Analysis of Office of the Director of Corporate Enforcement, Ireland

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Introduction

The following report sets out to critically assess the role and function of the ODCE with regards to the reasons it was set up, the primary functions of the office, it successes if any to date and any appropriate suggestions for future reform.

We have critically assessed by giving a detailed account under each section and by analysing these we have come up with recommendations that we believe are necessary and within the offices capabilities. We have found throughout the report that the ODCE is efficient and effective in what it does yet like everything else there is room for improvement. Within the conclusion we have given an assessment on each of the listed sections.

Setting up the ODCE

“The Office of the Director of Corporate Enforcement (ODCE) was established in November 2001 to ensure compliance with company law. This part of the paper will examine what events occurred for the creation of the ODCE and what developments by the government led to its creation.” (Entemp, 2001)

McDowell Report

On the 15 of March 1999 Minister Mary Harney welcomed a report from Mr Michael McDowell and his working group on Company Law Compliance and Enforcement.

The report found that “Irish Company Law has been characterised by a culture of non-compliance and the enforcement of the law in relation to non-registration type offences is very rare and wholly unpredictable”, he continued to say that “Those who are tempted to make serious breaches of company law have little reason to fear detection or prosecution.” (Entemp, 2001)

The McDowell Report was influenced from investigations such as the Ansbacher scam. This was brought to light when an inquiry into the affairs of businessman Ben Dunne discovered payments of more than £1 million to Mr Haughey.

Ansbacher

The Ansbacher (Caymen) was the biggest financial and political scandal to hit Ireland. It started in the early 1970s when Des Traynor, the late financial advisor to former Irish PM Carles Haughey, used his position on the board of Guinness and Mahon to set about establishing offshore subsidiaries in the Channel Islands and the Caymen Islands. The Caymen subsidiary was eventually bought by the Henry Ansbacher group and renamed Ansbacher(Cayman).

Clients deposited tens of millions of pounds with Ansbacher which was treated, for tax purposes, as if it were lodged offshore. But Mr. Traynor was holding the cash in Ireland and ran the business from his central head Dublin headquaters. the scam also involved offshore trusts, foreign- registered companies and complicated financial manoeuvring. (BBC News, 2002)

Findings of the McDowell Report

The Government considered carefully the systemic failures identified by McDowell’s report and the actions needed by the Government to strengthen legislation, regulation and enforcement to prevent the recurrence of such practices and to maximise the ability to discover them quickly and bring the participants speedily to justice. This identified further strengthening of the legislative and regulatory framework that must be required in the light of the inspector's findings.

The Ansbacher, Élan, NIB and other tax evasion schemes that came to light clearly indicated significant regulatory failures on the part of a number of statutory authorities. There was failure by the Revenue Commissioners to fully and aggressively investigate and target tax evasion in certain sectors. There was failure by the Central Bank to fully and effectively oversee and regulate the banking sector. Statutory auditors and their professional associations failed to ensure companies properly accounted for their activities and complied with the letter and spirit of the law. The Department of Enterprise, Trade and Employment failed to recognise that the code of company law created a regime that needed to be actively enforced and to devote adequate resources to the task. (Oireachtas - historical debates)

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