ISSUES PAPER REGULATORY ENFORCEMENT AND …

1 (LRC IP 8 - 2016) ISSUES PAPER REGULATORY ENFORCEMENT AND CORPORATE OFFENCES LAW REFORM COMMISSION OF IRELAND i About the Commission The Law Reform Commission is an independent statutory body established by the Law Reform Commission Act 1975. The Commission s principal role is to keep the law under review and to make proposals for reform, in particular by recommending the enactment of legislation to clarify and modernise the law. Since it was established, the Commission has published over 200 documents (Working Papers, Consultation Papers, ISSUES Papers and Reports) containing proposals for law reform and these are all available at Most of these proposals have contributed in a significant way to the development and enactment of reforming legislation.

2 The Commission s role is carried out primarily under a Programme of Law Reform. The Fourth Programme of Law Reform was prepared by the Commission following broad consultation and discussion. In accordance with the 1975 Act, it was approved by the Government in October 2013 and placed before both Houses of the Oireachtas. The Commission also works on specific matters referred to it by the Attorney General under the 1975 Act. The Commission s Access to Legislation project makes legislation in its current state (as amended rather than as enacted) more easily accessible to the public in three main outputs: the Legislation Directory, the Classified List and the Revised Acts.

3 The Legislation Directory comprises electronically searchable indexes of amendments to primary and secondary legislation and important related information. The Classified List is a separate list of all Acts of the Oireachtas that remain in force organised under 36 major subject-matter headings. Revised Acts bring together all amendments and changes to an Act in a single text. The Commission provides online access to selected Revised Acts that were enacted before 2006 and Revised Acts are available for all Acts enacted from 2006 onwards (other than Finance and Social Welfare Acts) that have been textually amended. LAW REFORM COMMISSION OF IRELAND ii Commission Members The Commission consists of a President, one full-time Commissioner and three part-time Commissioners.

4 The Commissioners are: President: Mr Justice John Quirke, former Judge of the High Court Full-time Commissioner: Finola Flanagan, Barrister-at-LawPart-time Commissioner: Donncha O Connell, Professor of Law Part-time Commissioner: Thomas O Malley, Barrister-at-Law Part-time Commissioner: Ms Justice Carmel Stewart, Judge of the High Court LAW REFORM COMMISSION OF IRELAND iii Commission Staff Law Reform Research Director of Research: Raymond Byrne BCL, LLM (NUI), Barrister-at-LawLegal Researchers: Lydia Bracken BCL, LLM, Barrister-at-Law, PhD (NUI) Hanna Byrne BCL (Intl) (NUI), MSc (Universiteit Leiden) Hugh Dromey BCL, LLM (NUI) Niall Fahy BCL, LLM (LSE), Barrister-at-Law Owen Garvey BA, LLB (NUI), Barrister-at-Law Finn Keyes LLB (Dub), LLM (UCL) Meghan McSweeney BCL with Hist, LLM (Georgetown), Attorney-at-Law (NY) Fiona O Regan BCL, LLM, PhD (NUI) Access to Legislation Project Manager: Alma Clissmann, BA (Mod), LLB, Dip Eur Law (Bruges), Solicitor Deputy Project Manager: [vacant at present] Administration Head of Administration: Deirdre Fleming Executive Officers: John Harding Pearl Martin Staff Officer.

5 Annmarie Cowley Clerical Officer: Patricia Mooney Library and Information Manager: rla Gillen, BA, MLIS Principal Legal Researcher for this ISSUES PAPER Jack Nea LLB, LLM (NUI), Barrister-at-LawMichael O'Sullivan BCL (NUI), Dip IT (DCU), SolicitorLAW REFORM COMMISSION OF IRELAND v Table of Contents ISSUE 1 Standardising REGULATORY Powers 13 ISSUE 2 Civil Financial Sanctions 19 ISSUE 3 Negotiated Compliance Agreements 29 ISSUE 4 Deferred Prosecution Agreements 33 ISSUE 5 Coordination of Regulators 41 ISSUE 6 Jurisdiction for REGULATORY Appeals 55 ISSUE 7 Corporate Criminal Liability 69 ISSUE 8 Liability of Corporate Officers 79 ISSUE 9 The Defence of Due Diligence 95 ISSUE 10 Are Irish Fraud Offences Adequate?

6 113 ISSUE 11 Reckless Trading 131 ISSUE 12 Appropriate Trial Venue 141 LAW REFORM COMMISSION OF IRELAND 1 Overview This ISSUES PAPER forms part of the Commission s Fourth Programme of Law It addresses a wide range of questions concerning two related matters. The first is whether the supervisory and ENFORCEMENT powers of the State s main financial and economic regulators are adequate or need to be supplemented by, for example, civil financial sanctions and more effective co-ordination between regulators. The second is whether there are gaps in the criminal law that do not deal sufficiently with serious wrongdoing by corporate bodies, in particular regarding current fraud legislation and the general rules for attributing criminal liability to corporate bodies.

7 The broad context for this ISSUES PAPER can be traced to the financial and economic collapse that emerged in 2008. A number of studies discussed below have identified failings in REGULATORY supervision and ENFORCEMENT in the years preceding the collapse. The close relationship between REGULATORY law and criminal law also brings into focus the effectiveness of existing criminal offences and the ways in which they might affect how companies behave and are regulated. Significant reforms to both the REGULATORY framework and criminal law have been enacted since 2008 but important areas remain to be addressed. This ISSUES PAPER identifies a number of these on which the Commission now seeks views.

8 Many of these can be linked to the financial and economic collapse of 2008, but a number potentially have a wider application beyond financial regulation, including those concerning fraud offences and the attribution of criminal liability to corporate bodies. To that extent, this ISSUES PAPER addresses future risks as well as risks already identified as arising from the financial collapse of recent years. The ISSUES PAPER contains 12 ISSUES on which the Commission seeks views. ISSUES 1 to 6 concern the supervisory and ENFORCEMENT powers of financial and economic regulators, while ISSUES 7 to 12 concern criminal law and related matters. Issue 1 considers the supervisory and ENFORCEMENT powers of financial and economic regulators, and asks whether and if so, how a standard set of powers should be created for some or all such regulators.

9 Issue 2 examines the power that some financial and economic regulators have to impose civil financial sanctions as a response to non-compliance with the law and as an alternative to criminal prosecution. It seeks views as to whether civil financial sanctions should be more widely available to regulators as an ENFORCEMENT tool. 1 Law Reform Commission Report on Fourth Programme of Law Reform (LRC 110-2013) Project 1. LAW REFORM COMMISSION OF IRELAND 2 Issue 3 examines the use of negotiated compliance agreements, which are also available to some regulators, by which civil litigation by the regulator (or a criminal prosecution for non-compliance with the law, usually involving a minor infringement) can be avoided if a corporate body agrees to specific terms, including preventative measures to ensure future compliance.

10 The Commission asks whether such agreements should be more widely available. Issue 4 examines deferred prosecution agreements (DPAs), which are widely used in the United States, and a judicially-supervised version of which was introduced in the UK in 2013. The Cartel Immunity Programme operated jointly by the Competition and Consumer Protection Commission and the Director of Public Prosecutions under competition law has some of the features of DPAs. The Commission asks whether DPAs should be available in other contexts, and if so what oversight protections should be put in place. Issue 5 examines matters concerning co-ordination and co-operation between regulators, notably where their statutory functions overlap.