New factors to consider in deciding whether to report 'white collar crime'
New factors to consider in deciding whether to report ‘white collar crime’
A recent High Court decision calls into question the constitutionality of an Irish statutory provision which, on its face, requires companies and individuals in Ireland to make reports to the authorities if they have certain information in respect of 'white collar crimes' which may have been committed by other parties.
The mandatory reporting requirement was introduced by Section 19 of the Criminal Justice Act, 2011 and makes it an offence to withhold such information without a "reasonable excuse". Section 19 resulted in the Gardaí receiving numerous reports about 'white collar crime' which they may not otherwise have received.
The wording for section 19 was based on section 9(1)(b) of the Offences Against the State (Amendment) Act, 1998. Section 9 created a similar reporting obligation relating to certain serious offences such as murder and kidnapping.
On 23 November, 2017 Judge Baker found that section 9 disproportionately interferes with the constitutional right to silence and is impermissibly vague. The arguments upheld by Judge Baker about section 9 would apply equally to section 19.
The significance of Judge Baker's judgement from a corporate perspective is that the likelihood of section 19 being prosecuted has diminished significantly; at least until any appeal in respect of the High Court decision has been determined.
The State is expected to appeal.
An appeal would introduce additional uncertainty. Parties considering not reporting information about 'white collar crime' because of the judgement would have to consider the implications of a successful appeal.
Section 19 remains the law in Ireland unless it is also declared unconstitutional. However, the logic of Judge Baker's decision clearly raises serious doubts as to the constitutionality of Section 19.
A decision not to comply with section 19 based on the judgement could carry risks which many corporates may be unwilling to take pending the determination of any appeal.
The judgement does not consider the extent to which self-incrimination might offer a "reasonable excuse" for not reporting information and therefore provide a full defence to any prosecution of section 9 or section 19. We expect that issue to feature prominently in any appeal. It will also remain a key issue to consider in deliberations on reporting matters under section 19.
The facts of Sweeney v Ireland, the Attorney General, and the Director of Public Prosecutions were straightforward.
Mr Sweeney, a suspect in a murder investigation, was repeatedly interviewed by the Gardaí in 2007. On all three occasions he was cautioned about his right to silence and he exercised that right on each occasion.
In 2014 he was charged with the section 9 'withholding information' offence outlined above. The Gardaí had not warned him that his silence could lead to prosecution.
Mr Sweeney brought a challenge to the constitutionality of s. 9, arguing that:
The offence breaches his right to silence in that an accused could be prosecuted for exercising his constitutionally protected right to silence.
The offence is impermissibly and unconstitutionally vague and uncertain.
The facts were an extreme example of the application of the withholding information offences. Sections 9 and 19 most commonly arise where the party involved has not come to the attention of the Gardaí. Both sections are addressed at information about third parties; strictly speaking they are not self-reporting obligations, albeit in some cases information about third parties may be self-incriminatory. In Sweeney, however, the accused was himself a suspect and subject to interview/interrogation by the Gardaí.
The right to silence
In a carefully reasoned judgement, Judge Marie Baker noted that the right to silence is a constitutionally protected right, albeit not an absolute one. She stated the extent to which an interference with it is permissible will depend on:
The protections in place to minimise any loss of the essence of the right;
Whether those protections are sufficient to ensure a proper balance between the right to silence and the countervailing right of the State to investigate crime.
Judge Baker noted there are no protections for a person charged with the section 9 offence. For example, the Gardaí are not required to warn a person of the potential for a section 9 prosecution if the right to silence is exercised. Judge Baker described this as presenting an 'irresolvable dilemma' for persons who are forced to either:
Answer questions and possibly incriminate themselves; or
Refuse to answer questions and thereby commit the section 9 offence.
On that basis she found that s.9 was a disproportionate interference with the right to silence and therefore offends the Constitution.
A criminal offence must be sufficiently clear to enable a person to understand what is demanded and what the consequences of breach are. Judge Baker found that the section 9 offence was impermissibly uncertain on the basis that the 'irresolvable dilemna' she referred to is too complex to expect a person in that scenario to grapple with.
'Reasonable excuse' for not reporting
The section 9 'withholding information' offence, and indeed the section 19 offence, are committed only if the person withholding the information has no 'reasonable excuse' for failing to report it.
The judgement does not consider whether self-incrimination might be a "reasonable excuse", as envisaged by the section, and therefore a full defence. Interestingly, section 38 of the Central Bank (Supervision and Enforcement) Act, 2013 specifies that self-incrimination is a 'reasonable excuse' for not reporting information required by that section. However, sections 9 and 19 are silent on what a 'reasonable excuse' for not reporting is. If self-incrimination is such a "reasonable excuse" for a section 9 or section 19 matter, then the dilemma faced by individuals like Mr Sweeney would be eased significantly; they could only be convicted under section 9 for failure to provide information about third parties which is not self-incriminatory. This issue may well feature in any appeal. However, the absence of any explanation in either section 9 or section 19 for what constitutes such a 'reasonable excuse' may be unhelpful to any appellant arguments in that regard.
What happens next?
Section 9 is due to be formally declared unconstitutional on 21 December, 2017. We will know then or shortly afterwards if the Sweeney judgement is to be appealed.