevant conditions, allows for the write-off of qualifying debt up to €20,000, subject to a three year supervision period.
The amendments are designed to respond to issues raised by the Money Advice and Budgeting Service, MABS, and will assist the MABS approved intermediaries in commencing the operation of the debt relief notice process in the 2012 Act and ensure greater clarity for debtors and creditors alike.
In brief, it is proposed to amend the Personal Insolvency Act:
(a) in section 25, by substituting the following definition for the definition of "debt":
" "debt", in relation to a debtor, means a debt for a liquidated sum that, on the application date, is payable either immediately or at some future time;";
(b) in section 26, by deleting subsection (4);
(c) in section 27(6), by substituting the following for paragraph (a):
" (a) the information contained in the debtor's Prescribed Financial Statement is true and accurate in all material respects, and",
(d) in section 43(3)(b), by substituting the following for subparagraph (v):
"(v) the procedural requirements specified in this Chapter were not complied with;
(vi) the debtor has by his or her conduct within the period of 6 months ending on the application date arranged his or her financial affairs primarily with a view to being or becoming eligible for the issue of a Debt Relief Notice.", and
(e) in section 44(3), by substituting the following for paragraph (f):
"(f) the procedural requirements specified in this Chapter were not complied with;
(g) the debtor has by his or her conduct within the period of 6 months ending on the application date arranged his or her financial affairs primarily with a view to being or becoming eligible for the issue of a Debt Relief Notice.".
The Bankruptcy Act amendments will involve the insertion of a new section in page 11 between lines 14 and 15.
With the objective of reducing the costs associated with bankruptcy, the Insolvency Service of Ireland has proposed that it would provide, cost free, a facility on its website for a bankrupt to "notice" that fact as required by law. Currently, only publication in Iris Oifigiúil and a newspaper are permitted. This change could save a bankrupt up to €500 in newspaper costs.
The textual amendment to a number of relevant sections of the Bankruptcy Act 1988 would allow the Minister for Justice and Equality to prescribe how notice was to be given by the bankrupt.
A further proposed amendment to section 140A(5) would permit the relevant register to be maintained in electronic format. As a consequence, I am considering bringing forward amendments to section 8, that is, the commencement provision. The proposed amendments outlined above will necessitate an amendment to the Long Title of the Bill.
For the Senators' benefit, I wish to inform them that the proposed amendments will be subject to full discussion on Report Stage. There is no ambiguity about this. This is merely a notification to Senators that they are being brought forward. There will be no issue on Report Stage about ensuring these amendments are discussed thoroughly.
I have a query on section 7. The Minister of State, Deputy Kathleen Lynch, said that some countries' auditing standards were deemed not to be the equivalent of those in the European Union. We will let that go given our earlier conversation but included in the list was New Zealand. It struck me as strange that New Zealand would be classified as a country whose accountancy and auditing standards were low. I ask the Minister of State to check that between now and Report Stage, especially as there are many New Zealanders around this week who might be annoyed if Members of the House were casting aspersions. Whatever about the rugby, if the Minister has evidence that their accounting standards are too low we will be glad to hear him on that on the next occasion we debate the Bill.
As a proud Munster man, we have a fairly stout record against the All Blacks, but I will revert to the Senator on that issue.
Question put and agreed to.
SECTION 8
Question proposed: "That section 8 stand part of the Bill."
I wish to clarify that we will bring forward on Report Stage a consequential amendment to the Long Title of the Bill to take account of the amendments being made to the Personal Insolvency Act 2012 and the Bankruptcy Act 1988.
I am not asking for an answer now, but in view of what the Minister of State has heard and, in particular, the remarks of the Leader, will he indicate if stricter penalties are required? I put that forward as a proposition because it would be the view of the House that the Minister of State might wish to consider this. I am not tabling an amendment but given what the Leader said and what was said by others in the House, perhaps the current system does not have sufficiently stiff penalties. I leave that thought with the Minister of State and thank him.
Question put and agreed to.
Title agreed to.
Bill reported with amendments.
When is it proposed to take the next Stage?
On Thursday.
Is that agreed?
It is not agreed. If the Minister proposes to bring forward substantial amendments on Report Stage, it does not seem satisfactory that the Bill will be taken on Thursday. I do not know whether there is an explanation for this. I will not hold up proceedings this evening, but it was promised that the practice of having only a couple of days between Stages of a Bill would come to an end. It appears to be rearing its head again. Members need adequate time to consider the amendments that might be put forward.
I ask the Senator to take me at my word. We have Report Stage ordered for Thursday. I will be meeting with the leaders tomorrow morning and if there is a difficulty, we can certainly review the position.
Is it agreed that Report Stage be taken on Thursday, subject to the clarification given by the Leader? Agreed.
Report Stage ordered for Thursday, 21 November 2013.
When is it proposed to sit again?
Ar 10.30 maidin amárach.
I welcome the Trinity College Dublin economic students in the Visitors Gallery who attended for the debate. They are very welcome and I hope they enjoyed the debate in the past few hours.