Jenny Bulbulia has been reading the report and considers the offencesand penalties it could entail.
Part of the Ansbacher inspectors' mandate was to identify any possible breaches of the Companies Acts and other statutory and common law offences and identify the persons responsible.
Mindful of the nature of the investigation, the inspectors have limited any such findings to those that in any particular case "there is evidence tending to show" that a particular offence has been committed or that "there is evidence tending to show" that a specified person has committed that offence. Parties named in the report are entitled to a presumption of innocence.
It will be the role of various regulatory authorities to further investigate where appropriate and possibly seek to have such offences prosecuted through the courts.
The inspectors have concluded that there is evidence that tends to show breaches of company law, banking law and common law (as well as significant breaches of revenue law which are dealt with elsewhere in this paper). Some of the possible offences are as follows:
It is a requirement under the Central Bank Acts that any person or company carrying on the business of banking on his own behalf or on behalf of any other person, in or outside the State, shall be the holder of a licence. It is a criminal offence to operate without a licence and carries penalties on summary conviction of up to £1,000 and/or imprisonment not exceeding 12 months, and on conviction by a judge and jury a fine of up to £50,000 and/or imprisonment not exceeding five years.
"Bankers are a privileged class. They are exempt from the vexatious restrictions which are imposed on other moneylenders. They are an exclusive circle to which entry is limited. It is important that we should know what these privileges are . . ." wrote Lord Denning in an English House of Lords judgment in 1966. Breaches of the banking laws must be viewed seriously.
The law also provides that any persons who facilitate, consent or approve of the carrying out of unlicensed banking will themselves be guilty of an offence and they may be tried and punished as though they were the principal offender.
The Report also discloses evidence that tends to show breaches of the Companies Acts.
Ansbacher (Cayman) Ltd is a company incorporated outside the State and relatively few provisions of the Companies Acts apply to it. However, companies, like Ansbacher, incorporated outside Ireland that have established places of business within Ireland are required to provide a certain amount of basic information about themselves. The report reveals that there is evidence to suggest that due to the highly secretive nature of Ansbacher's business dealings in Ireland such information was not furnished. Any company failing to comply with this requirement and every officer or agent of the company who knowingly permits the default is liable to a fine not exceeding £500.
The report also establishes that there is evidence that tends to show that certain companies and individuals conducted their affairs in a manner so as to defraud the Revenue or conspired with companies to this effect. Such persons may be liable under the statutory offence of fraudulent trading and/or the common law offence of conspiracy to defraud.
The penalties are, on summary conviction, imprisonment not exceeding 12 months and/or a fine not exceeding £1,000; on indictment, imprisonment not exceeding seven years and/or a fine not exceeding £50,000.
Prior to the passing of the Companies Act 1990 the statutory offence of fraudulent trading could only be invoked where a company was in liquidation. Certain companies whose involvement ceased prior to this Act may none the less be liable at common law (where an offence is not regulated by statute) for the offence of conspiracy to defraud. However, previous court rulings have cautioned against relying on the charge of conspiracy where there are other substantive offences alleged that are capable of being proved. None the less conspiracy is an indictable offence punishable by a fine or imprisonment or both.
If persons are convicted of an indictable offence or found guilty on indictment of fraud the court has wide-ranging powers to disqualify them from acting as directors, officers or auditors or of managing companies for five years.
The inspectors have recommended that the relevant authorities consider whether an application should be made to disqualify certain named individuals who failed to assist the inquiry in failing to produce information concerning Ansbacher (Cayman) Ltd.
Though not specifically mentioned in the report other possible statutory offences may include the following:
Certain companies incorporated in Ireland may be in breach of company law in failing to keep proper books of account that record a true and fair view of the state of affairs of the company and fully explain its day-to-day transactions in a manner that is capable of being traced through the system at any stage. The obligation to keep such records only extends for six years from the date of the latest entry. Under company law there is an express duty on auditors who form an opinion that the company has failed to maintain proper books of account to notify the Registrar of Companies. Failure to make such notification is a criminal offence and may result in an auditor being fined or sentenced to imprisonment or both.
It is a criminal offence to make a statement that is false or misleading or to furnish fraudulent documents requested under the Companies Acts. It is punishable on summary conviction by a fine not exceeding £1,000 and/or imprisonment not exceeding 12 months, and on indictment to a fine not exceeding £10,000 and/or imprisonment not exceeding three years.
It is also an offence for a company incorporated outside the State, but carrying on business in the State at any time, to furnish false information or to fraudulently alter or dispose of documents.
The inspectors also inquired into the watchdog type role that certain auditors are expected to play towards the companies. The report does not draw any conclusions on the finding that evidence tended to suggest that various audit firms did not identify evidence of unlicensed banking business. The inspectors consider this to be a matter for the regulatory authorities to consider, if appropriate.
Though the evidence tends to show that offences have been committed, the inspectors have specifically warned of factors that may prejudice successful prosecutions - the constraints on available evidence, the passage of time and the standard of proof required in a criminal case, that is that the accused be found guilty beyond reasonable doubt. Also the inadmissibility of certain evidence gathered by the inspectors must be a factor. Where testimony is given under legal compulsion it may not be admissible in criminal proceedings. However, under company law the findings of the inspectors are admissible in evidence in any civil proceedings that may be brought.
The task now falls to the relevant authorities to identify what in fact the evidence discloses and to pursue any potential offences appropriately with the same professionalism and sense of public duty displayed by those involved in the commission, preparation and execution of the report.
Jenny Bulbulia is a barrister-at-law