1 / 14

Law Reform Commission Annual Conference 2012

Law Reform Commission Annual Conference 2012. 11 December 2012. Law Reform – The Current Economic and Fiscal Crisis. Reflections on Weaknesses with respect to Accountability Paul Appleby. Outline of Presentation. Accountability in action to date Some domestic causes of the crisis

blaze
Download Presentation

Law Reform Commission Annual Conference 2012

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Law Reform CommissionAnnual Conference 2012 11 December 2012

  2. Law Reform – The Current Economic and Fiscal Crisis Reflections on Weaknesses with respect to Accountability Paul Appleby

  3. Outline of Presentation • Accountability in action to date • Some domestic causes of the crisis • What contribution law can make to improve governance and accountability in the future – some reflections • Concluding Comment

  4. Accountability in Action • New Government elected at the last Election • Outsiders now lead important national bodies • Bank boards/senior management replaced – three persons face criminal charges • Value of bank investments virtually wiped out • 2008 audit work on the banks is under scrutiny • Oireachtas banking inquiry is planned

  5. Some Domestic Causes of the Crisis • Dominance of the growth agenda in the banks • Many bank NEDs were inexperienced in banking • Contrarian views were discouraged • Remuneration packages related to short-term gain • Critical accounting rules were flawed • Auditors’ silence on the risks facing the banks • Inadequate responses of banking supervisers

  6. How the Law might improve Governance and Accountability • Legal changes are not a panacea, but… • Banking supervisors should have effective and wide powers to curb risks and impose sanctions • Law should criminalise all forms of misconduct • Penal sanctions must anticipate the worst case • Sanction options should be extended • Investigative efficiencies should be facilitated • Improvements to audit should be made

  7. Directors’ Compliance Statements – A Missed Opportunity? • In 2003, new law required directors to: • state that they were responsible for securing compliance with tax, company and other important obligations • confirm annually that internal procedures were designed to secure compliance and that they had reviewed the effectiveness of those procedures • In 2004, a similar law was enacted for banks • However, these laws were never operated • Honohan: The FR “deferred to industry pressure”

  8. Create New Offences/Extend Others • Criminalise reckless trading • Extend the fraudulent trading offence in companies to other entities • Make indictable the offence of managing a bank contrary to sound administrative and accounting principles • Extend this offence to other licensed entities

  9. Introduce Dissuasive Sanctions • Fine of €1,297 and imprisonment for six months: a deficient sanction for bank management failures • Review all EU Regulation offences to see if new sanctions limits should be adopted (Euro Comms Act 2007 provides for €500k fine and three years) • Most indictable offences in company law only attract a maximum financial penalty of €12,697 • Consider higher financial penalties for company breaches of law

  10. Develop Sanction Options • Extend the use of disqualification to sanction misconduct in other areas • Provide for voluntary disqualification/restriction undertakings as an alternative to Court actions • Examine extending the administrative penalties available in financial services law to other areas • Introduce the concept of deferred prosecution agreements

  11. Improve/Enhance Investigations • Extend unduly short time limits for investigation • Create general presumptions in favour of the admissibility of documentary evidence: • where a person seems to have created a document and in respect of the statements attributed to him/her in it • where no evidence to the contrary is offered by suspects during investigation and • where the Court is satisfied as to the document’s relevance and necessity

  12. Improve/Enhance Investigations • Alleviate the inhibiting impact of legal professional privilege and the exclusionary rule of evidence which give rise to major difficulties • Extend presumption of guilt to company officers who permitted a default unless they can show that they took steps to prevent it or were unable to do so because of circumstances beyond their control • Implement planned whistle-blowing legislation

  13. Improve Bank Audit Effectiveness • Consider having both the Central Bank and banks appoint bank auditors and determine audit scope • Have the annual transparency reports of major audit firms include statistics on their exercise of professional scepticism in conducting audits • Provide generally that no audit firm should audit a bank for more than eight years and that the audit partner must be changed after five years

  14. Conclusion • A common recent complaint in the accountability area is the time that important investigations take • This is primarily a function of the amount of material to be examined as well as weaknesses and inefficiencies in the law • Investigators must operate with great care within the law. Faster outputs require legal reform • Hope that my reflections today provide food for thought and will help the Commission in its work

More Related