knowledge 30 July 2019 |

Disputes - Investigations and White Collar Crime. Ireland’s Anti-Corruption law, one year on.

Ireland’s Criminal Justice (Corruption) Act 2018 (the “Act”) has been in effect for almost a year. Although it has been the focus of considerable attention and discussion in Ireland, it has received less attention in other jurisdictions, including the UK and the US. This is concerning, and should be urgently remedied. The Act impacts not only Irish companies, but also non-Irish companies, including US and UK companies with a subsidiary, or otherwise carrying on activities in Ireland. Moreover, US entities should be aware that, like the UK Bribery Act (“UKBA”), the Act is wider than the Foreign Corrupt Practices Act, (“FCPA”), (covering private as well as domestic and foreign official bribery), and more restrictive, (making no exception for facilitation payments).

Any corporate group doing business in Ireland should review its anti-bribery compliance (“ABC”) policy, warranties, third party agreements, and due diligence procedures now to ensure that they comply with the Act. When doing so, they should also ensure that they have procedures in place to effect compliance with the offence set out in s19 of the Criminal Justice Act 2011 (“s19 CJA”), of failure to report certain information on white-collar crime, including bribery.

The Act

The Act’s principal objective is to modernise and consolidate the law on bribery and corruption. In addition to criminalising active and passive bribery, the Act provides for a number of other offences, namely, active and passive trading in influence, corruption in office, facilitating the commission of a corruption offence and intimidation.

Significantly, s18 of the Act provides for a new “failure to supervise” type of offence (a “s18 offence”), pursuant to which a body corporate may be held criminally liable for a corruption offence committed by its staff, agent or subsidiary, where the relevant offence was committed with the intention of obtaining or retaining business, or an advantage in the conduct of business, for the body corporate.  In proceedings for such an offence it is a defence for the body corporate to prove that it “took all reasonable steps and exercised all due diligence to avoid the commission of the offence.” This appears similar to the UKBA “adequate procedures" defence, although arguably amounting to a higher standard.

Generally, an offence will be committed under Irish law where the last act necessary to complete the offence takes place in Ireland. However, the Act also applies to corruption offences occurring outside of Ireland in certain circumstances, including where an Irish citizen or body corporate does something in a place outside of Ireland, which is an offence both under the Act and in the place where the thing was done.  This gives rise to potential liability for US, UK and other overseas companies which do business in Ireland, for corruption which takes place outside Ireland.

The Act provides for significant penalties. A corporate convicted of a s18 offence will face an unlimited fine.

Section 19 CJA

Under s19 CJA, a person commits an offence if that person fails to disclose as soon as practicable to the relevant authorities, without reasonable excuse, information which he or she knows or believes might be of material assistance in:

• preventing the commission by any other person of certain white collar offences, including corruption, or

• securing the apprehension, prosecution or conviction of any other person for such an offence.

This reporting obligation is unique in being far wider than any provision in the USA or UK under regulatory, tax evasion and anti-money laundering laws. Companies in these countries which discover bribery will consider self-reporting but there is no mandatory duty. A failure to disclose an economic crime offence has been mooted under recent UK governments but not implemented.

By contrast, groups subject to the Act must make sure that, in addition to their responsibilities under the Act, they consider s19 CJA if they uncover any information regarding the possible involvement of an employee, agent or other person in bribery and corruption and in particular, whether they are obliged to make a report and if so, when such a report should be made. 

Recently, the Irish Supreme Court upheld the constitutionality of a similar type of reporting offence in Sweeney v Ireland.¹

Group ABC Policies and Procedures

Most corporate groups will be familiar with the need to put in place ABC policies and procedures to prevent bribery and to avoid infringing the FCPA and UKBA.

Groups with subsidiaries, or which carry out activities in Ireland, should also:

• consider the Act and ensure their ABC policies and procedures comply with it, and

• ensure that they comply with s19 CJA, including by implementing any policies and procedures necessary for such compliance. 

Effective ABC policies and procedures should be a good first step for a corporate mitigating prosecution risk and availing itself of the statutory defence under the Irish legislation in the same way as for the UKBA, but it will be important to demonstrate that the Irish law has been taken into account in assessing compliance risk.

At McCann FitzGerald we can assist in the development, adaptation and updating of group policies and procedures to take account of the Irish legislative developments and advise organisations on all aspects of compliance with this new regime. For further details, contact our Investigations and White Collar Crime Group or your usual contact at McCann FitzGerald.