Dáil Éireann Debate, Wednesday - 7 February 2018
30. Deputy Maurice Quinlivan asked the Minister for Business, Enterprise and Innovation the interim actions being taken to ensure white-collar crime is investigated fully pending the establishment of a new agency to replace the Office of the Director of Corporate Enforcement. [6083/18]
Amharc ar fhreagraI wish to ask the Minister about the Office of the Director of Corporate Enforcement, ODCE. As she is probably aware, many people have serious concerns about it and its workings. Pending the establishment of a new agency to replace what I believe is a non-functioning one, how will the Minister ensure that white-collar criminality is investigated and that those responsible are prosecuted until the new agency is up and running?
On 2 November last year, the Government published a suite of measures aimed at enhancing corporate governance, increasing transparency and strengthening Ireland's response to white-collar crime. The implementation of these measures is progressing across three Departments, namely, the Departments of Business, Enterprise and Innovation, Justice and Equality and Finance.
With regard to my Department, since that publication was launched work on the development of the legislative framework for the establishment of the ODCE as an agency has commenced. It is expected that the general scheme of a Bill to give effect to this decision will be published by the second quarter of 2018, with publication of the Bill by the fourth quarter of 2018. The Companies (Statutory Audits) Bill was published on 6 November 2017. The Second Stage debate on that Bill took place on 23 January 2018 and Committee Stage is scheduled for 21 February 2018. The Company Law Review Group has submitted its report on corporate governance. This is currently being examined with a view to further enhancing the corporate governance provisions of the Companies Act 2014. The public consultation to seek views from stakeholders to inform the transposition of the shareholders' rights directive commenced ahead of schedule, with responses due back by 9 February 2018.
In parallel with the implementation of these measures, the ODCE has played and continues to play a vital role in undertaking its statutory functions, as set out in the Companies Act 2014.
The ODCE annual report for 2016 points to a number of key successes during the year, as follows: following the examination of reports submitted to the office by liquidators of insolvent companies, 90 company directors were restricted and 11 disqualified by the High Court; in keeping with the ongoing strategic shift towards the investigation of more serious indications of wrongdoing, five investigation files were submitted to the DPP; as an alternative to formal enforcement actions, cautions were issued to a total of 61 companies; 108 directions were issued to relevant parties requiring them to comply with their statutory obligations under company law; and the securing of the rectification on a non-statutory basis, of suspected infringements of the Companies Act 2014, in regard to directors' loans in 60 cases, to an aggregate value of €17 million approximately.
Additional information not given on the floor of the House
In terms of prosecutions, the Director of Corporate Enforcement is only statutorily empowered to initiate summary prosecutions, that is, prosecutions of relatively minor offences in the District Court. More serious alleged breaches of company law are prosecuted on indictment in the Circuit Court and only the Director of Public Prosecutions, DPP, can direct that charges be preferred on indictment.
The ODCE has also been successful in recent high-profile white-collar crime prosecutions. In 2014, two individuals were convicted for the giving of unlawful financial assistance by Anglo Irish Bank for the purchase of its own shares. In 2016, an individual was convicted for fraudulent trading on foot of a plea of guilty. Also in 2016, another individual was convicted for failing to maintain a licensed bank's register of loans to directors on foot of a plea of guilty. In 2017, a person was arrested and charged with fraudulent trading based on an invoice discounting fraud and entered a plea of guilty.
I look forward to reading the full response that will be placed on the record. I am really disappointed with the response the Minister read out because this issue is not being dealt with as urgently as necessary. The questions over the current agency are very worrying. I refer to the botched Seán FitzPatrick investigation, the total absence of prosecutions and convictions for two years, the handing back of funding and the lack of staff in the agency.
Last week at a meeting of the Joint Committee on Business, Enterprise and Innovation, there was a vote against my proposal to invite the director in to answer questions. Legal worries were cited in the response to our invitation. As the record will show, clear guidelines could have been laid down to prevent any discussion of Anglo Irish Bank. Unrelated questions on why the ODCE is failing in its mandate could have been asked at a meeting of the committee. The ODCE has not been before a committee in the Oireachtas for a full eight years. The report compiled about the botched Seán FitzPatrick trial is secret. How are we supposed to find out what is going on in the ODCE? It is crazy. The tracker mortgage scandal highlights continued total disregard for corporate law. We learned from the finance committee yesterday that KBC Bank is still overcharging nearly 2,500 customers on tracker mortgages. That is no wonder because investigations into, and prosecutions of, white-collar crime in this country are a joke.
I will try to address just some of the issues the Deputy raised. He raised quite a number of them.
The funding allocation for the ODCE for 2017 was €4.895 million, with an outturn or expenditure of €3 million. The funding allocation is €5 million for 2018. Therefore, there is a considerable increase. A significant element of the ODCE's annual funding allocation includes a non-pay allocation for possible legal costs. Therefore, there is a reserve for legal costs. These costs and their timing are difficult to forecast as the office cannot be sure of the timing of the cases or their outcome in terms of costs. While it is entirely prudent that provision continue to be made to meet legal costs, there will always be uncertainty over the amount of costs and their timing. Therefore, there is potential for under-expenditure.
The Deputy mentioned the case of Anglo Irish Bank. I agree it was not well handled but, having said that, the current director was not in office at the time. The ODCE has been considerably strengthened since the time in question in terms of funding, staff and the skill mix.
The Minister mentioned funding allocations. My concern, however, is that money allocated recently has not been spent. It has been sent back to the Department. Perhaps the Minister will answer some specific questions. When does she anticipate the report on the ODCE and the botched Seán FitzPatrick investigation will be published? The Minister was not in her current role last June when the report landed in the Department. Surely it cannot take this long to write a report on that investigation.
Has the Minister met the director recently to monitor what is going on and to ensure another trial does not collapse? Will she commit that the new agency that will replace the ODCE, Office of the Director of Corporate Enforcement, will be more accountable to the Oireachtas because, as I have outlined, the current system of accountability is not working? The last time the ODCE was before an Oireachtas committee was in January 2010, a full eight years ago. Such a level of accountability and lack of oversight is unacceptable. Has the Minister figures on how many prosecutions led to convictions in 2017, considering none was achieved in the previous two years?
An account of the report into Judge Aylmer's ruling will be published. However, we had to go to court to get permission to do that. We are in that process.
Is there a timeframe for this?
I do not believe it will take that long.
I outlined several prosecutions and issues which the ODCE addressed in 2017. It has improved considerably since 2012 and is doing a good job. In 2017, a person was arrested and charged with fraudulent trading based on an invoice discounting fraud and entered a plea of guilty. In 2016, an individual was convicted for failing to maintain a licensed bank's register of loans to directors on foot of a plea of guilty and another individual was convicted for fraudulent trading on foot of a plea of guilty.
In terms of prosecutions, the Director of Corporate Enforcement is only statutorily empowered to initiate summary prosecutions. More serious alleged breaches of company law are prosecuted on indictment in the Circuit Court and only the Director of Public Prosecutions, DPP, can direct that charges be preferred on indictment.
The ODCE is doing good work. I want to put it into an independent agency which will mean it can go to the marketplace to attract the sets of technical skills it needs, such as forensic accountants.
