John Carty (Fianna Fail)

In the light of the recent controversy at Anglo Irish Bank, much more transparency is needed in loans that companies make to their directors and associates. Section 2 of the Bill places the onus on the company director to declare any interest he or she has in actual or proposed contracts with their company. This information is to be held in a book of declarations which the Director of Corporate Enforcement can access at any time. I hope the book will be looked at and checked out regularly. Currently, directors are not required to show any contractual interests they have, so the proposal is a welcome development. Politicians in the Seanad and the other House are subject to a requirement to fill in a questionnaire each year about what property, shares etc. we have and this information is put in the public domain. We have to go before our peers every four to five years and they judge what we have or have not done and whether we have got moneys illegally or otherwise. When we consider the amount of money the State spends on inquiries, tribunals etc., it beggars belief that people in financial institutions handle a lot more money without anybody knowing about it. If it was not for the global downturn and recession, we would probably never hear or know anything about it. The Bill will, for the first time, put loans made to directors of licensed banks on an equal footing with loans made by non-banking companies. There is a strong argument to be made that this should always have been the case, but it is nevertheless a positive step forward. To prevent any future misrepresentation of the loan amounts owed by directors of licensed banks, annual accounts will show the maximum amount outstanding during the year and not simply the sum owed at the end of the year, as has been the case previously.

The Bill also covers connected persons. Previous events have shown that friends and associates of those in licensed banks can be privy to soft loans with unusually lenient terms and conditions. It has created tremendous anger among the people that such practices have gone on. People in high places got loans at very low interest rates while smaller borrowers had to give huge commitments to the banks and other lending institutions. Indeed, people had to hand over all their documentation regarding their ownership of their property. I can only say that sharp practices went on. I note from Senator O'Toole's comments yesterday that, back in the middle ages, guys in Venice and other parts of the civilised world at the time would probably have been hung for dealing with getting loans and borrowing money in this way. The Bill increases the amount of information connected persons are required to disclose. Like directors, they are required to disclose the maximum amount outstanding during the year.

I welcome the fact that the Bill gives the Director of Corporate Enforcement the right to access the register of loans to directors and connected persons so enforcement action can be taken if necessary. Section 9 requires licensed banks to prepare an annual statement that relates to their register of loans to directors. This statement must be made available before the company's AGM. It is important that people have access to this information. This is a sound provision because it will ensure that all relevant shareholders are informed about the position with directors' loans. It will be an offence for companies, banks and their directors not to comply with the requirement of disclosure of loans to directors and connected persons. The Bill clarifies the Director of Corporate Enforcement's right to access third party records that relate to a company under investigation. The Director of Corporate Enforcement will also be able to seek from the court an extension of the period of a search warrant, and the Bill provides for the removal of paper and electronic information from premises that are searched. I hope these measures will not have to be called for too often, but they are essential if the Director of Corporate Enforcement is to carry out the duties of that office effectively.

We are aware that a wide-ranging analysis of company law is well advanced and the Minister intends to publish significant legislation containing 1,250 sections next year. I hope this will happen and that all aspects of the Companies (Amendment) Bill will be included in it. I welcome the Bill and look forward to the larger one when it comes to the House next year.