Opinion: If white-collar crime is to be treated like the serious crime it is, frequent successful criminal prosecutions are needed

White-collar crime has gained notoriety lately, with international scandals regularly making headlines. The conviction of Elizabeth Holmes of Theranos for defrauding investors is just the latest to attract international attention. Closer to home, Ireland has not been immune to the effects of white collar crime. Economic crime has long been estimated to cost the Irish economy around €2 billion a year, although the figure is likely to be higher today.

White-collar crime is a broad term and covers activities such as fraud, anti-competitive behavior, money laundering, cybercrime, etc. These are not crimes that harm the economy in the abstract, but they harm individuals. The cost of the 2008 financial crisis is still fresh in our memories, and the 2021 scandal involving Davy Stockbrokers underscores that a toxic culture of corporate greed is still alive and well among certain groups.

It should be noted that the white collar crime that affects Ireland does not necessarily originate in Ireland

But despite the high-profile nature of many corporate crimes, economic crime is relatively covert in nature and therefore difficult to uncover (at least without a whistleblower). Therefore, when discovered, he should be severely punished. Clearly, there is a strong incentive to tackle economic crime, and to tackle it hard, and that’s where criminal sanctions come in.

Generally speaking, severe criminal penalties have been introduced in many areas to deter potential offenders. The reasoning being that fines alone can be viewed simply as a “cost of doing business”. However, the potential prison terms are not enough to effectively deter would-be criminals. Systematic enforcement and prosecution of offenders is also needed, and it is on this front that Ireland unfortunately lags behind. Much of this under-enforcement can be attributed to the lack of resources of the relevant investigative departments.

To remedy this situation, among other things, the Corporate Enforcement Authority Bill 2021 proposed the replacement of Office of the Director of Corporate Law Enforcement (ODCE) with the new Corporate Enforcement Authority (CEA). The new body, due to be set up early this year, has been dubbed “Irish FBI for white collar crime”. At present, the bill has passed through all legislative stages in the Houses of the Oireachtas and has yet to be signed by the President and signed into law. Once enacted, it will see the creation of an authority that can appoint its own specialist staff to investigate sophisticated economic crimes.

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From RTÉ News in 2018 Cabinet approved ODCE changes

While a step in the right direction and a strong signal of intent, the bill is only a preliminary step in moving even closer to the creation of an Irish FBI to white collar crime. The bill essentially transfers the powers of the ODCE to the CEA with some relatively minor modifications. Further reforms must be considered in the years to come if the CEA is to become the powerhouse in the fight against white-collar crime that it has the potential to be.

With the increase in the budget and staff of the new CEA, and the recruitment of more specialized personnel, we can keep hope. But an operating budget of approximately 6 million euros, even if it is a 20% increase compared to the previous budget of the ODCE, still seems insufficient given the important and complex work that the CEA will have to carry out. It’s not a cheap undertaking: investigating serious economic crimes often takes years and involves a team of experts. However, given the high levels of fines that often accompany successful prosecutions, this could be cost effective for an authority with appropriate resources.

In the context of the pandemic, the CEA will certainly have to get started. Covid-19 has put tremendous pressure on businesses of all shapes and sizes and tough decisions have had to be made, with many hoping to keep their business afloat in these turbulent times. Some, unfortunately, may turn to illegal business practices to stay profitable. Low risk, due to low detection and prosecution rates, and high rewards can easily tip the balance in favor of committing an economic crime.

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From RTÉ Radio 1’s Drivetime, DCU’s Gary Murphy a new report on white collar crime in Ireland

Although the decision to evade taxes or fix prices with competitors may have been made with good intentions (such as saving company jobs), such benevolent motives should not act as some kind of get out of jail card. Strict enforcement and subsequent sanctions are needed if Ireland is to continue to be seen as a strong country when it comes to white collar crime.

The huge growth in cybercrime since the start of the pandemic is an example of how those involved in economic crime are taking advantage of the chaos for personal gain. With Ireland’s growing position in the global financial services industry, a sector whose GDP is around 20 billion euros, Ireland will need to remain tough on corporate crime and cybercrime if it is to continue to be successful on the global stage, which benefits the Irish Treasury through large total corporate tax contributions companies (around €2.5 billion in 2019).

It should be noted that the white collar crime that affects Ireland does not necessarily originate in Ireland. This means that the decision to form an illegal business cartel or commit computer fraud may take place in another country, but the effects of the decision may be felt here in Ireland. Over the past few months, raids have resumed at EU level regarding infringements of competition law. Fines of several million euros have been imposed and complex investigations are underway.

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From RTÉ Radio 1’s Today With Claire Byrne, Justice Minister Helen McEntee on white collar crime and other problems in our legal system

Fines are the most appropriate sanction for serious economic misconduct at EU level, although Ireland has particularly strict criminal legislation when it comes to punishing white collar crime. When white collar criminals bring their businesses to Ireland, they must be reminded, in no uncertain terms, that Ireland is no safe haven and that offenders will be prosecuted. If white collar crime is to be treated as the serious crime that it is, frequent and successful criminal prosecutions are necessary.

While some investigative approaches have had to be put on hold during the pandemic, white-collar crime never sleeps and remains an everlasting problem. The true scale and cost of white-collar crime during the pandemic may not become clear for many years. What is clear, however, is that the CEA will have to bare its teeth at the earliest opportunity for economic crime to be effectively deterred and punished in Ireland.

The views expressed here are those of the author and do not represent or reflect the views of RTÉ