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Office of the Director of Corporate Enforcement

Dáil Éireann Debate, Thursday - 23 November 2017

Thursday, 23 November 2017

Questions (2)

Maurice Quinlivan


2. Deputy Maurice Quinlivan asked the Tánaiste and Minister for Business, Enterprise and Innovation the reason the Office of the Director of Corporate Enforcement has brought no prosecutions or achieved no convictions in the past two years; and her plans to accelerate the reform of the agency. [49669/17]

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Oral answers (13 contributions) (Question to Business)

As the Tánaiste will be aware, the Office of the Director of Corporate Enforcement has brought no prosecutions and achieved no convictions in the past two years. In the past three years, this office has also surrendered almost €5 million of its funding to the State. The most senior Garda position in that office has been vacant since 2016. The Tánaiste recently outlined her plans to reform this office. However, I do not want to know what is happening in regard to those plans but what has happened at this agency over the past number of years and why it was allowed to happen under Fine Gael's watch.

The Deputy has asked a number of detailed questions on this issue, in response to which I sent him a letter last night containing a lot of detail.

I received it this morning. It is very disappointing.

I sent the Deputy as much information as possible in regard to the questions asked.

The Tánaiste's initial response was ridiculous.

The Deputy’s assertion that no prosecutions have been brought or convictions achieved by the Office of the Director of Corporate Enforcement in the past two years does not present a complete picture of the activities of that office over the past two years.  

It is important to make the point that the Director of Corporate Enforcement is only statutorily empowered to initiate summary prosecutions, namely, prosecutions of relatively minor offences in the District Court. In that context, and in keeping with the ODCE strategy of seeking to allocate resources towards confronting indications of wrongdoing at the more serious end of the spectrum, the ODCE did not initiate any summary prosecutions over the past two years.

More serious alleged breaches of company law are prosecuted on indictment in the Circuit Court. The Director of Corporate Enforcement cannot initiate prosecutions on indictment, rather only the Director of Public Prosecutions, DPP, can direct that charges be preferred on indictment. On foot of investigations undertaken by the ODCE, and the subsequent directing of charges on indictment by the DPP on 21 December 2016, a former director of Anglo Irish Bank Corporation plc entered a plea of guilty before Dublin Circuit Criminal Court to one count of fraudulent trading contrary to section 297 of the Companies Act 1963, as amended; on 21 December 2016, a former director of Anglo Irish Bank Corporation plc entered a plea of guilty before Dublin Circuit Criminal Court to one count of failing to maintain a register of certain transactions involving directors and others contrary to section 44 of the Companies Act 1990, as amended; and, on 27 July 2017, a person entered a plea of guilty before Limerick Circuit Criminal Court to one count of fraudulent trading contrary to section 297 of the Companies Act 1963, as amended.  The facts of this case are due to be heard, and sentence imposed, by the court on 21 December 2017.

Once the DPP directs charges on indictment, the matter moves into the realm of the courts. The speed of progress thereafter is determined within that process. I refer the Deputy to the ODCE annual report 2016 which points to a number of key successes during the year including, following the examination of reports submitted to the office by liquidators of insolvent companies, 90 company directors were restricted and 11 disqualified by the High Court;

Additional information not given on the floor of the House

93 restriction undertakings were obtained from directors of insolvent companies; as an alternative to formal enforcement actions, cautions issued to a total of 61 companies; the securing of the rectification on a non-statutory basis of suspected infringements of the Companies Act 2014 in relation to directors’ loans in 60 cases, to an aggregate value of €17 million approximately; 108 directions were issued to relevant parties requiring them to comply with their statutory obligations under company law; the submission of five investigation files to the DPP for consideration, with recommendations including charges under both company law and the Criminal Justice (Theft and Fraud Offences) Act 2001; seven demands issued to companies for the production of their books, records and other relevant documents; and during the year, the register of disqualified, deemed disqualified and restricted persons, as maintained by the Registrar of Companies, was reviewed. Arising from that review, a total of 83 instances were identified where persons appeared to be acting in contravention of court orders-legislative provisions.  Following intervention by the ODCE, the individuals’ positions were regularised.

In excess of 1,050 statutory reports and referrals were received from liquidators, auditors, examiners, professional bodies and other regulatory and enforcement authorities. There were 130 internally generated inputs and almost 250 complaints received from members of the public. To encourage compliance with company law, the ODCE issued in excess of 16,000 copies of its various publications during 2016. Over the past ten years the ODCE has referred files in respect of a number of investigations to the DPP, on foot of which the DPP has directed a total of 214 charges on indictment.

In terms of reform of the office, organisational reforms in the ODCE were commenced in 2012 by the current Director of Corporate Enforcement upon his appointment, to enhance the capability of the office to investigate increasingly complex breaches of company law and to ensure a more efficient and effective use of its resources.  These include reorganising the structures of the office; and recruiting additional expertise, including six forensic accountants and a digital forensic specialist. As senior level vacancies have arisen, reconfiguration of the skill sets, competencies, roles and responsibilities associated with those posts in order to better reflect the organisation's current needs. That exercise has resulted in the creation of two senior level professional posts of enforcement portfolio managers, with one of those posts having been filled and the filling of the other expected shortly.  Further recruitment is ongoing. Other reforms include fundamentally amending the investigative procedures used by the office so that members of An Garda Síochána take the lead in all criminal investigations; and fostering a greater culture of risk management within the office.

In addition to these reforms the establishment, as announced by Government earlier this month, of the Office of the Director of Corporate Enforcement as a new independent company law enforcement agency will provide greater autonomy to the agency and ensure it is better equipped to investigate increasingly complex breaches of company law. The package of measures to combat white collar crime sets out an ambitious timeframe for the establishment of the new independent company law enforcement agency.  It is expected that the general scheme of a Bill to give effect to this decision will be published by the second quarter of 2018, with final publication of the Bill by the fourth quarter of 2018.  Work on the development of the legislative framework for the agency has already commenced.

My Department will engage with the Organisation for Economic Co-operation and Development to advise on international best practice in the establishment of the agency in terms of internal controls, staffing, budget and corporate governance.

I am disappointed with the response I received this morning to the six parliamentary questions I asked over a month ago on 25 October. Those questions have not been answered. The Tánaiste referred to me the ODCE annual report of 2016 wherein the key successes of the office are set out. I have read that report and I do not understand why the Tánaiste's predecessors took no action to fix what I believe is an agency that is not working properly.

When did the Tánaiste become aware that this office is barely functioning? The most significant thing this office has done in the past 12 months is sabotage an extremely high profile banker's trial and, as result, let him walk away scot free. It has been brought to my attention that the figures relating to the number of director disqualifications and restrictions quoted in a previous exchange on this topic between myself and the Tánaiste were secured not by the ODCE, but as a result of work done by receivers, giving the impression that the office is functioning better than is the case.

I received a response from the Tánaiste's Department at 8.20 a.m., almost a full month after I submitted the questions. In October, the Tánaiste stated, "Between 2012 and 2016, investigations by the ODCE have resulted in the restriction of 886 company directors." The figures I received this morning show that between 2012 and 2016, the ODCE only made nine applications for restriction, approximately 1% of what the Tánaiste claimed in October. The figure the Minister gave to me in October is clearly wrong. It seems to have become a regular occurrence this week. Can she correct the record on that matter?

The information I gave to the Deputy was the information I was given at the time.

The Deputy is doing a complete disservice to the work of the ODCE in the way he has described it this morning. He need only look at the 2016 report - as the Leas-Cheann Comhairle has said to me, I do not have time to go into detail - as there is figure after figure. In 2016 alone, 90 company directors were restricted and 11 were disqualified by the High Court, while 93 restriction undertakings were obtained from directors of insolvent companies. A register of persons deemed disqualified and restricted, as maintained by the Companies Registration Office, was reviewed. A total of 83 incidences were identified where persons appeared to be acting in contravention of court orders and in excess of 1,050 statutory reports and referrals were received from liquidators, auditors, professional bodies and so on. A huge amount of work has been done by the ODCE. The Government has worked to put together a stronger package and to enhance the powers of the ODCE. We recognise there is further work to do in the area and that is why the announcement was made with regard to a range of initiatives that are being undertaken to make sure that the office is even stronger and is not an arm of the Department but will be an independent body led by commissioners, as are the Irish Human Rights and Equality Commission and the Revenue Commissioners. We are moving to a much stronger-----

The Minister will have a further minute.

I ask the Minister to correct the Dáil record. She told me in October that 886 company directors were sanctioned by investigations resulting from the ODCE, which is not correct. I previously made my position clear that the way we deal with criminal law in Ireland depends on who one is, where one is from and what one is worth. I received a response from the Tánaiste's office yesterday stating that she cannot publish the report received from the ODCE under section 995 of the Companies Act about the failings in the Seán FitzPatrick trial. Why can the Minister not do this? What legal barrier is stopping her from publishing this report? I asked the Joint Committee on Business, Enterprise and Innovation to examine the agency as a matter of priority to find out what is going on and why the Government has allowed it to happen. White-collar criminals in Ireland continue to live subject to different laws from everyone else. Saying that the agency is not fit for purpose is an understatement and many more questions need to be asked and answered on this.

The reason for that is the strong legal advice I have received from the Attorney General. I have had both direct confirmation and written legal confirmation with regard to this. Under the legislation, which has been carefully examined - since my approach would have been to publish this - it is not within the powers of the Minister to publish such a report. I certainly want to place as many of Judge Aylmer's concerns in the public arena as I can. That will involve getting transcripts and so on. The Department is working on a report that it hopes to be able to publish before the end of the year. The strong and clear legal advice was that, under the legislation, I did not have the power to publish this report.