Tackling white collar crime

Feb 11, 2019
Establishing the ODCE as a stand-alone agency has taken some time, but its independence is required and welcome. 

On 23 May 2017, the trial in the case of the DPP v Sean FitzPatrick, one of the most complex and largest investigations in the history of the Irish State, ended when Judge John Aylmer directed the acquittal of the defendant on all charges. In that case, Judge Aylmer advised that his decision to direct the jury to acquit the defendant arose out of concerns with the investigative process undertaken by the Office of the Director of Corporate Enforcement (ODCE).

As a consequence, the Director of Corporate Enforcement made a number of changes to the office to address the issues highlighted by Judge Aylmer. These included adding a team of forensic accountants, a digital forensics specialist and a digital forensics laboratory to the ODCE. In addition, ODCE staff are now provided with specialised training in the Garda Training College to assist them with, among other things, statement taking and preparing files for the Director of Public Prosecution and members of An Garda Siochána are assigned to the ODCE to lead all criminal prosecutions.

Notwithstanding the introduction of these positive changes, and in light of the Government’s commitment to further strengthen Ireland’s regulatory framework for the conduct of business and to combat white collar crime, further deliberation was given by the Government as to whether the ODCE could be provided with greater State support to assist it in carrying out its statutory functions. 

Establishing the Corporate Enforcement Authority

Against this backdrop, in November 2017, the Government published a package of measures to enhance Ireland’s corporate, economic and regulatory framework. One of these measures was to establish the ODCE as an independent agency better equipped to investigate and prosecute increasingly complex breaches of company law.

On 4 December 2018, Heather Humphreys T.D., the Minister for Business, Enterprise and Innovation, announced that Cabinet had approved the establishment of this agency and further announced that the agency would be called the Corporate Enforcement Authority. On that day, Minister Humphries, in affirming the commitment of Government to supporting Ireland’s enterprise base and preserving its competitiveness, confirmed that she had allocated an additional €1 million to the ODCE in her 2019 budget to support the establishment of the ODCE as a stand-alone agency. Legislation is needed to effect this change and Government proposes to achieve this through enactment of the Companies (Corporate Enforcement Authority) Bill 2018. 

The General Scheme of this Bill has been published. It proposes to give the Corporate Enforcement Authority the same functions and powers that the Director of Corporate Enforcement has but, in addition, to add flexibility so that it can structure itself to meet the demands of its extensive remit and appoint its own staff so as to preserve its independence. The Scheme also proposes to give the Corporate Enforcement Authority new investigative tools, most notably new search and entry powers to enhance the Authority’s ability to gather evidence that is held electronically.

The existing regime

The ODCE was established on foot of a recommendation from the 1998 Report of the Working Group on Company Law Compliance and Enforcement. At that time, the principal matter of non-compliance that was required to be addressed was a culture of failures by companies and their officers to meet their obligations in respect of the filing of annual returns. The fact that 90% of companies are now compliant with filing their annual returns on time is clear evidence that the ODCE has succeeded in addressing the defaults.

While the Director is expressed to be independent in the performance or their functions, they are politically accountable which is evidenced by the fact that they are a civil servant, they can be removed by the Minister for Jobs, Enterprise and Innovation at any time (albeit for stated reasons) and required to submit annual reports to the Minister.

The welcome changes

We now live in a time when, not only is there a greater awareness of the need to prosecute serious company law breaches but the nature of those breaches is becoming more complex. Therefore, our corporate watchdog needs to be equipped to deal with the challenges in encouraging greater compliance with company law and to thoroughly investigate suspected breaches of that law. 

The Government’s commitment to the establishment of the Corporate Enforcement Authority and to ensuring that it will operate in line with international best practice must, therefore, be welcomed.
Claire Lord is a Corporate Partner and Head of Governance and Compliance at Mason Hayes & Curran.