Vol. 4 No. 1
I welcome the Tánaiste and Minister for Enterprise, Trade and Employment to today's meeting. She is accompanied by the following officials: Philip Donegan, principal officer, Tim Cleary, assistant principal and Sean O'Flaherty and Catriona Cooney, higher executive officers. The Clerk will liaise with the convenors and spokespersons to arrange a time and date with the Minister's office for the next meeting.
Members have been circulated with a list of proposed amendment groupings.
I move amendment No. 1:
In page 8, subsection (1), between lines 9 and 10, to insert the following definition:
" 'fraud' means:
(a) a person who dishonestly, with the intention of making a gain for himself or herself or any other person, or of causing loss to the company, induces the company to act or refrain from acting;
(b) intentional misrepresentation affecting financial statements of a company;
(c) a person who dishonestly, with the intention of making a gain for himself or herself or any other person, or of causing loss to the company:
(i) destroys, defaces, conceals or falsifies any account of any document made or required for any accounting purpose;
(ii) fails to make or complete any account or any such document;
or
(iii) in furnishing information for any purpose produces or makes use of any account, or any such document, which to his or her knowledge is or may be misleading, false or deceptive in a material particular;
(d) dishonestly appropriating property without the consent of the company; or
(e) the use of the company for any of the purposes referred to in paragraphs (a) to (d) above;”.
This amendment is self explanatory. It seeks to include a definition of "fraud" in the Bill. To date, the term has not been statutorily defined, yet it is mentioned throughout this Bill. The legislation would be strengthened by the inclusion of such a definition which would simplify interpretation of the Bill's provisions.
I understand where Deputy Naughten is coming from with this amendment. Given the scope of this Bill, one can see why it would be necessary to be precise about the meaning of "fraud". However, I would have some concerns about whether this is the appropriate place to enshrine a definition of the term. Definitions of fraud are laid down in several court decisions going back to the nineteenth century, most famously in the case of Derry and Peek. I am not sure it is desirable to define the term differently here. The fraud offences Bill is currently before the House. If, as Deputy Naughten asserts, there is a necessity to define "fraud" to ensure it encompasses so-called "white collar crime", that might be more appropriately done in the fraud offences legislation. For that reason, I have some reservations about defining the term at this point.
I share the views expressed by Deputy Rabbitte. The effect of this amendment would be the insertion of a definition of "fraud" into the Bill. The word "fraud" does not appear in the Bill but cognate terms such as "defraud" and "fraudulent" do. Due to the collective construction of this Bill with the Companies Acts 1963-99, the insertion of a definition of "fraud" would have the effect of providing a definition of the term for all of the existing Companies Acts as well as for this Bill. I do not accept that there would be any benefit from providing a definition of the word "fraud" for the purposes of the Companies Acts. While the Acts refer to fraud and fraudulent activity, they have operated and been interpreted effectively and without difficulty to date, notwithstanding the absence of a specific definition of these terms.
Where a definition is not provided for a word or phrase used in legislation, that word or phrase would have its ordinary meaning subject, of course, to the context in which it would be used. Definitions of specific terms are usually provided in legislation where these are necessary or helpful to a proper interpretation of particular provisions. It is not accepted that such a need exists in respect of the word "fraud" in the context of the Companies Acts.
It is notable that the Criminal Justice (Theft and Fraud Offences) Bill, 2000, which is currently before the Oireachtas and which focuses on offences involving dishonesty, deception, misrepresentation etc. does not contain a definition of the term "fraud". A further factor to be considered is the extent to which a definition limits the interpretation of a word or phrase. In this case, acts or omissions of a company or individual which would not fall within the specific terms of the definition proposed by Deputy Naughten could not be interpreted as constituting fraud, notwithstanding that they could otherwise be so interpreted. In the absence of a compelling need for the provision of a definition, I cannot accept the proposed amendment.
I accept what the Minister has said in regard to my proposed definition not constituting a comprehensive definition of "fraud". However, it is important that such a broad term would be defined somewhere in our body of law. Such a definition is not enshrined in the fraud offences legislation. Will the Minister undertake to discuss the possibility of including a definition of fraud in that legislation with the Minister for Justice, Equality and Law Reform or his officials? I will withdraw the amendment if she will give me a commitment to do that.
As I stated earlier, the inclusion of a definition in legislation ring fences or limits the context in which a word or phrase can be used. I will undertake to speak to the Attorney General and to the Minister for Justice, Equality and Law Reform about this matter but I presume there is a very good reason for the term not being defined in the fraud offences legislation. I am aware that Deputy Naughten is seeking to ensure that the absence of a definition of the term does not allow those involved in fraudulent or dishonest behaviour to escape the consequences of that behaviour. I have outlined the legal advice I have received on this matter. Obviously, the Criminal Justice (Theft and Fraud Offences) Bill would contain such definitions if it was felt they would be helpful or useful. I will report back to the committee on this matter on Report Stage.
I move amendment No. 2:
In page 9, subsection (1), line 1, after "order" to insert "(other than an order made under section 2)”.
This insertion corrects a drafting error. The effect of the amendment will be that commencement orders made under section 2 of the Act will not be laid before the Houses of the Oireachtas and will not as a consequence be subject to annulment by the Oireachtas. Once the Oireachtas has approved the provisions of the Bill and the President has signed it into law, the commencement of provisions by order is an administrative matter and does not require the laying of such commencement orders before the Houses of the Oireachtas. Commencement orders are, as a matter of course, published in Iris Oifigiúil.
Amendment No. 4 is an alternative to amendment No. 3. Amendments Nos. 3 and 4 will be discussed together.
I move amendment No. 3:
In page 9, subsection (6), line 35, to delete "and shall assume" and substitute "and it shall be presumed, unless the contrary is proved,".
My amendment is similar to the amendment tabled by Deputy Rabbitte. It is a technical amendment, designed to clarify the extent to which judicial notice is to be taken of the signature of the Directorate of Corporate Enforcement on any document. Section 7(6) provides that judges, courts and other persons or bodies acting in a judicial capacity shall accept the signature of the director on a document as authentic without further proof. This will obviate the need to prove the authenticity of documents purporting to have been signed by the director every time such a document is presented in evidence in court.
The amendment provides that the authenticity of the director's signature shall not be assumed where the contrary is proved. Clearly, if it is proved that the signature on a particular document is not authentic, that document should not be accepted as valid. The amendment provides for the right of any interested person to contest and seek to disprove the authenticity of a document before it is signed by the director.
Amendment No. 4 in Deputy Rabbitte's name is an alternative amendment.
As the Tánaiste has said, the thrust of my amendment is identical to the amendment she has tabled. I do not think we could presume in all cases that a signature of the director is indeed that. There might be fraud, for example, or any other forgery. Therefore, unless the contrary is shown, the presumption exists. I will withdraw my amendment and accept the Tánaiste's amendment.
Assuming the enactment of the legislation - I do not know on what date the Tánaiste intends to invoke the implementation of the Bill - what is the position in terms of the appointment of the director given that this section deals with the conditions and terms of his appointment?
A competition was held by the Civil Service Commission some time ago and the person recommended for appointment was Mr. Paul Appleby. I have appointed him on an interim basis, pending the enactment of the legislation. He is currently seeking to establish the office so that there is not a huge delay between the passing of the legislation and the establishment of the office. On the successful conclusion of this legislation through the Oireachtas and its being signed into law, I intend the office will be established immediately on a formal and legal basis. Deputy Rabbitte will be familiar with the civil servant in question who was successful in the competition.
I move amendment No. 5:
In page 10, before section 9, to insert the following new section:
9.-(1) The Minister shall, with the consent of the Minister for Finance, if he or she considers it appropriate to do so, make and carry out a scheme or schemes for the granting of superannuation benefits to or in respect of one or more of the following, namely, the Director, the Acting Director and any officer of the Director.
(2) Every such scheme shall fix the time and conditions of retirement for the person or persons to or in respect of whom superannuation benefits are payable under the scheme, and different times and conditions may be fixed in respect of different classes of such person.
(3) Every such scheme may be amended or revoked by a subsequent scheme made under this section with the consent of the Minister for Finance.
(4) No superannuation benefit shall be granted by the Minister to or in respect of the Director, the Acting Director or an officer of the Director otherwise than in accordance with a scheme under this section or, if the Minister, with the consent of the Minister for Finance, sanctions the granting of such a benefit, in accordance with that sanction.
(5) If any dispute arises as to the claim of any person to, or the amount of, any superannuation benefit payable in pursuance of a scheme or schemes under this section, such dispute shall be submitted to the Minister who shall refer it to the Minister for Finance, whose decision shall be final.
(6) A scheme under this section shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the scheme is passed by either such House within the next 21 days on which that House has sat after the scheme is laid before it, the scheme shall be annulled accordingly, but without prejudice to thevalidity of anything previously done thereunder.
(7) In this section 'superannuation benefits' means pensions, gratuities and other allowances payable on resignation, retirement or death.".
Section 9 provides for the making of a scheme to grant superannuation benefits to the Director of Corporate Enforcement. However, since publication of the Bill, the Department of Finance has provided us with its standard template for schemes of superannuation in respect of non-commercial State agencies and offices. This amendment seeks to insert this standard wording in place of the existing section 9 of the Bill.
Amendment No. 7 is an alternative to amendment No. 6 and amendment No. 8 is related, therefore, amendments Nos. 6, 7 and 8 will be discussed together.
I move amendment No. 6:
In page 10, subsection (3), lines 25 to 30, to delete paragraphs (b) and (c) and substitute the following:
"(b) nominated as a candidate for election to either House of the Oireachtas or to the European Parliament or becomes a member of a local authority, or
(c) regarded pursuant to Part XIII of the Second Schedule to the European Parliament Elections Act, 1997, as having been elected to the European Parliament,”.
These are technical amendments which have been prepared on the advice of the Department of the Environment and Local Government, which has statutory responsibility for electoral arrangements in respect of the Houses of the Oireachtas, the European Parliament and the local authorities. The amendments are intended to reflect the wording now in use in such provisions. They have three effects. Subsection (3)(b) will require the incumbent director to cease to be a director where he or she is nominated as a candidate for election to either House of the Oireachtas or the European Parliament or to become a member of a local authority. Subsection (3)(b) as it stands would only require a director to cease being a director on election to one of these positions. Acceptance of a nomination for election signals a political orientation or aspiration and is in itself grounds to discontinue holding the post of director, regardless of whether the person is subsequently elected. In the case of a local authority, it is possible to be co-opted without election. Therefore, the existing text is deficient.
The reference in subsection (3)(c) to the European Assembly elections is out of date and should read as a reference to the European Parliament Elections Act, 1997.
Subsection (4)(c) is wrong in that a person does not become entitled to sit as a member of a local authority under the Standing Orders but by virtue of being elected or co-opted. The reference, therefore, should be to a member of a local authority.
It is an interesting distinction. My amendment points out the inaccuracy in paragraph (c), which has been corrected by the Tánaiste’s amendment. She makes an interesting distinction whereby not just the election of the director to the Parliament would disqualify him or her, but even contemplating facing the electorate would be a veto. I do not know if this is an appropriate week to talk about the suitability of our colleagues for this high office. It is probably a bit harsh that a political orientation alone would disqualify one from being considered for the office. However, I do not have strong views on the issue.
I move amendment No. 8:
In page 10, subsection (4), lines 36 and 37, to delete paragraph (c) and substitute the following:
"(c) a member of a local authority,”.
I move amendment No. 9:
In page 11, subsection (1), between lines 18 and 19, to insert the following:
"(b) to forward to the Competition Authority any information or evidence relating to possible breach of competition law which comes into the power or possession of the Director,”.
This amendment seeks to insert a new subsection, the purpose of which is to require the director to make available to the competition authority any information or evidence relating to possible breaches of competition law. In this section we are discussing the functions of the director and it seems, while we are spelling them out in considerable detail in the various subsections of section 12, there ought to be an obligation on him, where he stumbles across breaches of the Competition Acts, to put that information in the possession of the Competition Authority. One of the difficulties about the trend in recent years to set up various offices like this is that we are not necessarily providing for an inter-connection between the different offices. If the Director of Corporate Enforcement in the line of his work, which may have nothing to do with competition, comes into knowledge of information of breaches of the competition legislation, it seems no more than sensible that we ought to require him to make it known to the Competition Authority. Other than that, I am not stipulating what he should do with it or what the Competition Authority should do with it once it has it. If we are setting up this office and this information comes into the knowledge of the director, it is no more than common sense that the obligation is there to pass it on to the Competition Authority.
I support this amendment. Deputy Rabbitte made a valid point, particularly in light of numerous comments made by the Director of the Competition Authority to the effect that it is difficult to get inside information in relation to anti-competitive practices and cartels. The only way cartels can be broken and anti-competitive practices can be eliminated is to get information from the inside. If the Director of Corporate Enforcement comes across such information it should be made available to the Competition Authority which could assist him in carrying out an investigation into an organisation or anti-competitive practices. This amendment would facilitate this mechanism and strengthen the legislation and the competition Acts.
There is merit in the amendment put forward by Deputy Rabbitte. However, this section deals with the functions of the director, while section 17 deals with whom the director may disclose information to. If Deputy Rabbitte is agreeable, following consultation with the chief parliamentary counsel I will be more than happy to bring forward an amendment to section 17 requiring the director to pass on information to the Competition Authority. It is a good suggestion and I am happy to table an amendment to section 17.
Section 17 deals with the disclosure of information. I am happy to accept the Minister's commitment.
Amendment No. 10. Amendment No. 11 is alternative and it is proposed to take amendments Nos. 10 and 11 together. Is that agreed? Agreed.
I move amendment No. 10:
In page 11, subsection (1), lines 22 to 25, to delete paragraph (d) and substitute the following:
"(d) at his or her discretion, to refer cases to the Director of Public Prosecutions where the Director of Corporate Enforcement has reasonable grounds for believing that an indictable offence under the Companies Acts has been committed,”.
This amendment is on the advice of the legal assistant in the Attorney General's office who has examined the Bill for legal and constitutional correctness. The legal assistant has considered the existing wording of section 12(1) (d) which gives the Director of Corporate Enforcement the role of preparing cases for prosecution by the DPP. He believes that the words “where the Director of Corporate Enforcement considers that an indictable offence under the Companies Acts has been committed” could be interpreted as a severe test to be satisfied before the director could refer a case for prosecution by the DPP. A less severe and more reasonable test would be where the director has reasonable grounds for believing that an indictable offence under the Companies Acts has been committed. In this way the director does not have to be absolutely satisfied that an offence has occurred but rather than an offence appears to have occurred before the statutory power to refer the matter to the DPP may be exercised.
The second change to section 12(1) (d) relates to the removal of the words “and it is appropriate so to do” and the insertion at the beginning of the paragraph of the words “at his or her discretion”. One of the purposes of the Bill is to empower the Director of Corporate Enforcement to tackle non-compliance with the Companies Acts using any of the range of powers provided for that purpose. The director may take various approaches to breaches of the Acts depending on the gravity of the offence, whether it is a once-off breach, an honest mistake or part of a generalised disregard for the law. Thus, in any one case the director might seek to prosecute summarily, impose an on-the-spot fine or prepare a case for prosecution on indictment and pass the file to the DPP.
It is absolutely vital that the Director of Corporate Enforcement has discretion in his or her approach to breaches of the Companies Acts and the appropriate action to take in any particular case. I have been advised that the existing wording of section 12(1)(d) could be interpreted to mean that the director should refer every case of the suspected commission of an indictable offence to the DPP. This would undermine one of the main purposes of the Bill, which is to give the director complete discretion on which course of action he or she decides to take in a particular case. The director may consider in a particular case that he or she does not have enough evidence to build a case worth sending to the DPP for prosecution, in which case the director should have the discretion to go no further with the matter. If the director were to refer a case in which there was insufficient evidence to secure a prosecution the DPP would have to refer it for further investigation, but the appropriate authority to undertake the investigation will be the director who will already have decided that he or she can bring the matter no further. The director would not have the necessary discretion if he or she were statutorily required to refer all such cases to the DPP. This is why paragraph (d) should explicitly provide for full discretion by the director. Amendment No. 11 in Deputy Rabbitte’s name proposes an alternative wording for this paragraph.
This will be an immensely improved section as a result of this amendment. As the Minister is in government and I am in opposition one must give way, not to concede that her wording is necessarily superior - it is purely in terms of the pecking order. I was also concerned that paragraph (d) as drafted would seem to suggest some deterrents on the director from proceeding summarily, which I do not suppose is the intention. The sense of the Minister’s phrasing of reasonable grounds for believing that an indictable offence has been committed and my wording “which the director considers ought to be prosecuted on indictment” are the same. The excision of the words “and it is appropriate to do so” is also necessary. It is important it is clear that it is at the discretion of the director. I will withdraw my amendment No. 11 and support amendment No. 10 which strengthens the section.
Amendment No. 12. Amendment No. 13 is consequential. Is it agreed to take amendments Nos. 12 and 13 together? Agreed.
I move amendment No. 12:
In page 11, subsection (1), lines 30 to 33, to delete paragraph (f) and substitute the following:
"(f) for the purpose of ensuring the effective application and enforcement of obligations, standards and procedures to which companies and their officers are subject, to perform such other functions in respect of any matters to which the Companies Acts relate as the Minister considers appropriate and may by order confer on the Director, and”.
These amendments have been tabled on the advice of the legal assistant in the Attorney General's office. On the amendment of section 12(1) (f) and (g), the legal assistant has advised that the power being given to me as Minister for Enterprise, Trade and Employment to assign additional functions to the Director of Corporate Enforcement should contain a detailed principles and policy statement as to the matters to which these functions could relate. In other words, I should only assign functions to the director that fall within particular regulatory parameters and the legislation empowering me to assign additional functions should specify what these parameters are.
I am happy to accept this advice and the amendments to paragraphs (f) and (g) of section 12(1) are intended to set parameters on the extent of the power to assign additional functions to the director. They provide that any such additional functions must be for the purpose of enforcing the obligations, standards and procedures to which companies and their offices are subject under the Competition Acts.
I move amendment No. 13:
In page 11, subsection (1)(g), line 34, after “functions” to insert “for a purpose referred to in paragraph (f)”.
I move amendment No. 14:
In page 12, lines 1 to 3, to delete subsection (5).
I propose in this amendment the deletion of subsection (5) which provides that the director and the Attorney General shall from time to time consult about matters pertaining to the functions of the director. I do not have any burning desire that they ought not to consult but I am puzzled by the provision. I do not know of any parallel for this. The task of the Attorney General is laid down in the Constitution and his duty is to advise the Government. I am not clear about him advising quangos or persons analogous to the director. If he should wish to do so, presumably he is free do so. I do not know why it ought to be enshrined in the Act. What is the purpose of it? Is it considered that the director might need to have his hand held from time to time? If he wants to seek the advice of the Attorney General, I presume he is free to do so. Although the Attorney General is the law officer to the Government, not to the employment appeals tribunal or the Competition Authority or the director of law enforcement, I am puzzled as to why it is there.
I agree with the Deputy and I accept the amendment. The answer is I do not know why it is there.
I am sure Deputy Rabbitte will be happy with that one.
I am left with a kind of coitus interruptus feeling about it. I still do not understand but I should not be ungracious.
Deputy Rabbitte is right. There is nothing to stop a director from consulting with the law officer to the Government or with that office. To require such a formality in the legislation is unnecessary.
That was an amazing twist for Deputy Rabbitte. He started off by giving way to his constituency colleague because he was in Opposition and at the end he gets his way.
Perhaps the Tánaiste could elaborate on a few questions in relation to this section. On staffing of the Office of the Director of Corporate Enforcement, a matter I raised on Second Stage, will the staff be recruited through the Civil Service Commission? The experience of the Competition Authority has been that such a mechanism has been overly restrictive in recruiting qualified staff which it requires and in ensuring that those staff are appointed with haste rather than the delays which have hampered it during the past 12 months. I do not want to see a repeat of this in the Office of the Director of Corporate Enforcement where members of the Opposition have to spend months raising questions in the House until the Competition Authority finally gets its full complement of staff.
My second question relates to subsection (1) (e) regarding the supervisory role which the director will have in relation to liquidators. How does the Tánaiste envisage this role? Have any discussions taken place with the representative body of liquidators? The auditors would like to see a statutorily monitored self-regulation within the industry. Has the Tánaiste any views on this and how does she see this role evolving?
In relation to the staffing issue, the intention is that staff will be recruited by the Civil Service Commission with the exception of the members of the Garda Síochána who will be assigned to the office. The initial staffing requirement will be in line with the recommendation in the report of the company law enforcement group chaired by the Attorney General. The staff will be: one director, four solicitors, one consultant accountant, three accountants - grade one, two accountants - grade three, two principal officers, four assistant principals, four higher executive officers, four executive officers, five clerical officers, two detective sergeants, four detective gardaí and one detective inspector. When the office is in place for a period of six to nine months I envisage that we will review the staffing requirement. Clearly this is an unknown area. This is a new office that is being established. We have followed strongly the recommendation of the review group but as to whether that staffing complement will be sufficient only time will tell. The intention is to have a new independent office which will ensure that company law is enforced. As the report says the culture of compliance was not high in the past. It is probable that that was because the law was not being enforced. Laws that are not enforced are generally not regarded or respected.
In relation to the supervisory role in respect of liquidators and receivers, concern has been expressed in the past at the absence of statutory regulation of liquidators and receivers. Such persons discharge important duties in respect of the companies to which they are appointed as creditors and members. The Companies Acts prescribe specific offences in respect of failure of liquidators and receivers to meet their statutory obligations. The working group on company law compliance and enforcement recommended that the director of corporate enforcement be given a general supervisory function in respect of liquidators and receivers. This is consistent with the director's role of enforcing and ensuring compliance with the Companies Acts and reflects the significance of the roles played by liquidators and receivers under those Acts. It will allow the director to act on complaints regarding the conduct of liquidations or receiverships and to investigate the matter where complaints suggest offences under the Companies Acts.
The Bill provides powers for the director to examine the books of liquidators and receivers and to question them as to the conduct of liquidations and receiverships. If the director uncovers evidence of offences under the Companies Acts he will have the power to prosecute them. Alternatively, he may consider making an application to the High Court for the disqualification of a liquidator or receiver on the grounds that the person has been guilty of a breach of his duties towards a company or that the person's conduct makes him unfit to be involved in the management of a company. The review group also recommended that the company law review group should consider the desirability of establishing a statutory licensing or qualification system for liquidators and receivers and this is on the group's current work programme.
I thank the Tánaiste for her response. On the question of staffing, does the Tánaiste believe she will get the staff for that office and, if she will get the qualified staff required? I am led to believe that within the Competition Authority - which is similar to the new office being established - because of the salaries offered it is not getting the experienced staff it requires in respect of solicitors. A senior solicitor in the Competition Authority would seek a salary on the lines of that received by the director of the Competition Authority. Therefore, we will not get senior but junior solicitors. The whole area of competition law is complex. Will a similar problem arise for the director of corporate enforcement in recruiting experienced staff? The whole mechanism of going through the Civil Service Commission could delay the filling of vacancies. A number of investigations could be held up as has been the experience of the Competition Authority in the past 12 months which was not prepared to take on any new complaints because of the lack of staff.
There are real issues in how we remunerate public servants. There are huge difficulties at the moment and the benchmarking exercise which is under way will be extremely important for the future if we are to have a high quality and professional public service such as we have always had in the past and have today. There are real issues of concern. The reason we lost so many professional staff in the Competition Authority is, in some cases they went to other regulators where they were more handsomely remunerated. The level of salary which was recommended for the director is an assistant secretary salary, the maximum of which is £65,000. That is not a high salary by any means for somebody who has the kind of qualifications and experience that is required for this job. Thankfully, we still have outstanding people who are prepared to serve for what could only be regarded as modest salaries relative to their experience or competence. The new chairman of the Competition Authority is such a person who came back from a high powered position in the United States to take the position at a substantially reduced salary, and is doing an outstanding job. I am not certain we can continue to get that kind of person into the future unless we have realistic salaries and that is a real issue for politicians as well as public servants and those who work in public bodies generally. The sooner those issues can be addressed, the better. In some countries the median earnings of those in the private sector is what is paid to people in this kind of position and we need to be realistic in Ireland, particularly at a time of very high employment and huge opportunities where it is effectively an employee's market. The staff turnover in many public bodies is very high indeed.
I am optimistic that we will get good quality people from the existing public service. When the director's position was advertised the level of interest from outside the public sector was negligible. There were not the number of applications one would expect for such a prestigious and important position as this, and that has been the case with all public positions advertised in recent times. The level of interest is not as great as it would have been five or ten years ago and there are very obvious reasons for that.
Many of the people who will hold positions of this kind, whether they are professional people like accountants or solicitors, will work for a short period in public service positions in order to gain what is invaluable experience but they may not see it as something they want to spend their lives doing. The option is open to have staff on contract from time to time where the expertise is not forthcoming on a permanent basis but there are wider issues about which I am concerned. Everybody who works with public servants would have to be aware of the huge turnover currently and the difficulties in recruitment to the public service generally. That is a remuneration issue as much as it is an issue to do with productivity, the nature of the work and the attractiveness of alternative careers in the country.
Thank you, Tánaiste. We look forward to the review of personnel after the six month period.
If the Minister is successful in procuring suitable people for the staffing complement she read out earlier, would she discuss how that compares with the existing situation? I know we are not comparing exactly like with like because of the mix of skills, the involvement of the Garda and so on. My impression is that this used to be minded by a man and a dog.
Deputy Rabbitte is right. There are two people on enforcement at the moment, a HEO and an assistant principal, and they also have other duties so we did not have any effective enforcement. Having the kind of staff we will have at the level that is envisaged here, particularly having members of the Garda Síochána and some of the professional staff working totally on enforcement, will I hope make a huge difference.
I move amendment No. 15:
In page 12, subsection (5), line 41, after "provision" to insert "save where the court concerned so orders".
This amendment relates to the section that deals with the transfer of ministerial functions to the director. I am seeking to have the amendment enshrined at subsection (5) of section 14 where, for the purposes of clarity, it is necessary to add the words "save where the court concerned so orders". Clarity requires that to be inserted because we have to cater for the possibility of cases arising where substitution for the director by the Minister might be appropriate, for example, where a mandatory order is sought and the Minister no longer has power to deal with the matter.
This amendment relates to section 14, which provides for the transfer to the director of corporate enforcement of certain functions apparently performed by the Minister for Enterprise, Trade and Employment. Subsection (5) provides that, notwithstanding the transfer of functions, legal proceedings in which the Minister is a defendant and which relate to a function transferred to the director shall continue in the name of the Minister and shall not be continued against the director. This is a standard provision that is intended to ensure that the director does not have to defend legal actions against the Minister in respect of the performance by the Minister of functions subsequently transferred to the director.
The amendment proposes that the provision whereby the director would not be substituted for the Minister in respect of legal proceedings pending against the Minister should be subject to the power of the court hearing the proceedings to order otherwise. This would have the potential to leave the director in the position of having to defend decisions of the Minister taken before the establishment of the director. The director could be placed in an invidious position as a result and this amendment, therefore, is not acceptable.
In that context, section 14 (2) states: "Where, before its relevant amendment, anything was commenced under a provision of the Companies Act by or under the authority of the Minister, it may be carried on or completed on or after that amendment by or under the authority of the Director". Is there not some inherent contradiction between the two sections? I know one refers specifically to legal actions taken against the Minister prior to the transfer of functions but the other refers to anything that was commenced, which would obviously have to have a legal basis to it. There appears to be some inconsistency there.
The Bill provides that the director may take over the inquiries currently under way. At a later stage, however, I hope to bring forward a miscellaneous amendment for purely transitional reasons. Gerard Ryan, the authorised officer, is in the course of finalising a number of investigations that he has been conducting for some time. He is not moving to the new office of company law enforcement and, therefore, to remove from him all of the inquires he has currently under way, and in most cases fairly advanced, would not be satisfactory. I want him to complete those and I will propose a transitional set of arrangements later on to bring that about. There is a difference between that and asking the director to defend, on a legal basis, action taken against the Minister on foot of decisions made by the Minister. That would be unreasonable and unfair and would place the director in an invidious position. There are two separate issues but certainly work can be transferred to the director. That is the whole purpose of establishing this office.
A Minister is a political person and therefore makes political decisions. It is right that company law enforcement inquiries, carrying out and initiating inquiries, should all be done on the basis of independence of any kind of political intent. The review group recommended that the Minister should hold the powers as well but I was not keen to do that because I do not believe that is necessary or satisfactory. When we have an appropriate office in place we will have a new set of arrangements and it is appropriate that these matters should be dealt with on an independent basis by the director and by the office of the director.
Deputy Rabbitte, how stands the amendment?
Deputy Creed made a interesting point. At a glance, as he pointed out, the two subsections appear to be in conflict. Any arrangements we might make here for the future is not an effort by anybody to impede or slow down Mr. Ryan's investigations. That is not the purpose of my amendment. I do not understand the Minister's explanation in terms of why subsections (2) and (5) are not in conflict. A mandatory order could be sought and the Minister no longer has power to deal with the matter. In that situation how would the amendment I propose, which is merely to provide for a situation where the court concerned so orders, be deleterious to the position of the director? The Minister might be good enough to make another attempt at explaining it.
Nothing here will prevent the courts from making whatever decision they want to make, and that is not the intention, but there is a distinction between legal action involving the Minister and expecting somebody else to take responsibility for that and the continuation of inquiries that are fairly advanced in most cases. If Gerard Ryan was moving to the new office, it would make sense for him to complete the investigation and report directly to the director, but he is not moving. As he is an officer of the Department, it is appropriate that he concludes his investigations and reports to the Minister. It would then be a matter for the Minister to refer the reports to the director for further action.
To a large extent this new regime has been put in place because of the experience over recent years in relation to inquires and what was unfolding. When establishing a new regime there will always be transitional arrangements that are necessary for efficiency, effectiveness and speed, which is what members of the Opposition and I desire. I do not see a major difficulty or the conflict between the two situations. If the court wishes something to be different, there is nothing in the Bill that would prohibit it from making such a decision or such an order.
Notwithstanding Mr. Ryan's career wishes, does the Minister see any merit in him being allocated to the office of the director until these matters are finalised? Might it facilitate some expedition of the matters that have been languishing? I know they are complex, but they have been languishing for some time. Does she consider that taking the Minister out of the picture might facilitate expedition, which we have not witnessed to date?
If it is the wish of an officer, a professional accountant in a Department, to stay where he is, it would be wrong of me to seek to assign him elsewhere. The effect of that would be to effectively have the work almost commence again from the start by some other officer, but that is not feasible, practical or fair. The work has been under way for quite some time. A team of people are involved in the work with Mr. Ryan. I am more than satisfied that he will conclude his investigations fairly rapidly and by the time this legislation is enacted, which will be some weeks, if not months, from now, he will be closer to a conclusion of the inquiries that are under way. Some thought and discussion has taken place on this issue. It is not that I have a desire to hold on to certain matters. I envisage that when he reports I will pass on the reports to the director and it is the director who will make the decision about what to do with them, whether to initiate a section 8 inquiry or whatever. It is a purely transitional or logistical set of arrangements I am seeking to bring forward at a later stage. I have not tabled an amendment to this section, but I will table one for Report Stage, having regard to discussions I have had with my officials on these matters today and over the Christmas period.
I am not advocating that we start de nouveau. I am merely querying whether the existing person could not continue his brief within the rubric of the office of the director pro tem and that his wish to stay in the Department would not be affected by that once the operation is concluded. That is the only point I am raising.
I am taken aback by the Minister advising the committee that she intends to pass on the reports to the director. I rise early every morning to read the papers to see if she has yet promulgated the outcome of these and now she tells me she will pass them on to the director. I do not think I can wait for that. The country is in a similar state of expectation. I did not know that was her intention. I thought she was going to handle their being mediated into the public domain.
Thank you, Deputy.
That was a question, Chairman.
Was there a question there?
As Deputy Rabbitte knows, there are a number of section 8 inquiries under way and I anticipate they will be reporting fairly soon. They will report to the court and, like all other court matters, they will be in the public domain. I think that is the information the Deputy is awaiting with great interest.
Is the import of section 5 that when this legislation is passed and the inspector the Minister has appointed to carry out these investigations to date has reported, the Minister will step into the breach in the context of these high profile legal cases in the interim and that the director will start afresh with regard to any further or new investigations that might arise?
No, it is in relation to existing cases such as the Faxhill Homes cases, which is currently before the courts, the Dunnes Stores case, which I initiated and which has been before three courts already.
It will keep the Minister before the courts for a while. It is high profile.
It will keep the Minister for Enterprise, Trade and Employment before the courts. I am awaiting a date for a hearing in the Dunnes Stores case, but since I made a decision based on facts put before me, it would be wrong and unfair to expect somebody else to start defending that action, as such a person may have formed a different view.
Yes, but that would have been on the basis of the advice of the inspector.
Different people come to different conclusions on the basis of the same advice. As we said in relation to an earlier amendment, the director will have discretion. With regard to any decisions of this kind being made, particularly to initiate court proceedings or to prosecute companies under the Companies Act, there is an element of discretion in deciding whether to do so.
Will the director be in a position to have an opinion on these cases?
Yes, but I do not expect the director to have to defend actions initiated by somebody else, to have to take up the case midstream. That would be unreasonable. All subsection (5) seeks to do is to ensure that the Minister of the day defends the action based on decisions made by him or her rather than pass over the case to a different office holder in a different office who may have come to different conclusions.
Will the Minister elaborate on what exactly "very soon" means in relation to Mr. Ryan's reports, which are currently being completed.
I do not wish to cut across the Deputy but we are dealing with amendment No. 15.
I can return to that point, as we will deal with it in the next amendment. I note from the Official Report that during the past 18 months we have been told that these reports are imminent and will be published very soon. Will we have to wait another 18 months for their publication or can she give some indication of when these reports will be published? On other occasions the Minister said it would be within weeks.
I am not sure if the Tánaiste is in a position to respond.
I never said they would be published. Section 19 reports cannot be published. They are preliminary examinations.
Are they completed?
A number of them have been completed such as Faxhill homes, the Streamline report——
The outstanding ones.
——the IIB report which was referred to the Ansbacher inquiry, the Ansbacher report and the NIB report. Both the Ansbacher and NIB reports are with the inspectorate and it reports to the court, not to me. The remaining ones being concluded are reports to do with college trustees - the Dunnes Stores report is caught up in litigation and we have never gone in there - Hamilton Ross, Kentford Securities and Guinness and Mahon. Four reports have to be completed. They are under way and some are more advanced than others. To a large extent, due to the facts that have emerged, there is much cross reference so some of them might end together. Certainly, whatever about the written form of the reports, they will come to conclusions about the same time.
A small and dedicated team of people has done an outstanding job. The NIB case has been with inspectors for two years and the Ansbacher case has been with them for a year and a half. Members will be aware from the tribunals of inquiry how difficult it is, for a host of reasons, to conclude some of these matters. One thing I am optimistic about, however, is that they will be concluded satisfactorily.
I oppose this section. I do not understand the sweeping powers being conferred. It is a wide level of immunity which goes far beyond what is in general law. On the civil side it might not matter too much but it is tantamount to an exemption from criminal law. I do not understand why the director should be free from prosecution if he acts in good faith when members of the public, for example, are not free in similar circumstances. This is a week for absorbing the message that nobody is above the law and I am puzzled as to why the director is in this section.
I can live with and support the director being indemnified in certain circumstances. However, why ought the director have immunity which, in this circumstance, is the equivalent of an exemption from the criminal law? It might have serious consequences. If the fear is that the director might end up being sued or in certain circumstances being personally at risk, we can and ought to indemnify against that. I say yes to indemnity but no to immunity.
Given that members are free because of the privilege we enjoy as Members of the Oireachtas to speak before committees of the House or in the House, I am not certain this is an unreasonable provision.
The section provides an immunity from prosecution in a personal capacity for the Director of Corporate Enforcement and his or her staff in respect of anything done in good faith in the performance of the functions of the director. This section is intended to protect the director or his or her staff when acting in good faith in the performance of the director's statutory functions from being personally linked to any civil or criminal proceedings that might be taken arising from the performance of those functions.
This is complementary to section 7(4) which provides that the director as a corporation sole may be sued in his or her official capacity. The director and officers of the director shall, therefore, have immunity from legal action, civil or criminal, against them personally in respect of anything done in good faith by them in the performance of an official function. This will ensure that the director and his or her staff are not constrained from taking action by fear of proceedings being instituted against them personally by the company or individual concerned. The action of the director or officers of the director must be done in good faith. Otherwise, there is no immunity from legal action and conceivably they could be held personally liable.
The arguments raised by Deputy Rabbitte are interesting and I would like an opportunity to reflect further on them and to consider their merits before deciding whether to introduce an appropriate amendment on Report Stage. I see the distinction the Deputy makes between indemnifying somebody and the immunity granted in the section. I do not know if it is a standard provision in relation to other officers of this nature. I will seek advice. It is reasonable that we give protection to officers of this kind to ensure they can carry out their job knowing they will not be held personally liable. Whether that is too sweeping a power is something I wish to consider and discuss further before Report Stage.
I am not trying to dilute the efficacy of the director in any way. However, I do not know of any parallel provision for sweeping blanket immunity. I am not sure that the point about Members of the Oireachtas is well made. I am not aware of any freedom we have other than the freedom to speak in good faith in the House. That freedom has been through the courts, most recently in cases involving Deputy Spring and myself arising from the beef tribunal. I am not aware of any other powers we have.
Just because the director is acting in good faith does not mean he is correct.
One can sue him professionally. He is not acting personally as director but professionally. We are not giving him professional immunity, just personal immunity.
I appreciate that but indemnity is the way to deal with it rather than immunity which could be an encouragement. Look at some of the events that occurred in the health services. Some of those people would argue that they were acting in good faith but there were devastating consequences in some cases. I would appreciate it if the Tánaiste would take advice on this.
I have given an undertaking. Obviously, there are legal issues involved. I will consult and consider the matter and come back to it on Report Stage.
Amendment No. 17 is related to amendment No. 16. Is it agreed that we discuss amendments Nos. 16 and 17 together? Agreed.
I move amendment No. 16:
In page 13, subsection (3), line 20, after "require" where it firstly occurs, to insert", including a progress report on any outstanding investigation subject to the requirement that any such report shall not prejudice the investigation,".
The two amendments are similar. One relates to the Minister and the other relates to committees of the Houses of the Oireachtas. We are talking here about accountability. Where investigations are taking place by the director of corporate enforcement, the director should be answerable to the House in relation to progress on those investigations.
On a previous amendment I asked the Tánaiste about progress on a number of investigations that are currently ongoing. If this legislation is passed as it is, I will not be able to ask that question again. Under the Bill, the director of corporate enforcement will have the same entitlements as the Director of Public Prosecutions whereby progress in investigations cannot be questioned. Without compromising the position of the director of corporate enforcement, the House should be able to question the director on the progress, if any, being made in an investigation. The resources and moneys are given to the director with the agreement of the House.
What we will have is another National Roads Authority - each member is aware of the problems in getting responses from the National Roads Authority - and we cannot ask the Minister for the Environment and Local Government for the information. Even though the Minister for the Environment and Local Government gives an allocation to the National Roads Authority, under the rules of the House we are not entitled, other than by way of the Committee of Public Accounts, to question how the money is spent. It is wrong that the powers to question the progress of reports are being taken from the Houses of the Oireachtas and this is why I tabled the amendments. I ask the Minister, in the interests of accountability and not diluting the powers of the Houses of the Oireachtas, to accept my amendment.
I agree with the points made by Deputy Naughten and support his amendment. Accountability is a very important aspect of Dáil business and Deputies should not be frustrated in any way in seeking valid information. This committee should not diminish in any way accountability to the Houses of the Oireachtas. This is something which is sadly lacking in the Dáil and it causes much annoyance. We should ensure that the Government and Ministers are at all times accountable to the House for their actions and the actions of their agents. This is only reasonable and democratic. Questions should be answered in a fair and proper manner and I fully support this important amendment. I compliment Deputy Naughten on tabling the amendment.
I support the amendment. The Minister should be favourably disposed to it given that she has batted on this issue on numerous occasions in the Dáil. The amendment is appropriately phrased in that it will not prejudice ongoing inquiries. Given that there is no danger of this, obviously it is appropriate that the House and its committees should have access to up-to-date information on the status of inquiries.
I support the amendment. As already stated, we are living in a time of accountability and transparency - they are the buzzwords - and any attempt to dilute the authority of the Dáil is bad. I have heard the Minister argue this point on numerous occasions over the years. It is a grave mistake to limit the authority of the committees or the Dáil as these are the only places we can get the information. I ask the Minister to give serious consideration to the amendment.
These amendments relate to section 16 which deals with the reporting arrangements for the director both to the Minister and the Oireachtas generally. They will have the effect of requiring the director, if requested to do so, to provide progress reports on ongoing investigations subject to the proviso that any such progress report should not prejudice an investigation. This is contrary to the general thrust of the reporting arrangements proposed under the Bill in respect of the Director of Corporate Enforcement. The Bill provides that the director is to be accountable to both the Minister and Oireachtas generally in respect of the performance of his or her functions, but that the director should be operationally independent in the performance of those functions as provided for in section 12(3).
It may be contended that the provision of progress reports on ongoing investigations would not compromise the director's operational independence, but if this was to be the case it is likely that the reports would be in such general terms as to be worthless. The director will probably be limited to reporting as to whether a particular investigation was either ongoing or completed. Even such a general report could, however, serve to compromise investigations of the director as it would have the effect of confirming that the director was investigating a particular company or individual. For obvious reasons the director would normally want to keep confidential the fact that he or she was pursuing an investigation.
Another factor which must be considered in relation to the amendment is the effect the disclosure that a particular company or individual was under investigation by the Director of Corporate Enforcement might have on the investigated party. In many cases investigations undertaken by the director may lead to the conclusion that an investigated party has done nothing wrong and that no further action is warranted. This would be of little comfort to the persons concerned, however, if the fact that they had been investigated was to be disclosed publicly. The importance of a good reputation in business cannot be over-estimated and public disclosure of the fact that a person is being investigated by the Director of Corporate Enforcement, particularly where the person is eventually not found guilty of an offence, could do damage to a person's professional reputation.
The Bill strikes the right balance between accountability and operational independence as regards the Director of Corporate Enforcement. The proposed amendment would not be of any real practical benefit and could be damaging to the performance of the director's functions. A Minister is clearly accountable to the Oireachtas as a member of the Executive and through the Oireachtas to the people - essentially the powers exercised by a Minister are political ones. By assigning all these powers to a new independent officer the Director of Corporate Enforcement would be to company law what the Director of Public Prosecutions or Garda Síochána is to criminal law. The idea that he could in certain circumstances say what companies were under investigation or what persons were being investigated would prejudice the operation of the office. There is a difference between day-to-day operational matters and the director's overall performance in running his office and carrying out his functions generally, where he will be accountable to the Minister and the Oireachtas and will have to provide an annual report. We have to separate both. In any case, the director may not do reports in the future, rather he may be preparing the grounds for prosecutions. There may not be formalised reports such as we have under section 19 of the Companies Act. The information that comes into his possession may well be information which is simply put together for the purposes of initiating a prosecution.
We are moving into a very different regime. There is nobody stronger on accountability than I am but we have to know what it is we are trying to do here. It is the case that where there is not effective accountability, particularly by members of Government, to the Oireachtas or its committees, many things which should have come to light years ago have been held from public attention. The kind of investigations which are subsequently required are, therefore, much more expensive and thorough like tribunals of inquiry. Accountability is the most effective way of ensuring that people perform their functions effectively, honestly and openly. There is a difference between that and day-to-day operational matters such as what companies and individuals are under investigation.
As I said in response to Deputy Rabbitte, we are moving from a situation where we have a higher executive officer and an assistant principal officer involved in company law enforcement, and not even on a full-time basis, to one where we are establishing a new office. The regime will be very different and we, as Members of the Oireachtas, must have the confidence to allow that officer and office to carry out these new functions and not to feel that if we do not know what companies and individuals are under investigation that the officer is in some sense not being accountable. We will know quickly how effective the new regime is. It is the overall performance of the duties and functions about which we should be concerned and not the actual operational matters. Nobody would expect the Garda Síochána to report to anyone on what individuals are under investigation, under suspicion, or whatever and, equally, the same must apply here.
It appears from what the Minister has said here and also in the Dáil on numerous occasions in reply to questions about investigations under way that we will not be in a position to get that sort of up-to-date information from the director. Subsection (4) states that such accountability shall not impinge on the obligation of confidentiality attendant on the performance of the functions of the director. That appears to take account of the argument the Minister is making and to also provide that it will be possible to have accountability to the extent that she has done so to date in replies to parliamentary questions. Otherwise Members will have access to less information on ongoing investigations than they have now. This would not be a desirable outcome to the establishment of the director's office. It is possible to make information available without in any way prejudicing legal proceedings or unfairly inflicting commercial damage on companies which may be under investigation. It is obviously within the spirit of the legislation for the director to refuse to divulge information. If we do not include an amendment along the lines envisaged by Deputy Naughten we will not be in a position to get the kind of information we have had access to up to now through parliamentary questions. That is not desirable.
One would get the impression from the Minister that investigations and inquires are ongoing and widespread. I do not accept that. We have a very high standard of business ethics in this country. There are a small number of cowboys. That is all they are, no matter how well they are dressed, and they have to be outed. Members of the Dáil and the parliamentary question system must be defended. We are entitled to ask questions if we feel it is necessary to do so and Deputies must have understanding and common sense in relation to the replies they receive but I would not like to see accountability in the Dáil diminish by any action of this committee. I support Deputy Naughten's amendments.
The Minister raised a number of important questions in relation to the running of this new office but there is a different mechanism currently for carrying out those investigations. The Minister is answerable to the House in relation to those investigations. If the Bill, as it stands, was passed into law on 30 January and I asked a parliamentary question in the House on 31 January about the four ongoing investigations, I would be ruled out of order on the basis of what is contained in this legislation. The legislation is removing accountability from this House. We can dress it up any way we like but that is the fact. As soon as this legislation is passed, we will no longer be able to ask the same questions we asked prior to Christmas about ongoing investigations in the Department. That is wrong. It is removing accountability from this House.
The wording of the amendment is fairly balanced in that it protects any ongoing investigation. It states that the "report shall not prejudice the investigation". That is important but it is also important that there is an element of accountability. In relation to files that have been lodged with the Director of Public Prosecutions for three or four years, there should be a mechanism whereby the DPP could indicate whether a file is ongoing, dormant or whatever. The same could apply to the Director of Corporate Enforcement. I ask the Minister to reconsider her decision in relation to these amendments.
The Minister has completely overstated the intention of the amendments. We will not engage in a witch hunt of every individual. We are asking to retain the authority of the Dáil. It is as simple as that. This could be described as new procedures. I am prepared to accept the case made in respect of the Garda Síochána but, by and large, there is very little interference in that regard. We are sometimes dependent on the press for reports on what is happening when we should be able to investigate something by way of questions in the Dáil. The Minister is about to make a major mistake in respect of this particular legislation and I appeal to her to reconsider it.
This is one of the perennial questions that can be expressed in terms of independence versus accountability. Will the Minister indicate if there is any remaining area on which the Minister of the day will answer to the House? Other than perhaps a question about whether the director is in post or not, there is probably no such area. One of the perennial difficulties in setting up a number of these quangos in recent times is that one cannot get answers. As Deputy Naughten said, if one asks a question about a stretch of road, one will be told by the Minister for the Environment and Local Government that it is a matter for the National Roads Authority. There are complex questions here and interests that have to be balanced.
In favour of independence one would say that perhaps not all Ministers would act similarly. I have limited experience of some of the areas the Minister is now dealing with and I would have to draw the conclusion that perhaps a different Minister may act differently seized of the same circumstances and information. It is desirable that it ought to become a matter for the office of the director of law enforcement to be dealt with, hopefully, in an even handed fashion.
The dilution of answerability to the House is generally a concern and Deputy Naughten's amendments have highlighted that. If one looks at the amendments the Minister has initiated, the enormity of which she has described herself on a number of occasions, there are obviously fundamental matters of public interest involved. We may have got a fairly repetitive answer from the Minister over the past few years about progress on these matters but at least, as Deputy Naughten said, we had the facility to question her during Question Time. That is now gone out the window and clearly the Minister has a very circumscribed view of subsection (4). It appears she is suggesting to the committee that the director may well be examined by the committee in terms of the adequacy of his staffing complement or issues like that but no matter how big the investigation, Members of the House cannot pursue it if the director chooses to shelter behind the obligation for confidentiality and so on. It is a complex question and I am not sure what the correct balance is.
I certainly hear what people are saying. What we are debating here is the degree of accountability and, as Deputy Rabbitte put it, the conflict between independence and accountability. In relation to the investigations under way, and assuming we agree to the transitional arrangements, the Minister would have to be in a position to report to the House in relation to those. If one looks at subsection (4), and I take the point being made by the Deputies opposite, it would seem that the only thing the director could talk to the committee or the Oireachtas about would be the overall performance of his functions. He is precluded under that subsection from divulging any information specific to matters investigated or prosecuted by the director or likely to prejudice any such investigation. That is fairly severe so perhaps I could give an undertaking to look at that. A number of inquiries are under way and perhaps some specific inquiries are not unreasonable. Perhaps the members would allow me to look at the wording of subsection (4) in advance of Report Stage to seek to take on board some of the points being made. While I want to have an independent office, and that does outweigh the drawbacks of less political accountability, I do not want a situation to arise where Members of the Oireachtas have a meaningless meeting, be it of this committee or whatever, with the director. We will look at that subsection again and return to it on Report Stage.
Will the Minister also examine section 16(3)?
Yes, I will.
I wish to make two points to the Minister as she considers amending section 16(3) and (4). She made the point that a response to any query made in the House regarding an investigation could damage that investigation. Does she believe her public comments on the ongoing investigation have——
The Deputy received a favourable response to his amendment. How stands amendment No. 16?
On the point I am trying to make——
You can rake over that issue several times in a more appropriate setting.
I would like to complete the point I am trying to make. I will leave my first point with the Minister. I do not seek a response to it but perhaps she would take it into consideration when redrafting the subsection.
I remind the Deputy that I asked him how stands amendment No. 16.
This is Committee Stage. There is no limit on the time Members have.
No, but I am in the chair and I asked you how stands amendment No. 16.
Could I make my brief point and answer your question then?
Once the point is relevant.
Yes, it is. My second point is that we became aware of the problems of the Competition Authority and the fact it was unable to investigate due to lack of resources. Under the sections as they stand, we would not be made aware of the fact that the Director of Corporate Enforcement would not be able to proceed with investigations and consequently would not know that a difficulty existed with staffing. Will the Minister consider both points when considering both subsections? In the meantime, I withdraw amendments Nos. 16 and 17 with leave to reintroduce them on Report Stage.
I move amendment No. 18:
In page 14, lines 2 to 10, to delete subsection (2) and substitute the following:
"(2) Notwithstanding subsection (1), information referred to in that subsection which, in the opinion of the Director, may be required-
(a) for a purpose or reason specified in subsection (1) of section 21 of the Act of 1990,
(b) for the performance by a competent authority (within the meaning of that section 21) of a function or functions of the authority, or
(c) for the performance by the Director of a function or functions of the Director,
may be disclosed by or under the authority of the Director to the extent that, in the opinion of the Director, is necessary for that purpose.".
This amendment provides for the replacement of section 17(2). Section 17 provides for the security of information obtained by the Director of Corporate Enforcement and his or her staff in the course of their official duties. It imposes an obligation of confidentiality on them in respect of such information. Section 17(2) provides for circumstances in which information may be disclosed by the director, notwithstanding the general obligation of confidentiality in respect of such information. The proposed amendment does not substantively alter the intent or effect of section 17(2) but is advanced on the basis that the existing wording of the subsection may prove problematic to the director if he or she wishes to disclose information for prescribed purposes.
As drafted, section 17(2) requires the director to be satisfied that the information is necessarily and validly required for a particular purpose before he or she can disclose it. Even then, the disclosure may only be to the extent necessary to satisfy that requirement. This represents a very severe test and may prevent the director from disclosing information in circumstances where he or she believes such disclosure is warranted.
For example, if the director proposed to disclose information to the Revenue Commissioners on the basis that it might assist in the assessment of a person's liability in respect of tax, the director would first have to be satisfied that the disclosure was necessarily and validly required for that purpose. This would require the director to be satisfied that the assessment of the person's tax liability could not be completed without the information in question, something he or she would probably not be in a position to do.
The amendment provides that the decision to disclose information may be made where the disclosure may, in the opinion of the director, be required for a particular purpose. Where that decision is taken, disclosure may be made to the extent that, in the opinion of the director, it is required. The director will, therefore, be permitted to disclose otherwise confidential information if he or she believes it may be required for a particular purpose rather than having to be satisfied that it is required. These amendments will serve to ensure that, where the director obtains information that may be helpful to another statutory or non-statutory regulatory authority, the director will not be constrained from making the information in question available to that authority. Appropriate exchange of information with other regulatory authorities, which we discussed earlier in the context of Deputy Rabbitte's amendment, will be an integral part of the effective functioning of the office of Director of Corporate Enforcement.
In addition to the foregoing, minor textual amendments are proposed in respect of section 17(2)(a) and (b). These amendments are designed to remove any potential confusion as to the meaning of the publicised text. In section 17(2)(a) the reference to the provisions set out in section 21(1) of the 1990 Act was changed to a reference to the purposes or reasons specified in that section. This is to clarify that the reference in paragraph (a) is to all the grounds for disclosure of information specified in section 21(1) and not only to the legislative provisions listed in that section
In section 17(2)(b) the reference to information being required by a competent authority as defined in section 21(3) is to be changed to a reference to information which may be required for the performance by a competent authority of a function or functions of that authority. This is intended to clarify and be more specific as to the basis on which information may be disclosed by the Director of Corporate Enforcement to a competent authority.
Deputy Rabbitte expressed his interest in this area earlier. I hope it meets with his approval.
We need to bring forward an amendment to deal with the Competition Authority.
I welcome that. It is appropriate that we include the Competition Authority in this section. The question arises from Deputy Naughten's amendments whether we should also add the Houses of the Oireachtas. I do not know what the Minister would say to that.
We should examine that.
Amendments Nos. 19 and 20 are related and may be discussed together by agreement.
I move amendment No. 19:
In page 14, line 18, after "Síochána" to insert "or an officer of the Revenue Commissioners".
This amendment relates to section 18 which provides that a member of the Garda Síochána may disclose information to the Director of Corporate Enforcement if, in the opinion of the member in question, the information may relate to the commission of an offence under the Companies Acts. This provision is required to overcome the general obligation of confidentiality attaching to gardaí in respect of information obtained in the performance of their official duties. The amendment provides for the extension of section 18 to cover also officers of the Revenue Commissioners who are subject to a similar obligation of confidentiality in respect of official information. The effect of the amendment will be to allow an officer of the Revenue Commissioners to pass information to the director where the officer considers it may relate to an offence under the Companies Acts. Revenue personnel may come across information in the course of their investigations of companies' tax affairs that would be useful to the director in investigating offences under the Companies Acts. This provision will allow the director access to such information.
Is the Minister satisfied in identifying just the Garda and the Revenue Commissioners that she has exhausted the possible list of persons who may come by information which raises the spectre of a breach of company law? Another body which comes to mind is the Competition Authority which may on occasion have information to that effect, and there may be other bodies which I cannot recall which should be included.
The Deputy makes an interesting point about the Competition Authority and we should examine that.
Does the Minister believe that Irish culture can take this or might we puncture the Celtic tiger to such a degree that we will get a very hard landing if Irish culture must comply with this new regime?
No, I have said before that what we want from the Celtic tiger are blue chip companies. We want——
Ethics.
——a competitive environment and a minimalist approach to regulation which is strongly enforced. The economies that are the strongest enforcers of regulation are also among the most successful, so there is no conflict. We expect everyone to comply with the law. Those who do not have an unfair advantage. In the main, most companies comply with the law. The culture in places such as the United States where the revenue, company, competition and anti-trust law is enforced vigorously, is such that they are prepared to take on some of their largest players. We must follow suit in Ireland. We are good at making law but we have not been so good at enforcing it. I will examine what Deputy Creed suggested, especially in regard to the Competition Authority. The Deputy is right. We should not be too prescriptive.
I move amendment No. 20:
In page 14, line 20, after "member" to insert "or officer".
Amendments Nos. 21 and 22 are related and may be discussed together.
I move amendment No. 21:
In page 15, paragraph (b), line 7, before “commercial” to insert “significant”.
This amendment seeks to include the word "significant" before the phrase "commercial relationship". I am advised the current wording is too wide. The paragraph refers to the establishment of the commercial relationship of one company to another and my amendment would require that the relationship be significant. I would like to hear the Minister's response.
Amendment No. 22 is similar in that the definition of a commercial relationship in section 22 is too broad and could include a related company, no matter how insignificant the commercial relationship between the two companies. There is a need for a balanced approach and my amendment would give more focus to the definition of a commercial relationship. I am not tied to this wording, however, and we could come to an agreement if the Minister accepts, in principle, that the current definition is too broad.
These amendments address the question of what is meant by related companies for the purposes of section 9. This section permits court appointed inspectors to extend an investigation of a company into the affairs of a related company where this is necessary for the purposes of the investigation and the court approves.
Section 22 redefines the term "related company" to mean any company with which the company under investigation has a commercial relationship. A commercial relationship is said to exist where goods or services are sold or given by one party to another.
Amendment No. 21 would provide that a company is related to another where there is a significant commercial transaction between the two. The inclusion of the word "significant" would be likely to prove problematic in the context of section 9 of the 1990 Act and the meaning of the term "related company". The meaning of a significant commercial transaction may vary from company to company and, in the context of a company investigation, may not be directtly related to the monetary value of the relevant transactions. A relatively minor transaction might have considerable significance in the context of a given investigation.
I do not agree, therefore, that the introduction of the concept of significance would be helpful to section 9, as amended by section 22 of the Bill. The objective of the amendment of section 9, as provided for in section 22, is to get away from the concept that a company investigation should only be allowed to extend into the affairs of other companies which are either owned or controlled by the company under investigation or in the same group of companies, rather such investigations should extend to the affairs of another company whose affairs it is necessary to investigate in order to satisfactorily conclude the investigation of the primary target company.
The effect of amendment No. 22 would be to return to the status quo where a related company would, essentially, only mean a company which is owned or controlled by another. This would overturn the effect of the amendment provided for in the Bill and unnecessarily limit the scope of company investigations.
While I take the Minister's point as regards my amendment, I am still of the view that the definition in section 22 is too broad. In theory, it could extend to a company supplying paper towels to a company under investigation. While I accept this is taking the argument to an extreme, there must be some definition of what constitutes a commercial relationship.
The court will have to approve the extension. In other words, if a company is supplying paper towels, the court will not approve its inclusion unless it is necessary. That is the protection provided for in the legislation.
In some of the inquiries under way, many of the companies are loosely connected. Yet, it was necessary to go into what could be termed very different spheres to conclude some investigations. This may be one of the powers sought by the authorised officer to facilitate a successful conclusion of an inquiry. It is not included lightly, and will be subject to court approval. That is the guarantee that the provision will not be abused.
Am I correct in stating that this provision is included to guard against the situation we have witnessed in some inquiries where there is a shadow subsidiary company, where there may be different directors, but where the company trading with the company under investigation is a sole supplier and almost a subsidiary? Under existing rules, where, for example, a large retail multiple has a privileged sole supplier, such companies cannot be investigated as they are not related by way of legal or beneficial ownership, but they are, in effect, subsidiaries because they supply goods and services solely to the large company.
In terms of her experience of investigations under way, the Minister is speaking from a vantage point from which the rest of us cannot comment. It is difficult to get the correct balance because if it is left purely as a commercial relationship as defined in subsection (2), a tenuous link would be sufficient. On the other hand, if one approaches it as in my amendment and includes the word "significant", that could be pleaded as a defence against investigation where there are good grounds. If the Minister's experience is right, as I am sure it is, those skilled in this kind of situation can create vehicles which, on the face of it, have a tenuous link with the company under investigation, but which are essential in terms of getting to the bottom of an investigation. I defer to the Minister's argument.
Is the Minister stating that an inspector will have to outline to the court the reason such a company is related and the nature of the relationship? Will the inspector have to prove to the court that there is a need to investigate the company?
The inspector will have to prove to the court that it is necessary for the purposes of conducting the investigations and the court will have to approve the investigation.
The answer to Deputy Lenihan's query is yes, but not just in the cases mentioned by him. Those kinds of situation would be covered by these provisions.
I thank members of the select committee, the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, and her officials, Mr. Philip Cunningham, Mr. Tim Cleary, Mr. Sean O'Flaherty and Ms Caitriona Cooney for their attendance.
