Former tánaiste Mary Harney established the Office of the Director of Corporate Enforcement (ODCE) in 2001 to tackle growing white collar crime and the wholesale failure of companies to comply with the law.
By the late nineties, almost 90 per cent of companies were failing to meet basic legal requirements such as filing their annual accounts and details of their shareholders with the Companies' Registrar.
The phoenix syndrome, where owners ran companies into the ground and then re-appeared with the same business in another guise after avoiding their creditors, was widespread. At the same time, tribunals and scandals such as the banks’ use of offshore accounts to evade taxes, fed a public desire to see corruption tackled.
A company law reform group, headed by Ms Harney’s Progressive Democrats party colleague, senior counsel, Michael McDowell, recommended increased penalties for breaches of the law and the establishment of a specialist office to tackle corporate crime.
Ms Harney appointed civil servant, Paul Appleby, to head the office, which was given powers to investigate and prosecute companies and directors, oversee liquidations and take over some functions of the then Department of Enterprise, Trade and Employment to inspect businesses where there was suspected wrongdoing.
A number of gardaí were seconded to the office and it assumed its full range of powers in early 2002. However, it drew criticism from early on. Some said that its budget, more than €3 million in its first year, was not enough.
At the other side, lawyers claimed that the ODCE was tough on smaller businesses, but folded tamely when faced with bigger opponents.Those criticisms are likely to resurface in light of its role in the failure of the Sean FitzPatrick prosecution, which many saw as its biggest challenge.
Nevertheless, corporate governance expert, Professor Niamh Brennan of University College Dublin's school of business, argued on Tuesday that the ODCE, now headed by Ian Drennan, is still valuable despite what its critics might say.
“The fact is that white collar crime is extremely difficult to prosecute,” she said. “The serious fraud office in the UK has had its own series of embarrassing cases where it was not able to get a conviction.”
She pointed to a big improvement in compliance since the office was established. More than 90 per cent of companies now file returns and meet other requirements. Professor Brennan noted that has restricted large numbers of directors from acting in that role again following liquidations, a power that it was given to tackle phoenix companies.
“It is much better that allegations of wrongdoing be pursued, and are not successful, than that they not be pursued at all, in case those prosecutions might not be successful,” Professor Brennan said.
