Tanaiste pledges 'fundamental reform' of accountancy profession

The systematic, planned denial of taxes "was a denial of the sovereignty of the State," the Tánaiste told the Dáil. It was a subversion of the right of each citizen to live in a fair society, Ms Harney said. "It undermined the ability of the State to provide vital public services. It cost us all."

The Ansbacher report demonstrated "significant regulatory failures" by statutory bodies. But she told the one-day Dáil debate on the report and investigation that the Government had acted to change Irish political culture, which was "healthier now".

The report and the setting up of the office of director of corporate enforcement were a "watershed". She also told TDs that legislation to "fundamentally reform" the way auditors and accountants operate would be published before the Dáil resumes in the autumn.

The investigation into offshore accounts and irregular financial activity and the resulting report "takes us directly to issues at the heart of our democracy. A state that cannot collect taxes, through lack of will, lack of authority or a degeneration of its political culture, is a failed state."

The Revenue Commissioners failed to fully and aggressively investigate and target tax evasion. The Central Bank failed 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 law. The Department of Enterprise, Trade and Employment failed to recognise that the company law code created a regime that needed to be "actively enforced" and failed to devote adequate resources to this enforcement.

Ms Harney told the special Dáil session that the Government would give its "full backing" to the director of corporate enforcement, the Revenue Commissioners and the Director of Public Prosecutions, who she was confident would pursue the identified cases of wrongdoing "with the utmost vigour".

She stressed that politicians as legislators "must demonstrate our determination in clear actions to ensure that all citizens are not only theoretically equal in law but that they will be treated equally in reality".

As the Opposition repeatedly stressed that further action had to be taken, Ms Harney said the Ansbacher inquiry and report already demonstrated a healthier political culture.

"The Ansbacher investigation and report were not the result of chance and random forces, the flapping of butterfly wings in a Brazilian forest", said Ms Harney, who instituted the resulting five-year inquiry following the publication of the McCracken tribunal report in 1997.

Opening the debate on the 11-volume report, the Tánaiste pointed to the Government decision to undertake the inquiry, the changes in company law, increased penalties for corporate crime and more focused enforcement by the Revenue Commissioners.

Outlining the details of the planned new legislation on auditors and accountants, she said it would establish a new independent regulatory body to supervise them.

The authority would be able to apply to the courts to compel the amending of accounts that were not in line with accepted standards; would investigate directly cases of public interest and require accountancy bodies to amend their ethical rules and disciplinary and investigation procedures.

Pointing to the office of the director of corporate enforcement, she said that "for the first time in our history, we now have a body with the resources, expertise and powers to effectively enforce company law, an essential part of the legal framework of our enterprise economy".

The Tánaiste stressed that the integrity of corporations, financial institutions and markets was central to the health and stability of the Irish economy. "We must legislate to have effective common rules. These rules will not achieve much unless they are drawn up, enforced and updated in a supportive and compliant culture."

She said the "events in the Ansbacher report take us back to previous decades, and they remind us of a time when Irish society and Irish business was more closed, more inward-looking, more self-satisfied with under-performance".

Ms Harney concluded that the price of freedom was eternal vigilance. "It is the price of a fair democratic society and the price of real economic success."