Appleby calls for higher fines for white-collar crime
Mr Appleby, who oversaw his office’s long-running investigation into alleged financial irregularities at the former Anglo Irish Bank up to his retirement last August, claimed existing fines for such offences were “too low” to act as a real deterrent.
The former company law watchdog pointed out that most indictable offences for breaches of company legislation attracted a maximum fine of just €12,697.
Mr Appleby told a conference organised by the Law Reform Commission in Dublin yesterday that higher penalties should be considered, particularly where the accused party was a corporate entity as “a company cannot be jailed”.
He recommended a number of new offences, including the criminalisation of the offence of reckless trading by bankers which he noted was currently only considered a summary offence carrying a maximum fine of €1,297. Mr Appleby said bodies responsible for supervising banks should have “very effective and wide powers” to curb risk and impose penalties.
Among a range of additional sanctions that should be considered were increased use of disqualifications and restrictions on directors for financial misconduct with the possibility of voluntary disqualification as an alternative to facing prosecution.
Mr Appleby said another option would be to introduce the concept of deferred prosecution agreements on the basis of firms and directors undertaking to improve corporate compliance in return for no legal action being taken.
Investigations of white-collar crime could be improved through an extension of “unduly short-time limits” for such inquiries, said Mr Appleby. Other improvements could include greater assumptions in favour of the admissibility of documentary evidence and the extension of the presumption of guilty to persons who could not show they had taken steps to prevent an offence.
Mr Appleby welcomed the proposed introduction of long-sought legislation to provide protection to whistle-blowers, while he also recommended a limit of 8 years on audit firms for banks with audit partners being allowed carry out work for a particular bank for a maximum of 5 years before being replaced.
He said legislation introduced during the mid-2000s regarding obligations of directors of banks represented a missed opportunity as they had never been operated.
Mr Appleby said it could have reset the focus of bankers away from growth to proper risk management and ensuring compliance with best practice.
He challenged the view that nobody would be held accountable for the economic disaster than befell the country as “a little bit pessimistic”. He pointed out that the Fianna Fáil-led government which was in power during the banking crisis had been overwhelmingly voted out of office with the likelihood that many of the party’s then TDs will ever be re-elected again, while directors and senior managers at all the banks had virtually all been replaced.
Criminal prosecution were pending against three former Anglo executives, while Anglo’s auditors were also facing a legal action, said Mr Appleby.
The LRC conference also heard High Court judge Mr Justice Gerard Hogan criticise the “unsystematic and chaotic” system of Irish legislation, parts of which he claimed were impenetrable to many people.
“The legal system would benefit enormously from a spring clean” remarked the judge who recommended it should be modelled on the Swiss civil code.
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