Antiquated Irish laws on anti-bribery and corruption are to be modernised and strengthened, with tougher penalties and new offences.
- When adopted, the Criminal Justice (Corruption Offences) Bill 2017 will represent a major modernising reform to Irish anti-bribery and corruption laws.
- International companies with Irish subsidiaries, as well as Irish headquartered companies, should review their anti-bribery and corruption policies and systems in line with the expanded requirements expected by the new legislation.
- Anti-bribery and corruption systems should be designed to extend beyond just the company and to cover global supply chains as well. Companies need to pay particular attention to emerging markets and other high-risk geographies and sectors.
Whilst Ireland is signatory to, and has ratified, quite a number of international anti-corruption conventions, such as the United Nations Convention against Corruption and the OECD Convention on Bribery of foreign public officials, its domestic anti-corruption laws remain somewhat antiquated compared to those of their European neighbours, including the UK, Germany, France, the Netherlands and Spain, all of whom have brought in new, or toughened existing, anti-corruption regimes in recent years.
The Irish government has announced new legislation (the “Bill”) to update Irish anti-corruption rules, with provisions similar to the UK Bribery Act 2010. The legislation is still pending as part of a broader “White Collar Crime Package”, but is expected to become law with potential effect beginning later in 2018.
Announcing the Bill, Minister for Justice and Equality, Charlie Flanagan T.D. said that “corruption undermines social cohesion and equality in society. It attacks the integrity of our democratic institutions, is detrimental to the economy and it demoralises citizens. I am delighted to be publishing this Bill … which has been prioritised by this Government. When it is enacted, it will significantly strengthen our capacity to tackle corruption, both in public office and in commercial enterprises”.
Current Irish Laws
Currently, Irish anti-bribery and corruption laws, which date back to the 19th century, are a mix of common law and some seven Prevention of Corruption statutes, in particular:
Both the 1889 Act and the 1906 Act were Acts of the Parliament of the United Kingdom of Great Britain and Ireland (as it was then). The Acts were repealed in the UK in their entirety, along with the Prevention of Corruption and related common law offences. However they remain on the statute book in Ireland (although they have been amended on several occasions in more recent times).
White Collar Crime Package
The anticipated reform is long overdue. In the UK, the Salmon Committee on Standards in Public Life, which ran from 1974 – 1976, recommended updating and codifying the anti-bribery and corruption laws, eventually leading to the Bribery Act 2010. In Ireland, earlier efforts to modernise the law failed to make it to the statute book. The current proposed Bill, however, stands a better chance of success as it forms part of the Government’s White Collar Crime Package. The Bill can also be seen to be part of the Irish government’s attempt to enhance transparency over official actions and follows on from the Freedom of Information Act 2014, the Protected Disclosures Act 2014 and the Regulation of Lobbying Act 2015.
As well as consolidating the old laws into a single statute so as to make them more accessible, the Bill, which addresses a number of the recommendations of the Mahon Tribunal (an inquiry into allegations of corrupt payments to politicians), will beef up some existing offences as well as introduce new offences including:
- a new offence of ‘trading in influence’, i.e., bribing a person who may exert an improper influence over the decision-making of a public or foreign official; and
- liability of corporations (under Section 18) for the acts of its directors, managers, employees or agents and subsidiaries (relevant persons) who commit a corruption offence for the benefit of the corporation (the corporate offence).
The Bill provides for sentences of up to 10 years as well as unlimited fines for conviction on indictment of the main corruption offences in the Bill. The Irish Courts will also have a discretion to order that a public official found guilty of a corruption offence be removed from public office and to prohibit those convicted of corruption offences from seeking certain public appointments for up to ten years.
“Corruption is a very serious crime that has the potential to do considerable social and economic harm, especially when committed by public officials. The penalties must be sufficiently harsh to reflect this”, said Minister Flanagan.
Who will be Impacted?
The new laws are not expected to come into force until the end of 2018, so businesses have time to prepare. The corporate offence will apply to the activities in Ireland of all companies (regardless of where they are incorporated) including acts done on Irish ships or aircraft. And, similar to the UK’s Bribery Act 2010, the Bill provides that a person may be tried in Ireland for certain corruption offences committed overseas where those actions would constitute an offence if committed in the home country.
Corporations facing liability will be able to avail themselves of a defence to the corporate offence where they can prove that they took all reasonable measures and exercised due diligence to avoid the commission of the offence.
In recent years, many global businesses have set up shop in Ireland, attracted by the low rates of corporate tax (combined with favourable double tax agreements and other beneficial tax regimes), an educated workforce, a business-friendly and supportive government, friendly and hospitable locals and, relatively speaking, a light touch approach to regulation. Ireland is also seen as a convenient gateway to the rest of Europe, with the EU being the world’s largest trading block. These factors have proved particularly attractive to U.S. technology companies. Other sectors attracted to the benefits of setting up in Ireland include pharmaceuticals, cloud computing and high-end manufacturing.
Many companies in Ireland also have a UK presence and as such will be familiar with Section 7 of the UK’s Bribery Act which requires commercial organisations to implement “adequate procedures designed to prevent bribery”—doing so means that the organisation can avoid criminal liability if a person associated with their organisation bribes another person to obtain or retain business or business advantage for the organisation.
Whilst not a direct “copy” of UK rules, the equivalent Irish corporate offence/defence is quite similar. For those companies with no UK presence, the UK Ministry of Justice has published helpful guidance which discusses what is meant by “adequate procedures” based on the following six principles:
- Proportionate procedures
- Top level commitment
- Risk assessment
- Due diligence
- Communication (including training)
- Monitoring and review
In time, An Roinn Dlí agus Cirt agus Comhionannais (the Irish Department of Justice and Equality) might be expected to publish its own guidance on this topic for businesses, but for now, the UK equivalent serves as a good proxy.