James Browne (Wexford, Fianna Fail) | Oireachtas source

I am pleased to introduce the Criminal Justice (Theft and Fraud Offences) (Amendment) Bill 2020. The purpose of this relatively short Bill is to complete the transposition of Directive EU 2017/1371 on the fight against fraud to the Union's financial interests by means of criminal law, commonly referred to as the "PIF directive". This directive further harmonises the approach across the EU to the criminalisation of fraud affecting the Union's financial interests. I am hopeful the Bill will receive broad support in the House.

As Senators know, membership of the EU means that member states must contribute to the EU budget. Equally, member states receive funding from the EU budget through a variety of sources. Responsibility for protecting the Union's financial interests and fighting fraud is a shared responsibility between the EU bodies and the authorities within its member states. Member state authorities manage approximately 74% of EU expenditure and collect the EU's traditional own resources. As such, it is incumbent on all member states to take the necessary and appropriate measures to tackle criminal behaviour in relation to both EU revenue and expenditure.

The Directive replaces the 1995 EU convention on the protection of the European Communities' financial interests and the related protocols, which was the first measure to create a common approach to the criminal prosecution of offences against the EU's financial interests. This directive establishes minimum rules concerning the definition of criminal offences and sanctions with regard combating fraud and other illegal activities, including corruption and money laundering, which affect the European Union's financial interests. These financial interests refer to all revenues, expenditure and assets covered by, acquired through, or due to, the Union budget, the budgets of the EU institutions, or budgets directly or indirectly managed and monitored by them.

Fraud offences are, of course, not new to our legal system, or indeed to those of other member states. There are very few situations where the existing general offences on the Statute Book cannot be used to prosecute the relevant criminal behaviour in the State. Many aspects of the directive have not required legislation as the appropriate offences are already in place. However, this directive harmonises measures across member states and seeks to ensure that they are practical deterrents, that they fit together with other EU measures, and that they are effective against, in particular, cross-border crime.The key offence of fraud affecting the Union's financial interests is already in place. Ireland first gave effect to this offence in section 42 of Part 6 of the Criminal Justice (Theft and Fraud Offences) Act 2001. The directive requires that the offence be updated to provide for a new offence of misappropriation and to apply the freezing and confiscation measures which are contained in the Criminal Justice Act 1994 to the proceeds of criminal offences under this Bill. This is achieved through an amendment to Schedule 1A to the Criminal Justice Act 1994 to enable the freezing and confiscation of instrumentalities and proceeds from the criminal offences in the Bill.

Other provisions in the directive are already provided for in existing legislation and therefore do not need to be separately provided for in this Bill. Notably, the Criminal Justice (Corruption Offences) Act 2018 and the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended, apply in their respective areas and satisfy the requirements of the directive. Another provision of the directive is that committing a serious offence within its scope as part of the activities of a criminal organisation is considered an aggravating factor in sentencing. This provision already exists on a general basis through section 74A of the Criminal Justice Act 2006, as amended.

In a European context, the directive is of particular significance in that it defines the scope of offences falling under the European Public Prosecutor's Office, EPPO. Although Ireland is not participating in the EPPO, those offences will be prosecuted by the EPPO in other member states, potentially in co-operation with Irish authorities, so I would like to address developments in respect of that office. As Senators will be aware, the establishment of an EU-level body with investigative and prosecution powers was under consideration for many years. The legal basis for it was ultimately included in Article 86 of the Treaty on the Functioning of the European Union, as introduced by the Lisbon treaty. The regulation for its establishment entered into force in 2017 through a special legislative process and 22 member states are participating in it. Ireland, Denmark, Sweden, Hungary and Poland are not taking part. A European chief prosecutor and 22 nationally appointed European prosecutors are now in place and the EPPO is expected to be operational by the end of 2020.

In respect of Ireland's participation in the EPPO, the development of a supranational investigative and prosecution authority, even one with a relatively limited scope, clearly presents fundamental questions of policy which are outside the scope of the Bill. However, I note that a critical difficulty would have arisen whereby Irish courts would not be entitled to exclude evidence the collection of which contravened rights under the Constitution. Under the EPPO regulation, evidence would potentially be admissible based on other member state legal regimes and the regulation itself. In more general terms, challenges arose in how the EPPO structures would have interacted with our common law regime, given that the EPPO built primarily from a civil base. Although Ireland could not take part, we recognise that the establishment of the EPPO is an important and innovative EU measure and we have been working closely with participating member states and the EPPO, in particular to look at how cooperation with non-participating member states will work.

Although details of the arrangements are currently being worked on, the expectation is that under Article 105(3) of the EPPO regulation, participating member states will designate the EPPO as a competent authority within each for the purposes of making mutual legal assistance and European arrest warrant requests to non-participating states. These issues are currently under detailed consideration. It is important that we avoid conflicts of jurisdiction and ensure legal certainty in respect of requests. We will be consulting and taking into account the advice of the Attorney General on these matters. It is important to emphasise that the fact that Ireland is not participating in the EPPO does not prevent us from prosecuting such crimes in Ireland. Such offences will be dealt with by the relevant agencies within the criminal justice system, such as An Garda Síochána and the Director of Public Prosecutions.

I will now turn to the content and provisions of the Bill before the House. As I noted, it is a relatively short and primarily technical Bill comprising 11 sections and a Schedule. Section 1 is a standard provision defining the principal Act as the Criminal Justice (Theft and Fraud Offences) Act 2001.

Section 2 amends section 40, which is the interpretation section for Part 6 of the 2001 Act, and substitutes the definitions which will now apply to Part 6. In particular, it provides that the offences in the Bill have the same meaning as they do in the directive. This means that the offence of fraud affecting the financial interests of the European Union has the same meaning as in Article 3(2). The section provides that the offence of misappropriation has the same meaning as it has in Article 4(3).It also provides that "corruption offence" means an offence under section 5 of the Criminal Justice (Corruption Offences) Act 2018 and that "money laundering offence" means an offence under Part 2 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. Definitions of terms such as "national official", "public official", "union official" and "foreign official" are also included.

Section 3 amends section 42, the existing offence provision for fraud affecting the financial interests of the EU. It provides that the elements of the conduct that constitute the offence of fraud, when committed intentionally, can be in respect of non-procurement related expenditure, procurement-related expenditure, revenue other than revenue arising from VAT own resources, and revenue arising from VAT own resources in cross-border fraudulent schemes where the total fraud involves a value in excess of €10 million. A person guilty of an offence is liable on conviction on indictment to a fine or five years' imprisonment or both.

Section 4 inserts a new section 42A into the 2001 Act, which provides for the new offence of misappropriation. Section 2 provides that it has the same meaning as in Article 4(3) of the directive, which means the action of a public official who is directly or indirectly entrusted with the management of funds or assets to commit or disburse funds or appropriate or use assets contrary to the purpose for which they were in any way which damages the Union's financial interests. A person guilty of an offence is liable on conviction on indictment to a fine or to imprisonment for a term not exceeding five years or both.

Section 5 inserts a new section 42B into the 2001 Act providing for liability for offences by a body corporate in respect of an offence under section 42 or section 42A and provides for penalties on conviction on indictment of imprisonment and-or a fine.

Section 6 amends section 45 of the 2001 Act and provides for extraterritorial jurisdiction. I intend to bring forward amendments on Committee Stage in respect of dual criminality and to extend the jurisdiction where the criminal offence is committed by a resident of the State or a body corporate established in the State.

Section 7 provides for a technical amendment to section 58, regarding liability for offences by bodies corporate under the 2001 Act, to exclude the application of section 58 of the principal Act to Part 6 in view of the new section 42B inserted by section 5.

Section 8 provides for the insertion of Schedule 1A in the principal Act containing the text of the directive.

Section 9 adds the offences of "fraud affecting the financial interests of the European Union" and "misappropriation" to paragraph 10 of Part 2 of Schedule 1A of the Criminal Justice Act 1994. Article 10 of the directive requires measures to be put in place, in accordance with Directive 2014/42/EU, to enable the freezing and confiscation of instrumentalities and proceeds from the criminal offences in the directive. The principal offence of money laundering and active and passive corruption are already subject to these measures.

Section 10 provides for the repeal of sections 41, 46(4) and 47 and Schedules 2 to 9 to the principal Act. These Schedules are the 1995 Convention and related protocols on which Part 6 of Criminal Justice (Theft and Fraud Offences) Act 2001 is currently based, and as they are being replaced by the directive they will, therefore, no longer be relevant.

Section 11 is a standard provision, providing for the Short Title, collective citation and commencement provisions. The changes this Bill will make to our existing legislation enables us give full effect to the EU directive. As the transposition date for this was 6 July 2019, I hope Senators will facilitate its speedy passage through the House as enactment of this Bill will demonstrate Ireland's continued commitment to tackling fraud affecting the Union's financial interests.

As I previously mentioned, I propose to bring forward amendments on Committee Stage regarding the extraterritorial jurisdiction provided for in section 6. I also intend to bring forward technical amendments to include the new offence of misappropriation in the relevant Schedules to the Criminal Justice Act 2011 and the European Union (Passenger Name Record Data) Regulations 2018. I look forward to considering the Bill further with Senators on the remaining Stages, and I commend the Bill to the House.