Dominic Hannigan (Labour)

I move:

That Seanad Éireann, recognising that Ireland is crippled by a lack of confidence:

- lack of confidence among consumers;

- lack of confidence among investors in our banks;

- lack of confidence in the Government;

calls on the Government, as a step towards restoring confidence, to demonstrate its seriousness about rooting out corruption, corporate sleaze and crony capitalism by introducing a series of measures, including legislation

• to regulate the practice of political lobbying;

• to develop a system for whistleblowers protection;

• to ensure good corporate governance; and

• to restore the original provisions of the Freedom of Information Act 1997.

I welcome the Minister of State to the House. The Labour Party is using Private Member's time to make a constructive contribution to the debate about standards in public life, standards in corporate life and citizens' rights, which we have led. The Leas-Cheann Comhairle, Deputy Brendan Howlin, has introduced a Bill to regulate lobbying, our leader, Deputy Eamon Gilmore, has introduced a Bill on corporate governance and it is ten years since we introduced our Bill on whistleblowers protection. While Fianna Fáil publicly supported the latter Bill, it consistently dodged dealing with it, but these issues can no longer be dodged.

It is of crucial national importance that these matters are addressed quickly because the Labour Party's proposals are all about restoring the nation's confidence to the level we need - confidence among citizens, confidence among investors and, ultimately, confidence in our economy. We are all in agreement that confidence is key to getting ourselves out of recession and putting people back to work. We need to understand why we have such poor regulation in public and corporate life to address the current lack of confidence in Ireland plc.

Many of the problems we are experiencing have their roots in the corruption of the past, which resulted in councillors, Ministers and Members from some parties, though not the Labour Party, taking bribes in exchange for favours. These bribes were primarily connected to planning matters, but serious questions also hang over the connection between corporate political donations and the actions of Ministers. When the scandals broke around former Deputies Haughey, Burke and Lawlor and a slew of county councillors, the Government, led by Deputy Bertie Ahern, resisted putting in place the required measures to root out questionable payments to politicians.

Builders and other business interests did not want anything to change nor did a number of political parties. The reason for this reluctance was twofold. Some public representatives were just plain greedy and they wanted to pocket the largesse of benefactors but others did it for electoral advantage. Many educational institutions have gathered ample evidence that the more money a candidate has to spend on a campaign, the better his or her chances of being elected. Not only did members of some parties accept money for personal gain, they also did it for electoral gain. This distorted our democracy and the hangover remains. It continues to affect public confidence in the political system. The current scandals relating to banks, which also go back to the Haughey era, have undermined confidence in the financial system. Today people want to know how we can stop the scandal of bad loans and exorbitant executive pay in banks.

With regard to politics and lobbying, a rather shaky system of checks and balances was eventually put in place. It remains weak however, reflecting the reluctance to deal with this matter. The chair of the Standards in Public Office Commission, SIPO, Mr. Justice Matthew Smith, has indicated his dissatisfaction with the regulation of lobbying and political contributions and there have been unforeseen consequences for non-political organisations. The country is reaping the whirlwind of inaction now more than ever.

The Labour Party is consistent with its tradition in tabling the motion. We introduced the first Freedom of Information Act in 1997 and the first Ethics in Public Office Act in 1995. When Fianna Fáil took office without a Labour Party watchdog, it undermined the Freedom of Information Act by breaching the confidentiality of applicants and applying charges to FOI requests. However, this still allowed too much transparency for Fianna Fáil's liking and the party eventually filleted the Act to recreate the cloak of secrecy around its clientelist ways. The Information Commissioner, Emily O'Reilly, has repeatedly called for the Act's scope to be widened. In her annual report published last month she commented on the increase in requests regarding financial institutions, stating:

This new thirst for information should cue a re-evaluation of the role of FOI in holding such institutions to account. I have noted before how many of the state institutions are outside the scope of FOI including the Central Bank and Financial Services Regulatory Authority of Ireland, the National Treasury Management Agency, the National Pensions Reserve Fund Commission and the State Claims Agency. I have also commented before on the secrecy provisions which are contained in the legislation establishing a number of public bodies and which, by virtue of the provision not being included in the Third Schedule to the FOI Act, are outside the scope of the FOI Act.

She is referring fundamentally to a citizen's right by calling for the creation of structures that create public confidence. It is not good enough to demand sacrifice from the public while doing nothing to break up the "golden circle" at the top that got us into this mess and to prevent it from forming again.

To that end, our party leader, Deputy Eamon Gilmore, brought forward the Corporate Governance (Codes of Practice) Bill 2009. We hear constantly about the need to position ourselves for the upswing in the global economy, but the solution to our problems is not only about financial restraint, it is also about financial controls. We must engender trust to engender confidence. We need to ensure money flows into Irish companies and by creating a regulatory regime in which investors can feel they trust a company's board, we can restore that confidence. The first step towards that is a legally enforceable code of good corporate governance. My party's Bill recognises that a one-size-fits-all approach will not work. That is why it suggests that codes of practice vary depending on the size of the company.

Our Bill empowers the Central Bank to draw up codes of practice, which this legislation would make legally binding, but there must be public oversight in the drafting of such codes. We, therefore, propose that the Central Bank submits a draft code to the Minister for Finance and the Joint Committee on Finance and the Public Service, which could make recommendations to the Minister. In this way, the code would be developed in an open and transparent manner and the views of companies and their stakeholders could be heard in the open so the public could make a judgment on whether the regulations serve their purpose. As part of that principle, this legislation also covers financial reporting. It makes the ISEQ's corporate disclosure provisions legally enforceable. Currently, corporate interests can simply explain the reason they do not intend to comply with the disclosure provisions. In other words, board directors can declare to shareholders that they will not be transparent about the way the company is being run. That is not good enough.

People's pensions, savings and sometimes their incomes are reliant on a functioning and healthy market. Market dysfunction affects many people and those worst affected are small investors. We have seen how the secrecy of company directors has contributed to the financial meltdown we are experiencing both here in Ireland and globally. That is the reason there is a number of specific provisions regarding company directors in this legislation.

If chairs and chief executives are to have such vast salaries and bonuses, the buck must stop with them. They must have direct responsibility for ensuring good corporate governance. If boards are to provide a proper oversight function for shareholders, the practice of a chief executive also being chair of the company must come to an end. This Bill provides for that.

The Bill also prohibits a former chief executive officer becoming chair of the same company and bars non-executive directors serving on a board for more than seven consecutive years. It also stops the cosy practice of cross-directorships. The potential for conflicts of interest is far too great. To put it in language Members on the opposite side of the House will understand, we cannot have public and international confidence in Irish corporate governance if the boards of companies resemble golf courses that everyone gets to play eventually. That is the reason the Labour Party is proposing such a comprehensive set of measures.

This country has been run not just by a golden circle but by a golden chain, from wealthy interests seeking favourable tax treatment and secret meetings with bankers, to political favouritism in public appointments all the way down to local level. In counties such as Wexford and Kerry rezonings continue to be promoted for private gain and political donations. All the while, the Government has been holding back the tide of demands for transparent governance. Green Party Members once agreed with us on this but they now drag their heels as they continue with their "my Government right or wrong" approach. Either they support crony capitalism or they oppose it. In politics, one cannot afford to be ambivalent.