More powerful corporate enforcers being considered, by Law Reform Commission

Construction work taking place at the new headquarters for the Central Bank.

Beefed-up corporate watchdogs, greater use of financial fines, and new criminal liability offences are among robust laws being examined by the State’s legal advisers.

The Law Reform Commission is also to investigate if existing fraud offences are sufficient to deal with the full range of such activity.

The commission today publishes its issues paper on regulatory enforcement and corporate offences, and is seeking submissions from the public.

It said that there were two related areas under review.

The first is whether the supervisory and enforcement powers of the State’s financial and economic regulators — such as the Central Bank, ComReg, the Competition and Consumer Protection Commission, and the Director of Corporate Enforcement — are adequate.

The second is whether there are any gaps in the criminal law, particularly in relation to fraud and if there is a case for a new offence of reckless trading.

The legal expert body said while “significant reforms” had been brought in since 2008, “important issues” remained and these were being examined by its review.

Among the issues are:

  • Introducing “standard set of powers” for all regulators (as in Australia and the UK), to include: powers of entry to premises; powers of access to computers, and powers to interview staff;
  • Greater use of “civil financial actions” by regulators for non-compliance with the law and as an alternative to criminal prosecution;
  • Greater use of “negotiated compliance agreements” as a means of avoiding civil litigation;
  • Introduction of “deferred prosecution agreements”, as widely used in the US and the UK;
  • Introducing a new test for the offence of criminal liability by a corporate body to one based on the “acts” of its senior managers, not on their “intention” to defraud;
  • Changing the test for personal criminal liability of senior corporate officers.

The 164-page issues paper is also examining whether there is a gap in the law on fraud offences and if there is a need to enact offences along the lines of the US mail fraud and wire fraud laws.

It noted that despite the broad range of fraudulent conduct covered in Irish law, there was “no substantive offence of simple fraud”.

The commission is exploring the case for a new offence of “reckless trading”.

The paper said: “Such an offence would criminalise corporate activity that involves a reckless disregard by the corporate body that its activities would cause a loss to another person.”

It said this involved a “significantly lower threshold” than applies to fraud- related offences, which require actual knowledge that the activity would cause loss and also an intention to defraud.

www.lawreform.ie 


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