Whistleblowing in the Financial Sector: Statements

I welcome the Minister of State.

This is the first occasion I have had to be in the House since the death of Senator Kieran Phelan. I extend my sympathy to his family and all his colleagues. He took great pride in his membership of this House. He always referred to it, particularly to those of us in the other House, as the Upper House. I encourage all Members to reflect the pride he had and in their membership of the House show the same diligence, care and sense of duty.

I am pleased to be here to speak on the important issue of whistleblowing in the financial sector. The Government does not cavil at the need to protect those who, at potentially great cost to themselves, expose corrupt practices in order to serve the public interest. I will begin by setting out is what ordinarily understood by the term, "whistleblowing". It is usually interpreted to mean the reporting in good faith of a breach or potential breach of the law and the protection of the person concerned against penalisation by the entity about which the report has been made. In many cases, it involves protecting employees who blow the whistle on their employer. Whistleblowers risk their careers and expose themselves to being ostracised by their colleagues. They may also face potentially costly and stressful legal action. They do so in order that information, often buried deep within organisations and beyond the purview of regulators and officialdom, can be brought to light. The Government does not need to be convinced of the value of having honest men and women of integrity who are willing to assume these risks in the public interest. Agreement on the policy principle does not, however, reduce the complexity in translating these protections into workable legislation to encourage the unearthing of illegal practices in a way that will prevent the victimisation of whistleblowers. I will speak about possible enabling whistleblower legislation in the financial sector, but it may useful to place my comments in the context of general whistleblower developments across thesectors.

The Government has never sought to play party politics with this issue. It was willing to engage with the Private Members' Bill brought forward by the Labour Party in 1999. It gave careful attention to the provisions of that Bill, but it became clear that a number of amendments were required, amendments which raised detailed and complex issues which required substantial redrafting of the Bill. Having explored the various possible approaches to protecting whistleblowers, it became clear to the Government some years ago that while one grand slam piece of legislation, so to speak, to provide blanket protection would be desirable, there were considerable legal obstacles to finding a good fit between the genuine intention of the legislation and the multifarious circumstances in which it was to apply. The Government was careful not to promise whistleblower protection which, if tested by the courts, might ultimately be found wanting.

The second difficulty is that there are many genuine instances where those working in the State have access to sensitive personal and commercial information or information that is of importance to national security. Clearly, in such circumstances, there were concerns about where best to draw the line of public interest. This problem was exacerbated by the need to find a solution that would work well and equally so in all circumstances.

I will provide the House with a flavour of some of the issues arising at the time to enable Members to gain some appreciation of the complexity involved in giving effect to a provision on which, perhaps, we all agree in principle. For example, in the financial sector it is necessary to consider the position of the Central Bank. Its confidentiality regime derives from obligations regarding professional secrecy imposed under the European System of Central Banks Statute and the Treaty of Rome and further underpinned by section 33 AK of the Central Bank Act 1942. Clearly, any provision will need to be consistent with the Central Bank Acts and-or EU law. Other complex legal questions arise in relation to the obligation on designated bodies and the Central Bank and Financial Services Authority of Ireland to report suspected money laundering to the Revenue Commissioners; the Official Secrets Act 1963 and its implications for civil servants; and the protection of trade secret types of industrial processes.

On balance and in the light of the many legal complexities likely to be encountered, it became clear that a sectoral approach would be more effective and practical. This approach has served us well in placing whistleblower protections on the Statute Book to be used effectively in a number of areas. Examples include the Safety, Health and Welfare at Work Act 2005; the Garda Síochána Act 2005 and the more recent Labour Services (Amendment) Act 2009.

Senators will be familiar with the whistleblower provisions in sections 222 and 223 of the National Asset Management Agency Act 2009. Section 222 provides protection against civil liability for whistleblowers, while section 223 prohibits penalisation of whistleblowers by their employers. The sections apply to a range of persons and there is a redress process available under Schedule 2 in respect of employees who consider they have been penalised. In addition, section 203 imposes a positive obligation on NAMA to report suspicion of crimes to appropriate law enforcement authorities. The Central Bank and Financial Services Authority of Ireland has also published a whistleblower policy for its own staff, outlining its approach to dealing with reports of wrongdoing within the authority.

The number and range of the whistleblower provisions introduced in the past five years show clearly that the Government has engaged fully with this critical issue. Of course, there are still some key areas, of which financial services is one, in which we must consider what more can be done. Policy in this area has been informed by the work of the company law review group, the statutory advisory expert body charged with advising the Minister for Enterprise, Trade and Innovation on the review and development of company law in Ireland. The group examined the inclusion of whistleblowing provisions in Irish companies legislation in 2007 and brought to light the complexity of the issues involved. The majority recommendation at the time was that a company law-specific whistleblowing provision should not be included in the new Companies Consolidation and Reform Bill. In coming to this conclusion the group stated it had taken into account the degree of malpractice, the required nature and extent of the disclosure, the reputational risk for companies and the extra resources, or the diversion of resources, for enforcement agencies. However, this is a matter which the Minister for Finance will consider further, given recent disclosures regarding corporate governance in the financial services sector and, in particular, in the light of the outcome of ongoing investigations of these matters by the Office of the Director of Corporate Enforcement, the Garda Síochána and the Financial Regulator.

Senators will be aware of the recent announcements on white collar crime by the Minister for Justice and Law Reform. The Minister made proposals in the context of the Prevention of Corruption (Amendment) Bill under consideration by Dáil Éireann and awaiting Committee Stage. The Bill includes a provision to protect whistleblowers who report offences of corruption within the meaning of the Prevention of Corruption Acts 1889 to 2005. These measures propose to protect any person working in any sector who reports, in good faith, a suspicion of corruption as defined in these statutes. Under the legislation as it now applies to situations involving whistleblowing, the definition of corruption essentially provides that anyone who corruptly accepts any gift, consideration or advantage as a reward for someone doing an act or making an omission in relation to his or her office or position is guilty of an offence. The Minister intends to look at clarifying this definition further under the Bill. The provision will also contain an outline of the various methods of redress which will be available to an individual who may be treated unfavourably by an employer, for example, for making such a report. Committee Stage of the Bill is expected to be taken later this month and Senators will have the opportunity to consider the proposal in greater detail.

The Minister for Justice and Law Reform has also announced recently that he will be bringing proposals to the Government shortly for the consolidation of all the anti-corruption legislation on the Statute Book, some of which dates back to the Victorian era, while some has been introduced more recently. There is undoubtedly a need to bring greater clarity to the issue by consolidating these offences in a single statute.

One area in which the need for whistleblower provisions has been brought into sharp focus is that of financial services. The issue of whistleblower provisions in relation to financial services was most recently brought to public attention by comments made by the Director of Public Prosecutions during a recent interview on "The Week in Politics" programme on RTE.

Prior to the financial crisis, there was a general view that the structures and systems responsible for financial regulation were effective and appropriate. As we now know, that confidence was seriously misplaced. The previous regulatory system failed spectacularly to prevent grossly excessive and irresponsible lending to the property sector. As a result, our most systemically important banks have had to be recapitalised and Anglo Irish Bank has had to be brought fully into public ownership.

The financial system overall has been severely shaken and customers and households are managing unprecedented levels of debt. Wide-ranging reform is urgently required. We need a system where the overarching objective of the stability of the financial system directly informs the supervision of individual firms, while at the same time safeguarding the interests of consumers and investors.

The Central Bank Reform Bill 2010 has recently completed Second Stage in Dáil Éireann and is expected to come before this House before the summer recess. The Bill is a crucial step in a comprehensive programme to put in place a domestic regulatory framework for financial services. It meets the Government's objective of maintaining the stability of the financial system. It provides for the effective and efficient supervision of financial institutions and markets, and it safeguards the interests of consumers and investors.

In terms of the overall standards to apply across the sector, the Bill provides for new powers for the Central Bank to ensure the fitness and probity of nominees to key positions within financial service providers and of key office-holders within those providers. We have already seen the devastating effects of irresponsible and incompetent behaviour at senior levels in financial institutions and must ensure, as a matter of urgency, that the powers are available to prevent such behaviour in future. These new powers for the bank will help to restore confidence in the management of financial institutions domestically and in international markets.

A second Bill to be brought before both Houses in the autumn, will enhance the powers and functions of the restructured Central Bank, particularly concerning the prudential supervision of individual financial institutions; the conduct of business, including the protection of consumer interests; and the overall stability of the financial system.

A third Bill will consolidate existing statutory arrangements for the Central Bank and financial regulation in the State. This legislative programme is demanding and complex, but it is essential. A sound financial regulatory regime is fundamental to a sustainable and dynamic financial services industry.

It is within the context of the second Bill that the Government will look at the need for specific legislative protection for whistleblowers in the banking and financial services sectors. In carrying out this examination we will draw on recent experience in Ireland, as well as experience in other jurisdictions.

Current financial reforms under discussion in the United States include new financial incentives for whistleblowers. The Financial Regulation Bill passed by the US Senate recently includes a provision that expands a bounty programme to compensate whistleblowers who report fraudulent or corrupt activity by their employer. A new fund would pay out between a minimum 10% and a maximum 30% of the recovered money from a violation of more than $1 million. While I am not sure that making incentive payments to whistleblowers is the way to go in this country, it important nevertheless to note that whistleblower provisions such as this are emerging as a common feature of reforms elsewhere.

In the United Kingdom the Public Interest Disclosures Act 1998 provides a basis for whistleblower protection. That Act applies to people at work raising genuine concerns about crimes, civil offences — including negligence, breach of contract or administrative law — miscarriages of justice, dangers to health and safety or the environment, and the cover-up of any of these. The Act applies to employees, including contractors and trainees, but not to volunteers, the self-employed, the intelligence services or the armed forces. The Act provides that disclosures may be made by employees and, depending on the circumstances, to the employer, regulators or more widely to the police or MPs, for example.

Generally, disclosures are protected where they are made in good faith and where the whistleblower has a reasonable belief that the information tends to show the occurrence of malpractice. Additional requirements apply to disclosures to regulators or wider disclosures, for example, to ensure disclosures are not made for personal gain.

Gagging clauses in employment contracts are void in so far as they conflict with the Act, although the Act does not provide protection for breaches of the Official Secrets Act or other secrecy provisions. Where a whistleblower is victimised or dismissed in breach of the Act, they can claim for compensation from an employment tribunal. Awards are not capped and based on the losses suffered.

I am aware of the recent report on whistleblowing by Transparency International entitled, An Alternative to Silence, which puts forward the UK legislation as a model to follow. It also recommends the enactment of whistleblower protection for the financial services sector. That report pulls together useful information in this under-studied area of Irish life. I was particularly interested in the 2008 research cited in the report on the financial services sector, which explored attitudes to whistleblowing. It also examined reasons which would discourage disclosures such as a sense of loyalty to the company, fear of negative reaction from co-workers; the belief it would impact negatively on a person's career; and the belief reporting an incident was outside a person's realm of responsibility. Interestingly, the fear of reprisal was cited least. This is just another example of why this is a complex matter and that there are other factors that discourage disclosures beyond the existence of specific legal protections.

The Government is prepared to look at making such a provision in the context of the reforming legislation on the financial services to be published this autumn. In developing our thinking in this area, there are several matters that need to be examined in great depth such as whether there should be confidentiality provisions attaching to disclosures and whether anonymous complaints would be pursued; whether the protections should apply to all employees or even beyond employees to any person reporting malpractice, for example, customers or suppliers; and the time limits for making disclosures or claims for compensation for reprisals. We should consider whether reprisal protections should extend to others who may become vulnerable, apart from the whistleblower. We should also consider how compensation levels are to be set and whether a cap should apply. Equally, we must examine the circumstances when full whistleblowing provisions should apply, which would provide protection against penalisation of the employee and protection for the employee against civil liability. There are also a range of other issues.

When looking at the financial services sector specifically, we need to look at how best to handle the relationship between any whistleblower protection provisions and commercially sensitive information, intellectual property rights, and the protection of confidential and personal data, among other things.

As Senators will be aware, there are many important matters that must be considered and decided upon to give full effect to any sort of whistleblower provision in the context of the Irish financial services system.

Some Members of this House have had their own experiences with whistleblowers. I look forward to the debate on the issues I have outlined, as well as reflecting on the experiences that Senators may care to outline in this regard.

I would have been more impressed with the Minister of State's speech if he had focused on how we could overcome the problems he mentioned. For instance, he should have focused on what problems have been encountered in the United Kingdom where the Public Interest Disclosure Act of 1998 has been in place for the past 12 years. Could that legislation be transposed into Irish law? The whole purpose of whistleblowing is to ensure the information becomes public, thus leading to change and-or prosecution, depending on the leading reason a whistleblower acts.

Reprisal or other adverse events against a whistleblower are often secondary when the whistleblower first decides to make information public. We have done very little about this, however. I do not think there is the ethos or culture here to support this sort of thinking. There was nothing in the Minister of State's speech — or in so many Oireachtas debates — to indicate any great desire by the Government to promote whistleblowing, whether in the financial or other sectors.

The Director of Public Prosecutions has a fair idea of how the law works and what could or could not be achieved with regard to legislation. If the Director of Public Prosecutions considers there is a need for whistleblowing legislation, he clearly understands we can overcome the obstacles to which the Minister of State referred. I believe, however, that the Government parties have no interest in making whistleblowing work in the way we would like to see it operating.

There are a number of ways in which it could be made to work. For example, a potential whistleblower could contact a regulatory body which could then make inquiries. All of these inquiries could be made away from the glare of public discussion in the media. If the information turns out to be true, it can be made public in whatever forum is deemed necessary such as the courts or the Oireachtas. If the information was given in bad faith for some reason — the person concerned might have been trying to manipulate the facts for personal gain, for example — it could be quietly disregarded.

I cannot understand the argument that whistleblowing cannot work accurately in this country. If I refer back to my own profession, medical doctors receive buckets of confidential information on sensitive issues such as the health of an individual or organisation, or child abuse in the home or the community. We can avail of an array of ways of reporting such information to the Irish Medical Council, the HSE and our colleagues. With the possible exception of the legal profession, no other profession is as bound by confidentiality. We are able to make it work. I do not believe the Minister of State's suggestion that real and imaginary obstacles have prevented the Government from implementing whistleblowing legislation for over a decade. I suggest the Government does not believe in the ethos of open government. I do not think a great enough effort is being made to transmit this information and get the legislation on the Statute Book. The Minister of State should come back to the House to clearly and properly outline the obstacles to making whistleblowers legislation work.

I refer to all of the things about which he has been talking. When Senators Ross and Norris speak later in this debate, I am sure they will be able to talk about their experiences and say where this can work. I do not believe the issues mentioned by the Minister of State cannot be overcome. We need to focus on the financial sector. Commercially sensitive information could easily be handled by an ombudsman who would understand the sensitivities involved. If the role of the ombudsman was strengthened appropriately, the issues associated with intellectual property rights could be dealt with. Confidential and personal data are constantly protected by many organisations across the country. If a specific whistleblowers ombudsman were given responsibility for such information, he or she would treat it with the confidentiality it required.

Members of the Oireachtas have always been excluded from the limited whistleblowers provisions included in legislation. As we have parliamentary privilege, we can say what we like about anybody or anything. In my eight years of experience across both Houses, I have never seen that privilege abused in a major way. Members of the Oireachtas are capable of handling sensitive information and deducing whether it needs to be highlighted. We can use our contacts — Oireachtas colleagues and officials in the public service — to clarify much of the information given to us. We are able to check whether it is authentic. On the basis of my experience as a Member of the Oireachtas and before that as a medical professional, I see no reason robust whistleblowing legislation cannot be enacted. If the Minister of State gets an opportunity to respond to us, perhaps he can speak a little more strongly and forcefully about why it is not happening. Perhaps we should examine the UK legislation in this regard. UK legislation can often be relatively easily transferred into the Irish context because our legal systems are so similar. I ask the Minister of State to give me an answer on that issue. That is what we really need.

This debate which consists of statements on whistleblowing in the financial sector is happening as if this issue had just fallen out of the sky. If we have to continue to come into the House to listen to statements, the role of the Seanad will be demeaned. We know that more could be done. When the relevance of the Seanad is being discussed, we can say we raise issues in the Chamber on a regular basis. Statements in the Seanad have a role to play in the context of dealing with topical, complex or changing issues. It is important that we will make statements on the Gaza crisis this evening, for example, as it will give the Minister for Foreign Affairs an opportunity to update the House on relatively new developments. I suggest, however, that these statements on whistleblowing in the financial sector represent no more than a sop to our concerns, if they involve the Minister of State rehashing some old ideas. All he is doing is acknowledging that there are problems, while suggesting they cannot be overcome. It is clear that they can be solved. I ask the Minister of State to return to the House with something stronger. He should give us the Attorney General's opinion on why the obstacles in this sector are genuine and, ultimately, produce legislation on this issue.

I am glad to have an opportunity to make a few points about whistleblowing in the financial sector. I would like to pick up on what Senator Twomey said. It would be extremely foolish for any Minister participating in a debate to dictate the position rather than to listen to suggestions and points that have been thought out by Senators. I hope some of the points we make today can be reflected when improvements are made in future legislation.

I agree with Senator Twomey that the culture until 2005 or thereabouts did not give whistleblowers any protection. The Minister of State, Deputy Calleary, alluded to a number of Acts that have been introduced since. We have legal whistleblowing safeguards to cover people reporting suspicions of child abuse, breaches of ethics legislation and competition law and problems with workplace health and safety. Gardaí and Garda civilian employees can report corruption or malpractice. Health care employees can report threats to the welfare of patients. Whistleblowing provisions also apply to offences relating to employment permits, the regulation of communications, consumer protection, offences relating to chemicals and breaches of charity law.

I am glad the Government is playing a part, to the maximum extent possible, in trying to change the culture. The Minister of State has outlined in detail that whistleblowing protections are needed in the financial sector. He has mentioned some of the difficulties in that regard. Senators can consider and respond to such points. I look forward to benefiting from the substantial experience of Senators Ross and Norris and others. As Senators, we can play our part in our democracy by giving our informed views. We are required to feed into legislation the will of the sectoral interests we are supposed to represent. The Senators I have mentioned represent the universities, just as I represent the industrial and commercial sector.

I am glad the speech made by the Minister of State was not prescriptive. It sought to deal with the complexities that he outlined which have made it difficult to introduce the simple overarching whistleblowers protection law we would have liked to have had before now. The Minister of State has mentioned that there was some engagement on the Private Members' Bill introduced by the Labour Party in 1999. We would all like the legal complexities in that regard to be overcome as quickly as possible.

Deputy Rabbitte has sponsored the Whistleblowers Protection Bill 2010 which has been discussed on Second Stage during Private Members' time in the Dáil. The purpose of the Bill is to provide protection from civil liability for employees who make certain disclosures, reasonably and in good faith, with regard to the conduct of the business and affairs of their employers. The Bill also proposes to prohibit the penalisation of employees by their employers in such circumstances. It sets out the persons to whom disclosures could be made and the categories of matters, in respect of which such disclosures would be permitted.

One has to acknowledge that cross-party efforts have been made to try to advance this issue. It seems from the Minister of State's remarks that the Government is trying to make progress with it as a matter of priority and as quickly as possible. Recent developments in the world economy make it all the more important for us to take this forward. The Minister of State described the spectacular failure in our own regulatory regime, from a financial services perspective. A Transparency International report in January stated the most obvious gaps in coverage of the whistleblower provisions relate to the reporting of offences under company law and financial services. This was referred to by the Minister of State. It also stated, regardless of the unethical events of recent years in some Irish enterprises, that the business community and vested interests remained actively opposed to protecting those who reported such wrongdoing. It recommended that Ireland adopt a generic whistleblower protection law, the principal of which was agreed by all concerned. This does not solve all the complexities involved. I am interested to hear the views of those informed about the complexities of the financial services industry such as Senator Ross, and the Minister of State's views in the preparation of legislation in this area.

I welcome the recent address by the Minister for Justice and Law Reform, Deputy Dermot Ahern, to the Law Society in which he stated any renewed prosperity must also bring with it reformed systems, strong laws and regulations to ensure it was not possible to play fast and loose with the financial and economic system. He stated that part of this reform would mean a rigorous focus on white collar crime, detecting and deterring it and bringing to justice those who perpetrated it.

The Minister has also proposed the introduction of blanket whistleblower protection for reporting suspicions of corruption, a new consolidated corruption Bill and a White Paper on white collar crime seeking public and practitioner input. We cannot have enough consultation when it comes to such important legislation.

The best example of whistleblower protection is the UK Public Interest Disclosure Act 1998, widely regarded as the international benchmark and which I am sure will form the basis of the Government's and this House's consideration of the appropriate provisions. It allows employees in the public and private sectors to report concerns to their employers, regulators and, in limited circumstances, the media.

Regarding the latter provision, the Minister of State has said consideration will have to be given to whether anonymous reports should be investigated. I believe they should be. In some instances there is a need for reports to remain confidential until such time as they are proved to be factually correct and require investigation. The universal charter has worked without legal mishap for ten years in Northern Ireland.

The Minister of State rightly pointed to the spectacular failure of the international financial regulatory regime and the Irish regime, which we all much regret. The new Financial Regulator, Mr. Elderfield, and the new head of the Central Bank, Dr. Honohan, are doing some good work in making improvements to the regime. The legal, accounting and auditing professions should also have their existing ethics and standards examined. They will contend everything they did when it came to financial institutions were to the highest standards of the day. These standards, however, fell far short of where they should have been. Accordingly, an examination of the respective organisations that represent these professions should be undertaken to ensure significant improvements can be made to their own regulatory regimes.

I hope all voices are heard during the consultation process on the White Paper on white collar crime. I am glad the Minister of State has an open mind on the matter and is listening to the views expressed in this House to ensure they feed into the process.

The Central Bank Reform Bill, currently going through the Houses, will put in place a new domestic regulatory framework for financial services and create a new fully integrated structure for financial regulation. The Central Bank (No. 2) Bill, to be published in the autumn, will enhance the powers and functions of the restructured Central Bank framework and will provide an opportunity to consider the provision of specific whistleblower provisions for the financial services sector.

It must be acknowledged that it is impossible to have any level of independent financial advice from financial institutions within which their employees are expected to operate in a targeted sales environment. This needs to be addressed by the State through the auspices of a statutory organisation.

I wish to share my time with Senator Quinn.

I am quite happy to wait my turn as there was a misunderstanding which I will explain later.

I share Senator MacSharry's last sentiments but little else of what he said. This promise of legislation is deeply disappointing. As the House knows, the Director of Public Prosecutions, Mr. James Hamilton, made a statement on the need for whistleblower legislation on "The Week in Politics" programme. Suddenly, a week later, the Minister for Justice and Law Reform announced he would introduce such legislation. It took the Director of Public Prosecutions, not parliamentarians or members of the Minister's party, to prompt him into saying he was going to take action. There was a welcome response to the announcement and agreement that at least Mr. Hamilton had managed to get some badly needed movement on this issue. The Minister of State's speech today reveals the response is totally and utterly inadequate. I am also slightly puzzled as to which Department is in charge of this legislation. Is it the Department of Justice Law Reform or the Department of Finance?

I had the experience of a whistleblower, of which I have written; therefodre, I am not revealing anything new about any individual. Mr. Eugene McErlean who worked in AIB had blown the whistle on foreign exchange transactions and all sorts of internal goings-on at the bank to the Central Bank. His reward for this was to lose his job at AIB. He has also been before several Oireachtas committees and everyone knows he is an utterly convincing and truthful witness and a man to whom a great injustice has been done which has not yet been properly remedied.

The Minister's whistleblowing proposals will not address these problems. I see his point about various whistleblower protections which have been promised in various places. This addresses solely the issue of corruption, by which the Minister means bribery. To claim we will look again at financial whistleblower provisions is absurd because the real and only issue is financial whistleblowing. To introduce legislation which addresses corruption overall is inadequate. What we need is legislation which protects people in the financial services sector who blow the whistle on unethical, inappropriate and illegal activities. Mr. McErlean would not have received any protection from the promise here today. It is simply not adequate but I do not blame the Minster of State for this; I recognise the hands of the mandarins all over this speech. There is a power play going on in the Department of Finance. It is not adequate to maintain that this has been addressed, that the problem was examined in 1999 and that it is somewhat complex. We know what that means and that it is being put on the long finger. We know that someone has put their hands on this legislation and decided he or she will not address it because it is too complex.

I was in the House when a very complex problem was addressed here. I cannot remember the date exactly but when Larry Goodman went bust there was a complex problem. Some 33 banks and a significant amount of legislation were involved in that case. It was introduced overnight and passed without any problem. The Minister of State has an issue with whistleblowers but no one can tell me that this has not been addressed in the public domain because it has. The Government maintains it examined this issue in 1999, it has considered it very carefully since but that it is somewhat complex. It is not. Blanket immunity should be given to people in the same situation as Mr. McErlean and others such as Mr. Tony Spollen, a man whose name is known to many in this House and who was in the same situation. He blew the whistle on AIB and lost his job but he would not be protected by this Bill. It is inadequate to come forward today and suggest it is too complex to address now but that it will be considered. We should receive the legislation today and not promises of a future date.

I am unsure whether the Minister of State mentioned it and I may be wrong to say otherwise, but he will be aware that this issue was addressed at the Council of Europe some two or three weeks ago. A resolution was passed at the Council of Europe which would address the problems in the financial sector and the problems with which Messrs McErlean and Spollen were confronted. For some reason, we are not up to speed on that development. We introduce a bunch of rhubarb about difficulties here, there and everywhere which is utterly and totally unconvincing. I say as much not to chastise the Minister of State but simply to point out that this is something which could be but has not been addressed. Today Mr. McErlean is in the same situation as he was then. He has not been given the credit or acknowledgement he should have been given for doing a public service to the State and the nation and for revealing what was going on in the financial sector. I refer to what this matter is all about, that is, the main problems faced by whistleblowers in the financial sector. There is documentary evidence of people having been victimised for having told the truth. The Government maintains it is concerned about the matter and it will consider what to do.

I apologise if I am somewhat emotional on the matter but I call on the Minister of State to indicate when and how he will address this subject and to give us a timetable for it because I do not believe he could possibly be content with the script he was given to read today. His reference to urgent reform being necessary is totally unacceptable. We are aware that wide-ranging reform is needed but wide-ranging reform comes from one place alone. The reference to the relevance of key people or roles being changed in the financial sector is complete and utter camouflage. It does not matter a hoot who has or has not been changed or what changes have been made. The issue is protection for employees and whistleblowers.

I welcome the Minister of State. He will recall the old Irish seanfhocal, "Éist le fuaim na habhann, mar gheobhaidh tú iasc", or "listen to the sound of the river if you are going to catch a fish". I refer to it because, having listened to Senator Ross, I hope the Minister of State will do the same. His comments must be instilled in this process. Why are we taking so long to implement this legislation? We should consider the recommendations of Transparency International, which is calling for one single tranche of legislation to protect and promote whistleblowing. It has pointed out that the United Kingdom did as much some ten years ago with the UK Public Interest Disclosure Act. That legislation came about after a series of avoidable disasters such as the sinking of the ferry Herald of Free Enterprise. Do Members remember that incident? It was a long time ago. The thinking behind it was that hundreds of lives could have been saved if those working in companies had secure means to have their voices heard.

We have all heard the Director of Public Prosecutions, Mr. James Hamilton, call for legislation to protect whistleblowers in cases of alleged white collar crime. However, he believes that recourse to the Employment Appeals Tribunal is not sufficient for a dismissed employee whistleblower. In this respect, the Council of Europe has stated Ireland should introduce whistleblower protection against unfair dismissal, defamation or prosecution for breaching official secrets.

The Minister for Justice and Law Reform indicated last Friday that whistleblower protection was to be included in new anti-corruption legislation, which is welcome. However, Senator Ross's point is that we need one tranche of legislation to make this happen because the anti-corruption legislation will take a long time to bring forward.

Some very interesting developments, which are worth considering, may have unfolded in the United States in this area. The financial regulation Bill, passed by the US Senate last Thursday, includes a provision that expands a reward programme to compensate "whistleblowers" or those who report fraudulent or corrupt activity by their employer. Currently, the programme, run by the US Securities and Exchange Commission, only pays out to "informants" in insider trading cases. This has been used five times in its 20-year existence. However, the programme's expansion would cover all securities violations, including the Foreign Corrupt Practices Act, a law that bans the bribing of foreign officials by US companies, US citizens and, under certain circumstances, foreign companies and foreign nationals. The new Bill in the United States will set up a new fund, known as the Securities and Exchange Commission Investor Protection Fund, which will pay out between a minimum 10% and a maximum 30% of the recovered money from a violation of more than $1 million.

The fundamental idea behind the whistleblower reward programme in the United States is to encourage people to come forward. It is evident that many working in the financial sector were aware things were wrong before the crisis hit. Even in the months leading up to the collapse of Lehman Brothers, that institution's vice-president, Matthew Lee, tried to whistleblow over the firm's accounting. His contract was terminated some weeks afterward in June 2008. In Ireland there have been many examples, some of which were referred to by Senator Ross, of bankers or those working in the financial sector who had their careers severely affected when they proceeded to raise concerns about malpractice within their employers. For example, in 2001 Rupert Walker was sacked from AlB's British subsidiary, Govett, after speaking out about a "magic circle" of fund managers.

I do not hold that we need a vast financial awards scheme as part of whistleblower legislation but it is a measure well worth considering. Some form of award may tip the balance for those who have doubts about reporting financial wrongdoing. Also, given the significant financial benefit of reporting certain wrongdoings in the financial sector, an award would probably be a tiny percentage of this. More may come forward with their concerns were there better protection for whistleblowers, but perhaps they should be rewarded more for what is often a remarkably risky act. We have heard some examples of such cases today.

We are doing everything as a country to restore confidence internationally and set the conditions for our recovery. However, we still lag behind countries such as the United States, the United Kingdom, Canada, Australia and many European nations also. We could significantly improve our reputation in corporate governance and regulation were we to introduce such legislation and I look forward to the Minister's intention to bring this forward, I hope not in the near future but in the immediate future. We need whistleblower legislation confined to this area to ensure it materialises, rather than a long drawn out process. I am amazed by the remarks of Senator Ross. He referred to the first consideration of this matter in 1999. We must move on this matter.

I refer to one criticism of the difference between the business world and what happens in legislation, that is, the length of time it takes to get things done. Let us move on this immediately.

Although I acknowledge the culture has improved immeasurably in recent years, if we had a culture of openness and transparency here, there would be no need for whistleblowers or legislation that would oblige the exposure of information which has remained hidden for too long. Nowhere is this more apparent than in the situation in our financial services sector and the difficulties we are obliged to deal with due to that lack of openness and transparency.

These statements are being made at a very important time. We are awaiting the publication of the reports which have already been presented of Mr. Regling and Mr. Watson and of the Governor of the Central Bank, Professor Patrick Honohan, on the circumstances surrounding the collapse of our banking sector. I expect these to be forthright and honest reports and the public debate will be assisted by their publication. That said, these reports are preliminary and are meant to inform the tribunal of inquiry into the banking system which will follow. In making these statements it is important we call for that inquiry to be as open and public as possible. I believe it will predominantly be public, although elements will be private and confidential, being linked to commercial interests and so forth. The model in place in the US Congress which has been promoted by the Governor of the Central Bank is the one we should follow. I look forward to decisions being made in the next few weeks that will allow such a tribunal to be held.

I share the frustration of many Members regarding the lack of legislation and the inability to assist or engender a culture of whistleblowing in this country. There has been conflicting legal advice as to whether this can be done in one over-arching legislative measure, in a number of measures, through some form of halfway house with a measure to deal with the public service in general and another to cover the financial institutions under the State guarantee, or by having degrees of State ownership. It must be done to the largest scale and depth possible and as quickly as possible. Often it is not the fact that there are crimes that are unaccounted for, which unfortunately there are, but the element of cover-up and the lack of ability to get the information that causes greater public concern than the nature of the crime itself. The culture that allows that to happen is one that generates fear and disbelief among the population, and the political system cannot allow that to occur any longer.

Like other speakers, I believe we are being too cautious and led by legalities in this area. There is a type of coquettishness about dealing with the issue, on which we must put a brake. Ultimately, there are things we do not know, and we do not know them because the individuals who have caused the situations are not being open and honest and those around them do not have the appropriate degree of legal protection that would allow agencies of the State to reveal these issues properly. Others will ask: "If not by now, when?" The time we are living in and the nature of the economic shock we have experienced in terms of the public expenditure crisis and the collapse of the banking system will be seen in retrospect to be an important time for this country. It is the opportunity out of a crisis that our political system needs to make. If we do not make these changes now and acknowledge that there have been huge failings in this area which need to be corrected in the very short term, we will have let the country down to an even greater extent than the circumstances that caused the financial and economic crisis in this country.

After making these statements today I ask that there be some resolve to have the legislation more all-embracing and brought before both Houses of the Oireachtas at the earliest opportunity. It must be informed by events at the tribunal of inquiry into the banking system, but the Government has determined a short life span of six months for that tribunal. If we go into the next general election with these issues still being discussed, it will be a huge failure of the political system. There must be legislation in place and adequate protection. That protection under the legislation must bring about the transparency that is so badly lacking in our financial services. Given the scale of resources, which this country does not have, being pumped into resuscitating and perhaps unnaturally keeping alive elements of our financial services, if it is not accompanied by appropriate legislation in the area of transparency and whistleblowing, it will be a further waste, and a criminal waste at that, of public resources. That cannot and should not happen.

I wish to share time with Senator Hannigan.

Is that agreed? Agreed.

One of the most frustrating things about these debates on transparency and the need for new legislation and measures to deal with whistleblowing and related matters is the extent to which people give the impression that there has only been a recent discovery or realisation of the necessity for such measures. Senator Ross referred to this. Senator Boyle hopes there will not be another general election before something is done about this, but there have already been two general elections and we are well into the third Oireachtas since this issue was raised for public debate in 1999 by Deputy Pat Rabbitte who published a Bill that year to deal with this issue. It is fully 11 years since this matter was first raised for public debate. It is simply not good enough for anyone, be they a Minister, supporter of the Government or otherwise, to imply that these matters are now coming forward for public consideration and concern and must be addressed in the light of what has happened recently. We knew about these issues many years ago. There is little use in people saying that now we have seen the dreadful things that have occurred which we never thought would happen — the subtext being that they never thought there would be a problem — but on which we have been proven wrong, we must do something about it. It is simply not good enough to give the people that excuse.

The Minister of State referred to the conclusion of the company law review group. Bluntly, the company law review group is wrong. When we are considering its report and when we are pointing out, as the Minister of State did, the fact that this group of eminent individuals came to this conclusion, we should bluntly state that the conclusion was wrong. Had these matters been considered in the depth and with the realism with which they should have been considered, the group would have come to a different conclusion. Mr. Paul Appleby and Mr. Michael Halpenny, the representative of the ICTU, were the two lone members of the group who maintained the view that it was necessary to bring forward a report that proposed robust whistleblower protection and legislation. When considering the balance sheet of what has occurred, I believe the best way for the Minister of State to view that group's report is to conclude that it was wrong. We must do something different from what it recommended.

The Minister of State's speech was interesting and helpful in one sense in that it constituted a detailed survey of the current position and the necessity for legislation in different areas. Where it is deeply disappointing, and I must echo the remarks made by Senator Twomey, is that it is another example of what we see so often in public life in these Houses, especially from the Government, where there is one good reason for doing something and ten reasons for not doing it. That is what we were treated to today. Incidentally, we were told 11 years ago by the Government, shortly after Deputy Rabbitte introduced his Bill, that there were significant legal and constitutional difficulties in this area. What are they? Eleven years have passed; therefore, the Government should give us a glimpse of what they are. I am not sure I agree with colleagues who suggest this could be done with a click of one's fingers. I do not suggest it can be done in 24 or 48 hours, but it certainly does not require 11 years. It should not even take 11 months. It might take 11 weeks.

Rather than speaking about White Papers or reports that will be prepared shortly, as the Minister for Justice and Law Reform recently did, I would like the Minister of State to give a convincing and clear indication of a specific timeline for the introduction of the proposed legislation, whether it is sectoral or over-arching. The Director of Public Prosecutions has called for legislation to protect whistleblowers. It is not often that a public official such as the Director of Public Prosecutions intervenes in an area such as this.

The Minister of State, rightly, welcomed much of what is in the report by Transparency International. It is an extremely helpful report. We must face up to a central political point. Lying behind the Company Law Review Group report was the fear of upsetting the principle of light regulation. The report alludes to the concern that we would undermine our competitiveness or damage our image as a country that has light regulation where business happens quickly with little interference or oversight. That is not a reputation we should want to have or promote internationally. Our credibility and competitiveness rest on the necessity to have clear, robust and reliable whistleblower legislation.

Deputy Pat Rabbitte introduced his Bill in 1999 and was told the Government would introduce similar legislation, although it did not do so. He has again introduced legislation. It is available for the Government to take up and improve, if it wishes. The Bill is on the Order Paper. Let the Government bring forward legislation and toughen up the pious words of the Minister of State and the Minister, Deputy Dermot Ahern, in his recent speech to the Law Society of Ireland.

Senator Hannigan, you may have the three minutes remaining of Senator White's time.

I would prefer to wait for a later turn, with your permission, a Chathaoirligh.

You may speak for seven minutes later in the debate. Senator White, you may speak for another three minutes if you wish.

Senator Boyle, rightly, said legislation was an important element of what required to be done and he hoped it would be done quickly. When will the Minister bring forward these proposals? It is not good enough to say it will happen in the autumn, although I know that anti-corruption legislation is planned.

We have heard an impressive survey of the problems and obstacles associated with whistleblower legislation. The obstacles are not specified. The legal problems foreseen by the Minister should be explained to us in more detail. It is not sufficient for a Minister to tell the Seanad that legal and constitutional obstacles exist. We are all grown up. We could look at those obstacles and see if we have views about them. The Government should tell us what they are and let us be party to the debate as to how they can be overcome.

I was interested to hear what Senator Twomey had to say about his professional experience as a medical person. I have worked in the legal profession. People who work in financial institutions have a real concern that their employment will be threatened if they come forward and publicise information or otherwise make it available to the authorities. Instances of this have been outlined to the House today. Mr. Eugene McErlean is a clear example and there are many others. There may be many examples of which we will never hear. The absence of protection for whistleblowers has such a chilling effect on people that we may never know or appreciate the extent, quality and importance of the information people have and which, through fear for their livelihood and professional lives, they have not revealed.

This issue reduces itself to a political question. Are we willing to cut through the argument that it is a good thing for Ireland to have a light regulatory regime that stands back from business, the banks and financial institutions, for fear of appearing to be over-regulated? We need more regulation and not less. We need quality and discerning regulation and not simply regulation for its own sake. That would, absolutely, include protection for whistleblowers.

We appear to have two economies. We have the real economy and the financial economy. The real economy has been making significant progress in recent years. This week, an editorial in The Wall Street Journal complimented Ireland on the manner in which it was managing its economy and achieving necessary savings without the difficulties experienced in other countries such as the riots in Greece.

The economy is expected to grow by 3% in 2011 and some growth is expected in the second half of this year. We have seen an upturn in retail sales. The Central Statistics Office shows an increase in exports through Dublin Port. The Economic and Social Research Institute, the Central Bank and the European Commission are all agreed that we are heading for a period of growth. Retail figures in the motor trade are up, consumer sentiment is high, employment is stabilising and many respected financial journals, other than The Wall Street Journal , believe NAMA and the measures we have taken will work. We should not diminish the difficulties we had 20 months ago when we did not know what type of economy we faced into or what type of recession the world faced. Notwithstanding this, we have come through strongly and with flying colours. We can already see an element of growth. People are beginning to feel more confident in their jobs and this confidence is reflected in consumer spending.

Then there is the financial economy which caused all the problems. The financial economy can be affected by a regional savings bank in Spain going under, affecting global markets and the price of the euro, dollar, sterling and yen. The financial market is unstable because there has been massive fraudulent misrepresentation of what was happening. We are fortunate that this massive fraudulent misrepresentation took place mostly in the United States, originally with sub-prime lending, abuse by hedge funds and the market manipulation by those same funds. Problems were created and the security of banks driven down in order that when Lehman Brothers collapsed, inter-bank lending was not possible because no one in the banking sector was sure who they could trust anymore and strong difficulties were created within that sector. The people responsible are as guilty of a criminal act as many who appear in the Four Courts and receive jail sentences for relatively minor crimes. These people in the banking sector have got away with their actions for years.

There is a perception in Ireland that people have got away with wrongdoing. Let us face facts. There was systematic overcharging in our banking system. Even recently, I saw a cheque from Visa, which was a repayment for overcharging. There are other examples. Banks overcharged systematically on their charges, by giving incorrect interest rates and on currency exchange. It is high time good people who stand up and are prepared to give information were not held liable for letting down the financial institutions employing them. It is about time malpractice and parallel companies were addressed. Such companies are outside the laws affecting ordinary transactions because they are in the financial services sector, but that should not make a difference. This will be dealt with comprehensively in the whistleblowing legislation.

We have a new economy and a fresh start. We know what went wrong and it must be ensured it will not happen again because our financial memory is short. We should have listened to the warnings of commentators in the late 1920s and early 1930s and the inaugural speech of President Roosevelt who threatened to do away with merchant banks that had increased the credit available beyond the capacity of people to repay. The responsibility of those in the financial sector is double that of those who operate in the main economy. Therefore, we should take strong action now to restore credibility. Banking is about credibility and belief. We have created the economic environment in which to trade in this country, but we do not want a scenario in a few years where we will find a bank trading from the IFSC has been responsible for wrongdoing in another country, which could easily happen unless the Government properly and comprehensively deals with white collar crime. Such crime has been more devastating to economies, people's livelihoods and well-being and the future of nations than other forms of crimes. That is why we must be deal with it finally, as we embrace a new economy and a fresh start in order that stability can be restored to the financial services sector.

There was a little confusion earlier which I said I would explain. I mentioned to our Whip, Senator O'Toole, that I was interested in this matter and he asked me to lead off. I had agreed to share time with Senator Quinn but then I discovered Senator Ross had a particular interest in the matter and I was happy to yield to him. That was the source of the confusion.

The reason I have an interest in the debate is I have tabled motion No. 16 on the Order Paper which has been seconded by Senators Bacik, Quinn and Mullen on whistleblowing, a serious issue. I have also had direct involvement with two whistleblowing cases and, on both occasions, the persons involved lost their jobs and were not protected, to which I will refer again.

The Minister of State's contribution was bland and he made a number of worrying comments. He stated, for example, in trying to define "whistleblowing", it is "usually interpreted to mean the reporting in good faith of a breach or potential breach of the law...". However, there are other standards such as good governance, morality, the protection of children and so on and they are inadequately covered because the Government parties have withdrawn and retreated from their original position which was to introduce general legislation. They gave a commitment in this regard but then withdrew it under pressure from now discredited financial sources. The Minister of State said, "while one grand-slam piece of legislation to provide blanket protection would be desirable, there were considerable legal obstacles...," which he did not specify. Perhaps he will mention what these are. Is it not curious that these fanciful objections have not obstructed successful engagement on the neighbouring island, the United Kngdom, where for the past ten years a comprehensive whistleblowing law has been in place and operated without once dragging the system into court? There has not been the slightest legal hitch, which is interesting.

The Minister of State then recited laws that provided a degree of whistleblowers protection. There are 15 in all, but they are patchy and irregular. There is no harmonisation and they do not give the degree of protection required. I will refer to a number of specific instances later. He stated blandly, "Generally, disclosures are protected where they are made in good faith...," but that is not the case. That is simply not true and it is dangerous to give people a false sense of security that they are protected by legislation when they simply are not. That is where I would start from.

This issue has arisen in the aftermath of a direct call by the Director of Public Prosecutions, Mr. James Hamilton, for the introduction of legislation in this area. It is in my experience highly unusual for an officeholder such as this to engage with the Government in this way. Therefore, it is appropriate to take action. It is three years since a body called the company law review group lobbied against such a proposal. This was an interesting group as it was chaired by Dr. Courtney, a partner in the leading firm of lawyers, Arthur Cox, which does quite a bit of government work. It rejected the idea of a law on whistleblower protection in 2007 stating, ‘"One cannot say that there is any evidence of endemic failure in relation to corporate governance or its enforcement in Ireland that negatively affects the investment climate and which requires enhanced ‘whistleblowing' provisions." It is interesting that the group stated there was no evidence of corporate governance queries or problems. Perhaps its members had not heard of the Ansbacher bank, about which I wrote an article in the Evening Herald at the time. Therefore, I knew about it, but, apparently, this group was unaware of it, which suggests a degree of ignorance that might not place its members in the best position to advise a Minister. What about National Irish Bank, Allied Irish Banks, Irish Trust Bank, PMPA and ICI which resulted in the taxpayer bailing out a major financial institution and so on?

A series of whistleblowers in AIB paid the price prior to 2007. Mr. Tony Spollen, group head of internal audit, had to leave after preparing an internal report that the bank faced an estimated €100 million liability over its failure to collect DIRT and he was proved completely right. Whereas politicians and bankers have been asleep on the jobs, there have been useful contributions by commentators in the press recently, in particular, Kathleen Barrington in the Sunday Business Post and John Devitt in The Irish Times. In 2001 Mr. Rupert Walker was sacked by the British subsidiary of AIB, Govett, because he had blown the whistle on dodgy practices within the bank. Former AIB group internal auditor, Mr. Eugene McErlean, was not fired but his contract was not renewed. Senior officials in the bank tried to pin the Rusnak scandal on him in revenge because he had brought to the attention of the board matters, including overcharging and peculiar offshore trading in the bank’s shares. He also brought them to the attention of the Financial Regulator and paid the price.

I raised two cases in the House, one of which related to the former head of ISME whose civil rights have been completely violated. People in Departments lied and suppressed information that was necessary and the Garda obfuscated and they are continuing to do so, despite questions being raised in both Houses. He cannot get justice and lost his job. I also raised the case of a whistleblower in the IFSC who had brought to my attention and that of the House a serious situation regarding a major bank in the centre. Nobody took him up on it until Süddeutsche Zeitung got into it. Where an employee in a bank reports dodgy loans, for example, he or she will not be protected under the proposed legislation. If a nurse innocently and honestly makes a report on bad conduct, she could be sentenced to three years in jail. Does the Minister of State think that is a serious response? He referred to good faith, but I am outlining what is the actual situation. My niece is in a school for special children and assumed to have reported certain bad practices to the HSE. At this moment she is probably in floods of tears in that school in north Dublin as she is being punished for being a whistleblower. Let us not pretend that this legislation is anything other than a farce. It does not do what it states it is going to do and it is clear we should introduce such comprehensive legislation as has successfully worked in other jurisdictions in the past ten years.

I welcome the Minister of State and the opportunity to speak on the subject of whistleblowing. There have been a number of high profile cases in the banking world where brave individuals have sought to highlight wrongdoing only for their careers and lives to be put on hold or, worse, ruined as a result. I have no doubt countless others would have made matters public on points of principle but were afraid because of concerns that in doing so, they might put their livelihoods at risk.

I note the Minister of State said the Government had never sought to play party politics with this issue. He mentioned the Labour Party Bill of 11 years ago and said a number of amendments were necessary in that regard. I cannot help believing those amendments might have been introduced at some stage in the past 11 years. If that had happened, we might have averted some aspects of the current banking crisis or at least mitigated some of the damage done by individuals in the intervening years since we attempted to bring forward that Bill.

The term "whistleblowing" comes from English policemen blowing their whistles on noticing the commission of a crime. The more technical term, as pointed out by the Minister of State, is "reporting in good faith", which has been defined as, "the public disclosure by a person, working within an organisation, of acts, omissions, practices or policies perceived as morally wrong by that person, and is a disclosure regarded as wrongful by that organisation's authorities". A whistleblower is someone who sounds the alarm within an organisation in which he or she works, aiming to spotlight neglect or abuses which threaten the public interest. Apart from the Labour Party Bill, the Office of the Director of Corporate Enforcement has done significant work on this issue and it is clear his office agrees with the Labour Party position that we need comprehensive regulation to protect whistleblowers such as the Public Interest Disclosure Act in the United Kingdom.

In 2008 the Office of the Director of Corporate Enforcement called for the inclusion of a whistleblower provision in the companies legislation. This proposal would have provided protection for whistleblowers in cases where the disclosure was made in good faith, where a person had sought to bring a matter to the attention of those responsible, internally at first or following attempts to address it internally if no action had been taken to remedy the default. Those proposals strike a good balance in ensuring people are encouraged to report matters internally, have such issues dealt with by their managers and only resort to whistleblowing as a last resort.

It is very disappointing that the company law reform group has rejected this proposal in its submission to Government on a new companies Bill. I note the Minister of State said that a majority recommendation of the group was to the effect that this should not be included in the new companies Bill. This conclusion was arrived at because the group took into account the degree of malpractice, the nature and extent of such disclosure, with the reputational risk for companies, and concluded that such an initiative was not warranted. I wonder whether the group would have come to the same conclusion today after all the wrongdoing highlighted in the past two years. I believe that, in the event, it would have come to a different conclusion.

Research from the United Kingdom has found that companies can lose up to 5% of turnover as a result of internal malpractice. Effective whistleblowing can help to counter and prevent this. While it is hardly surprising that the Government is running scared on this issue, it makes one wonder what it can be afraid of. It is disingenuous for the Government to state this can be dealt with sector by sector. This means, in effect, that only those working in a small number of State bodies which have a whistleblowing provision in their founding legislation will have legal protection while the majority of State employees and all those working in the private sector will have no protection at all.

Today we are focusing on the financial services sector and, yet again, the Government is showing its determination to avoid whistleblowing at all costs. A couple of weeks ago the Taoiseach admitted something all of us had known for the past two years, namely, that there had been a stunning failure of corporate governance in the banks. If we are to address the issue of these past failures, we need to put in place a strong and effective corporate governance structure, part of which would include effective policies and procedures to support those who feel the need to blow the whistle.

In the last month the Financial Regulator has published a draft code on corporate governance for banks and financial institutions which, as with the rehashed programme for Government, was produced in consultation with the Government. The contents of this draft code are broadly based on the provisions of the combined code of corporate governance with which companies listed on the UK and Irish Stock Exchanges are required to comply. One of the interesting omissions from this draft code was the provision of the combined code section C.3.4 in relation to audit committees. It states that audit committees should review arrangements by which staff of a company may, in confidence, raise concerns about possible improprieties in matters of financial reports or other matters as well. Will the Minister of State clarify whether the omission of this requirement concerning audit committees is deliberate on the part of the Government? If it is an error, he should clarify this because if there was a deliberate decision to exclude this provision, I am baffled as to why given what we now know. I call on the Government to review that decision.

A code is not sufficient. As we have seen, the banks have paid lip service to these whistleblowing policies and speak-up charters. We need effective monitoring and oversight of the corporate governance code to ensure the whistleblowing policies and procedures are put in place. We need to ensure they work in practice in order that whistleblowers know they can call time on malpractices within their organisations without fear of getting P45s for their efforts.

My party is determined to introduce strong whistleblowing legislation. We believe the unacceptable practices at the banks and in other public bodies might well have been uncovered sooner if such legislation had been in place. Although there are limited protections for employees in certain legislation, there are several problems also.

Not all employees in either the public or private sectors are safe from retaliation if they report wrongdoing. There is virtually no protection for whistleblowers in the financial services and business sectors and there is little in the way of whilstleblower codes and guidance to be found throughout the public service. Our proposed legislation will not harm any business that is compliant with the relevant regulations and ethics in their industry.

We have published the legislative proposals to give protection to the whistleblowers in the open government Bill 2010, which forms part of Fine Gael's political reform policy, New Politics. The Prevention of Corruption (Amendment) Bill 2008 was published on 6 June 2008. Two years later it still has not been enacted by the Government. The Minister for Justice and Law Reform said only two weeks ago that he was going to progress the Bill and only then because of sustained pressure to protect whistleblowers. We will certainly support this measure but believe it does not go far enough. For example, the Government has tabled an amendment to the Prevention of Corruption (Amendment) Bill 2008 which is specific to an offence under that legislation and relates only to the public service and to public officials only where they receive some personal benefit or obtain it from another person. The Government has inserted a whistleblower provision as an amending section, section 8A. This is very limited because section 8 itself is very limited. It is the only reference to corruption in public office.

In contrast, our proposals are deliberately general. We need far more than simply this limited offence of corruption in public office offered by the Government. Hence, the very broad list of areas where an employee can make a protected disclosure. This would cover, for example, a bank employee's reporting of the fact that the bank did not have proper internal auditing controls in place or was giving out loans without proper legal documentation. Another example is the misuse of public funds, as we saw in FÁS. The 2008 Bill provides for communication to "an appropriate person", which is defined as a member of the Garda Síochána, or, where the suspected transgression occurred in the course of a person's employment, the employer or a person nominated by the employer. We do not think this is satisfactory. Our proposals would allow for whistleblowing disclosures to be made by a nominated person who might be independent. For whistleblowing provisions to work, employees or members of the public must trust the independence of the person receiving the information. Nobody will go to his or her employer with information if there is no protection. It is recognised by all parties in the House that we need strong whistleblower legislation. We can only think of what could have been prevented if we had had such legislation before the banking crisis and the FÁS debacle. I recommend that the Government introduce stronger legislation than it is proposing in the form of the Prevention of Corruption (Amendment) Bill. I hope such proposals will be brought before us at the earliest opportunity.

I thank Senators for their contributions to the debate and particularly for the passion they have injected into it. I commit to discussing their inputs, including their concerns about restrictions on the proposals, with my ministerial colleagues, after which I will come back to the House to update it.

It is wrong to suggest, as some Senators have, that nothing has been done and that we are trying to ignore this issue. When one considers the range of legislation under which we have dealt with specific sectoral issues since the middle of the last decade, as Senator MacSharry mentioned, one can see the Government's intent in this regard. I have acknowledged that the position has changed since the company law review group made its recommendations. I also accept what Senator Norris said about events that occurred before that. We will reflect these changes in the Bills we will bring before the House in the autumn.

I again thank Senators for their constructive inputs. I will return to update the House at an appropriate time.

Sitting suspended at 4.35 p.m. and resumed at 5 p.m.