Leo Varadkar (Dublin West, Fine Gael)

Fine Gael will be supporting the Bill and will be happy to co-operate with its speedy passage through the House. The Bill is relevant to certain investigations that are under way and it is important that the House should co-operate in the context of ensuring that those investigations are carried out to the fullest extent possible. We will, however, be tabling a number of amendments on Committee Stage and I hope the Tánaiste will look favourably on them.

The Bill is a response to a series of corporate and banking scandals which have damaged both the economy and the reputation of the State. I refer, for example, to the scandal involving loans to the directors of Anglo Irish Bank, the activities of Mr. Fingleton at the Irish Nationwide Building Society, the passage of moneys between Irish Life & Permanent and Anglo Irish Bank and, previously, the overcharging and tax evasion engaged in by some of the larger banks.

It might not have been necessary to introduce this Bill if such a lax approach had not been taken to financial regulation and if the Government had not been so soft on corporate crime. If one consults the Official Report, it is interesting to note the number of occasions on which Members on this side - including the current Minister of State at the Department of Agriculture, Forestry and Food, Deputy Trevor Sargent, who was then in opposition - raised the issue of the under-resourcing of the Office of the Director of Corporate Enforcement, ODCE. The response of the then Taoiseach was that the Director of Corporate Enforcement would be obliged to wait his turn to obtain additional staff. It is regrettable that such an attitude was adopted by the former Taoiseach and the Government.

Another matter of interest is the delay in the introduction of the company law (consolidation) Bill, which has been promised for a long period. We understand, from the output statement issued yesterday, that it is hoped to publish the Bill next year. The Tánaiste has abandoned her target of having it enacted in 2010. I accept that this legislation is complicated and that, like the Taxes (Consolidation) Act, it will be a massive measure. It is, therefore, important that we get it right. However, I do not believe that we should accept the excuse put forward by the Tánaiste that any amendments to the Bill before us should wait until the company law (consolidation) Bill is brought forward. In light of her record, it is likely that the latter will not be enacted until 2011 or 2012. My party will not accept being told that we must wait two years before important amendments are made.

The Companies (Amendment) Bill 2009 builds on the Company Law Enforcement Act 2001. As the Minister of State indicated, it deals with three broad issues, namely, improving the transparency of loans made by companies that are licensed banks to directors and persons connected to them, supporting the Director of Corporate Enforcement in his efforts to enforce compliance with company law - regardless of whether the company being investigated is a bank - and amending existing provisions relating to Irish-registered non-resident companies to meet European Commission concerns. The latter relates to allowing company directors to be resident in EEA states and not just necessarily resident in the Republic of Ireland.

The Bill provides that companies which are licensed banks must in future disclose in their annual accounts prescribed details of all loans above a de minimis threshold made by their directors. This disclosure will be on the same basis which already applies in respect of non-banking companies. There will also be a disclosure regime for persons connected to those directors but this will not be as detailed as that which will apply in respect of the latter. Essentially, we will continue to be presented with aggregate figures in respect of favourable loans given to connected persons. The Bill also provides that the maximum amount outstanding during any given year will also have to be disclosed.

I am not satisfied with section 41(6) of the Companies Act 1990, which deals with the matters to which I refer, and I intend to bring forward an amendment to it on Committee Stage. Under the Bill as it stands, the loans that were taken out by Seán Fitzpatrick would have to be disclosed. However, preferential loans given to wives, girlfriends, husbands, boyfriends and other people connected to directors would not have to be disclosed. All that will be provided is an aggregate figure in respect of all the loans given to connected persons. As a result, we will not be in a position to know how many such loans were given, the identity of those to whom they were extended, the amounts involved or the level of repayments made. The legislation represents an advance on the existing law. However, it is unacceptable that we should allow the practices that occurred in the past to continue under the guise that they will relate to connected persons. In light of its experience regarding personal finances being routed through the bank accounts of wives and girlfriends, the main party opposite should know better when it comes to an issue of this nature.

The Bill also strengthens the enforcement of company law by making it an offence for companies, including banks and their directors, not to comply with the disclosure provisions in the Companies Act regarding loans, etc., to directors and connected persons and the material interest of such directors in company contracts. It clarifies and provides a specific right of access for the ODCE to the statutory register of directors' interests in contracts made to a company. Furthermore, it modifies the evidential requirement of the ODCE when pursuing alleged breaches of company law rules in respect of company loans to directors. In future, the ODCE will not, therefore, be obliged to prove willful default in order to secure a successful prosecution. That is a major development.

The Bill clarifies the right of the ODCE to access third party records in respect of companies under investigation. It also modifies the provisions of the Companies Act 1990 relating to entry and search of premises by the ODCE. In this regard, the Bill does not amend the provisions in the context of vehicles associated with a business. Given that this matter has been an issue in cases involving the Competition Authority, is there not a case for considering such an amendment?

The Bill also provides for situations where the extension of the period of a search warrant can be sought from and granted by a court. Furthermore, it makes provision for the removal of paper and electronic information, from premises being searched, for subsequent examination elsewhere in order to determine their veracity.

I support these various amendments to the company law. However, I am somewhat concerned with regard to the liability that will be imposed on directors in the context that they will be held collectively as well as severally responsible. This provision is quite far-reaching and non-executive or worker directors might be prosecuted in respect of decisions to which they were not party. However, the Bill makes provision for directors, should they be prosecuted, to enter a reasonable defence. I will not be proposing specific amendments to the relevant section but I wish to place on record my concern that this matter might be the subject of a court case in the future. Should a judge ever be obliged to hear such a case, it is important that the Oireachtas should state that it is not the intention to hold worker or non-executive directors liable for decisions to which they were not party.

I will be tabling an amendment in respect of extending the remit of the ODCE to investigate mutual societies and credit unions. I may be wrong but I understand the ODCE does not have the power to investigate mutual societies, such as Irish Nationwide, or credit unions in the way it has the power to investigate banks. We are all concerned with regard to what has been happening in some credit unions and building societies. In such circumstances, Fine Gael will not accept being told that we must wait for the enactment of the company law (consolidation) Bill before the power to which I refer is extended to the ODCE.

By and large, we welcome the Bill, which represents progress and improves existing company law legislation. However, we will be putting forward amendments in respect of the matters to which I refer. I hope the Tánaiste will give them favourable consideration.

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