Full compliance with company law requires to be speedily enforced

For too long the State has allowed company law to be completely unenforced, the former chairman of the Company Law Compliance and Enforcement Committee, Mr Michael McDowell SC, said yesterday.

"The dole abuser is jailed, but the commercial or corporate thief is not even prosecuted. The businessman who dishonestly pockets VAT or PRSI is given a warning or a fine or penalty for his trouble," he said, addressing the inaugural meeting of the Irish Financial Services Society, which is part of the Association of Chartered Certified Accountants (ACCA).

The American hotel tycoon Leona Helmsley, said when being sent to jail: "I thought tax was for the little people," Mr McDowell said. "In this Republic we have to ask ourselves whether compliance and enforcement of the law is for the `little people'."

The company law committee, which Mr McDowell chaired, reported last year. "The Government's acceptance of the report on Company Law Compliance and Enforcement must now be enacted by speedy and effective implementation," he said. "There is no reason why we should tolerate slippage in relation to vital reforming regulations on which our economic well being and social cohesion depend."

Referring to the Implementation Advisory Group on a Single Financial Regulator, which he chairs, Mr McDowell said he did not want to pre-empt that body's report, which is expected in the coming weeks. However, he said whatever model is chosen for the regulator, it will have "a vital role to play in consolidating our financial success of recent years".

"To those who fear over-regulation and over-enforcement, I would point out that we all pay the cost of under enforcement. Tribunals, inspectorates, compensation of financial victims, write-offs of tax debts - these are the means by which we pay for corporate and commercial fraud and misfeasance."

Mr McDowell said the question of why the State is so tolerant of white collar crime is a vital one. He quoted from the Beef Tribunal report: "There was a deliberate policy in the Goodman group of companies to evade payment of income tax". . . "the records of the company were misleading and calculated to deceive the Revenue Authorities"; the system of concealment "was known to the top management of the group, undoubtedly organised by them and was very well and professionally put together and" . . "had been organised by a large group organisation . . and had been organised by professionals."

He continued: "Five years have passed. Everyone involved in that debacle walked away from the wreckage and no sanction, civil or criminal or professional, and no disqualification under company law was ever attempted in relation to any of the top management people concerned. They have gone on to better things - fortified by millions of taxpayers' money in payment of their costs."

"Perhaps some day soon we will hear an explanation - perhaps not." There were many less powerful people who would gladly make room in the State's overcrowded prisons for the "perpetrators of the Goodman fiasco", he said. "And to those who argue that our beef barons made us all wealthy by cutting a few corners, I say that they didn't. It was we who made them wealthy and it was they who ripped us off. We owe them nothing - except perhaps some well deserved contempt."

Mr McDowell said new laws of criminal evidence and procedure were needed to make it simple to establish in court what had happened in fraudulent commercial transactions. Accountants' reports and analyses of transactions should be made provable, subject to contradiction and cross examination.

"If we really have republican values, our legal system should be as amenable to convicting the top management people referred to in the Goodman report, as it is to convicting the little people who shoplift. Our rules of evidence should be appropriate to the nature of the crime, and in the context of commercial fraud, our law relating to evidence and procedure should not be an impenetrable thicket for the protection of the rich and powerful." Mr McDowell said whether the issue was one of class or a "collective national character fault", the notion of equality before the law should not begin and end "with treating all drink-driving killers in the same way".

Last night the Goodman group responded to Mr McDowell's comments, saying it co-operated fully with the Beef Tribunal, that it was the decision of the now Chief Justice, Mr Justice Hamilton, that it costs be reimbursed, and that any outstanding tax due to the Revenue was paid years ago. "The Beef Tribunal was established when Mr McDowell was a politician at the insistence of his then party leader at enormous cost to the taxpayer."