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Extensive Reform of Anti-Corruption Law in Ireland – Highlights for Businesses
On 20 June 2012, the Minister for Justice published the draft scheme of the much anticipated Criminal Justice (Prevention of Corruption) Bill 2012. The draft scheme proposes to repeal the current varied sources of anti-corruption legislation in Ireland and replace it with one consolidated piece of legislation. Many of the existing provisions remain in the draft scheme but have been clarified and strengthened. The draft scheme also incorporates a number of recommendations from the recently published Mahon Tribunal report which inquired into certain planning matters and payments to politicians.
Although no formal indication has been provided as to when the draft scheme might be published as a bill, it contains a number of interesting and potentially very significant provisions.
From a business perspective, this includes the fact that Irish companies will be liable for the commission of corrupt offences by their employees and associated persons. In this context, the key message is for Irish companies to put in place anti-corruption policies and procedures as soon as possible, in order to avail of the proposed defence under the draft scheme in respect of such liability.
In a provision similar to Section 7 of the UK Bribery Act 2010, the draft scheme now provides under Head 13 that companies are liable for corruption offences of their employees, agents, subsidiaries, officers, secretaries, managers and directors, where there is an intention by those persons to obtain or retain business for the company. This now makes it easier for companies to be prosecuted for corruption, as previously common law rules of identification and attribution were necessary to determine liability for a company. The maximum penalties for offences under the draft scheme can be up to 10 years imprisonment and / or an unlimited fine. However, to date there have been no recorded prosecutions of companies under Irish anti-corruption legislation.
The draft scheme proposes the introduction of a defence for the company to prove that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence. This echoes the position under the UK Bribery Act 2010, albeit the UK defence is arguably wider as it only requires the implementation of “adequate procedures” designed to prevent corruption.
In order to rely on the proposed defence of having taken all reasonable steps and exercised all due diligence, we would advise companies to put in place effective and robust anti-corruption policies and procedures. Companies who are already subject to the UK Bribery Act 2010, which is any company carrying on part of its business in the UK, may already have such policies and procedures in place. These should be revised on a regular basis and communicated to all employees and persons associated with the company. Companies should ensure, in particular, that subsidiaries or agents operating in foreign jurisdictions, which may have less stringent anti-corruption laws, receive appropriate training on anti-corruption procedures.
Under the draft scheme “Irish public official” is defined to include a director of an Irish company. This has the consequence that directors of private companies would be subject to the same regulations that apply to officials in Government or State roles. We consider that this is unlikely to have been the intention of the draft scheme and is most likely a drafting error which should be corrected by the parliamentary draftsmen.
Expanded definition of “corruptly” and other new provisions
Whereas the offences of corruption were previously contained in a number of different pieces of legislation dating from 1896 to 2010, the draft scheme clarifies the existing offences of corruption and introduces some additional circumstances where corruption will arise. In summary, the following acts will constitute an offence of corruption under the draft scheme:
(a) corruptly giving or accepting a gift or advantage as an inducement to do or omit to do something;
(b) giving a gift or advantage to another knowing, or reckless as to whether, that gift or advantage will be used to facilitate the commission of an offence of corruption;
(c) using a document, including a disk, tape, audio or video recording, or internet page, which the user knows or believes to contain a false or defective statement with the intention of inducing another to do or omit to do something relating to his office or employment; and
(d) corruptly threatening harm to a person with the intention to influence any person to do or omit to do something in relation to his office or employment.
As in the existing legislation, many of the offences relate only to the corruption of public officials and both the Irish public official and the person attempting to corrupt that official can be prosecuted under the draft scheme. In addition to a fine and / or imprisonment, an Irish public official will also be required to forfeit his office and may be prohibited from holding office for up to 10 years. A person who seeks to corrupt a foreign public official can also be prosecuted in Ireland.
While a presumption of corruption currently exists with regard to undisclosed political donations exceeding the amount permitted by the Electoral Act 1997, a new presumption of corruption has been introduced in respect of corrupt enrichment by an Irish public official. Where an Irish public official maintains a standard of living above that commensurate with his stated interests, or is in control of property of a value disproportionate to his stated interests, it shall be presumed that this enrichment is the result of an inducement to do (or not to do) something in relation to his office or employment. This would be a far reaching provision which, in practice, would seem difficult to prosecute but indicates the current emphasis on deterring corruption in public office.
The draft scheme proposes to expand upon the current definition of "corruptly". A statutory definition of "corruptly" was only introduced in Ireland in 2010 and was limited to "acting with an improper purpose personally or by influencing another person". The new definition is now far broader, and includes acting in breach of duty, acting without due impartiality, acting without lawful authority, acting in breach of a relevant code, acting in pursuit of undue benefit, and acting in a deceitful, dishonest or misleading manner. Should the bill be drafted in the proposed terms, the scope of the offence of bribery would be expanded far beyond that currently covered by Irish or UK corruption legislation and beyond the broad definition of "corrupt payment" used by the Mahon Tribunal.
The Department of Justice and Equality has stated that the draft scheme has been published to allow the Irish Parliament’s Committee on Justice, Defence and Equality to consider its contents before it is fully drafted by the parliamentary draftsmen. In terms of the content of the draft scheme, there are a number of areas which, at a preliminary analysis, may require further discussion or assessment. For example, we would query whether the presumption regarding “corrupt enrichment”, as currently drafted, will stand up to judicial scrutiny. Furthermore, the Department of Justice itself has said the “forfeiture in office” provision has “implications for the constitutional balance of power between the judiciary, the legislature and the electorate”.
While it is entirely coincidental that the draft scheme has been published in a week in which an Irish political figure was jailed for corruption, the current drive towards an increased culture of whistle-blowing and transparency and combating corruption, particularly in light of the recent publication of the Mahon Tribunal report, will be further facilitated by any new legislation in this regard.
There has been no indication as to when the Government intends that the draft scheme be approved by the Irish Parliament and enacted into law. However, what is clear is that the draft scheme, if enacted in its current form, would represent a very robust piece of anti-corruption legislation which could have a comparable impact on Irish companies as the UK Bribery Act 2010 has had in the UK.