Company directors who had taken out improper loans from their companies paid back more than €200 million last year after being contacted by the Office of the Director of Corporate Enforcement (ODCE). Colm Keena,Public Affairs Correspondent, reports.
The Revenue Commissioners were informed about 86 of the larger cases, involving loans totalling €48 million.
"It is a matter for the Revenue to determine if a tax liability arises in any of these cases," the director, Paul Appleby, said in an interim review of the 2006 year. The ODCE told the Revenue about the larger cases in September of last year under a provision that allows both agencies to share information.
Under company law, directors' loans from a company cannot exceed 10 per cent of the company's value. Mr Appleby's office has been involved in an ongoing drive to raise awareness of this law and to encourage greater compliance.
If company directors borrow a large percentage of a company's assets, creditors can be left exposed if the company gets into difficulty.
Moreover, directors who derive a benefit by having such funds are required to declare it to the Revenue Commissioners. Mr Appleby told The Irish Timesthat "several" of the cases that had come to the attention of his office involved individual loans of more than €1 million.
"Directors' loans continued to be amajor focus of office attention as a result of the continuing use by company directors and connected persons of company assets for personal purposes contrary to law," he said in his review.
During the year, 556 cases involving loans totalling €244 million were examined in detail by Mr Appleby's office. "In the absence of wilful default, the office has encouraged administrative rectification of the defaults," the review noted.
Almost 900 company directors were cautioned and advised that any further infringements would render them liable to enforcement action, Mr Appleby said.
While the office monitored the return of €160 million during the year that arose from the larger cases, Mr Appleby was confident that more than €200 million had been returned overall as a result of the ODCE's campaign.
Mr Appleby's office has been working on the issue for a number of years and yesterday he said he believed its efforts to "achieve a culture of change among directors" was beginning to have a positive effect. However, the figure in yesterday's review statement is more than double the amount returned in 2004.
The total number of cases of possible corporate misconduct evaluated by Mr Appleby's office in 2006 was 1,285, more than half of which were brought to the ODCE's attention by members of the public. The rest were brought to the attention of the office by auditors and other professionals.
During the year, the office secured convictions against 48 companies, directors and others for breaches of company law. It was also involved in having 14 persons disqualified by the High Court from acting as company directors, and a further two restricted in their acting as directors.
Disqualification proceedings were ongoing at year's end in respect of 20 persons.
Mr Appleby said he hoped to secure ministerial approval this year for administrative fines for minor company law offences.
He also said he hoped to see progress with some of the more resource-intensive cases that the office had on its hands. The office has been examining the Ansbacher and NIB reports, as well as the affairs of Bovale Developments, the property development company that featured in the Flood (now Mahon) tribunal.
Proceedings seeking the disqualification of Bovale directors Tom and Mick Bailey from acting as directors were initiated last year and are ongoing.
The ODCE was set up in October 2001 after corporate scandals in the late 1990s - such as the Ansbacher andNIB controversies - drew attention to the low level of policing of company law. The office is staffed by public servants with a range of skills and also has a number of gardaí attached to it. Two arrests were made last year.
In his 2006 review, Mr Appleby said the ODCE had maintained a staffing level close to its approved complement of 37. It applied for an increase in its staff in May 2005, but has not as yet received a definitive response.