RICHARD CURRAN
More action needed on white collar crime,
IT seems that 16 years and many corporate controversies later, one central question in tackling white collar crime has yet to be answered. What should the role of the Garda Siochana be when it comes to investigating cases of corporate crime?
New plans published by the Government to tackle white collar crime will see the shortcomings of the Office of the Director of Corporate Enforcement (ODCE) finally addressed. There will be a new agency that will no longer be part of a government department and therefore not subject to the vagaries of budgets, hiring restrictions and pay limits.
The new agency will be run by three commissioners and according to the new government plan will be more independent and flexible in tackling company law breaches.
It isn’t clear how it will be financed and whether current ODCE management and staff will have to apply for their jobs with the new agency. I guess the answer is probably not.
Yet, what part will the Gardai play? The proposals suggest there will be consultation on “how the role of the Garda Siochana can be optimised within the new agency”.
The ODCE was originally set up in the wake of the Ansbacher and NIB scandals to tackle company law breaches. Its biggest successes were in getting directors to file accounts on time, which have gone up from 13pc of companies to 90pc.
Its real successes were in smaller scale breaches. When it came to the big stuff like insider trading or cases in the wake of the collapse of Anglo Irish Bank, it was less successful. At one stage in 2015 it had just 37 staff, which included just one accountant and two solicitors.
It is incredible to think that 16 years after the establishment of the ODCE, the Government is initiating a “pilot” exercise in setting up a multi-agency task force which will be Garda-led, on tackling payment fraud.
Surely, at this stage the best way of pooling the collective resources of investigation and law enforcement should have been found. Did the ODCE get caught in a turf war or clash of cultures between the Gardai and the former civil servants — something that has yet to be fully resolved? Elsewhere, the Government plans talk about implementing legal changes that would bring us in line with European directives. Impressive Central Bank powers, granted in 2013, have come too late for the tracker mortgage scandal as we have seen.
But new legislation will broaden powers of enforcement bodies around sanctioning and removing executives. Bravo! But will it ever actually happen? Based on the pace of previous probes, they will have retired before they are actually removed.
A new register showing beneficial ownership of corporate entities and trusts will be established. This too will bring Ireland in line with international trends in this direction.
Unfortunately, most opaque corporate entities and trusts are held in places like Cyprus, Isle of Man, Jersey or more exotic locations further afield.
I cannot imagine the new register will shed much relevant new light on beneficial ownership. A more controversial change is likely to be the pledge to make it an offence to engage in “trading of influence”. This is defined in the EU as the “intentionally, promising, giving or offering, directly or indirectly, of any undue advantage to anyone who asserts or confirms that he or she is able to exert an improper influence over the decision-making of any person”.
This is basically where I charge somebody money or some other benefit in return for providing the influence I have over an elected or public official. But it is defined as intentional and improper. It is extremely hard to prove. The Council of Europe has its own definition of trading in influence but many countries will not make it a crime because it could criminalise legitimate lobbying.
Our Government has said it will create new offences dealing with trading in influence but the published plan is short on detail. I am not surprised.
Use of confidential information will also be an offence but no detail is provided. I would like to see how the Bill is drafted to deal with that, given that so much of Irish corporate, public and social life is built around “influence”, which of course is sometimes rewarded.
Would a former politician or adviser, now being paid as a lobbyist, fall victim to a broad definition of trading in influence? Of course politicians can say the lobbyist has no influence at all over them, but then why are clients paying lobbyists at all, especially those with past working relationships with public officials or representatives?
Or more to the point, every paid lobbyist would need to be a complete stranger to the public officials they are seeking to influence, to avoid falling under tough trading in influence laws.
Those drafting the legislation on this one will have their work cut out.
There is no textbook solution for tracker scandal damage
FRANCESCA McDonagh certainly has her work cut out as the new chief executive at Bank of Ireland. No doubt she plans to use her extensive experience in the UK to bear in Ireland especially when it comes to the massive changes in how customers use banks.
Digital and online banking is the new challenge, as well as tackling costs and figuring out what to do with expensive loss-making branches in smaller towns.
But her first big task is dealing with the tracker mortgage scandal and the collateral damage it is bringing on the banking sector as a whole. So it was not surprising to read that she has called in AT Kearney, the US banking consultants, to have a look at the culture of the bank.
AT Kearney are very well-regarded and McDonagh will be familiar with the outfit from her HSBC banking days. However, some of their literature on the future of banking doesn’t have a lot to say about Ireland.
One detailed report the firm did called ‘The Digital Banking Journey’ details banking trends in relation to online development around the world.
It doesn’t mention Ireland at all. Yet, some of its points seem to sum up the Irish banking landscape well: “The industry has been in a comfortable position for decades with low customer turnover, almost no regional competition, good personal relationships and trust as selling points, and not much intervention from regulators.”
That sounds very familiar. It goes on: “Staying ahead of the curve was easy, and there was no pressure to change.”
AT Kearney maintains that most of the change so far has been about offering more digital products and enhancing the customer side of digital banking. But it argues that few banks have changed their internal organisations or governance principles.
“Most customers still belong to branches and in the back office the preparation for being the central customer interaction co-ordinator has been timid.”
AT Kearney reckons that “one of the biggest challenges will be culture and people. Transforming from the traditional bankers’ club into a customer-focused, innovative and fast player is seen as a major issue.”
All good stuff, but they don’t mention anything about what to do when you have been part of an industry-wide rip-off of struggling mortgage customers at a time of deep economic crisis.
UK exchequer is addicted to ‘crack cocaine’ betting revenues
THE British government has bottled it on reducing the maximum bet on Fixed Odds Betting Terminals (FOBTs), referred to even by some bookies as the “crack cocaine of gambling”.
After months of investigation, consultation and consideration, it said this week the cap would be reduced from £100 to between £50 and £2. It will now begin a fresh round of consultation before deciding on the level of the new lower cap.
This leaves a lot to play for with betting companies who will feel they can still convince the Government to opt for a cap of £30 or £20 instead of £2. Paddy Power would be among the least affected and has said it favours reducing the cap substantially anyway.
However, the British exchequer is clearly as addicted to the tax revenues from FOBTs as their clients are to using them. I would venture to bet it will be fixed at £30 or £20 after the consultation, but not lower than that. This week’s fudge was just buying time for a cop-out on the issue.