Presentation to
MBS in Accounting Students,
Dublin City University
23 October 2012
Outline of Presentation
 Introduction to the ODCE
 Our Goals and associated work
 Our initial impact
 Concluding Comments
What is the ODCE?
 Business scandals of the late 1990s (Tribunals
of Inquiry – McCracken/Flood, High Court
Inquiries – Ansbacher/NIB) and the PAC’s
DIRT Inquiry)
 Working Group on Company Law Compliance
and Enforcement finding of “a culture of noncompliance” with respect to company law
duties
What is the ODCE?
 Remit focused on the Companies Acts 1963-2009
 Multi-disciplinary agency comprising c.49
administrative, legal, accounting and Garda staff
 Expenditure of €3.4 million in 2011
 Director must act on an independent basis
 Director obliged to respect commercial confidentiality
ODCE Goals
 Encouraging Improved Compliance
 Uncovering Suspected Breaches
 Prosecuting Detected Offences/Breaches of
Duty
 Sanctioning Improper Conduct affecting
Insolvent Companies
 Providing Quality Customer Services
Enforcement
Pyramid
DPP
referrals
Disqualifications
Summary Prosecutions
Civil Enforcement Actions
(Compliance Orders, Restrictions)
Administrative and Legal Actions
(Investigations, cautions, rectification and remediation
on a non-statutory basis)
Encouraging Compliance
(Advocacy & guidance)
ODCE’s Compliance Work
 Publications
 Information on the ODCE’s Remit - Auditor
Reporting
 General Guidance on Directors’ Duties, etc.
 Guidance on new legal requirements, e.g., New
Companies Acts
 Topical Guidance, e.g., Management companies,
Audit Committees, Transactions involving directors
 Presentations, Conferences, etc. (c.70 per year)
 Press Statements, syndicated news articles
ODCE’s Compliance Work
 Policy Contributions
 New Companies Bill
 Company Law Review Group
 Irish Auditing and Accounting Supervisory Authority
 International Dimension
 Responses to EU Company Law consultations
 International Association of Insolvency Regulators
 Future of audit
ODCE’s Detection Work
 Public Complaints about companies, directors,
etc.
 Auditor Reports of suspected indictable
offences
 Regulatory Bodies like Revenue, the Garda,
etc.
 Matters in the public domain, e.g., Inquiry
Reports
 ODCE’s own inquiries, e.g., the CRO Register
ODCE’s Detection Work
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Identify if a prima facie breach has occurred
Consider if administrative rectification will suffice
Assess if ODCE intervention is called for
Consider if legal action is necessary or desirable
Evaluate if other actions are warranted, e.g.,
referral of case to another regulator for evaluation
 Vast majority of issues dealt with administratively
ODCE’s Detection Work
 Directors’ Transactions – One Area of Work
 General Ban on use of Company Assets for personal
purposes
 Auditors have been reporting on average 300 cases a year
since 2003
 Publication/issue of ODCE Guidance in November 2003
 ODCE Article issued to all Directors in 2004
 Directors’ voluntary or prompted remedial action often
accepted
 A handful of cases of ‘wilful default’ have been prosecuted
 Law amended to allow easier prosecution
 2011, 143 cases, €44million (2009, 185 cases, €162million)
ODCE’s Enforcement Work
 Criminal Enforcement Options
 Summary Prosecution in the District Court
 Referral to the DPP for Prosecution on Indictment
 Typical Criminal Enforcement Offences
 Persons acting as Directors/Auditors while
prohibited
 Accounting issues, e.g., failing to keep proper
books
 Falsification of company documents
ODCE’s Enforcement Work
 Corran Building Services Ltd. Case
 Liquidator submitted a criminal conduct report
 Gardaí obtained/executed a search warrant
 Gardaí seized two company cars bought with
company funds which had not been handed over
to the liquidator
 One director convicted of fraudulent trading,
failing to keep proper books and failing to file
annual returns
 Two directors afterwards restricted by the High
Court
ODCE’s Enforcement Work
 Civil Enforcement Options
 Remedial Orders
 Restriction
 Disqualification
 Related Civil Enforcement Responses
 Failure to discharge an obligation of law
 Failure to act honestly and responsibly in
insolvency
 Serious misconduct, e.g., fraud
ODCE’s Enforcement Work
 Anglo investigation
 Information disclosed by FR
 Further disclosures by bank
 Warrant obtained, paper and electronic documents seized
 Amendments to law to deal with scale of seizure
 Documents being interrogated
 Individuals making statements, some under arrest
 Individuals have been arrested and charged, more may
follow
 Largest and most complex financial investigation in State
ODCE’s Insolvency Work
 Formerly only court appointed liquidators
sought the restriction of certain directors.
 Every liquidator of an insolvent company must
report to the ODCE and apply to the Court for
directors’ ‘restriction’, unless relieved by the
ODCE
 About four out of five directors avoid
restriction
ODCE’s Insolvency Work
 Initial reports received within 6 months of
appointment
 Formerly 250/300 reports a year
 1,287 reports in 2011
 Same or more in 2012
ODCE’s Insolvency Work
 ODCE may also seek disqualification of
directors in unliquidated insolvent/struck-off
company cases
 Our role is to ensure that persons who abuse
their position are brought to account in Court
 ODCE has successfully piloted actions in this
area
ODCE’s Insolvency Work
 Phoenix Activity
 One acted as director of eight struck-off companies,
all of which had debts outstanding
 Another acted as director of four of these companies
 Came to attention due to employee, creditor and
Pensions Ombudsman complaints in a failed
company
 First director disqualified for 12 years
 Second director disqualified for 8 years
ODCE Impact since 2002
 Over 80 new or revised ODCE Publications issued
 178,000 visits to the ODCE website in 2011
 12,000 complaints/reports dealt with
 More than 100 companies/directors/others convicted
by ODCE on over 300 charges
 1200 directors restricted
 Over 100 directors disqualified
ODCE Impact
 Future Direction
 Reach out to company stakeholders and SME directors
 Deal with minor offences administratively
 Target and aggressively prosecute serious misbehaviour
 Concentrate more enforcement resources on complex cases
or areas of major non-compliance
Concluding Comments
 ‘Culture of non-compliance’ which was said to
prevail is being turned around:
 State had failed to regulate effectively
 Professional Conduct was not supported
 Little Prospect of Sanction for Misconduct
 Deficient Accountability Framework in Practice
Concluding Comments
 New Situation
 Directors, etc. now more accountable
 Auditor’s independent role reinforced
 Errant and unscrupulous Directors face ODCE
Inquiry/Court action
 Creditors’ Situation has improved
 Better Information Disclosures to Market
 Reinforcing Good Practice in other areas
Concluding Comments
 Effective and Balanced Regulation protects:
 The public from fraud
 Employees, traders and suppliers from irresponsible
conduct
 State revenue and the taxpayer’s interest
 Investors and credit institutions from bad debts
 Legitimate business from fraud-based competition
 Personal and Corporate Reputation
Thank You
Further Information is available from
www. odce. ie