Oireachtas Joint and Select Committees
Tuesday, 2 April 2019
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
General Scheme of the Companies (Corporate Enforcement Authority) Bill 2018: Discussion (Resumed)
I remind members, visitors and those in the Public Gallery to ensure their mobile phones are switched off or are on flight mode for the duration of this meeting as they interfere with the broadcasting equipment, even when on silent mode.
I welcome Ms Justice Mary Laffoy, president of the Law Reform Commission and former judge of the Supreme Court, Mr. Raymond Byrne, a commissioner with the Law Reform Commission, Mr. Paul Egan, chairman of the Company Law Review Group, Mr. Vincent Madigan, also of the Company Law Review Group, and Ms Tara Keane of the Company Law Review Group secretariat.
In accordance with procedure, I am required to read out the following. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
I remind our guests that the presentations should be no more than five minutes’ duration. Members have been circulated with the presentation submitted by today’s attendees. I ask Ms Justice Laffoy to make some brief introductory remarks. I will then ask Mr. Byrne to make a presentation to the committee.
Ms Justice Mary Laffoy:
I thank the Chairman and the members of the committee. We are very happy to be here and we hope we will be able to assist the committee. I will introduce my colleagues. Raymond Byrne is the full-time commissioner in the Law Reform Commission. He was there throughout the work period which ultimately produced the report on regulatory powers and corporate offences, so he knows all about it. I only became president of the Law Reform Commission when the report was about to be published, although I had the honour of being involved in its launch, so I am relying on Mr. Byrne. Some of our researchers are here, namely, deputy director of research, Mr. Robbie Noonan, and two of the principal legal researchers who were involved in this report, Ms Leanne Caulfield and Ms Morgane Hervé.
Mr. Raymond Byrne:
I thank the Chairman and the members of the committee. I am very happy to be involved in this. As to how we hope we will assist with the committee’s scrutiny of the general scheme of the companies (corporate enforcement authority) Bill, in some respects the report we published last October overlaps with the committee’s current deliberations. There is no doubt, however, that some other aspects of our report which had a different focus may not overlap. Nonetheless, we thought it would be useful to give an overview in the written statement of the general report. One of the areas in which the committee might have a particular interest in considering the scheme of the Bill is the recommendations we made on what we described as the core regulatory toolkit that financial and economic regulators should have, and I might focus on this.
The background to the report published in October last year was that, after extensive consultation on the content of our current programme of law reform, which was approved by Government in 2013, a number of submissions asked us to look at the whole area of the regulatory powers of financial and economic regulators. While the general background to the report was no doubt heavily influenced by the financial crisis that emerged in 2008, many of the submissions that we were sent in respect of the consultation on that fourth programme also recognised that, other than the Central Bank, which has very significant regulatory powers, there are other regulators that did not have as wide a regulatory toolkit. I refer to bodies such as the Commission for Communications Regulation, ComReg, the Competition and Consumer Protection Commission and the Office of the Director of Corporate Enforcement, ODCE, although I know that in some of the literature there is a debate as to whether one could describe the Office of the Director of Corporate Enforcement, ODCE, as a regulator as such. It certainly has some of the attributes of a regulator. We were also very conscious of the fact that while obviously we have been through huge trauma as a result of the banking crisis, the next major crisis of systemic proportions for the State might not come from the banking sector. The focus of our report therefore was not just on financial regulation but on other sectoral economic regulators as well.
We are very conscious that we are an advisory body and that what we recommend and include in our report, including draft Bills, are therefore matters for others to determine as to whether there will be any law reform arising from our recommendations. Of course, these are matters for members of this committee and other Members of the Houses of the Oireachtas. We are aware that a number of recommendations of the report are under consideration. On page 3 of the paper we circulated to the committee, we mention just some of the main recommendations, including the establishment of a statutory corporate crime agency and the idea that financial and economic regulators should have the power to impose significant financial sanctions and to make regulatory enforcement agreements. As I mentioned, the committee may want us to look at the latter area. We also looked at our existing fraud offences and made recommendations as to how offences under the theft and fraud offences Act might be amended. Then there is the question as to whether a statutory system of deferred prosecution agreements should be introduced.
I will make just brief comments on the proposal in the commission’s report on a corporate crime agency because I know to some extent from the deliberations that have taken place here that there has been a debate about the overlap with the ODCE’s reforms in the corporate enforcement authority Bill. The commission’s proposal on a corporate crime agency was focused on issues such as major corporate fraud and corruption-type offences and the need for a separate agency to examine these kinds of offences. We certainly did not make a recommendation directly related to reform of the ODCE. We were very conscious that this had been debated in the Government’s 2017 paper on measures to improve the effectiveness of the response to so-called white-collar crime. We understand, therefore, that this issue of a corporate crime agency, or what could be described as a serious fraud and corruption agency, is being considered by the group chaired by the former Director of Public Prosecutions, James Hamilton. We understand that this group is due to report later this year.
I thank the Chair and members of the committee for their attention. We are very happy to take questions.
Mr. Paul Egan:
This afternoon I appear as chair of the Company Law review Group. Beside me is Mr. Vincent Madigan, who like me is a founder member of the Company Law Review Group and review group’s secretary, Ms Tara Keane. The Company Law Review Group was established on a statutory basis by section 67 of the Company Law Enforcement Act 2001 and continues under chapter 4 of Part 15 of the Companies Act 2014. The review group consists of members who have an expertise in and an interest in the development of company law, including practitioners such as lawyers, accountants, chartered secretaries, users of company law such as business persons and trade unions, regulators, that is, implementation and enforcement bodies and representatives of Departments, including the Department of Business, Enterprise and Innovation. A number of professional and other bodies nominate members and the Minister makes appointments as well. The secretariat is provided by the company law development and EU unit of the Department of Business, Enterprise and Innovation. We work to a work programme which is determined by the Minister in consultation with the review group. The review group presents its recommendations on matters in its work programme to the Minister. The Minister reviews the recommendations of the group and then decides the policy direction to be adopted. Members of the review group other than the chair are not remunerated in respect of their membership.
The review group meets between two and four times a year in plenary session, with most of our work being carried out by committees of which there are currently five. They are related to corporate governance, corporate insolvency, a statutory committee which is a standing committee dealing with ongoing matters, a corporate enforcement committee and the Part 23 committee, which relates to public companies which are dealt with under Part 23 of the Companies Act.
Our statutory functions are set out in section 959 of the Companies Act 2014, which include: a requirement to monitor, review and advise the Minister on matters concerning the Companies Act; the amendment of the Act; the introduction of new legislation on the operation of companies and commercial practices in Ireland; the rules of court; judgments of courts; issues arising from the State’s membership of the EU; international developments in company law; and other related matters. In so doing we must seek to promote enterprise, facilitate commerce and simplify the operation of the 2014 Act, enhance corporate governance and encourage commercial probity.
The Bill, the heads of which are under discussion today, to establish the new corporate enforcement authority as an independent company law compliance and enforcement agency is one of several measures announced on the 2 November 2017 in measures to enhance Ireland’s corporate economic and regulatory framework. This is pursuant to a policy initiative of the Government rather than a proposal resulting from one of the Company Law Review Group’s reports. The Bill, however, does include a number of provisions to give effect to certain of the recommendations in review group reports or derived from those reports. I refer specifically to the review group’s report on shares and share capital which was prepared in the first instance by a committee of which I was then chair, a report on corporate governance matters and a report on the protection of employees and unsecured creditors where Mr. Madigan was the chair. Our competence to speak to matters today is focused on Parts 3, 4 and 5, which deal with those respective reports and recommendations either contained in or derived from them.
To bring the committee up to date, the way the review group has worked in the past has been on two-year programmes with a big report at the end of two years. In the paper that I submitted in advance of today’s meeting, I give the headings of the various reports that have been submitted. I took office in June 2018, by which stage the review group had produced 16 annual reports and eight special reports, most notably the report that gave rise to the general scheme of the Companies Bill which was published in 2007 and eventually became law as the Companies Act 2014. That was probably the most intense period of work of the review group as its refocused company law away from the minority of companies which were public companies and instead focused it on the private company. That resulted in a section-by-section, root and branch reform of the law. The review group feels a special affection for the 2014 Act.
Most recently, the review group delivered its annual report for 2018 to the Minister in compliance with the Companies Act. It contained a code of conduct that we applied for in the conduct of our proceedings, a submission on the review of the Limited Partnerships Acts, a submission on the shareholders’ rights Directive 2017/828 and a report on the UNCITRAL Model Law on cross-border insolvency. I look forward to discussing the Bill, in particular the heads in Parts 3, 4 and 5.
Is there any potential crossover between the roles of the proposed corporate crime agency and the corporate enforcement authority? Is there any liaison on the international side given the fact of cybercrime on the Internet and the global nature of it?
Mr. Raymond Byrne:
In terms of overlap and liaison, there is no doubt that there would be very important liaison if a corporate crime agency was to be established. The report that we carried out did a lot of consultation with people who had been involved in examining some of the very serious issues that arise on the regulatory side. What we discovered from some of the regulators was that they were very capable of examining those areas for which they had functional responsibility, in terms of regulating banks and other financial institutions. The competition commission has functional responsibility to look at competition law, mergers and takeovers, and various other bodies which have a regulatory role in various economic sectoral areas. What they all said as well was that there was a risk that even though they might be looking at all of those detailed areas, certain areas such as major fraud matters, which would not be within their responsibility as regulators could in a sense fall between the cracks. That is why the commission made a recommendation that there ought to be an agency that would be responsible for looking at those areas. That would be quite separate from the Office of the Director of Corporate Enforcement, ODCE, as it currently stands or the corporate enforcement authority if it is to be established under this Bill, because the corporate enforcement authority would still just have responsibility for the enforcement of the Companies Act, as amended.
That was the issue that arose in the consultations we had with a number of the regulators that we consulted with, and therefore the conclusion the commission reached was that it recommended the need for a separate agency that would be responsible for examining issues that fall outside the remit of the existing financial and economic regulators.
The witnesses might not be able to answer this question. I refer to the communication between the regulatory agency and the businesses in question. If, for example, we take what happened ten years ago with the banks, I am interested to hear what type of communication takes place? Is it real-time type data that they request or are the systems sufficiently sophisticated that they can provide such data? From my experience in the private sector, what happened ten years ago was that the communication of data was perhaps two or three months behind.
Again, this is anecdotal and from my own experience. One very significant thing that was done in the intervening years was to try to get the systems up to speed such that there is almost real-time communication, that when one goes in takes a snapshot one can find out exactly what is going on, as opposed to in three or four months’ time. This negates any risk. Is there any development in this regard? If Mr. Byrne cannot answer that question, I fully understand. I know it is quite broad, but just as a matter of interest.
Mr. Raymond Byrne:
One thing we did not do was look at how regulators regulate. That was not part of our function and we would not really be competent to do that. However, one issue that certainly comes up when one looks at the history of regulation in Ireland is resourcing. This was one of the reasons we added in our recommendation that when it comes to the establishment of a corporate crime agency, resourcing is a very important matter. Something we are not competent to decide is what the level of resourcing should be, but these are the kinds of issues involved. I refer to the expertise within any of the bodies - the existing regulatory bodies and the body proposed here in the form of a corporate enforcement authority. Has it sufficient resources, and would a corporate crime agency be given sufficient resources as well? We certainly know about this from history, certainly the history of the financial crisis. There were issues as to whether existing powers were being used appropriately but there was also no doubt about another issue as to whether there was appropriate resourcing of the bodies that were charged with responsibility for enforcing financial regulation in the State. Other than at the very high level of resourcing, we could not comment on these issues surrounding resources, technology and the capacity of regulators to ensure they have the information.
I understand. Again, anecdotally, this may be there already, but from the committee’s point of view, it is important that the organisations themselves and their systems be framed and set up in such a way, insofar as possible, given they work in a commercial environment and we have to be mindful of that, that real-time reporting could be generated. That may be the situation in 2019. I know that this was a problem at the time, that there were lags of three, four and five months, or whatever it was at the time.
I wish to ask Mr. Byrne a question. In his concluding comments he spoke about international best practice and said both the OECD and the EU have strongly advocated that financial and economic regulators should have at their disposal an effective regulatory toolkit, and that the key components of such a toolkit are the powers to impose administrative financial sanctions. Does he believe that the heads of the Bill on which we are conducting pre-legislative scrutiny will provide for this? Is that too blunt a question?
Mr. Raymond Byrne:
Of course, it is a matter for the committee to decide whether the conclusions the commission made in its report should be implemented. I refer to our analysis of international best practice, including many reports that have been published by the OECD and at EU level. We then looked at the most recent literature we could find, some of which has been carried out by Professor Chris Hodges in Oxford, for example. That information and that research indicate that these kinds of powers are the most effective in order to generate the kinds of results that would deliver as far as possible the kinds of regulatory systems we all want, whereby organisations being regulated live up to those kinds of standards, whether in respect of compliance with company law or financial services law. That was certainly the evidence we had from a lot of the submissions we had received and the literature we looked at. It would appear that this is not included in the draft heads. Again, we are very conscious that these heads are going into the 2014 Act, but our understanding is that while the existing powers in the 2014 Act give extensive powers, for example, to company inspectors appointed by the High Court, the ODCE and the proposed corporate enforcement authority would not have those powers.
I thank Mr. Byrne. We are at the very first stage of the legislative process, so any information we can feed back to the Minister will be very important.
I wish to ask a question of Mr. Egan or Mr. Madigan - whoever would like to answer it. The general scheme does not include a number of recommendations made by the Company Law Review Group. Are there any in particular to which the witnesses would like to draw the committee’s attention and which they feel could have been given more consideration? As I said, we are trying to make this the best legislation possible. The role of this committee is to scrutinise what is before us, and then we welcome any feedback we can get from the experts.
Mr. Paul Egan:
We understand our function to be to monitor, report and advise. Once we have discharged that duty, we do not tend to revisit the matter because policy is a matter for the Government and the Department. We produce our reports, and I think the committee will find that the reasoning behind the various recommendations in all the reports are-----
Could Mr. Egan advise us, as laypeople who do not have qualifications in this regard, on either one or two specifics he feels might have been given further consideration? It would be helpful to us when compiling our report. I do not mean to put Mr. Egan on the spot - but I am doing just that.
Mr. Paul Egan:
All the reports, with I think the exception of the one on employees and unsecured creditors, are consensus reports, in which a wide variety of views are expressed. Eventually, we try to achieve a consensus among the various constituencies represented and we deliver that to the Minister. We do not see it as our function to revisit the matter or to debate with the Minister when we have delivered our report.
I welcome the reports of the Law Reform Commission and of the Company Law Review Group. They are very comprehensive. Like Senator Reilly, I have been reading through them as we talk. I have just two points.
First, not to sound too crass or to the point, there is a general perception portrayed in the media, as we are all aware, that Ireland is soft on corporate or white-collar crime. We all read the newspapers and listen to the news every day of the week. I am curious about the witnesses’ thoughts as to whether or not this perception is true when Ireland’s position is compared with EU standards and our sisters in the EU.
Second, do the witnesses believe that the Garda has enough resources to tackle financial and corporate irregularities and criminal acts? It seems to have been pointed up that we might be behind the curve in this regard, particularly when compared with perhaps Britain or similar-type countries. I am curious about the witnesses’ thoughts on both these areas. They have spent a lot of time looking at them.
Mr. Raymond Byrne:
As to how we compare with other countries on white-collar or corporate crime, as far as the consequences of the financial crash and the banking collapse are concerned, what is of some interest is that, looking back now, a number of very senior people in banking institutions were prosecuted under our existing flawed legislation. Some of them have received significant prison sentences. Let us compare this with the situation in other countries. We sometimes think about the United States and Mr. Madoff in this regard. Mr. Madoff pleaded guilty to certain crimes but, by comparison, in terms of the size of some of the other countries we are looking at, there have been very few prosecutions of very senior bankers.
In fact, some of those countries began with the idea of having only financial settlements. We have made recommendations that regulators ought to have the ability to impose significant financial sanctions on corporate entities. In Ireland, what happened is that some of the more significant resourcing was put into criminal prosecutions and resulted in criminal convictions. There have been some convictions, very recently in relation to some of the rate-fixing scandals in the UK but they came very late to that. It is not that I want to give us all a pat on the back of our heads, as it were, but at the same time we should not say that nothing was done in terms of white-collar crime.
There is no doubt that there is an issue around resourcing. The commission is not competent to talk about what level of resourcing the Garda or the regulators ought to have, but as I mentioned before, that is certainly something that we said must be part of the equation, that is, the appropriate resourcing of bodies if they are being set up by legislation. If a new entity is being created out of the old ODCE then a major question has to be the appropriate resourcing. In the past, the perception was that white-collar crime or senior executives within organisations were not really being prosecuted, but there is no doubt the experience in recent years has been that there have been prosecutions and convictions and very significant resourcing. As the Director of Public Prosecutions has pointed out recently, very significant resources of her office have been spent over the past ten years in bringing those cases to trial. All those resources were put in place but it is another question as to whether there are sufficient resources to address all of the issues that arise. There is no doubt that those trials that did go to conviction were very expensive trials, but the State did spend considerable resources in that area.
The Minister was before us last week to discuss the budget for the Department of Business, Enterprise and Innovation for the coming year. We learnt that in the Estimates there will be an extra €1 million applied to the new statutory body that will be set up. We pressed the Minister on whether there would be enough finance available and she stated that if there is a demand for it, it would be made available. In fairness to her, she did put those fears to rest last week. Would Mr. Egan or Mr. Madigan like to comment on that question as well?
Mr. Paul Egan:
I can answer half of the Senator's first question. With regard to the resources of the Garda, I have no information and I would not be competent to respond on that. The question was if we are soft on corporate crime. The bit that I can speak about is whether I believe that the law we have in Ireland is of a high standard compared with OECD international standards. I am of the view that it is. There are a number of threads that feed into this answer. First, the 2014 Act was the result of an exhaustive section by subsection analysis of all of our existing company law. Historically, we used to copy what the UK did and sometimes we would just copy it almost word for word. More and more, the law that we have in terms of our company law, securities law and insolvency law is in fact generated in the EU. That is not to say it is up to the EU to do it, but there is a rigour in the drafting of the law. In terms of the companies Bill, if we go back to the report on company law and enforcement from 1998, one of its recommendations was that at least once every two years there would be a companies Bill just to do a bit of catch-up and this is an example of that in terms of all the little tweaks and fixes that are being done. I believe that the statute law that we have and the whole body of companies legislation we have stands up to scrutiny and any comparison.
I appreciate the answer. However, I am concerned, for example, when one looks at HSBC and the fixing of rates. It was difficult enough to catch the company. There was also Bernie Madoff and his Ponzi scheme. However, in the context of Ireland we had less than a handful of people facing short enough prison sentences. The State was practically defunct afterwards. We had to get bailed out. We are comparing chalk and cheese to a certain extent in terms of how we have dealt with some of these guys. There is also a pile of other banks on which I could comment but I will not mention names. High profile heads of banks were described as running fiefdoms and they have not gone anywhere else, apart from still having a good time in Ireland. It is not without merit. There has been a big shift to try to bring us somewhat up to speed but we are still a long way behind.
I welcome the witnesses and thank them for their presentations. As previous speakers said, there is a sense out there that corporate white-collar crime does not get pursued in the same way as other crime.
I very much welcome the report and many of the recommendations in it. The witnesses speak specifically to two areas where they feel the power is available to the Central Bank to impose administrative financial sanctions of a serious quantum such as €10 million or 10% of turnover and €1 million to the individual and the power to enter into regulatory compliance agreements but those are not available to the regulatory authorities. I very much agree with the suggestions in that regard.
I also very much like the idea of being able to do the equivalent of the Probation Act to enter into a stay of execution and see whether a company will clean up its act. That is not being in any way soft on white-collar crime. There is a significant problem at the moment with insurance, which I accept is not the remit of the witnesses. We called for a dedicated insurance fraud squad in the Garda. What the witnesses are speaking to here is another group within the Garda who would be specifically looking at corporate crime. Would that corporate crime agency lie within the Garda or would it be parallel to the Garda? How would it operate with the Criminal Assets Bureau, CAB? Who would it answer to? I ask the witnesses to answer those questions.
I do not know if the witnesses are in a position to answer this question, but do they have any information available now or it could be provided later on how many convictions with serious consequences, that is, prison sentences, have been made for corporate crime in the years 2014 to 2018? Have we seen the benefit of the 2014 Act in terms of it having a net effect? I speak as someone who works in both sectors. There is a vote in the Seanad. I do not want to be rude and not be present for the reply to my questions.
If the witnesses do not mind, I will read their response in the Official Report. I am concerned that we have made an impact and that it is not the case that while we have the laws, as Mr. Egan said, but the question is whether they are being implemented by the courts. I apologise as I must go to vote.
Mr. Paul Egan:
I cannot answer the question posed. I am aware that the Director of Corporate Enforcement or a member of his team who has given evidence before this committee has provided some information. Over the past 20 years there has been a sea change in rudimentary compliance with company law for making sure that there is timely information, which means that any one of us now is able to click onto a website and in practically every case we would be able to find a company’s accounts and the names of directors. There is that level of transparency and there is an immediacy of information. In addition, the Irish law, as well as having copied British law for many years, has introduced, for example, restrictions on directors.
A statistic that was quoted here was that between 2007 and 2018, 1,860 directors were made subject to restriction orders and more than 240 were disqualified. It is not the same as sending people off to jail but if one can get people off the pitch unless they comply with conditions, that has to be a positive move.
Mr. Raymond Byrne:
There were a couple of questions. Senator O’Reilly asked about the structure of the proposed corporate crime agency which is separate from the corporate enforcement authority. The proposal that the commission put forward would be that it would be a multi-disciplinary task force type agency that would bring under one roof the different kinds of skills that would be required in terms of investigation and prosecution all the way from, if one likes, end to end in terms of investigation and prosecution. There is no doubt that under the current arrangements the Garda has very specific skills. Some of the regulators liaise with the Garda in making reports. Of course there is a very skilled unit on corporate crime within the Office of the Director of Public Prosecutions. What the commission was proposing in its report last October was that there could be an agency which would have all of those under one roof from the very beginning. That was modelled very much on the model of the Criminal Assets Bureau. It is not that it will be reporting to CAB but that the model would be comparable with the CAB type of model. It would be multi-disciplinary and a task force-type agency.
It is very clear that in terms of compliance with company law, there has been, as Mr. Egan said, a sea change in the last 20 years or so. If we look at prosecutions outside the company law area, again the number of prosecutions that we see being talked about in the courts, where executives of companies who are engaged in tax fraud and in tax evasion, who are actually getting prison sentences, who are being prosecuted under regulatory powers of different regulators, there is no doubt that very serious convictions on indictment are being brought. There may not be a huge number of people who have served prison sentences. However, again we need to look at that in the context of the overall regulatory approach that criminal conviction ought not to be regarded as the only mechanism by which we ensure our compliance with legislation of a regulatory type.
The other proposals that the commission looked at in its report were recommendations looking at all of those other aspects as well as tightening up on some of the areas of criminal law.
One of the key recommendations in your report was that a statutory corporate crime agency should be established, that the dedicated unit in the Office of the Director of Public Prosecutions should be maintained and both should be properly resourced. Is that working in collaboration with the ODCE? Do you think that is the way forward?
Mr. Raymond Byrne:
There is no doubt that what needs to happen is that as far as the commission would be recommending in the report, the existing regulators can engage in very good co-ordination between each other in terms of some of their overlapping responsibilities. That is certainly something that is done and can be done through various mechanisms, sometimes in legislation, sometimes through memorandums of understanding. That is certainly something that works quite effectively in a lot of situations.
In terms of the corporate crime agency, there is no doubt that if it does have those kinds of skill sets under one roof then it can work very effectively with the existing regulators. That would be extremely important, as well as the issue of proper resourcing.
Going back to the heads of the Bill, we know the ODCE came under the Department of Business, Enterprise and Innovation. What this Bill is proposing is that it will be a statutory body in its own right. Do you welcome that? Do you think that is the right way forward? Perhaps Ms Justice Laffoy might answer.
Ms Justice Mary Laffoy:
I do. It is a very good idea. It is really the head in the scheme that is of most interest to us. It would be appropriate to have a statutory body which was independent of the Department. It is in head 7. Head 8 reflects the 2014 Act largely, but I do think it is a very good idea.
It was stated in some of the submissions some time ago that because of what happened ten years ago there was a collapse of an institution. Obviously the regulatory bodies probably did not have the wherewithal to be able to deal with that. Where are we now on that, if that was to happen tomorrow? A financial institution collapsed and it was stated the last day that the body itself did not have the capacity to be able to deal with that doomsday scenario because obviously it was never envisaged that that doomsday scenario would happen. It actually did happen. In hindsight, if that doomsday was to happen tomorrow, in the opinion of the witnesses where would we be? If they are able to answer that.
Mr. Raymond Byrne:
That would be a bit outside what the commission looked at in its report. One of many things that did happen after 2008 is that, not just at national level, very significant new powers were given in 2010 and, following that, in 2013 to the Central Bank. Also at EU level issues around the supervisory mechanism that now comes out of the European Central Bank where the pillar banks are being looked at very closely including where rules about the capital ratios and the ratios that the banks actually hold. Those have certainly been strengthened at EU and international level. So there have been significant responses.
One could say two things. The next crisis may not be in financial services but that in so far as the regulatory system both at national level and at EU level in terms of the single supervisory mechanism reforms, those have certainly strengthened the capacity to intervene earlier before there would be a collapse. There is specific legislation in the financial services area to deal with liquidation of our banks and before that actually happens, to address issues like capital ratio. I cannot say in particular that the commission examined that issue. However, we have been very conscious as we went through our analysis that a huge number of reforms had taken place.
The other aspect of this is of course that in terms of the regulators that are involved in enforcing financial and economic regulation in Ireland, our analysis was that they all needed a core set of regulatory tools. The ones that we mentioned in the submission to the committee would have been the ones where we felt there was a gap in some of those regulators. That would be something that we found from the literature. That is quite important in terms of prevention.
I apologise again for members having to leave to vote. Unfortunately, given the nature of our business it happens regularly. I thank Ms Justice Laffoy for being here today. She is no stranger to committees. Deputy Neville and I were members of the climate change committee which she appeared before on several occasions. I thank her for all of her time. I also thank all of the other witnesses for giving of their time to be here today to deal with the pre-legislative scrutiny of the general scheme of the Companies (Corporate Enforcement Authority) Bill 2018, which is an important body of work for the committee. We are only at pre-legislative stage but it will come back to us again. We want to try to make it as robust as possible such that the mistakes of the past are learned.