In 2018, the Companies (Corporate Enforcement Authority) Bill was published, with the view to re-establishing the Office of the Director of Corporate Enforcement (ODCE) with a more independent body called the Corporate Enforcement Authority (CEA).
The ODCE is a branch of the Department of Enterprise, Trade and Employment of the Irish Government, which is managed by the Director of Corporate Enforcement, Mr. Ian Drennan. This dedicated company law enforcement body was set up as a result of a report by the McDowell Group, the working group on company law and compliance in 1998. The McDowell Report showed an obvious lack of corporate enforcement in Ireland, which at the time had a rising number of phoenix companies and recognised that Ireland was characterised by a culture of non-compliance. The government’s response to the McDowell Report was the enactment of the Company Law Enforcement Act 2001, which established the ODCE in its current form.
Section 12(1) of the Company Law Enforcement Act 2001 sets out the main functions of the ODCE as follows:
As demonstrated above, the ODCE has both an enforcement role and an administrative role, which is difficult to achieve through recruitment of civilian individuals and it has been recognised that more expertise and police recruitment is required in order to carry out these important functions.
Throughout the financial crisis and in 2017 in particular, the weaknesses in the ODCE’s structure began to show when a case against a former banker fell apart due to lack of resources in the ODCE. As a result, there were calls by the public to eradicate the ODCE completely, with the Law Reform Commission expressing the need for a Criminal Assets Bureau-like body being established to tackle corporate enforcement effectively. No one was held accountable for the ODCE’s failures in this case as the Company Law Enforcement Act 2001 provides immunity to the ODCE and its staff. It was noted in a report by Judge Aylmer that there was a significant deficit in the areas of forensic accountancy and digital forensics within the ODCE, along with a clear lack of expertise in evidence collection. This presented a need to re-establish the ODCE body as an agency to ensure greater independence and autonomy over its resources and investigations.
The Government’s response to Judge Aylmer’s criticisms was the publishing of the Companies (Corporate Enforcement Authority) Bill 2018. As mentioned above, the Bill proposes to re-establish the ODCE as an independent corporate body called the Corporate Enforcement Authority. Instead of having one senior official, it will have a minimum of one member and a maximum of three. The members will act as the board of the CEA and will be appointed by the Minister of Enterprise, Trade and Employment, an office currently held by the Tánaiste Leo Varadkar. The current Director of Corporate Enforcement is Ian Drennan, and Mr. Drennan will assume the role of ‘member’ on the date of the re-establishment. The CEA will oversee its own expenditure and recruitment, in the hopes that it will be more successful than its predecessor.
Not much movement has occurred in enacting this Bill due to the dissolution of the Dáil in early 2020 and the ensuing Covid-19 pandemic. However, one might argue that that proper corporate enforcement is needed now more than ever, with certain business sectors facing turmoil as a result of lockdowns and harsh restrictions in Ireland for over a year now.
A remote Joint Committee on Enterprise, Trade and Employment debate was held on Friday 29th January 2021 where TDs met remotely to discuss and move forward with the proposed changes. The Tánaiste explained that although no progress has been made on enacting the Bill, the transition from the ODCE to a stand-alone agency has continued nonetheless, citing an increased budget and staffing levels with more Gardai having joined the ODCE being the primary changes to date. Ministers at this Joint Committee expressed their enthusiasm for the Bill to be enacted in 2021 and referred to a report laid before the Government in December 2020, dubbed the ‘Hamilton Review’. This report recommended improvements in financial crime in Ireland, which complements the idea of an independent company law enforcement agency. This subject led to the discussion of a possible “new police powers Bill”, which will give the Gardai enhanced powers to access electronic information and cloud-based data which will in turn assist the Corporate Enforcement Authority with its investigations.
The Tánaiste said he hopes to have the Bill through the Houses of the Oireachtas by the summer recess this year, followed by the establishment of the agency which is likely to take place in January 2022. He made it clear that the ODCE is not waiting for the Bill to be enacted in order to start the transition to a standalone agency, which is already underway. We are hopeful that Ireland is headed towards a more secure landscape within which to do business and the well-awaited independent company law enforcement should hopefully be in operation by this time next year.