Ireland: The Inquiries Act - The Banking Inquiry A Test Case?

The fifth anniversary of the "bank guarantee" - 30th September - has passed and it is timely that at the end of September 2013 legislation was enacted which will enable the long anticipated banking inquiry to take place. The public interest in the events leading up to the bank guarantee has not waned. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin¹ when signing the commencement order for the Act, commented that the people of Ireland have made some basic demands with regard to the scope of a banking inquiry into the events leading up to 30 September 2008 including the need to know i) how it happened, ii) who was involved and iii) who gave advice.

The Minister outlined the new statutory powers available to the legislature in the Houses of the Oireachtas (Inquiries, Privileges and Procedures) Act, 2013 (the "Act"). The Act will provide a statutory framework to assist the House to conduct inquiries into matters of public importance i.e. a parliamentary inquiry. The Act came into force on 25th September 2013.

The Minister, looking forward to the commencement of the banking inquiry, commented that:

"It is crucial that the terms of reference for an inquiry be narrow and specific to ensure that a focused inquiry can be effectively conducted within the timeframe available. Used effectively, I believe that an inquiry constituted in this manner will facilitate the unfolding of the full narrative of events surrounding the near-collapse of the banking system in Ireland and the events leading up to and including the decision on the bank guarantee."

The Minister has yet to identify the form and Terms of Reference pursuant to the Act which it is proposed the banking inquiry will take. We await details of the major provisions applicable to such inquiry including the appropriate committee of the House to conduct the inquiry and the procedural and organisational aspects of such inquiry. Detailed standing orders and guidelines will have to be put in place prior to the commencement of the inquiry. In due course, when Terms of Reference are made available, this will require further and more detailed analysis and legal review which we will continue to monitor.

Below, we have set out a summary of selected provisions of the Act² in a Q&A format.

1. What type of inquiry can be conducted?

An Oireachtas Inquiry can be conducted into any matter of public importance. Part 2 of the Act sets out in detail the type of inquiries that may be conducted ("Part 2 inquiry") and provides for procedures, establishment, terms of reference and commencement of an inquiry. The banking inquiry is likely to be the first such inquiry and has been described as a "milestone inquiry" by the Minister.

Section 7 Inquiry - subject to appropriate terms of reference and standing orders, a committee appointed by the Oireachtas may conduct an inquiry into any matter. The Act is broad in its scope and application. The methodology of such an inquiry consists only of (a) recording evidence, (b) reporting the evidence, (c) making findings of fact, and (d) making recommendations arising from findings of fact.

Section 8 Inquiry – enables inquiry into legislative functions of either House or both Houses of the Oireachtas, including whether there is a need for new legislation.

Section 9, 10 & 11 Inquiry into personal conduct – enables an inquiry into the removal or proposed removal of an office holder, howsoever described, under relevant provisions (defined in the Act); conduct of member of House and certain office-holders including the Government, and persons accountable to the Oireachtas by virtue of contract or statutory appointment.

Section 16 President – provides for the eventuality of a process of impeachment of the President of Ireland.

The presumption is that an Inquiry will be held in public (s. 31) and its taking of evidence shall be conducted in public and broadcast to the public (subject to some exceptions). Where evidence is heard other than in public, publication of such evidence shall not enjoy privilege against defamation (s.31(3)).

2. Who can be questioned and what rights does a witness have?

Similar to civil and criminal trials any person may be called as a witness. The Minister commented that the proposed banking inquiry is tasked with uncovering and disclosing (i) who was involved and (ii) who gave advice. This suggests an extensive and large witness list for the banking inquiry. A non-exhaustive list which might include executive and non-executive directors, management and employees, contractors and consultants, politicians, professional financial advisers, regulators, civil servants, accountants, auditors and lawyers. When available, the Terms of Reference and Guidelines may provide more detailed provisions in relation to witness rights, entitlements and obligations.

A witness may be questioned directly or through the person's legal practitioner, if any. In general, a witness has the right to be accompanied by a legal practitioner while giving evidence and to attend any public session of the inquiry, or subject to the opinion of the chairman, the giving of evidence of another person relevant to the witness (s. 22 (1)).

Whilst witnesses are entitled to have legal representation at an inquiry, the costs associated with such legal representation are at the expense of the individuals concerned. The Act provides for the payment of legal costs in limited circumstances where the good name of a witness is at issue (s.47). In such circumstances, a witness must apply to the Oireachtas Commission for an order to recoup such expenses and it is for the Commission to determine subject to any guidelines, whether the individual concerned is entitled to such costs. An officeholder who is subject to a section 9 inquiry has the right to attend any session of the inquiry where evidence is given.

Right to Good Name:There are a number of provisions dealing with preserving the right to a "good name". The person whose name may be impugned during an inquiry has a right to fair procedures in defending his/her good name (s. 24).

These rights include i) advance notice in writing of the evidence proposed to be given against him or her; ii) right to cross-examine witnesses; iii) right to give evidence to answer the allegation; iv) call witnesses to answer the allegation; v) make a submission at the close of evidence; and vi) request the committee to call or direct specified persons to attend to give evidence or procure by direction production of specified documents.

In accordance with the requirements of fair procedures, the Act specifically provides for a right of access to the High Court of a witness or individual who is of the opinion that his or her constitutional rights are not being vindicated by the inquiry (Part 9).

Privilege and immunity:A person who gives evidence voluntarily or pursuant to a direction under the Act has the same immunities and privileges in respect of the evidence or documents and is also subject to the same liabilities, as a witness to proceedings in the Court. (s.18 (1)) with some exceptions (s. 94 Seek Court directions).

Subject to s.18(1), a person shall not be entitled to refuse to answer a question or furnish a document on the grounds that it would incriminate him/her or any other person (s. 18(2)).

Obligation to Preserve Relevant Material:Section 30 places a statutory obligation on a person(s) to preserve material in his or her possession or control including documents or other information in any form relating to any matter within the terms of reference for the inquiry. The obligation relates to material in the possession of such a person after the establishment of an inquiry or before its establishment in circumstances where it can reasonably be inferred that the establishment of the inquiry must have been apprehended by the person.

Furthermore, a document in the possession or control of a company of any kind is considered, in the absence of evidence to the contrary to be also in the possession or control of any individual who, because of his functions or position within the company can reasonably be expected to have possession or control of the document (s.2(2)).

A person who knowingly or recklessly fails to preserve such documentation is guilty of an offence (s. 32 (2)).

Evidence given to an Inquiry is not admissible in certain other proceedings:Witness statements, witness admissions and/or documents provided to an inquiry are not admissible in any other proceedings (including disciplinary proceedings) except prosecution of offences under the Act or the offence of perjury.

Regulatory oversight and supervision for banking executives through the fitness and probity regime and employee disciplinary proceedings have separate investigative powers and procedures. However, evidence disclosed and revealed in a parliamentary inquiry, which might be material to such other proceedings, may not be usable in the determination of such disputes and issues.

Findings of Failure to Co-Operate:The committee in conducting a Part 2 Inquiry may make a finding of fact that a named person failed to fully co-operate. Such finding may lead to an additional inquiry, disciplinary proceedings in another forum and/or recommendations in the final report with consequential bad publicity and impact on reputation and good name.

3. What type of materials and evidence will be accessible by the inquiry?

The format of any inquiry may consist of (a) recording evidence, (b) reporting the evidence. The Act contains a number of definitions to assist to identify the types of materials which may be required to be produced either by institutions or individuals.

Section 30 (preservation of relevant material) defines "relevant material" to mean in relation to a Part 2 inquiry a document or other information in any form relating to any matter within the terms of reference for the inquiry.

"Document" is extensively and broadly defined to include any printed matter in material or dematerialised form and stored in/on electronic devices. Electronic device includes any device used, any electrical, digital, magnetic, optical, electronmagnetic, biometric or photonic means, or other forms of related technology, or any combination therefore to store or transmit data.

The definitions reflect modern business practises and the high use and dependency of financial institutions on technology.

4. What is the Standard of Proof?

The standard of proof to make findings of fact (including a finding that impugns good name or relevant misbehaviour, broadly being the failure of an individual to co-operate with an inquiry) is that applicable to civil proceedings i.e. balance of probabilities and the committee shall give its reasons in writing (s. 27).

5. What are the consequences for non – compliance with an inquiry?

Robust penalties are in place for anyone who sets about obstructing the legitimate work of the parliamentary inquiry. There are seven different offences provided for in the Act. By way of summary a person guilty of an offence under the Act is liable, (a) on summary conviction to a class A fine³ or imprisonment for a term not exceeding 6 months or both, or (b) on conviction on indictment to a fine of €500,000 or imprisonment for a term not exceeding 5 years or both.

Conclusion and Consequences of an Inquiry

Upon conclusion of a Part 2 inquiry the committee shall prepare and give to the House a final report in writing setting out their findings of facts, if any, including findings of relevant misbehaviour which broadly means findings of fact in respect of an individually named person's failure to co-operate with the inquiry (s.14)) and its recommendations (Part 4 ss. 33-41). The inquiry does not have the power or authority to implement recommendations or sanctions (other than offences under the Act).

Subject to s.95 (prejudice to criminal proceedings) the House (a) shall resolve to publish the final report as soon as possible, and (b) may in its discretion resolve to publish any interim report unless publication would hinder or impair the Part 2 inquiry. Where the committee is of the opinion that publication could reasonably be expected to prejudice any criminal proceedings that are pending or in progress or any criminal investigation, they will apply to the High Court for directions concerning publication (s.95). The Minister commented that "the criminal process is a separate and distinct accounting process which must follow its course without interference". The banking inquiry is likely to be only part of the process and part of the banking inquiry cannot commence until the current police investigations and any subsequent criminal proceedings have completed.

The Minister has stated that the banking inquiry must be completed within the lifetime of the current Oireachtas sessions (i.e. no later than April 2016). Subject to the issuance of the Terms of Reference, guidelines and standing orders for the banking inquiry, by the Spring of 2016, the expectation is that the final report will provide a reasonably full narrative, of i) how the bank guarantee and banking crisis in Ireland happened, ii) who was involved, what their roles were; who made the decisions, iii) who gave advice along the way and iv) the behaviour, responses and personal account of key players throughout the period leading up to 30 September and the consequences therefrom.

Footnotes

1 Minister Howlin comments in this Note are taken from commencement statement relating to the Act delivered in the Seanad on 24 September 2013.

2 Please note that this briefing note is a summary only of some selected provisions of the House of the Oireachtas (Inquiries, Privileges and Procedures) Act 2013 and does not constitute legal advice. The note is not a comprehensive analysis of all provisions of the Act, its interpretation or potential application. Terms of Reference for the Banking Inquiry have not issued (1 Oct 2013). Legal advice should be sought on the Act and the Terms of Reference (when available) in context of the proposed banking inquiry.

3 Fines Act 2010 – Class A fine is currently greater than €4,000 but not greater than €5,000.

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