James Browne (Wexford, Fianna Fail) | Oireachtas source

I thank the Deputies for their reasoned and constructive amendment and I appreciate the intent and spirit of it. Section 5 inserts a new section into the principal Act and this provides for the liability of offences for a body corporate. This is in accordance with Article 6 of the directive.

The approach taken in the section reflects the general approach that is consistent with similar provisions in other recent legislation, for example, the Criminal Justice (Corruption Offences) Act 2018, the Criminal Justice (Offences Relating to Information Systems) Act 2017 and the Counterfeiting Bill 2020. That Bill was recently brought through Second Stage in Dáil Éireann. The provisions are not word-for-word identical but they are similar and they follow a similar pattern.

In this case, criminal liability is imposed on the body corporate for offences committed by an employee or other officer where the corporate body failed to exercise the requisite degree of supervision or control. This is subject to the defence under subsection (2), which requires the body to prove that it took all reasonable steps and exercised all due diligence to avoid commission of the offence. The onus is very much on the body corporate.

Before I come to the specifics of the Deputy's amendment I am keen to mention several points. First, the liability of the corporate body is in addition to that of the person committing the offence. Second, depending on the circumstances, managers may also be personally criminally liable, whether as perpetrators, insiders or accessories.

I recognise and appreciate that the amendment is well-intentioned in clarifying what is meant by "reasonable steps" and "due diligence". However, my concern is that a suggested definition of those terms may not always be appropriate. I would argue respectfully that this is better dealt with on a case-by-case basis. Otherwise, the section may inadvertently be weakened by suggesting that there is a formulaic approach to these terms. I prefer to see the matter left to the courts. I do not believe the defence weakens the section. Rather, it reflects that if we are to impute criminal liability, then there must be some culpable wrongdoing on behalf of the person, in this case the legal person, who will be punished. The requirements of the section are strong. The body corporate must prove that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence. To successfully raise the defence, the court would have to see evidence. I expect that it would be difficult for the body corporate to prove that it took reasonable steps in the absence of having documented them. If internal controls and processes were not in place, I imagine it would be difficult to prove the exercise of all due diligence.

This question has been examined recently in great depth by the Law Reform Commission in its 2018 report on regulatory powers and corporate offences. I refer in particular to two statements from that report. The first is in paragraph 10.04 of the report and it refers to due diligence in general by reference to section 78 of the Consumer Protection Act 2007. It states:

...a corporate defendant will need to produce evidence of the systems and procedures it had in place to avoid the commission of the offence, and that these included all steps that should reasonably have been taken to avoid its commission. The mere production of policies and procedures, without effective implementation, monitoring, communication and oversight, will not suffice.

The second statement is contained in paragraph 10.17 of the report and is in respect of the type of defence that arises here and which combines requirements for reasonable steps and due diligence. It states:

The elements are distinct but related. As already seen, reasonable steps or precautions refers to setting up a system. Due diligence is ensuring that the system is working as intended. To establish the defence, therefore, an appropriate system must have been put in place, there must have been effective measures or controls implemented to monitor the effective operation of the system and it must be demonstrated that the system was operating at the time the offence was committed.

Finally, the report notes in paragraph 10.03 that due diligence has been recognised as being a concept not susceptible of precise definition. This is the nub of the issue. What reasonable steps and due diligence are can only realistically be assessed on the facts of each case. I suggest that task should be left to the courts based on the facts of the particular case in question. In the circumstances, unfortunately, I cannot accept the amendment but I accept the good intentions of the Deputies concerned.