Prevention of Corruption (Amendment) Bill, 2000: Second Stage.

Wednesday, 21 June 2000

Dáil Eireann Debate
Vol. 521 No. 5

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Minister for Justice, Equality and Law Reform (Mr. O'Donoghue): Information on John O'Donoghue  Zoom on John O'Donoghue  I move: “That the Bill be now read a Second Time.”

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. O'Donoghue: Information on John O'Donoghue  Zoom on John O'Donoghue  The Prevention of Corruption (Amendment) Bill sets out the Government's proposals to combat bribery and corruption. To this end, the primary aims of the Bill are to update our anti-corruption legislation, to expand it to cover areas which are currently outside its scope and to make the law more responsive to modern conditions. The Bill contains measures which will ensure that corrupt behaviour is dealt with swiftly, effectively and severely by the rule of law. I wish to make it clear, without equivocation or ambiguity, that the Government, on whose behalf I am bringing forward this tough new legislation, will not tolerate corrupt behaviour or practices from wherever they emanate. The message is clear. Under this Bill persons found guilty of corrupt practices will face unlimited fines or up to ten years in prison or both. These could be described as swingeing penalties, but I make no apologies for that.

Deputies do not need me to remind them of the need to have in place effective laws to tackle corruption. It is timely that we are debating this measure at this time. Charges of corruption levied against the few have the capacity in the public mind to taint everyone engaged in public life. Allegations and rumours of corrupt practices have a corrosive effect on public life with the result that public confidence in the entire system in undermined. Members of this House have a right to be concerned at the possible erosion of confidence in politics and politicians and to demand that the law is stringent enough to deter corrupt practices in the first instance and to severely punish such conduct when it is uncovered. My responsibilities as Minister for Justice, Equality and Law Reform place me to the fore in ensuring that our criminal law is responsive to the needs of society in fighting corruption involving public representatives or officials. My Bill will do that.

I will not comment on allegations made during hearings of the tribunals whose task it is to investigate payments to politicians or corruption in the planning process. Those tribunals will report in due course on their findings and nothing we say in this House should interfere with that process. However, we must be concerned at the reports that have emerged and we must be prepared to take action to ensure that confidence in the political system and in us as politicians is not lost. The Government has already taken action in this regard.

The Bill before the House today is one such measure. Others include the recently published Local Government Bill which includes a comprehensive ethics framework for local authorities [1195] which will apply to elected members and employees alike. Legislation is being prepared to deal with standards in public office to include a public offices commission to investigate complaints against office holders and members of the Oireachtas as well as procedures for dealing with breaches of the legislation. The Government is also committed to examining the need for regulation of lobbyists.

At present, the law relating to corruption is governed mainly by the Prevention of Corruption Acts, 1889 to 1916. There was some updating to these made by the Ethics in Public Office Act, 1995. Under these Acts various activities are criminalised as corrupt practices. For example, the 1889 Act, as amended by the 1995 Act, makes it an offence for a person holding a public office, a special adviser or a director of or occupier of a position of employment in a public body to corruptly solicit or receive any reward as an inducement for acting or refraining from acting in accordance with the individual's duty. It is also an offence for a person to offer to such an individual any reward for acting or refraining from acting in accordance with his or her duty. The current penalty for conviction on indictment for this offence is a fine of £50,000 or imprisonment for up to seven years or both.

The Prevention of Corruption Act, 1906, used the concept of “agent” to define a wide range of persons who might conveniently be described for present purposes as office holders or employees whether in the public or private sectors. It provided that any agent who corruptly accepts or obtains from any person, either for himself or herself or for any other person, any gift or consideration as an inducement for acting or refraining from acting in relation to an employer's affairs will be guilty of an offence. Corruptly giving or agreeing to give to an agent a gift or consideration for the like purpose is also an offence.

The term agent was defined firstly as including any person employed by or acting for another. It was, however, then further defined and given an extended meaning by providing that persons holding an office remunerated out of the central fund or out of moneys provided by the Oireachtas as well as other public office holders were also agents. The Ethics in Public Office Act, 1995, amended this extended meaning to provide that agent includes an office holder or a director of, and a person occupying a position of employment in, a public body and a special adviser.

The amendment effected by the 1995 Act had the effect of removing from the definition of agent in the 1906 Act some categories of person previously covered by virtue of holding an office remunerated out of the central fund or moneys provided by the Oireachtas. Thus, while the new definition covered certain specific national office holders, such as Ministers, as well as civil and public servants, it excluded a number of others, such as members of the Dáil and Seanad, as dis[1196] tinct from Ministers and judges. I have no doubt that Deputies would agree that the categories of persons who should be covered by anti-corruption legislation should be as broad and comprehensive as possible.

The effect of the 1995 Act, which was marketed by the rainbow Government as its flagship legislation to root out corruption in public life, considerably weakened the pre-existing legislative provisions to deal with this. It was most regrettable that that Government balked at taking the tough decisions which were required in this area. My Bill will correct this deficiency. I will return to this matter again when dealing with the detail of the Bill.

The 1916 Act was aimed at a particular form of corruption, namely, the awarding of public contracts and provided for there to be a presumption of corruption where it is proved that money was given to a public official by a person seeking to obtain or to retain a Government contract. This Bill will build on these earlier Acts and will considerably strengthen our laws against bribery and corruption. The Bill will enable Ireland to ratify a number of conventions dealing with corruption which have been drawn up by the European Union, the Council of Europe and the OECD. I will outline briefly for the House what these conventions contain.

The EU convention on the fight against corruption involving officials of the European Communities or officials of member states of the European Union aims to complement national measures to combat fraud and corruption of public officials. It was thought desirable in circumstances where the European Union was tightening links between its member states and in the context of protecting the EU's institutions and staff that bribery and corrupt conduct aimed at officials of other member states should be criminalised in the same way that bribery and corruption of national officials are dealt with by states.

The convention deals with corruption by an official who requests or receives advantage in return for acting or refraining from acting in accordance with his or her duty, which it terms passive corruption, and corruption of an official by others who promise or give advantage in return for that official acting or refraining from acting in accordance with his or her duty, which it terms active corruption. Corruption of or by members of the European Commission, the European Parliament, the Court of Justice and the Court of Auditors are also covered by the convention. It requires member states to take the necessary measures to criminalise such activities.

The OECD convention deals with situations where a person commits an offence by promising to give or by giving a bribe. It seeks to ensure as far as possible that parties to the convention adopt equivalent measures to penalise bribery of foreign public officials. The primary objective of the convention is set out in article 1 which provides that it should be a criminal offence for any person to bribe a foreign public official, that is, [1197] to offer, promise or give any undue pecuniary or other advantage to obtain or to retain business or other improper advantage in the conduct of international business. For the purposes of the convention, a foreign public official is defined as meaning any person who holds a legislative, administrative or judicial office of a foreign country, a person who exercises a public function for a foreign country and any official or agent of a public international organisation.

The Criminal Law Convention on Corruption, a Council of Europe convention, also seeks to put in place a common response to the problem of corruption. It deals with corruption of or by domestic and foreign public officials and members of domestic and foreign parliaments or other assemblies, officials of international organisations, members of international parliamentary assemblies and judges and officials of international courts. It also deals with corruption in the private sector.

I have set out briefly for the benefit of Deputies the law relating to corruption and the broad provisions of the conventions which the Government intends to ratify. I hope this will provide a good background and understanding of the contents of the Bill before the House.

The Bill sets out a range of persons covered by its provisions and amends the definition of agent in the 1906 Act to include a wide range of office holders and employees of public bodies, including members of the Oireachtas, judges, members of foreign governments or foreign parliaments, members of the European Parliament and Commission and persons employed on behalf of a foreign public administration. It also provides that the offence of corruption will cover not only direct corruption of or by an agent but also indirect corruption, such as where the spouse of an agent receives a benefit with the intention of influencing that agent.

Other provisions cover such matters as granting jurisdiction to the Irish courts in cases where any element of the offence of corruption occurred in the State or where an Irish office holder or official is involved. There will be a new offence of corruption in office which will criminalise activity aimed at obtaining personal advantage. It also establishes the liability of officers of bodies corporate for offences of corruption. The Bill will increase the maximum penalties for those convicted of the offence of corruption to an unlimited fine or ten years imprisonment or both. I will outline the contents of the Bill in greater detail later in my address.

The need to update our corruption legislation is accepted by the main Opposition parties. Each of them has brought forward their own proposals to deal with the matter. Last year the House voted against a Fine Gael Private Member's Bill on Second Stage. Recently the Labour Party published its proposals in this regard. That Bill purports to be a consolidation measure by repealing earlier anti-corruption legislation and enacting in its place a single Act. It is nothing of the sort. In [1198] repealing earlier provisions without replacement or explanation, I am not sure that the matter has been fully thought out. For example, the earlier legislation provides for the possibility of forfeiture of pension rights of persons in the employment of any public body found guilty of an offence of corruption. There is no mention of such provision in the Bill. Was it really intended that this important sanction should be dropped?

An initial examination of the Labour Party Bill leads me to the conclusion that it has little to recommend it beyond those sections which are taken from my Bill. There are, however, significant differences and for present purposes I would like to offer some brief comments on them.

In specifying the categories of persons who are “agents” for the purpose of the Bill it mentions, among others, the President, the Ombudsman, and members of the Defence Forces and the Garda Síochána. Reference to the President raises a profound constitutional position in relation to the position of the President and the exercise of the functions of the President. Under Article 13.8 of the Constitution, the President is not answerable to any court for the exercise and performance of the powers and functions of the office or for any act done or purporting to be done in the exercise and performance of these powers and functions. The question of including the President, therefore, would need detailed examination and I have sought the opinion of the Attorney General on the matter.

With regard to the Ombudsman and members of the Defence Forces and the Garda, these are already covered by the definition of “agent” contained in my Bill and there would appear to be no advantage in making specific mention of these categories. To include them begs the question: why stop there? Why not include teachers or nurses and so on? The list could be endless.

Section 4 seeks to extend the presumption, which applies to Government contracts under the 1916 Act, to all proceedings for corruption. Under this section there would be a presumption that money and so on has been corruptly received where it has been proved that the office holder received money and the donor was a person who had an interest in the office holder's performance of his or her functions.

A similar provision was contained in the earlier Fine Gael Private Members' Bill and was opposed, following advice from the Attorney General, because the proposal was too broad. The problem is that there may not be a clear connection, as there will be with regard to the awarding of a contract, between the giving of the money and the performance or failure to perform official functions. In addition, a wide presumption as suggested, involving a general reversal of the presumption of innocence, raises constitutional and European Convention on Human Rights implications. Indeed, on one interpretation of this type of provision it amounts to a presumption of guilt in the circumstances outlined. In fact, a recent UK law commission report on corruption recom[1199] mended that the existing presumption in relation to contracts, which also exists in the UK, should be dropped. The report raised concerns about its compatibility with the European Convention on Human Rights.

Section 7 of the Labour Party Bill provides for the issue of search warrants. I am not sure why search warrants under the Labour Party proposal should have to be issued by the High Court. Other Acts providing for the issue of search warrants give this jurisdiction to the District Court. At any rate, the Government has already approved the drafting of a criminal justice Bill which will contain a general provision for the issue of search warrants in connection with the investigation of certain serious offences, which will include those created by my Bill. However, given that those proposals are at an early stage I am prepared to consider the inclusion of a search warrant provision in the Bill and suggest that the matter can be considered on Committee Stage.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. O'Donoghue: Information on John O'Donoghue  Zoom on John O'Donoghue  In regard to the Labour Party Bill, the guide issued with it states that a comprehensive consolidation measure is required in this area. That guide may be right, but consolidation requires lengthy and detailed examination. In this regard, I point to the Statute Law (Restatement ) Bill, 2000, which will provide a simpler method whereby current legislation can be set out in a consolidated form for ease of reference. In relation to corruption, when the restatement Bill and my Bill have been enacted a restatement of the law on corruption can be prepared at an early stage.

Section 1 of the Bill before us is a standard provision. Section 2 may be considered the central provision of the Bill. It substitutes a new section for section 1 of the 1906 Act. As I mentioned earlier, this Act introduced the concept of agent for the purpose of criminalising corruption by or of a wide range of office holders and employees, public sector as well as private sector. I also mentioned that the Ethics in Public Office Act, 1995, had amended the definition of agent in such a way that a number of persons previously covered were now outside its scope. Consequently, I take the opportunity to make the definition as comprehensive as possible as well as providing for suitable penalties for any breach. The best way to achieve this is to substitute an entirely new section for the old one.

Section 2 provides that an agent includes any person employed by or acting for another. With regard to public bodies, “agent” is defined by reference to the 1889 Act and includes an office holder or director of, or person occupying a position of employment in, a public body, and a special adviser. A director in this context includes members of local authorities, health boards and [1200] other bodies financed out of Exchequer funds. The section then sets out further specific categories of persons also covered. These are members of the Oireachtas, the Attorney General, the Comptroller and Auditor General, the Director of Public Prosecutions, judges and any other person employed in or acting on behalf of the public administration of the State. That is a fairly full list of office holders at all levels, local and national.

Corruption does not, however, respect national boundaries and in the context of efforts to combat corruption by or of foreign office holders and officials, it is important that our laws should, excusing the pun, capture such activities. In any event, to enable Ireland to ratify the three conventions to which I have referred, we will have to make provision for criminalising corruption of foreign office holders and officials. Accordingly, the definition of agent in section 2 will also extend to members of the Government and national or regional parliaments of any other State, a member of the European Parliament, European Court of Auditors and European Commission, foreign public prosecutors and judges and judges of any international court established by agreement to which Ireland is a party. It includes employees of international bodies and foreign administrations.

Regarding the offence of corruption, the section states that it will be an offence for an agent, or any other person, to corruptly accept or obtain, or agree to accept or attempt to obtain, whether for personal benefit or for someone else's benefit, any gift, consideration or advantage as an inducement or reward for acting or refraining from acting in accordance with his or her position. It will also be an offence for any person to corruptly give, agree to give or offer any gift or consideration to the agent or any other person as an inducement or reward for the agent acting or refraining from acting in accordance with his or her position. Deputies will appreciate that the offence covers not only the office holder or employee but any other person who might have influence over the former, such as a spouse.

I have already indicated that there can be no tolerance of corrupt practices within our political system. With regard to the law against corruption, it should be equally clear that such activities will be subject to severe sanctions. That is why the Bill provides that the penalty to be imposed following conviction on indictment will be increased from the current penalty of a fine of up to £50,000 or imprisonment for up to seven years or both to an unlimited fine or up to ten years imprisonment or both.

Sections 3 and 4 relate to aspects of jurisdiction. Normally Irish criminal law is territorial in its jurisdiction. In other words, it applies only to acts done in Ireland. There are some exceptions to this, such as certain sexual offences and murder. It would be naive to think corruption takes place only within national boundaries, requiring a purely domestic response. The increasing complexity of international business [1201] and the opening up of national economies increases the danger that some will seek to exploit this by trying to influence decisions in their favour through the offer of corrupt payments. This has been recognised and is the reason the EU, the OECD and the Council of Europe has each thought it desirable to formulate conventions to criminalise such practices involving foreign office holders and officials. It follows that as the offence, or elements of it, can be committed across frontiers, there should be legislative sanctions to enable the taking of prosecutions where any aspect of the offence occurs within this jurisdiction.

Section 3 meets this requirement by providing that a person may be tried in Ireland for the offence of corruption once any element of the offence took place within the State. As a corollary, section 4 criminalises corrupt acts by Irish office holders or officials that are committed abroad, for example, by accepting a bribe while outside Ireland.

I said that section 2 was the central element of the Bill. I am sure, however, Deputies will agree that section 5 represents a significant contribution to the Government's determination to combat all forms of corruption in public life. Section 5 creates a new offence of corruption in office.

Current anti-corruption legislation does not deal adequately with a situation where an office holder or official may act corruptly on his or her initiative to secure some personal benefit or advantage for another person. In such circumstances, there is no question of a corrupt payment or favour being sought from, or offered by, any person. This might arise where an individual's actions are designed to benefit one's own family. The new offence created by section 5 will criminalise any act or omission by an office holder or official done with the intention of corruptly obtaining a gift, consideration or other advantage for himself or herself, or for any other person. As an indication of how seriously this type of corruption is viewed by the Government, the penalty provided will be on a par with that for other offences of corruption under the Bill, an unlimited fine or up to ten years imprisonment or both.

During the Second Stage debate on the Fine Gael Prevention of Corruption Bill I indicated that a section of that Bill dealing with abuse of public office was deserving of attention and undertook to study the matter further. The outcome of that examination is contained in section 5, which meets the point raised by the Deputy Jim Higgins.

With regard to the issue of corruption carried out by or on behalf of bodies corporate, corporate bodies as well as individuals may become involved in offences of corruption. Equally, there are instances when individuals within a body corporate can contribute to such offences, whether directly by consenting to or conniving with the commission of an offence, or simply by wilful neglect of their responsibilities. For this reason, section 6 provides that responsibility for an [1202] offence of corruption by a body corporate can be attributed, where appropriate, to certain of its officers and-or members. In this way, individuals as well as the body corporate can be held liable for the offence. Section 7 states the Short Title of the Bill.

While this is a short Bill, it contains a range of measures that will copperfasten and considerably improve existing legislation on the prevention of corruption. It will also meet our international obligations. It is clear that the elimination of corrupt practices is an objective to which all parties in the House are committed. My Bill represents the best option for achieving that objective. Nevertheless, I will consider sympathetically any amendment the Deputies opposite table and if I am convinced such amendments will improve on the measures contained in the Bill, I will not be slow to accept them. I commend the Bill to the House.

Mr. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  (Mayo): I should like to quote the following:

“I staunchly supported Mr. Haughey . . . I admired Mr. Haughey greatly and few men of this century were more committed to this country and its people than Charlie Haughey.

There is a song which says ‘follow the fellow who follows a dream' and Mr. Haughey had a vision of this country with which I could identify. A lot of people at grassroots Fianna Fáil could identify with it. It was a vision of a republic, of a just society, of a society which made up its own rules and did not ape and copy the rules of any other country for the sake of doing so”.

Does the Minister recognise the text or the context or the author of those comments? Does he recall that the author was none other than the Minister for Justice, Equality and Law Reform, Deputy O'Donoghue, giving an interview to Voices of Kerry when Deputy for South Kerry solely. I wonder, on reflection what the Minister now thinks of his comments. He is certainly right as regards making up our own rules and not following any other country. No other self-respecting country would have tolerated the low standards in high political office and the low standards of public officials in certain key posts that the Republic has tolerated.

It is obvious this Bill would not be before the House today had it not been for the fact that the Opposition has continually highlighted the Government's tardiness in bringing forward anti-corruption legislation. It is equally obvious that the legislation before the House is not the Government's creation but has been effectively handed to it on a plate in that it ratifies three international conventions, two of which were drawn up in 1997 and the other almost 18 months ago. It is patently obvious that the Bill deals only with one sphere of corruption – that involving public officials, public servants and public officeholders. While the Minister refers to the fact that [1203] the criminal law convention on corruption deals with corruption in the private sector this Bill does not. It is confined solely to the public sector. It does not pry into the semi-State sector or the former State companies which have been privatised and it does not deal with the banks, other financial institutions or the murky areas of business or tax evasion.

Two years ago the Government told us in banner headlines that it was about to overhaul the law to tackle the escalation in fraud. This was to be the Government's sledge hammer to tackle fraud and corruption. We were told by the Minister two years ago that the Fraud Offences Bill would be a comprehensive overhaul of the law in this area “on a scale not previously witnessed in the State”. What has happened to the Fraud Offences Bill in the meantime? A perusal of the Government's list of promised legislation and one will see that it is stuck firmly at the bottom of the Government's list of priorities.

In April 1999, Deputy Charles Flanagan published a Private Members' Bill – the same title as this Bill. The Prevention of Corruption (Amendment) Bill, 1999, was drafted to bring about far reaching changes to the corruption laws which have remained unaltered for almost 100 years. The Bill was comprehensive and detailed. It dealt with the public and private sectors. It dealt with bribery and defined bribery for the first time. It dealt with the new offence of offering or receiving a secret commission where an agent takes a payment from another as an inducement or reward for doing any act in relation to the business of a principal. For example, a banker who corruptly receives money from a customer as an inducement for giving the customer preferential treatment when approving a certain financial accommodation or a loan or settling an account would be guilty of receiving such an illegal commission. Likewise the customer would be guilty of an offence. This part of the Bill would also cover many in the financial services sector advertising and offering to arrange loans for people at high and totally unfair rates of commission. The Bill dealt with the area of “payola” for the first time. A public official who gains an unfair benefit from information at his or her disposal would be guilty of an offence if the information is used in a dishonest manner. The Bill also had a specific section dealing with the circumstances under which a defence may be offered. Effectively, the burden of proof was to be placed on the shoulders of the person charged with the corruption. The Minister rejected the Bill on the basis that he would introduce his own Bill in due course. He assured the House that his Bill would be far reaching and would cover categories of persons not covered at present. The clear impression given was that when the Minister's Bill was enacted it would go at least as far if not beyond the provisions of Deputy Flanagan's Bill. Unfortunately, the Minister's Bill is “hand-me-down”[1204] legislation from Europe and falls far short of the provisions contained in Deputy Flanagan's Bill.

When the history of the 20th century is being written, the period 1987-1992 will be seen as the area of capitalist sharp practice. Many of those involved would like to dismiss or downplay it as “it was the culture of our time”. We recall that the chief executive of AIB at the DIRT Inquiry tried to talk down the scale of tax evasion by his bank by trying to explain it away, that it was an “industry wide” practice and so it was – even the State owned banks were not paying deposit interest retention tax. The culture of the time developed a convenient excuse or cover by giving it an air of respectability –“everyone is at it”.

While the foundations for the current economic success were laid in the development of social partnership in the 1987-92 period, it was also the era when the avarice of the entrepreneurial classes colluded with a small clique of those in high political office to wrongly and ruthlessly manipulate the leaders of power to line their own pockets. An alliance of politicians and business leaders used their insider knowledge and privileged positions to piggy-back on the rising economic tide and did so most often at the expense of the State. It was the era of a small but elite golden circle.

A State-owned company, Telecom Éireann, chaired by a wealthy businessman, Dr. Michael Smurfit bought a site for a new company headquarters at an inflated price without supposedly knowing he, as chairman, had owned a share of the land. A State-owned company, Greencore, bought another smaller company without knowing that its chief executive, Mr. Chris Comerford, was secretly a shareholder in that company. The issue only came to light when he sued his partners for a share of the profits.

Confidential commercial documents concerning a State-owned company, Irish Helicopters, were sent to a rival company Celtic Helicopters – coincidentally owned by a son of a former Taoiseach, Charles Haughey. The State offered tens of millions of pounds in loans, grants and export credit insurance to Fianna Fáil's favourite son, Larry Goodman's, Goodman International which spent the money on disastrous overseas investments totally unrelated to the Irish food industry and which lost millions of pounds. The same Mr. Goodman's company was responsible for a massive fraud on the European taxpayer which led to the beef tribunal. Not alone did nothing come of the beef tribunal but the Irish taxpayer ended up being saddled by the Government with a fine of £70 million imposed by the EU. Surely, such a fine should have been passed on to the Goodmans and the other beef barons who abused their positions.

The reality is that nobody goes to jail in Ireland for white collar crime. Nobody was jailed for the Telecom Éireann-Ballsbridge scandal, the Greencore scandal or for the missing millions at Aer Lingus Holidays. Nobody in the entire Goodman empire was jailed for the fraud the company per[1205] petrated except for two low key operatives at the Rathkeale plant.

Mr. Howlin: Information on Brendan Howlin  Zoom on Brendan Howlin  Perhaps my colleague will forgive me. A wider audience is required for this very important contribution. I call for a quorum.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  (Mayo): Take, for example, the Carysfort College saga. It was bought by Mr. Haughey's friend, Mr. Pino Harris, for £6.5 million. Mr. Harris decided to offload his purchase; he did not know what to do with it. University College Dublin, which could not afford and did not want the property, was called in. Eight high powered meetings were arranged, some of them chaired by Mr. Haughey and a mere seven months after Mr. Harris bought the property, the Irish taxpayer paid £8 million to enable UCD to buy the property.

Instead of penalising people who evade taxes, in 1988 the State offered an amnesty to tax dodgers on the basis that it was their last chance to regularise their affairs. Five years later, in 1993, it offered tax offenders yet another opportunity to settle for a mere 15% of what they owed. This was also the time when the State was selling Irish passports, in some cases to fraudsters like the Mafouz family, for millions of pounds.

Will this so-called far reaching legislation, introduced by the Minister today, do anything to thwart or curb white collar crime? Had it been in force during the heyday of the golden circle, would it have tackled any of the financial scandals? It would not and will not. This legislation, for example, does not deal with the corruptive practices of the banks. AIB. deliberately contrived an illegal tax avoidance scheme to enable at least 53,000 deposit holders to avoid paying tax. Up to £600 million was lodged in bogus offshore accounts. The biggest banker in the country deliberately defrauded the taxpayer of over £84 million in tax.

Is it any wonder that the ordinary compliant PAYE worker is left reeling in anger when the NIB, another pillar of the financial world, is ruthlessly exposed by RTE's George Lee and Charlie Bird as having contrived yet another illegal and ingenious but fraudulent scheme? The arrogance of NIB is well illustrated in its determination to bring its case to the Supreme Court to try to halt publication of the fraud it perpetrated. It was a chilling reminder of just how arrogant, untouchable and strident is the elite of the white collar criminals. Will any of the executives of AIB or NIB end up in jail as a result of the fraudulent schemes they devised and sold to their customers? I doubt it.

It continues. The latest research on the level of tax evasion in Ireland has found that the black economy now accounts for 16.6% of the national income. That puts a value of £8.7 billion on the black economy. It is costing the Exchequer an [1206] estimated £2 billion a year in lost taxes and bogus social welfare payments, considerably more than we received in each of the last five years from the EU Structural Funds.

In spite of Government warnings and sabre rattling, tax evasion is widespread. All one need do is look at the figures which came into the public domain after the Minister, Deputy McCreevy's, attempt to deal with the housing crisis. It has emerged that only 10% of landlords are registered with local authorities as they are obliged to do. One can, therefore, assume that the remaining 90% are unregistered because they are not declaring rental income from their properties for tax purposes. The black economy has grown since the birth of the Celtic tiger.

The Government recently announced the building of 700 new prison spaces. One can bet safely that not one of these prison spaces will be filled by a white collar criminal. Comparisons are rightly made between the “softly softly” approach to dealing with crimes committed by the establishment and the judicial treatment of those who come from less privileged social and economic backgrounds. Sabrina Walsh a drug addict and bag snatcher gets nine years reduced to six years but, on the other hand, judicial mountains are moved and the judicial system is abused and circumvented by a Supreme Court judge, a High Court judge and a County Registrar in order to arrange for the early release from prison of Philip Sheedy who was responsible for the death of a young mother. This man was released because of his connections, his breeding and his professional standing.

Jail in this country is for helpless drug addicts, shoplifters, bag snatchers and sex offenders. Their misdemeanours are classified as crimes but the scams perpetrated by those with white collars and silk ties are classified not as crimes but as mere offences.

Large scale tax evasion is not a victimless crime. Tax evaders are able to use their illegal income for additional investment and projects in order to further enrich themselves. This vicious circle leads to the widening of the gap between the rich and the poor or, at another level, between those who cheat and those who behave honestly. A society that tolerates tax evasion is unlikely to take seriously its obligations in coming to terms with social deprivation.

The distribution of income is never likely to be equal. The gap grows continually wider and greater as the inequalities in society expand. The more obvious that gap becomes between the haves and the have nots, the more likely it is that there will be more violent crime. There is a huge and growing groundswell of frustration among the vast majority of ordinary decent people at what white collar criminals have been let away with and the ongoing failure to tackle white collar crime. Unless white collar criminals are taken seriously, treated as common criminals and jailed for their crimes, there is no guarantee where this public discontent will end.

[1207]Mr. Howlin: Information on Brendan Howlin  Zoom on Brendan Howlin  The purpose of the Bill is to extend the existing statute law relating to corruption. As such it is an important measure to be welcomed, which I did on its publication. This Bill is not and was never intended to be a comprehensive response on the part of the Government to the current wave of scandal washing over the Irish body politic and which my party strongly argues demands a collective and effective response from all of us.

For the past two months we have argued our position that several urgent steps need to be taken by the Oireachtas in order to collectively attempt to restore a measure of confidence in the integrity and impartiality of public administration in this State. Profound damage has already been done to the political process and to people's confidence in the way the State administers itself. Any hint of prevarication or vacillation in our response now would serve only to intensify that damage and further alienate the people from those elected to serve them and from those charged with the administration of public affairs.

Those of us who have had the opportunity to have direct contact with the public in the past number of weeks in the constituency of Tipperary South will be aware of the alienation, particularly among the young, from administration and politics in particular. Therefore, it is incumbent on all of us to seek to address this issue collectively for the good of the overwhelming majority involved in political life and administration who have no hand, act or part in any corrupt practices.

When the Labour Party Bill on donations to parties and candidates recently came before this House it was not voted down by the Government side. In fact, a recent amendment was tabled that simply passed the measure with a delaying mechanism to ensure it would not have the effect of passing Second Stage until the end of this year. Indeed, Committee Stage was postponed until the end of this year or early next year. Meanwhile, the Government proposed to us and to the Fine Gael Party, and announced to the public at large, that the mechanism to deal with this issue was to establish an all-party committee to consider the Bill together with a range of other measures and other proposed legislation.

We suspect the only thing these various matters had in common to justify them being grouped together in the way proposed by the Government was that the Government was not anxious to proceed with any of them. Correspondence between the leader of the Labour Party and the Taoiseach confirmed beyond doubt our view that, although the Government supported the Bill ostensibly to end corporate donations, it is fundamentally opposed to doing just that. It sounds bizarre that the Government would vote in favour, although including a delaying mechanism, of a measure to which we now believe it is fundamentally opposed.

However, the subsequent utterances from the Taoiseach that the proposal was, in fact, unconstitutional and that his advice from the Attorney [1208] General was to that effect indicates that he has no intention of proceeding with this measure. It also indicates that the effect of the proposal to have an all-party committee to address these matters was to send a group of people on a fool's errand to search for a consensus when none was possible, given that the Government has indicated it believes the very principle which it says should be considered by this committee is unconstitutional and that the advice available from the Attorney general confirms that view. Despite my requests to the Taoiseach to provide Opposition parties with such advice – there is ample precedent for the advice of the Attorney General to be made public – that invitation was not forthcoming. Consequently, my party declined to participate in such a committee which was clearly designed to put action on the long finger.

In the interim the Government has decided to proceed with this measure and even that has some interesting developments along the way. When I asked originally when the measure would come before this House, I was informed by the Taoiseach that it would be the autumn. Within a matter of days I was told it would be introduced before the end of this term. I appreciate the alacrity with which that timetable was amended but I think it had more to do with public pressure that demanded action from the Government rather than a self-motivated Government timetable. It is a stand-alone measure which does not pretend to be a response to events which have threatened to subvert public administration in Ireland. As the Minister outlined in his speech, the Bill does not even have its origins in Ireland. As its Long Title makes clear, the Bill is designed to incorporate into Irish law several conventions drawn up at European level, which had as their central purpose the safeguarding of the finances of the European institutions and which the State is now obliged to implement. The Bill therefore extends existing law to cover members and officials of the European institutions. The opportunity has also been taken to include for the first time Members of the Houses of the Oireachtas, in their capacity as such, and judges within the framework of the existing law.

Compared, however, with the Labour Party Bill published last month, there are at least three aspects of the Minister's proposals which I believe could be improved. This is an amending Bill which leaves on the Statute Book four other enactments, dating back to 1889, which have only a dozen or so relevant sections between them. A comprehensive consolidation measure is required now rather than adding to the legislative clutter.

The original 1889 Bill applied only to public bodies outside central government. A 1906 Act introduced a comprehensive measure to deal with corrupt transactions with an “agent” in relation to the affairs or business of his principal. Those holding office under the Crown were deemed to be agents of the Crown. Members of Parliament, however, as opposed to Ministers, were not considered to hold office under the Crown and so [1209] were not covered in that capacity. In 1916, a presumption of corrupt payment was introduced to cover situations where it was proven that a payment was made by a person holding or seeking a Government contract.

In 1995, the Rainbow Government took the opportunity in the Ethics in Public Office Act to update the language of the Prevention of Corruption Acts and to introduce a comprehensive definition of “public body” to which the Acts would apply. I was interested to hear the Ministers comments about the Ethics in Public Office Act. He talked about the failure of the Rainbow Government in this regard. That borders on the comical because I had the honour of negotiating with the Minister's party about the matter prior to the formation of the 1992 Government. The argument coming from Fianna Fáil then was not for comprehensive ethics legislation, it was to delay it as far as possible so the indebtedness of the party could be addressed. I will let history lie at that point but it is amusing that the Minister now feels that the measure which was resisted for so long was an inadequate measure when it finally reached the Statute Book. It was hard to secure the agreement to get it on to the Statute Book in the first place.

The last thing needed now is another piecemeal amending Bill. The central and workable elements of the legislation on the Statute Book should be identified and reproduced is a single and comprehensive measure. The Minister should present such a consolidating Bill to the House at the earliest opportunity.

There is nothing inherently ineffective or inadequate in the central provisions of the present anti-corruption code. Many of us believe that the response to every situation is to introduce new legislation. Sometimes we forget to examine existing legislation which is often not properly used. These anti-corruption measures operate effectively in other jurisdictions and prosecutions are brought to a successful conclusion. My proposals would assist in the investigative and prosecutorial process rather than attempting to rewrite the substantive law. There is a body of law which defines corrupt action; the difficulty is establishing the case and properly prosecuting the facts to a conclusion.

Powers for the Garda, under judicial supervision, of search and seizure are needed if corrupt practices are to be effectively investigated and prosecuted. The Criminal Assets Bureau has exercised such powers since its establishment under the Rainbow Government. It could not have operated effectively without them. I welcome the Minister saying that he will examine giving effective search powers to the Garda on Committee Stage.

Finally, there is in the present code a provision which creates a presumption of corruption where payment is made to a public official by a person seeking a contract from a public body. The statutory presumption reverses the burden of proof so that the parties have to prove, on the balance of [1210] probabilities, an innocent explanation for such a payment. This presumption has to be extended beyond its present application to the awarding of contracts. It should apply in any circumstances where payment is made to a public official by a person who has a significant material interest in the outcome of a decision to be made by that official.

The Minister should take this opportunity to consolidate existing law and repeal the four existing Acts, which are no longer relevant, provide for Garda power of search and seizure and create an improved and expanded presumption of corrupt payment. If our roles are still the same in the autumn, I will table amendments on Committee Stage to achieve these purposes. I will outline in greater detail my proposals in relation to the presumption of corruption and search warrants.

On the presumption of corruption, I will propose that where, in any proceedings against a person for an offence, it is proved that any money, gift or other consideration has been given to or received by a public official from a person with a material interest in the performance by that public official of a function of his or her office or position, the money, gift or consideration shall be presumed to have been given and received corruptly until the contrary is proved.

My amendment will provide that a person will have a material interest in the performance by a public official of a function of his or her office or position, if the consequence or effect of the performance of that function may be to confer on or withhold from the person a significant benefit, without also conferring it on or withholding it from a general category or class of persons in general. In other words, a decision by a public official which would be of general application, for example, a reduction in the basic rate of income tax, would not be something in which a person who made a gift to that official would have a material interest. However, a gift by a person who owned land in a particular area which was subsequently designated for a particular purpose, thereby conferring certain benefits on the person in question, would be of material interest and might, in those circumstances, give rise to a presumption of corrupt payment.

I understand the Government may have been warned of constitutional difficulties in such an approach. I am interested in hearing the views of the Minister in this regard. He must be aware that a presumption of criminal intent is often provided for in the criminal law where a prima facie case has been made and where the exculpatory facts, if they exist, are within the particular or peculiar knowledge of the defendant. The onus on a defendant in such circumstances is to rebut the presumption by providing proof that, on the balance of probabilities, there is an innocent explanation.

Let use consider three examples which relate to this area. First, there is the presumption of corrupt payment already provided for in the case of those holding or seeking Government contracts. [1211] Second, section 15 of the Misuse of Drugs Act, 1977, deals with possession of controlled drugs for unlawful sale or supply. The section provides that, where it is proven that a person was in possession of a controlled drug and the court, having regard to the quantity of the controlled drug which the person possessed or to such other matter as the court considers relevant, is satisfied that it is reasonable to assume that the controlled drug was not intended for the immediate personal use of the person, he shall be presumed, until the court is satisfied to the contrary, to have been in possession of the controlled drug for the purpose of selling or otherwise supplying it to another. The onus, therefore, is on the holder of the drugs to prove that they were not intended for sale.

The third example relating to this area is section 8 of the Criminal Law (Jurisdiction) Act, 1976, which deals with possession of firearms or ammunition in suspicious circumstances. That section again imposes an evidential burden on an accused by providing that a person who has a firearm or ammunition in his possession or under his control, in such circumstances as to give rise to a reasonable inference that he has not got it in his possession or under his control for a lawful purpose, shall, until it is proven that he has it in his possession or under his control for a lawful purpose, be guilty of an offence.

These examples are sufficient to demonstrate that constitutional difficulties should not arise from extending the operation of the presumption of corruption as I have outlined. However, I am interested in hearing the views of the Minister and, if they are available, those of the Attorney General in that regard.

With regard to search warrants, the Minister correctly stated that the Bill published by the Labour Party proposes that a judge of the High Court, on hearing evidence on oath given by a member of the Garda Síochána not below the rank of superintendent, may, if he or she is satisfied that there are reasonable grounds for suspecting that evidence of or relating to an offence under the Act is to be found in any place, issue a warrant for the search of that place and any person found at that place. The Minister believes that it is too onerous to require the High Court to issue such. If he wishes to have matters of this nature dealt with in the District Court, I am sure we can accommodate him in that regard. I welcome his statement that this is a desirable objective and I am anxious to see what he intends to propose on Committee Stage. I intend to table amendments in respect of this matter at that point.

A warrant would authorise a named member of the Garda Síochána, accompanied by such other persons as he or she thinks necessary, to enter, within one week of the date of issuing of the warrant, the place named in the warrant and to search it and any person found at that place. It would require any person so found to produce any books, documents or records which are in [1212] that person's control and to give such information as may reasonably be required in regard to any entries in such books, documents and records. It would also require them to inspect and copy or take extracts from any such books, documents and records.

These requirements are necessary if we are to achieve the objective outlined by the Minister and Deputy Jim Higgins, who correctly pointed out that those accused of white collar crime are rarely prosecuted. While I agree that the definition of corruption contained in law requires strengthening, there is already on the Statute Book a reasonable body of law which defines crime. The prosecutorial system may need strengthening to aid the Garda Síochána units involved in investigating corporate, white collar or financial crime or criminal activities relating to public administration. We must also make it an offence to obstruct a member of the Garda Síochána in carrying out his or her duties under the Bill.

The Bill needs to be strengthened, consolidated and placed in the context of a body of broader, over-arching legislation. The Government has indicated its belief that this should be the case. I understand that before the conclusion of the current session the Government will publish legislation dealing with matters such as corporate donations, the funding of political parties and public administration. I hope we can advance these matters in a speedy manner to allow the public to regain confidence in the administration of public life, public business and politics.

The Bill will improve and strengthen the existing law. The amendments I propose to table will strengthen that objective and purpose, create an effective deterrent which will discourage people from engaging in corrupt practices and assist the prosecutorial authorities in the difficult and daunting task they face in dealing with corruption in the corporate and financial sectors, in the sphere of public administration and in the area of administration in general.

I welcome the introduction of the Bill. I hope we will have an early and constructive debate on it in order to ensure that it is placed on the Statute Book as soon as possible.

Acting Chairman (Mr. McGrath): Information on Paul McGrath  Zoom on Paul McGrath  I call Deputy Conor Lenihan.

Mr. Higgins: Information on Joe Higgins  Zoom on Joe Higgins  (Dublin West): On a point of order, I was under the impression that precedent dictates that a Member who has been in the House for a long period during a debate would be allowed to make his or her contribution before a Government Deputy who rushes flush-faced into the Chamber having been despatched by the Chief Whip and who needed to obtain an emergency briefing from the Minister for Justice, Equality and Law Reform. I ask the Chair to call on me to make my contribution.

[1213]Mr. C. Lenihan: Information on Conor Lenihan  Zoom on Conor Lenihan  The Deputy's interpretation of the position is incorrect.

Acting Chairman:  The Ceann Comhairle has indicated that people who have been in the Chamber for some time may be called. However, there is also a long-standing precedent in the House that once the Minister and the two Opposition spokespersons have spoken, the order reverts to the Government side. I called Deputy Conor Lenihan in accordance with that precedent. The decision on the order in which speakers are called rests with the Chair. As it is now 7 p.m., I call on Deputy Lenihan to move the adjournment of the debate.

Mr. C. Lenihan: Information on Conor Lenihan  Zoom on Conor Lenihan  I will move the adjournment of this debate but I wish to complain about the remarks made by Deputy Higgins which are utterly untrue. I made extensive preparations in advance of this debate and I object to the suggestion that I was briefed at the last minute. The comments were typical of Deputy Higgins.

Acting Chairman:  The Deputy will be in possession when the debate resumes and will have 20 minutes.

Debate adjourned.


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