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Bill Aims To Tackle Corrupt Practices

02 July 2012

The following article appeared in The Irish Times on 2 July 2012 and was written by Paul Egan, Partner and Chairman of the Corporate Department at Mason Hayes & Curran.  To view the article as it was originally published, please click here.

Legal Update: The Minister for Justice and Equality recently published the draft scheme of the Criminal Justice (Corruption) Bill 2012, 123 years after the enactment of the statute that is the basis of our current law.

In so doing, Alan Shatter included measures recommended by the Mahon tribunal report, published three months ago.

Bribery and corrupt practices by employees and agents of a company are to be automatically imputed to the company. Companies must “take all reasonable steps” and “exercise all due diligence” to avoid criminal liability.

Extravagant lifestyles of public officials will now carry a presumption that the public official is living off bribes. Intimidation of a public official is to be an offence, if motivated by a wish to corrupt the public official’s decisions.

Employing an intermediary to bribe or corrupt a public official is to be expressly outlawed.

Disclosure by a public official of confidential information for gain is outlawed, for example, tipping off to facilitate insider dealing.

Punishments for bribery are to be widened so that unlimited fines now apply for all bribery offences.

Public officeholders will be subject to removal from office – including elected office – for up to 10 years. Pensions cannot be forfeited (for constitutional reasons) but unlimited fines give scope to achieve the same economic effect.

In summary, it will mean two things for business: first, a need to design and operate proportionate structures and procedures to prevent corruption. Secondly, it will involve challenges for companies with overseas activities.

The new law will require companies to “take all reasonable steps” and “exercise all due diligence” to prevent bribery and corrupt behaviour by directors, employees, subsidiaries and agents anywhere in the world.

An Irish company with foreign subsidiaries will have a responsibility to ensure that ethical behaviour permeates the entire organisation. This implements a key Mahon recommendation and mirrors British law introduced in 2010.

What “all reasonable steps” will mean will boil down to common sense. High-street retailers and construction companies operating in a Third-World dictatorship will each require different procedures.

The proposed law is aligned with British law in not allowing for facilitation of “grease” payments. The US’s foreign corrupt practices act does allow for perhaps more local “culture” than does Britain. In view of Ireland being an exporting country, the ultimate shape of the law may reflect the US model more than Britain’s.

The proposed new law is part of a quartet of laws to update Irish business law to best-in-class standard – the other three being the proposals on whistle-blowing, lobbyists and the general consolidation and reform of company law.

Laws in and of themselves do not change cultures.

That said, the unfolding of facts in the tribunal reports and a general international tightening-up of anti-corruption and related legislation is making Ireland a colder place for corrupt practices.

Your Contact:

Paul Egan
Chairman of Corporate
t: +353 1 614 5021
e: pegan@mhc.ie

The content of this article is provided for information purposes only and does not constitute legal or other advice. Mason Hayes & Curran (www.mhc.ie) is a leading business law firm with offices in Dublin, London and New York.

© Copyright 2012 Irish Times.  All rights reserved.

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