Dcu 231012 kevin
description
Transcript of Dcu 231012 kevin
Presentation to MBS in Accounting Students,
Dublin City University
23 October 2012
Outline of Presentation
Introduction to the ODCE Our Goals and associated work Our initial impact Concluding Comments
What is the ODCE? Business scandals of the late 1990s (Tribunals
of Inquiry – McCracken/Flood, High Court Inquiries – Ansbacher/NIB) and the PAC’s DIRT Inquiry)
Working Group on Company Law Compliance and Enforcement finding of “a culture of non-compliance” with respect to company law duties
What is the ODCE?
Remit focused on the Companies Acts 1963-2009 Multi-disciplinary agency comprising c.49
administrative, legal, accounting and Garda staff Expenditure of €3.4 million in 2011 Director must act on an independent basis Director obliged to respect commercial confidentiality
ODCE Goals
Encouraging Improved Compliance Uncovering Suspected Breaches Prosecuting Detected Offences/Breaches of
Duty Sanctioning Improper Conduct affecting
Insolvent Companies Providing Quality Customer Services
DPPreferrals
Disqualifications
Summary Prosecutions
Civil Enforcement Actions(Compliance Orders, Restrictions)
Administrative and Legal Actions (Investigations, cautions, rectification and remediation
on a non-statutory basis)
Encouraging Compliance (Advocacy & guidance)
Enforcement Pyramid
ODCE’s Compliance Work
Publications Information on the ODCE’s Remit - Auditor Reporting General Guidance on Directors’ Duties, etc. Guidance on new legal requirements, e.g., New Companies
Acts Topical Guidance, e.g., Management companies, Audit
Committees, Transactions involving directors Presentations, Conferences, etc. (c.70 per year) Press Statements, syndicated news articles
ODCE’s Compliance Work
Policy Contributions New Companies Bill Company Law Review Group Irish Auditing and Accounting Supervisory Authority
International Dimension Responses to EU Company Law consultations International Association of Insolvency Regulators Future of audit
ODCE’s Detection Work
Public Complaints about companies, directors, etc. Auditor Reports of suspected indictable offences Regulatory Bodies like Revenue, the Garda, etc. Matters in the public domain, e.g., Inquiry Reports ODCE’s own inquiries, e.g., the CRO Register
ODCE’s Detection Work
Identify if a prima facie breach has occurred Consider if administrative rectification will suffice Assess if ODCE intervention is called for Consider if legal action is necessary or desirable Evaluate if other actions are warranted, e.g.,
referral of case to another regulator for evaluation Vast majority of issues dealt with administratively
ODCE’s Detection Work
Directors’ Transactions – One Area of Work General Ban on use of Company Assets for personal purposes Auditors have been reporting on average 300 cases a year since
2003 Publication/issue of ODCE Guidance in November 2003 ODCE Article issued to all Directors in 2004 Directors’ voluntary or prompted remedial action often accepted A handful of cases of ‘wilful default’ have been prosecuted Law amended to allow easier prosecution 2011, 143 cases, €44million (2009, 185 cases, €162million)
ODCE’s Enforcement Work
Criminal Enforcement Options Summary Prosecution in the District Court Referral to the DPP for Prosecution on Indictment
Typical Criminal Enforcement Offences Persons acting as Directors/Auditors while prohibited Accounting issues, e.g., failing to keep proper books Falsification of company documents
ODCE’s Enforcement Work Corran Building Services Ltd. Case
Liquidator submitted a criminal conduct report Gardaí obtained/executed a search warrant Gardaí seized two company cars bought with
company funds which had not been handed over to the liquidator
One director convicted of fraudulent trading, failing to keep proper books and failing to file annual returns
Two directors afterwards restricted by the High Court
ODCE’s Enforcement Work
Civil Enforcement Options Remedial Orders Restriction Disqualification
Related Civil Enforcement Responses Failure to discharge an obligation of law Failure to act honestly and responsibly in insolvency Serious misconduct, e.g., fraud
ODCE’s Enforcement Work
Anglo investigation Information disclosed by FR
Further disclosures by bank
Warrant obtained, paper and electronic documents seized
Amendments to law to deal with scale of seizure
Documents being interrogated
Individuals making statements, some under arrest
Individuals have been arrested and charged, more may follow
Largest and most complex financial investigation in State
ODCE’s Insolvency Work
Formerly only court appointed liquidators sought the restriction of certain directors.
Every liquidator of an insolvent company must report to the ODCE and apply to the Court for directors’ ‘restriction’, unless relieved by the ODCE
About four out of five directors avoid restriction
ODCE’s Insolvency Work
Initial reports received within 6 months of appointment
Formerly 250/300 reports a year 1,287 reports in 2011 Same or more in 2012
ODCE’s Insolvency Work
ODCE may also seek disqualification of directors in unliquidated insolvent/struck-off company cases
Our role is to ensure that persons who abuse their position are brought to account in Court
ODCE has successfully piloted actions in this area
ODCE’s Insolvency Work
Phoenix Activity One acted as director of eight struck-off companies, all
of which had debts outstanding Another acted as director of four of these companies Came to attention due to employee, creditor and
Pensions Ombudsman complaints in a failed company First director disqualified for 12 years Second director disqualified for 8 years
ODCE Impact since 2002
Over 80 new or revised ODCE Publications issued 178,000 visits to the ODCE website in 2011 12,000 complaints/reports dealt with More than 100 companies/directors/others convicted
by ODCE on over 300 charges 1200 directors restricted Over 100 directors disqualified
ODCE Impact
Future Direction Reach out to company stakeholders and SME directors
Deal with minor offences administratively
Target and aggressively prosecute serious misbehaviour
Concentrate more enforcement resources on complex cases or areas of major non-compliance
Concluding Comments
‘Culture of non-compliance’ which was said to prevail is being turned around: State had failed to regulate effectively Professional Conduct was not supported Little Prospect of Sanction for Misconduct Deficient Accountability Framework in Practice
Concluding Comments
New Situation Directors, etc. now more accountable Auditor’s independent role reinforced Errant and unscrupulous Directors face ODCE
Inquiry/Court action Creditors’ Situation has improved Better Information Disclosures to Market Reinforcing Good Practice in other areas
Concluding Comments
Effective and Balanced Regulation protects: The public from fraud Employees, traders and suppliers from irresponsible
conduct State revenue and the taxpayer’s interest Investors and credit institutions from bad debts Legitimate business from fraud-based competition Personal and Corporate Reputation
Thank You
Further Information is available from
www. odce. ie