Seanad Éireann díospóireacht -
Thursday, 5 Nov 2020

Vol. 272 No. 3

Criminal Justice (Theft and Fraud Offences) (Amendment) Bill 2020: Second Stage

Question proposed: "That the Bill be now read a Second Time."

Minister of State at the Department of Justice (Deputy James Browne)

I am pleased to introduce the Criminal Justice (Theft and Fraud Offences) (Amendment) Bill 2020. The purpose of this relatively short Bill is to complete the transposition of Directive EU 2017/1371 on the fight against fraud to the Union's financial interests by means of criminal law, commonly referred to as the "PIF directive". This directive further harmonises the approach across the EU to the criminalisation of fraud affecting the Union's financial interests. I am hopeful the Bill will receive broad support in the House.

As Senators know, membership of the EU means that member states must contribute to the EU budget. Equally, member states receive funding from the EU budget through a variety of sources. Responsibility for protecting the Union's financial interests and fighting fraud is a shared responsibility between the EU bodies and the authorities within its member states. Member state authorities manage approximately 74% of EU expenditure and collect the EU's traditional own resources. As such, it is incumbent on all member states to take the necessary and appropriate measures to tackle criminal behaviour in relation to both EU revenue and expenditure.

The directive replaces the 1995 EU convention on the protection of the European Communities' financial interests and the related protocols, which was the first measure to create a common approach to the criminal prosecution of offences against the EU's financial interests. This directive establishes minimum rules concerning the definition of criminal offences and sanctions with regard to combating fraud and other illegal activities, including corruption and money laundering, which affect the European Union's financial interests. These financial interests refer to all revenues, expenditure and assets covered by, acquired through, or due to, the Union budget, the budgets of the EU institutions, or budgets directly or indirectly managed and monitored by them.

Fraud offences are, of course, not new to our legal system, or indeed to those of other member states. There are very few situations where the existing general offences on the Statute Book cannot be used to prosecute the relevant criminal behaviour in the State. Many aspects of the directive have not required legislation as the appropriate offences are already in place. However, this directive harmonises measures across member states and seeks to ensure that they are practical deterrents, that they fit together with other EU measures, and that they are effective against, in particular, cross-border crime.

The key offence of fraud affecting the Union's financial interests is already in place. Ireland first gave effect to this offence in section 42 of Part 6 of the Criminal Justice (Theft and Fraud Offences) Act 2001. The directive requires that the offence be updated to provide for a new offence of misappropriation and to apply the freezing and confiscation measures which are contained in the Criminal Justice Act 1994 to the proceeds of criminal offences under this Bill. This is achieved through an amendment to Schedule 1A to the Criminal Justice Act 1994 to enable the freezing and confiscation of instrumentalities and proceeds from the criminal offences in the Bill.

Other provisions in the directive are already provided for in existing legislation and therefore do not need to be separately provided for in this Bill. Notably, the Criminal Justice (Corruption Offences) Act 2018 and the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended, apply in their respective areas and satisfy the requirements of the directive. Another provision of the directive is that committing a serious offence within its scope as part of the activities of a criminal organisation is considered an aggravating factor in sentencing. This provision already exists on a general basis through section 74A of the Criminal Justice Act 2006, as amended.

In a European context, the directive is of particular significance in that it defines the scope of offences falling under the European Public Prosecutor's Office, EPPO. Although Ireland is not participating in the EPPO, those offences will be prosecuted by the EPPO in other member states, potentially in co-operation with Irish authorities, so I would like to address developments in respect of that office. As Senators will be aware, the establishment of an EU-level body with investigative and prosecution powers was under consideration for many years. The legal basis for it was ultimately included in Article 86 of the Treaty on the Functioning of the European Union, as introduced by the Lisbon treaty. The regulation for its establishment entered into force in 2017 through a special legislative process and 22 member states are participating in it. Ireland, Denmark, Sweden, Hungary and Poland are not taking part. A European chief prosecutor and 22 nationally appointed European prosecutors are now in place and the EPPO is expected to be operational by the end of 2020.

In respect of Ireland's participation in the EPPO, the development of a supranational investigative and prosecution authority, even one with a relatively limited scope, clearly presents fundamental questions of policy which are outside the scope of the Bill. However, I note that a critical difficulty would have arisen whereby Irish courts would not be entitled to exclude evidence the collection of which contravened rights under the Constitution. Under the EPPO regulation, evidence would potentially be admissible based on other member state legal regimes and the regulation itself. In more general terms, challenges arose in how the EPPO structures would have interacted with our common law regime, given that the EPPO built primarily from a civil base. Although Ireland could not take part, we recognise that the establishment of the EPPO is an important and innovative EU measure and we have been working closely with participating member states and the EPPO, in particular to look at how co-operation with non-participating member states will work.

Although details of the arrangements are currently being worked on, the expectation is that under Article 105(3) of the EPPO regulation, participating member states will designate the EPPO as a competent authority within each for the purposes of making mutual legal assistance and European arrest warrant requests to non-participating states. These issues are currently under detailed consideration. It is important that we avoid conflicts of jurisdiction and ensure legal certainty in respect of requests. We will be consulting and taking into account the advice of the Attorney General on these matters. It is important to emphasise that the fact that Ireland is not participating in the EPPO does not prevent us from prosecuting such crimes in Ireland. Such offences will be dealt with by the relevant agencies within the criminal justice system, such as An Garda Síochána and the Director of Public Prosecutions.

I will now turn to the content and provisions of the Bill before the House. As I noted, it is a relatively short and primarily technical Bill comprising 11 sections and a Schedule. Section 1 is a standard provision defining the principal Act as the Criminal Justice (Theft and Fraud Offences) Act 2001.

Section 2 amends section 40, which is the interpretation section for Part 6 of the 2001 Act, and substitutes the definitions which will now apply to Part 6. In particular, it provides that the offences in the Bill have the same meaning as they do in the directive. This means that the offence of fraud affecting the financial interests of the European Union has the same meaning as in Article 3(2). The section provides that the offence of misappropriation has the same meaning as it has in Article 4(3).

It also provides that "corruption offence" means an offence under section 5 of the Criminal Justice (Corruption Offences) Act 2018 and that "money laundering offence" means an offence under Part 2 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. Definitions of terms such as "national official", "public official", "union official" and "foreign official" are also included.

Section 3 amends section 42, the existing offence provision for fraud affecting the financial interests of the EU. It provides that the elements of the conduct that constitute the offence of fraud, when committed intentionally, can be in respect of non-procurement related expenditure, procurement-related expenditure, revenue other than revenue arising from VAT own resources, and revenue arising from VAT own resources in cross-border fraudulent schemes where the total fraud involves a value in excess of €10 million. A person guilty of an offence is liable on conviction on indictment to a fine or five years' imprisonment or both.

Section 4 inserts a new section 42A into the 2001 Act, which provides for the new offence of misappropriation. Section 2 provides that it has the same meaning as in Article 4(3) of the directive, which means the action of a public official who is directly or indirectly entrusted with the management of funds or assets to commit or disburse funds or appropriate or use assets contrary to the purpose for which they were in any way which damages the Union's financial interests. A person guilty of an offence is liable on conviction on indictment to a fine or to imprisonment for a term not exceeding five years or both.

Section 5 inserts a new section 42B into the 2001 Act providing for liability for offences by a body corporate in respect of an offence under section 42 or section 42A and provides for penalties on conviction on indictment of imprisonment and-or a fine.

Section 6 amends section 45 of the 2001 Act and provides for extraterritorial jurisdiction. I intend to bring forward amendments on Committee Stage in respect of dual criminality and to extend the jurisdiction where the criminal offence is committed by a resident of the State or a body corporate established in the State.

Section 7 provides for a technical amendment to section 58, regarding liability for offences by bodies corporate under the 2001 Act, to exclude the application of section 58 of the principal Act to Part 6 in view of the new section 42B inserted by section 5.

Section 8 provides for the insertion of Schedule 1A in the principal Act containing the text of the directive.

Section 9 adds the offences of "fraud affecting the financial interests of the European Union" and "misappropriation" to paragraph 10 of Part 2 of Schedule 1A of the Criminal Justice Act 1994. Article 10 of the directive requires measures to be put in place, in accordance with Directive 2014/42/EU, to enable the freezing and confiscation of instrumentalities and proceeds from the criminal offences in the directive. The principal offence of money laundering and active and passive corruption are already subject to these measures.

Section 10 provides for the repeal of sections 41, 46(4) and 47 and Schedules 2 to 9 to the principal Act. These Schedules are the 1995 Convention and related protocols on which Part 6 of Criminal Justice (Theft and Fraud Offences) Act 2001 is currently based, and as they are being replaced by the directive they will, therefore, no longer be relevant.

Section 11 is a standard provision, providing for the Short Title, collective citation and commencement provisions. The changes this Bill will make to our existing legislation enables us give full effect to the EU directive. As the transposition date for this was 6 July 2019, I hope Senators will facilitate its speedy passage through the House as enactment of this Bill will demonstrate Ireland's continued commitment to tackling fraud affecting the Union's financial interests.

As I previously mentioned, I propose to bring forward amendments on Committee Stage regarding the extraterritorial jurisdiction provided for in section 6. I also intend to bring forward technical amendments to include the new offence of misappropriation in the relevant Schedules to the Criminal Justice Act 2011 and the European Union (Passenger Name Record Data) Regulations 2018. I look forward to considering the Bill further with Senators on the remaining Stages, and I commend the Bill to the House.

Senator Robbie Gallagher

The Minister of State is welcome back into the House for consideration of this legislation, which is short and technical. We in Fianna Fáil are happy to support this Bill transposing EU directives that will help in the fight against fraud and that will be in the financial interests of the EU. It is critical that we have good co-operation across the EU when it comes to tackling areas of fraud such as those mentioned. I understand the level of fraud involved is largely unknown.

However, some informed sources have said that the figure could reach as much €500 million per annum, a sizeable sum of money in anybody's language. It is important that such a large sum of money, which could be used for the benefit of EU citizens, is not lost. We can think of many areas in need of funding and this is a massive amount of money, so it is vital that every effort is made to ensure there is a consistent approach to fighting fraud such as this across the EU.

The Minister of State mentioned that not all member states have transposed this directive into their national law. Why is there a problem with some states? The Minister of State mentioned Portugal and a few others. Is there a particular problem or what is the reason for the delay? How many member states have yet to sign up to the directive, and is there a timeframe for it to be transposed into the member states' legal systems? With regard to this type of fraud, do we have arrangements with other states outside the EU and what is the position there? In the context of Brexit and our neighbour, the UK, leaving the EU, what effect will that have on existing arrangements that may be in place in respect of this type of fraud? Are there any plans to formulate a relationship with the UK after 31 December when Britain leaves the EU?

I am happy to support the Bill on behalf of Fianna Fáil, and I look forward to it being passed speedily by the House.

Senator Barry Ward

I welcome the Minister of State back to the House. Like my colleague, Senator Gallagher, I welcome the Bill. Fine Gael is supporting this legislation which is very important to implement the existing directive relating to these matters. This legislative measure comes at the end of a long path of legislation in this area. Obviously, theft, fraud and dishonesty offences are as old as time. In 2001, Ireland passed an Act which gave effect to other international conventions at that time and replaced the Larceny Act 1916 and many of the outdated provisions in that Act. The 2001 Act was the standard bearer in respect of dishonesty offences and has been for almost 20 years, but this is the tenth iteration of amendments to that legislation so it has had to be updated as the nature of crime in this area has changed and become particularly advanced. I refer, in particular, to the cybercrime and corruption offences that are targeted by this amendment to Part 6 of the 2001 Act.

We have often been critical in recent months of the fact that legislation gets pushed through the House. I welcome the fact that the Minister of State is both initiating this Bill in the Seanad and giving us an opportunity to deal with it and also allowing us to deal with it in an appropriate fashion, by starting with Second Stage and canvassing the views of Members. I also note what he said about bringing forward amendments on Committee Stage and we look forward to that. I congratulate him on taking a reasoned approach to this.

I noted what Senator Gallagher said about the difficulties other states have had in transposing the directive into their national law. I am not sure that Ireland is in a position to cast stones in that regard, because we have been quite slow in doing so with other legislation. I also note that the Commission is due to bring a report before the European Parliament on 6 July 2021. In light of what the Minister of State said, I certainly hope we will have it passed and in law by then and that the Commission will be in a position to report on the provisions we have put in place to implement the directive, which is an important one.

There was also an opportunity in this legislation to examine, perhaps, gaps that have arisen in the last 20 years in the ordinary course and beyond what this Bill specifically does in terms of transposing the directive, for example, the provision of greater penalties in respect of making a gain or causing a loss by deception, which is provided for in section 6 of the 2001 Act.

The Oireachtas has taken time since the 2001 Act and in recent years to make a very clear policy statement in respect of the unacceptability of certain offences by marking specifically harsh or strong penalties in respect of certain types of offence, or offences that take place at a certain level. I have in mind specifically section 15A of the Misuse of Drugs Act 1977, as amended. The section provides a presumptive minimum mandatory sentence of ten years in respect of the possession of drugs for sale and supply of greater than €13,000. I recognise that the operation of the measure in practical terms has a different effect than was perhaps intended by the Oireachtas but nonetheless the Oireachtas took an important step in making a clear statement that the State would not tolerate drugs activities at that level.

When we look at section 6 of the 2001 Act, we can also say that it is possibly appropriate for the State to make a similar statement in respect of fraud and deception, also at a very high level. In recent years we have seen prosecutions in this jurisdiction for extraordinarily high levels of fraud alleged against individuals. It would potentially have been appropriate in this legislation to bring forward, perhaps a section 6A, to provide for a minimum mandatory sentence in respect of fraud above a certain level. I do not prescribe what that is, but there was an opportunity there to look at that.

Notwithstanding that, I think it is very important to have regard to what is in the Act. By my reckoning, it really does three specific things in extending the definition of fraud within the context of the European Union's financial interests; defining the offence of misappropriation and the extraterritorial applications provided for in section 6. I wish to make a point specifically in respect to the definition of "misappropriation". I heard what the Minister said about the definition section that is provided for in section 2. Misappropriation is said to have the same meaning as it has in Article 4(3) of the directive, which is included as a Schedule to the Bill. From the point of view of making legislation more accessible to the public, as much as it is to practitioners, I wonder if a definition of misappropriation could be put into the definition section rather than forcing anybody who wants to see what it is to go to Article 4(3) of the directive, which I think is on page 17 of the Bill, and to read the definition that is provided there. I think it would make it easier.

This is the tenth iteration of amendments to the theft and fraud offences legislation in Ireland. It includes corruption offences, which the Minister mentioned. I think she also mentioned money laundering and terrorist financing, which were dealt with in the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 but, equally, it covers everything from social welfare and burglary of dwellings to miscellaneous provisions and mutual assistance. There is quite a lot of legislation here.

I have regard in particular to the great work the Law Reform Commission does in providing access to consolidated legislation, which makes it a great deal easier for anybody who wants to parse what is in the legislation to look at a consolidated Act. Again, there is possibly an opportunity for these Houses to consider consolidating the theft and fraud offences legislation into a single Act in order that we have easy access to all the relevant considerations.

Finally, I will address the extraterritorial application of the offences, as provided for in section 6. I welcome this, as I believe it is very important. Again, the nature of these offences is changing. The international nature of them is clear now and we need legislation like this to ensure that the State is equipped to deal with those matters. I do not have any difficulty with the provisions in section 6 relating to the fact that an offence committed in another State, which is an offence there, can be an offence here. That already exists in other Irish legislation. Is it possible to clarify that the principles of autrefois acquit and autrefois convict would equally apply, so that one does not have a double jeopardy situation where somebody was facing charges in both states? I think provision is already made for that generally in law but it might be worth confirming that this is the case.

I welcome the legislation. I think it is timely. I think Ireland is clearly acting in an expedient manner in terms of putting an important directive into Irish law so that it is there and we comply with our obligations under European law. As the Minister said, the Bill is quite short and it uses the Schedules to the Act to slim down the text of the Bill itself but there is a solid legislative basis for us to proceed. I welcome the Bill.

Senator Ivana Bacik

I welcome the Minister, Deputy McEntee, to the House and congratulate her on her appointment. It is my first opportunity to do so.

To echo the words of previous speakers who spoke of the Bill as "technical", and I believe the Minister of State used that word himself, the Bill is primarily technical in nature. We have, however, seen some Bills purporting to be technical in nature rather rushed through this House that have created a great deal of controversy in recent weeks. So, I have heard those words with a somewhat dread feeling, which I am sure was shared by others also. This Bill, however, is genuinely a technical one and I am happy to support it on behalf of the Labour Party Senators.

Previous speakers have also referred to the fact that the Minister will bring the Bill forward only to Second Stage today and that we will have some time, which will be short no doubt, before Committee and Remaining Stages. That should not need to be said. It is exceptional that we would see Bills being rushed through this House on all Stages. Unfortunately, that exception has proven to be the norm in recent weeks over this term. I am glad that we are only dealing with Second Stage today, but it is partly because we have the Seanad Chamber today and therefore could not be dealing with Committee and Remaining Stages in any case. I note that the Minister will have amendments on the extraterritorial issue in section 6 coming forward on Committee Stage.

I disagree with the Senator who spoke about minimum mandatory sentences. They are not commonplace in Ireland's sentencing system and I do not believe they are a good idea. They do not have any evidence basis for their effectiveness and it is welcome that we have not moved towards minimum mandatory sentencing in general in our criminal justice system.

This is a somewhat technical Bill. I will not speak for very long on it. I am aware that it is before us with the purpose of transposing remaining provisions of the 2017 directive known as the PIF directive. I am grateful to the Oireachtas Library and Research Service for its usual excellent work in informing us about the background to the Bill, and for informing us that the name "PIF", which I had wondered about, is an acronym of the French for protection of financial interests.

The directive is about protecting the EU financial interests and therefore the provisions in this Bill are primarily amending the Criminal Justice (Theft and Fraud Offences) Act 2001, but doing so in order to create offences around fraud affecting the financial interest of the EU. Some aspects of the PIF directive have already been transposed into our law via the Criminal Justice (Corruption Offences) Act 2018, which replaced some provisions in Part 6 of the Criminal Justice (Theft and Fraud Offences) Act 2001.

My primary question for the Minister is why the 2018 Act did not transpose all of the relevant provisions of the directive. In other words, why is this Bill actually necessary? I am particularly interested to know the answer to that given that the transposition deadline for the PIF directive, a largely technical directive as we have heard, was 6 July 2019. This is not timely, it is actually overdue. We have already had legislation before the Houses that passed in 2018, which already has inserted some of the relevant provisions from the directive into the 2001 Act. I have a question about why we are only seeing this legislation now, especially given its relatively technical nature.

I have two more points to make. I note that the Bill amends the 2001 Act. The 2001 Act was itself a major piece of codifying and reforming legislation bringing together, as it did at the time 19 years ago, all of the pre-existing law on theft and updating it. I am certainly old enough to remember teaching my students about the Larceny Act 1916, and indeed defending before the courts on prosecutions under that Act. The 2001 Act was a very welcome piece of codifying legislation. Senator Ward referred to the need for consolidating legislation more generally, and made the point that this is the tenth version of amending legislation to the 2001 Act that has been before the Houses. We have excellent consolidating work going on with the Law Reform Commission and others, but we in the Oireachtas have a duty to ensure we are not engaging in piecemeal amendment over different pieces of ad hoc legislation. Again, my question is why we could not have had just one piece of legislation amending the Part 6 of the 2001 Act to transpose the directive. Why is there a need for two? Now we should really be looking at a more wholesale codification of the 2001 Act and its subsequent amendments to ensure we have a criminal theft code. Theft and fraud offences are not the only area, indeed they are not by any means the most problematic area, where we see this sort of piecemeal and ad hoc reform and amendment. Sex offences law is a real area crying out for codification. Many of us have spoken on this many times. We need to see a proper codifying Act that brings together the vast array of these different offences, and especially sex offences against children, on which I did some work a few years ago.

As a result, inconsistencies have arisen over the years and have been litigated before the courts in the context of the provisions of sentencing, etc., on those very serious offences. We could take a lead from companies law where we have very good consolidation in statute. That is a general call.

I note the Minister of State's comments about the European Public Prosecutor's Office, EPPO. Ireland is one of five members states which has not taken part in the EPPO system. We opted out of that under Protocol 21 along with four other states on the basis of concerns over our constitutional due process guarantee over our rules regarding admissibility of evidence and more generally because our common law system is different and has evolved differently from the civil law system pertaining in other member states. I absolutely support that. In previous justice committees I have supported us taking a different perspective on criminal law matters. Obviously, Ireland is not the only member state to do so.

However, there are aspects of the civil law system that we can learn from and can borrow from for our own criminal justice system. One of these is the idea of codifying criminal laws so that they are easily accessible and understandable. Consistency across different provisions is a very strong feature of European criminal justice systems. There is also the issue of the protection of victims' interests. While we have very strong due process laws which I strongly support, we can learn from other European systems in strengthening the role of the victim and enabling the victim to have a voice within the criminal justice system through the partie civile method and other mechanisms. We are changing and improving our system to take account of those good practice measures elsewhere. When we are debating legislation that is European criminal justice legislation, we should bear those points in mind.

I support the Bill and thank the Minister of State for coming to the House.

Senator Niall Ó Donnghaile

Cuirim fáilte roimh an Aire Stáit. Silim gurb é seo a chéad seal ag plé ábhair linn ina ról nua. Déanaim comhghairdeas leis.

Before I speak to the Bill, I touch on an issue that may appear a bit awkward. I am sure it will not be lost on people that today the Government is bringing through legislation that aims to protect the EU's financial interest while we still have the ongoing saga of Apple's tax affairs. The Government's attitude towards the Commission was to fight it in the courts instead of doing the right thing in that regard. I know this Bill is not related to the Apple tax issue, but it should not be lost on anybody here that the EU directive which we are beginning to transpose into law here comes from the belief that the EU's finances must be protected in the same way that we must protect our own financial interests. The tax loopholes here have contributed to the EU's frustration with tax avoidance. It is embarrassing that the State is involved in legal disputes that allow Apple to run away with €13 billion that should have been taxed, ach mar a duairt mé, sin scéal eile. That said, Sinn Féin will support the Bill.

It is welcome that the Bill tackles further aspects of white-collar crime, corruption, fraud and tax evasion even though it is more specific to offences against the EU's financial interests. The Bill aims to tackle fraud that affects the EU's financial interests. We know the complex VAT fraud and what are known as carousel fraud operations have used shell companies and Irish banks. Of course, they have been unwittingly involved, but criminal enterprises have used Irish banks to commit serious offences. Therefore, it is right that Ireland plays its part as a member state and implements the legislation to give effect to this EU directive. We know that these types of crimes cost EU taxpayers billions of euro each year.

Criminal liability for corporate bodies is very welcome, particularly the failure-to-prevent model, notwithstanding the difficulties highlighted in the court cases with proving intent. I hope it will provide another aspect of liability should a corporate body be negligent in preventing the offence. However, I note that the specific type of corporate criminal liability only applies to offences that affect the EU's financial interests. The clear aim of Article 10.2 of the 2013 directive and section 9(1) and (2) of the 2017 Act is to drive corporate bodies to ensure that they have mechanisms in place to ensure that their managements prevent employees and subsidiaries from committing offences under the Act and the failure-to-prevent model is considered appropriate.

The Law Reform Commission has suggested that this approach could give rise to difficulties and could potentially be unfair. The commission also stated that other legislation has "overcome this particular potential difficulty by requiring that the contingent offence be committed for the benefit of the corporate body as an express proof of the corporate liability mechanism." It further indicated that it is considered one of the toughest approaches to corporate crime. Can the Minister of State tell me why, in this instance, we did not take the tougher approach to corporate offences?

I want to mention a couple of concerns that I am sure the Minister of State will engage with me on as the debate on legislation proceeds. I agree with other colleagues who have welcomed the fact that we are getting a regular, proper approach in terms of this legislation's journey through the parliamentary process.

The EU directive failed to create a harmonisation of penalties for these offences across member states. I know that the Council has its reasons for that. However, this type of criminality is generally carried out across borders where a problem arises. I mean if the penalties differ across member states it could give rise to issues of legal uncertainty for defendants and concerns about the fundamental rights of defence and entitlement to a fair trial. Does the Minister of State have any thoughts on mitigating the issues that might arise in terms of those fundamental rights? While these crimes are serious, we must still ensure that defendants are treated with their right to justice in mind. I hope that the Minister of State or the Taoiseach have engaged at EU level to ensure that this is not going to be a major issue of concern for us as we move forward.

Other parts of the directive improve harmonisation across member states by actually recognising that fraud and tax evasion affect EU finances under criminal law, which is welcome. What concerns me deeply is that part of this island, with Brexit, is being dragged out of the EU and, therefore, these measures will only have effect on one part of Ireland. I would like to hear from the Minister of State, if he is in a position to provide the information at this stage, on what he thinks the implications will be for the people of the North and, indeed, of the whole of the island in terms of preventing cross-Border fraud, as well what will be the consequences for fundamental rights, in the context of the EU, as a result of Brexit. How will Ministers engage with their colleagues north of the Border?

Sinn Féin supports the Bill at this point. I am sure that, like others, we will seek to amend it on Committee Stage. At the moment, however, we are content. I look forward to working with the Minister of State, his officials and other colleagues across the House.

Senator Rónán Mullen

Cuirim fáilte roimh an Aire Stáit. I support this Bill. It is technical legislation that transposes a directive and replaces a range of existing EU directives and regulations. The directive and this Bill are aimed at stamping out crimes against the EU budget and specifically mentions fraud that affects the financial interests of the European Union. To be clear, we are talking not just about, for example, the misappropriation of funds that might be obtained under the EU budget but also fraud or wrongdoing concerning money from national budgets that could contribute to EU resources. I mean the EU budget being made up of the EU's own resources, as they are called, namely, its share of customs duties collected by member states, a portion of the VAT collected by member states and a fixed percentage of the gross national income.

Is this legislation about crimes against member states which would affect those areas of national income-gathering that would indirectly impact on the portion of their national incomes contributed to the EU? Is that what we are talking about? So it is not just the misappropriation of funds obtained from the EU, for whatever purpose, but clearly applies to broader areas of activity such as VAT, fraud or whatever, which affects member states. Is it our understanding that that is also fraud as it affects the financial interests of the European Union because it affects the moneys available to member states from which a portion is given to the European Union? In that context, I am conscious of the role of the EPPO which will only begin its operations this month. That is probably why the Bill is before the House now.

The EPPO investigates and prosecutes crimes against the EU's financial interests, including fraud concerning EU funds of over €10,000 and cross-border VAT fraud cases involving damages above €10 million. It is targeted at particularly high-end fraud, with small issues being handled domestically. Up to now, only national authorities could investigate and prosecute these crimes and they cannot act beyond their borders. The EPPO will have a European delegated prosecutor in each member state. Ireland has opted-out of participating in the EPPO, as did the UK originally. Obviously, the UK will not be opting-out of anything any longer. Ireland opted-out on the grounds that the Director of Public Prosecutions, DPP, is independent of Government and of the police and it being part of an EPPO might undermine its independence. We are a common law jurisdiction. Is it the ongoing position of the Government that we will be opting out of the EPPO? Is there any intention to opt-in in the future? How is it envisaged the DPP will handle cases covered by this legislation in the absence of having an official delegated prosecutor within its ranks?

In 2016, the EU's fight against fraud annual report found 1,410 instances of fraud involving some €391 million. I recently read the regulatory impact analysis on this Bill, published by the Department of Justice, arising out of which I have a question. It states that the EU Commission estimates that implementing the directive would result in a saving of €477 million across the EU. The Department's analysis is that it is not possible to quantify what portion of that €477 million would result from Ireland's transposition of the instrument. I ask the Minister of State to address that point. On what basis did the Commission reach the figure of €477 million and why can a country-by-country breakdown not be given, even in very general terms? The Commission's fight against fraud report gives a national breakdown. If it has a means of estimating an overall figure, surely it would be able to estimate a breakdown by country. It would be of benefit to know what kind of money could be saved by the passage of this Bill into law. I am wondering why there is no country-by-country breakdown by the Commission or Ireland. Is it about protecting the reputations of certain countries? Is it the case that the further east one goes the further into the wild west one goes and so on? I would be grateful if the Minister of State could address that issue as well.

Acting Chairman (Senator Victor Boyhan)

As no other Senators are offering, I call the Minister of State, Deputy Browne, to respond to the debate.

Minister of State at the Department of Justice (Deputy James Browne)

I thank Senators for the support expressed for the Bill, which while technical is important. I thank them for their contributions and the points raised, some of which were very interesting and relevant as I expected. I am glad the Bill was commenced in the Seanad and that adequate time is provided in that regard. It was suggested by my Department that the Seanad be used in this manner as much as possible. There are a number of pieces of legislation in the Department of Justice that have fallen behind schedule. There is no reason in the world they cannot be brought before the Seanad first, with adequate time provided for scrutiny.

While the Bill is a relatively short and technical Bill, the importance of this area should not be understated. These crimes are not victimless. We all pay for them. Updating the legislation to reflect fully the new requirements arising out of the directive is important to keep pace with new behaviours and is an important step in showing our commitment to dealing with this type of illegal behaviour. I do not propose to deal with all of the issues raised but I will touch on some of the points raised by a number of Senators.

The main point raised by Senator Gallagher was that a number of states have not signed up to the EPPO. Most states have transposed it. Ireland is late in transposing it. It is my responsibility to get through as quickly as possible the EU legislative matters that have been held up, but with due consideration and assessment, which is what I am trying to do in terms of the various Bills I am bringing forward.

Brexit will cause serious difficulties. There is no question about that. I know Senator Ó Donnghaile raised this issue as well. We still hope there will be an agreement between the EU and the UK that can address all of these concerns. If there is no such agreement, the fallback will be to try to agree a bilateral arrangement with the UK, although I hope that will not be needed. If that cannot happen, we will go back to international conventions, which would cause serious difficulties, whether that is in family law, crime or any other area. I hope we do not end up in that position because it would be serious and difficult for us to deal with.

Senator Ward raised a number of important issues, such as minimum mandatory sentences. Some of the decisions of the Supreme Court in recent times seem to be against minimum mandatory sentencing. I am not a particular fan of minimum mandatory sentences. While they give out a clear message, in many cases they catch not the serious players but the people the serious players are taking advantage of. Even the mandatory sentences in place now are often more honoured in the breach than the observance by the courts these days. I will seriously consider the matter, however. We need to send out a clear and strong message that this is a serious offence. Deception and fraud are not taken as seriously as they should be by some people, including criminals. This is certainly not a victimless crime. Outside the scope of this legislation, we have recently seen that some young people are using their bank accounts to effectively carry out fraud, perhaps without even realising what they are doing. They are seriously damaging their futures as a result.

This is the tenth iteration of amendments to this Bill. It is an issue on which I have always been strong, even as a practising barrister. People often spend a great deal of time finding out exactly what the law is. This can cause problems with the Garda Síochána as well. Not only do we need to see greater accessibility to and consolidation of legislation, I also want to see a greater emphasis placed on plain English. An awful lot could be done on that in this country in various departments and in terms of law in particular. Other jurisdictions have done some good work around this and it is something that is absolutely needed here. As we know, ignorance of the law is no defence but one should be able to find out what the law is. For this reason, I want to see greater work done on that.

Some of my comments have touched on certain of the matters correctly raised by Senator Bacik. I do not know why this issue was not dealt with in the 2018 Act and I acknowledge that we are late in transposing this directive. In my role as Minister of State at the Department of Justice with responsibility for law reform, I have a focus on transposing EU legislation and doing so on time. I intend to use the Seanad for a considered debate on these technical Bills. The Seanad is an appropriate place for doing that.

Codification is needed in various areas, including sex offences. There are a number of lacunas in this area. I am familiar with one from when I practised criminal law, namely, that nearly all cases of rape are dealt with in the High Court but rape with a digit is dealt with in the Circuit Court. That is an anomaly but those kinds of anomalies are increasing as a result of the piecemeal approach we have taken to these offences. I agree that codification is very important.

We are strong on the issue of due process but, again, the voices of victims have not been heard in the way they should have been heard. In fairness to the Minister, Deputy McEntee, she has made some strong statements around that and she intends to introduce reform to give victims a greater say and role in criminal processes.

I addressed Senator Ó Donnghaile's main concern about what will happen if an agreement is not reached with Brexit. It is a serious situation and the Senator raised an important point. The guillotine is coming down on the negotiations so I hope that an agreement can be reached. Otherwise, we will find ourselves in a very serious situation.

Senator Mullen raised some important points. I do not have answers to his questions on the European Commission, the €477 million of savings or the breakdown but I will endeavour to get that information for him. The main reason we have not opted into the EPPO is that there are issues with exclusion of evidence. The courts here would be required to accept evidence that would probably otherwise be excluded under the Constitution. Our view is that the Constitution and the due processes provided therein must be protected.

Obviously, it is always possible to opt in but it would be very difficult to see that happening.

Detailed consideration will be given to the Bill on Committee Stage. I thank Senators for their contributions to this debate. If any Member has any issue with the Bill that he or she would like to discuss outside the Chamber, I am happy to do so.

Question put and agreed to.

Acting Chairman (Senator Victor Boyhan)

When is it proposed to take Committee Stage?

Senator Barry Ward

Next Tuesday.

Committee Stage ordered for Tuesday, 10 November 2020.

Sitting suspended at 2.30 p.m. and resumed at 3.15 p.m.