Standards in Public Office Commission

Chapter 2 - Ethics

Table of Contents

Ensuring Integrity in Public Service

The Irish people are entitled to expect that decisions taken in our name are based on the merits of the case and do not favour any private interest. Among the elements required to ensure that this is the case is a strong and effective integrity framework for public servants and public representatives. Such a framework depends on the existence of a clear statement of ethical principles, elaborated where required by appropriate rules and on a strong commitment by political leaders and by the public service to ensuring adherence to the highest ethical standards. Finally, there must be effective investigation of any failure to abide by those standards.

Whistleblowing

An effective investigation framework relies on the availability of evidence of wrongdoing. For that reason, investigative bodies such as the Standards Commission are given wide powers in relation to discovery of evidence, the taking of witness statements, etc. However, such powers can only be legitimately used where there is cause to use them. The Standards Commission has in previous annual reports considered the question as to why it continues to receive a small number of complaints under the Ethics Acts. It speculated that this may be due to -

  • the complexity of the legislation, especially the provisions relating to complaints about a “specified act”,
  • a low level of awareness of the principles of the various codes of conduct,
  • the lack of publicly available evidence of non-compliance, in view of the restricted disclosure provisions applicable in many cases under the Ethics Acts, or
  • a possibility that there may be a low level of contravention of the Ethics Acts.

However, it is also the case that a major factor in the low level of complaints is fear on the part of potential whistleblowers of the consequences of reporting wrongdoing. It may also be that the piecemeal approach to introducing protection for whistleblowers has created confusion as to whether protection is available or indeed whether there is a real commitment to encouraging whistleblowers to come forward. There is a strong public interest in ensuring that persons who are aware of wrongdoing are encouraged to report it to the appropriate authorities.

Successful law enforcement and anti-corruption strategies are largely dependent upon the willingness of individuals to provide information and/or to give evidence. Whistleblowers are people who inform the public or the authorities about corrupt transactions they have witnessed or uncovered. These individuals often require protection from those they expose. Whistleblower protection, therefore, refers to the measures (administrative or legislative) taken to shield the whistleblower from physical, social and economic retaliation. (Corruption glossary, www.u4.No)

Transparency International defines whistleblowing as -
The disclosure of information about a perceived wrongdoing in an organisation, or the risk thereof, to individuals or entities believed to be able to effect action.

The Standards Commission notes that in response to allegations of wrongdoing in FÁS, the government introduced whistleblower protection under the Labour Services (Amendment) Act 2009. It also notes the publication in March 2010 by the Minister for the Environment, Heritage and Local Government of the scheme of a Bill to establish a Dublin Mayor and Regional Authority which, inter alia, would introduce whistleblower protection for persons who report alleged contraventions of the Ethical Framework for the Local Government Service to an ethics registrar. These provisions were first called for by the Standards Commission in its observations on the draft code of conduct for local authority employees in 2004. While these developments are to be welcomed in themselves, they do not go far enough in addressing the culture whereby whistleblowing is seen in some quarters as an unacceptable activity.

It should be noted that complainants to the Standards Commission under the Ethics Acts are afforded immunity. Where a complainant in good faith makes a complaint under the Ethics Acts or reasonably believes that the complaint has been made to the appropriate person and is one that falls to be investigated under the Ethics Acts, the legislation provides -

no cause of action shall lie against the person, and no disciplinary action shall be taken against him or her, in respect of, or of any matter arising from-

  1. the complaint,
  2. the furnishing of information to the Commission, a Committee, a Clerk or an inquiry officer in relation to the complaint,
  3. the performance by the Commission, a Committee, a Clerk or an inquiry officer of a function of it or of his or hers under [the Ethics Acts] in relation  to the complaint.

However, the Standards Commission considers that the immunity provided needs to be strengthened in the context of a comprehensive law providing immunity for whistleblowers and for disclosure in the public interest of wrongdoing to the appropriate authorities.

Transparency International (TI) Ireland, as part of a European Commission-funded study of whistleblower protection in ten European countries, published a national study in January 2010. It found that the Irish approach is deeply flawed. It referred to the piecemeal approach and noted marked variation between the protections afforded by different Acts. It stated -

A serious criticism of the more restrictive provisions is that they do not appear on the face of it to capture a significant portion of the range of actions and omissions seen in whistleblower reprisal. The provision in the Ethics Acts is the weakest, it protects the whistleblower against only [formal] “disciplinary action.” Others forbid the employer from penalising the employee: this level of protection is at least open to a narrow interpretation as being limited to the formal sanction of the employee. The protections afforded by the Safety, Health and Welfare at Work Act and the Communications Regulation (Amendment) Act should be seen as the model as they are drawn widely enough to capture immediately many of the tactics used against whistleblowers such as “white-walling” (giving no work to the employee) or the denial of previously available overtime and benefits which it could be argued are not captured by the more restrictive definitions. (Transparency International Ireland - Whistleblower Protection Assessment Ireland)

The Standards Commission welcomes the TI report and endorses its recommendation that a comprehensive public interest disclosure and whistleblower protection law be introduced as a matter of urgency. As well as the specific protections which would be afforded, such a step would send out a clear signal that wrongdoing is not to be tolerated and that reporting in good faith of wrongdoing is to be strongly encouraged.

Inquiry Officer

A related issue is the capacity of investigative bodies to conduct their investigations in a manner which elicits the facts in order that wrongdoing can be uncovered. One of the strengths of the Ethics Acts is the power given to the Standards Commission, in the 2001 Act, to appoint an Inquiry Officer to assist it, by carrying out a preliminary examination, when it is considering whether a complaint provides a basis for initiating a formal investigation.

The Ethics Acts provide for a two stage process for the examination of complaints -

(a) consideration by the Standards Commission as to whether an investigation is warranted and
(b) if it is warranted, a full, formal investigation involving public hearing of evidence and consideration of relevant documentary evidence.

Prior to the 2001 Act, the Commission itself had to gather relevant evidence and statements from relevant persons and base its consideration on initiation of an investigation on the evidence or statements gathered. The 2001 Act provided for the appointment of an Inquiry Officer who would assist the Commission in its initial consideration of whether a complaint warranted investigation and provide a firm evidential basis for such a decision.

The 2001 Act gives the Inquiry Officer powers to -

  • procure the evidence of the complainant or of any other relevant person;
  • put such evidence before the person the subject of the complaint;
  • allow the person the subject of the complaint to make a statement;
  • conduct interviews with the complainant and the person the subject of the complaint;
  • request the production by a person of any relevant document in the possession or control of the person; and
  • report in writing to the Standards Commission.

Such a report would not contain any determinations or findings, but would, if the Standards Commission so requested, include an expression of the opinion of the Inquiry Officer as to whether there was prima facie evidence to sustain the complaint. The Commission would then be in a position to decide if an investigation of the complaint was warranted.

The power to appoint an Inquiry Officer is important in order to ensure that complaints are the subject of a full formal investigation by the Commission only where that is truly warranted.

In annual reports since 2004, the Standards Commission has pointed out that it can appoint an Inquiry Officer only when it has received a complaint. It has recommended that it be granted the power to appoint an Inquiry Officer to assist it in considering whether an investigation is warranted where no complaint has been received.

While the Standards Commission has set out its recommendation and the basis for it in its annual reports, there has been a persistent and unfortunate misunderstanding of the position in public comment on the matter. In Dáil debates concerning this issue, it has been discussed on the basis that the Commission was proposing that it be granted the power to initiate investigations in the absence of a complaint. Since the Ethics in Public Office Act 1995 was enacted, the Commission has had the power to investigate both where it has received a complaint and also where “the Commission considers it appropriate to do so...”. Thus, the Oireachtas has already granted the Commission the power to commence an investigation on its own initiative in the absence of a complaint.

The Standards Commission recognises the responsibility that the Acts place upon it in this respect and the effect that the initiation of a formal investigation could have on a person who is accused of contravening the Ethics Acts. It would only do so were there was prima facie evidence to warrant the initiation of the investigation. This could be provided by the Inquiry Officer. Where there is such evidence, it is clearly in the public interest for the matter to be fully investigated, regardless of whether a complaint has been made. Contrary to claims that, if a matter is of sufficient public importance, a complaint will be made by an affected or third party, the Commission is satisfied that this may not always be the case.

The capacity to appoint an Inquiry Officer would allow a matter of significant public importance to be examined in an efficient, economic and effective manner which would provide clarity as to the issues involved and which would provide a firm basis for any Commission decision to initiate an investigation. The process which must be followed at present is for all the members of the Commission to consider a matter, to decide at each stage on the next course of action, to decide to seek information, evidence, etc., from a person or body, to order discovery of documents if that is considered warranted and to then make a determination as to whether a person may have contravened the ethics legislation or have done a ‘specified act’.

With four ex-officio members, the make up of the Commission does not lend itself to carrying out this process in a speedy manner. Where it has appointed an Inquiry Officer to conduct a preliminary inquiry into the facts of a complaint, the process is much more efficient and the Inquiry Officer’s report provides a firm basis on which to decide whether there is prima facie evidence of a contravention or a ‘specified act’. The Commission’s proposal is merely to replicate that efficient process to assist it in its existing statutory duties to consider whether an investigation may be appropriate, notwithstanding the absence of a complaint.

Previous cases have highlighted the fact that the Commission is hindered in the exercise of the functions given to it to initiate an investigation on its own initiative as compared with its powers where a complaint has been made. The Commission continues to believe that this anomaly should be removed as a matter of urgency.

Overlapping Ethics Frameworks

The Standards Commission is concerned at the proliferation of statutory provisions relating to disclosure of interests in legislation relating to individual public bodies, which are also subject to the separate provisions of the Ethics Acts. It has noted that since the enactment of the Ethics in Public Office Act 1995, legislation has been introduced to provide separate disclosure of interests obligations in over fifty public bodies. The intention of the Ethics Acts is to provide a clear and comprehensive framework for the disclosure of interests by public officials. This is not served by the enactment of legislation applying to some but not all public bodies which overlaps with the provisions of the Ethics Acts. The implication may be that the Oireachtas considers the provisions of the Ethics Acts to be inadequate if they must be supplemented by separate legislation in certain public bodies. In addition, there is considerable scope for confusion on the part of persons who are obliged to comply with separate disclosure provisions. There is also the possibility that a person may be found to have contravened the provisions of the Ethics Acts, but to have complied with other statutory disclosure provisions arising from the same circumstances.

The Standards Commission considers that there is a clear public interest in the adoption of a single comprehensive Act which applies equally across all public bodies to ensure that private interests are appropriately disclosed and that conflicts of interests are properly dealt with. It recommends that the Department of Finance should draft new legislation to be based on best practice for dealing with conflicts of interests and would consolidate the provisions of the Ethics Acts, all other relevant legislation and the relevant provisions of the Code of Practice for the Governance of State Bodies.

High Level Statement of Ethical Principles

The issue of whether a rules-based approach or a principles-based approach should be followed in matters of corporate governance has been much discussed since the onset of the banking and financial crises. The same issue arises in respect of ethics frameworks. The Ethics in Public Office Act 1995 introduced a set of clear rules to be followed in relation to conflicts of interests. The Standards in Public Office Act 2001, while revising those rules in the light of early experience of the 1995 Act, shifted the emphasis in that it also introduced provisions in relation to codes of conduct, which would set down the standards of conduct and integrity to be followed by public servants and public representatives in the performance of their functions. Codes were subsequently published for office holders, TDs, Senators and civil servants.

In following this approach, the Oireachtas determined that neither a simple rules-based or principles-based approach was appropriate. The Standards Commission is of the view that the combination of both approaches provides a sound basis on which any ethics framework relies. Any rules that are laid down should be derived from general principles of ethical behaviour. It is also strongly of the view that the emphasis must be on adherence to the spirit of ethics laws rather than simply compliance with the letter of the statute. It considers however, that the adoption of codes of conduct for specific sectors in themselves is an inadequate expression of the standards by which all public servants and public representatives should abide.

The Standards Commission therefore proposed that a clear high level statement of the ethical principles to be followed by public servants and public representatives should be adopted, either in primary legislation or in each of the relevant statutory codes of conduct. It considers that the UK Committee on Standards in Public Life’s Seven Principles of Public Life might provide a good starting point for discussion as to the fundamental principles that each public servant or public representative should know they must follow. The ultimately agreed principles should be incorporated into the Ethics Acts as public service values. Failure to abide by these principles could be cited in any complaint under the relevant ethics legislation. The provision in section 4 of the Standards in Public Office Act 2001 where a complaint may be made about a ‘specified act’ by a ‘specified person’ should be amended to provide that the Standards Commission may have regard to the principles when considering whether a person has done a ‘specified act’.

The Standards Commission again notes that almost a decade after the enactment of the Standards in Public Office Act 2001, the adoption of a code of conduct for the wider public service under that Act is still awaited. It has been made aware that the Department of Finance, which has responsibility in this regard, is actively pursuing the issue and expects that a draft code will be provided to the Standards Commission for consultation in accordance with the provisions of the legislation. It trusts that this important document will be expedited in order that directors and employees of all public bodies will have a clear statement of the standards they are expected to follow in performing their duties.

Complaints

The number of complaints received by the Standards Commission remains low. In 2009, it received a total of 32 complaints, six of which were valid within the terms of the Ethics Acts. The Standards Commission found that none of the complaints provided a basis on which to initiate an investigation.

Killarney Town Council Investigation

The Standards Commission has reported in previous annual reports on its investigation of alleged contraventions of the Ethical Framework for the Local Government Service by two members of Killarney Town Council, one of whom was found to have contravened those provisions in a number of respects. In the annual report for 2008, it reported that following an investigation hearing in 2007, it referred a report to the Director of Public Prosecutions about alleged breaches of the Local Government Ethical Framework by Councillor Patrick O’Donoghue. He was subsequently charged with offences under the Local Government Act 2001 and at a hearing in the Circuit Criminal Court in Tralee on 12 March 2009, Councillor O’Donoghue pleaded guilty to a charge that he “being a member of Killarney Town Council and being a person with actual knowledge of his beneficial interest in certain lands at Killarney on dates between January 1, 2006 and March 6, 2006, at Killarney - sought to influence a decision of Killarney Town Council in respect of a matter regarding the performance by that authority of its functions under the Planning Act 2000, namely the rezoning of those lands”. A charge that he failed to withdraw from the Council meeting on the night of 6 March 2006, when the motion was considered, was withdrawn.

On 30 June 2009, a fine of €5,000 was imposed on Councillor O’Donoghue. This was the first occasion in which an offence under Part 15 of the Local Government Act 2001 was found to have been committed.

Use of Oireachtas Facilities

In March 2009, the Chairman of the Standards Commission wrote to the Taoiseach setting out its view that resources, such as Oireachtas envelopes, provided to TDs and Senators at public expense in order to facilitate the performance of their functions as public representatives should not be passed on to others who have no entitlement to use them. The Standards Commission is strongly of the view that such a practice is an abuse of public resources and is entirely inappropriate. It issued a press release on the matter in April 2009.

The Standards Commission subsequently received no complaints about members of the Oireachtas passing on publicly-funded facilities to candidates at the local or European elections. It did receive a number of complaints about a member using Oireachtas facilities himself to campaign on behalf of a candidate. However, the member concerned was not an office holder and the matter was therefore outside the remit of the Standards Commission.

Connected Persons

The Standards Commission is concerned at the narrow definition of a ‘connected person’ in the Ethics Acts in the context of a person who has an interest as a company director. The full definition of a ‘connected person’ is set out in Appendix 3, but includes the following -

(iv) a company (see definition in Appendix 3) is connected with another person if that person has control (see definition in Appendix 3) of it or if that person and persons connected with that person together have control of it,
(v) any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.

The Standards Commission is of the view that the definition of a ‘connected person’ is unduly restrictive in relation to whether a company is connected to a person and to whether another person connected to a company is connected to a person. This question rests on the concept of “control” which in this context has the meaning assigned to it by section 157 of the Corporation Tax Act 1976, which in turn refers to section 102 of that Act, which has subsequently been re-enacted in section 432 of the Taxes Consolidation Act 1997. It provides -

a person shall be taken to have control of a company if he exercises, or is able to exercise or is entitled to acquire control, whether direct or indirect, over the company’s affairs, and in particular, but without prejudice to the generality of the preceding words, if he possesses or is entitled to acquire-

  1. the greater part of the share capital or issued share capital of the company or of the voting power in the company; or
  2. such part of the issued share capital of the company as would, if the whole of the income of the company were in fact distributed among the participators (without regard to any rights which he or any other person has as a loan creditor), entitle him to receive the greater part of the amount so distributed; or
  3. such rights as would, in the event of the winding up of the company or in any other circumstances, entitle him to receive the greater part of the assets of the company which would then be available for distribution among the participators.

This gives rise to circumstances where, for example, a member of a board of a public body, who is closely involved with a company (e.g., Chairperson, CEO, etc.) but who does not “control” that company and who is called upon to perform a function as a member of the board of the public body, the effect of which would be to benefit significantly that company, the company may not necessarily be regarded as a connected person with a material interest in the function to be performed, in which case, the board member would be entirely within his/her rights to participate in the function, notwithstanding the close connection that exists between that person and the company.

An example of this was reported by the Standards Commission in its Annual Report for 2007. It received a complaint about the actions of two members of the Dublin Docklands Development Authority, Mr Lar Bradshaw and Mr Sean Fitzpatrick, in view of their interests in Anglo Irish Bank which was providing funding for a number of schemes in the docklands area. The complainant alleged, inter alia, that the two members had each failed to make a statement of a material interest as required by section 17 of the 1995 Act on a number of occasions arising from decisions taken by the Authority relating to a series of developments for which Anglo Irish Bank provided funding.

The Standards Commission decided that there was no basis on which to find that Mr Fitzpatrick and Mr Bradshaw were, as between themselves, connected persons. In addition, there was no basis on which to find that Anglo Irish Bank was, in relation to either Mr Fitzpatrick or Mr Bradshaw, a connected person. While it may be that both held substantial shareholdings in the bank, the decision rested on the fact that there was no evidence that either held ‘control’ of the bank. Accordingly, the Standards Commission decided that there were no grounds on which to initiate an investigation into a contravention by either Mr Fitzpatrick or Mr Bradshaw of section 17 of the 1995 Act.

The Standards Commission considers that Section 2(2) of the Ethics in Public Office Act 1995 should be amended to provide also that a person is a “connected person” to a company of which he or she is a director and that the other directors of that company are also “connected persons” to that person.

Scope of the Ethics Acts

The Standards Commission has reported in each of its annual reports since 2004 on the large increase in the scope of the Ethics Acts in terms of the numbers of public bodies in the public service in which the Minister for Finance has prescribed designated directorships and designated positions of employment (see definition in Appendix 3). In its report for 2008, it stated that over 670 public bodies were covered in 2009.

This number has been increased on three occasions since that time. On 24 July 2009, the Minister for Finance signed regulations prescribing directorships and positions of employment in Anglo Irish Bank Corporation Limited and in 31 of its subsidiaries. The Bank had been brought into public ownership in January 2009. The Standards Commission had called for regulations to be introduced on the occasion of the establishment of a public body in order that the ethics obligations be applied as early as possible. It welcomes those regulations as the first occasion on which its recommendation was acted upon.

Further regulations were introduced with effect from 1 January 2010 which brought the total number of bodies, including subsidiaries to around 860. Regulations were subsequently made on 19 March 2010 which prescribed as designated directors the members of the board of the National Asset Management Agency (NAMA), of NAMA committees established under section 32(1) or 33(1) of the National Asset Management Agency Act 2009 and of NAMA group entities as defined in section 4 of that Act (including any Special Purpose Vehicles established under that section).

The Standards Commission welcomes these regulations and trusts that the Minister for Finance will ensure that the scope of the Ethics Acts is applied to all new public bodies in a timely manner.

Ethical Framework for the Local Government Service

The Standards Commission welcomes the intention of the Minister for the Environment, Heritage and Local Government to extend the scope of the Ethical Framework for the Local Government Service provisions of Part 15 of the Local Government Act 2001 to the proposed Dublin Mayor and Regional Authority. However, the Commission remains of the view that the procedures for examination and investigation under the framework are inadequate and that an explicit statutory procedure for complaints about local authority members and employees should be introduced as a priority.

Codes of Conduct

The Civil Service Code of Standards and Behaviour sets out, inter alia, the prohibition on all civil servants above clerical grades from engaging in political activity. The code states that civil servants at or above clerical level may not engage in public debate (e.g., letter writing to newspapers, contributions to television or radio programmes, etc.) on politics, except if required to do so as part of their official duties.

The Department of Finance drafted a circular dealing with civil servants and politics during 2009. It consulted the Standards Commission with particular reference to engagement in politics by ministerial appointees who are not subject to the general restrictions of the code on such activity. The Standards Commission provided observations on the draft circular regarding advice given to election candidates on expenditure and on candidates’ use of publicly-funded facilities in the course of an election. The circular was redrafted accordingly. The Department also consulted the Standards Commission concerning advice to be given to civil servants regarding the provision of briefings to Oireachtas members. The Standards Commission had reported on this issue in the annual report for 2006. The Standards Commission was pleased to note that the draft circular reflected the Commission’s view that civil servants should not give briefings to parliamentary party meetings, but that briefings to parliamentary party subcommittees on technical matters such as draft legislation was acceptable.

The circular also elaborated on the provisions of the code in regard to civil servants engaging in political activity. It provides -

Civil servants may engage in voluntary, local, community or sporting affairs, where that activity is not connected to, or does not conflict with, their official duties, or is not connected to politics; and does not conflict with the need for civil servants to behave, and to be seen to behave, in a politically impartial manner. However officers should adopt a precautionary approach when dealing with the media or making any public comment about their activities. Officers must notify the Personnel Officer of their Department/Office in advance of making any public comment about those activities and must comply with any restrictions required by the Personnel Officer.

In the event that the Standards Commission receives a complaint about a civil servant engaging in political activity, it may have regard to the terms of the circular as well as the provisions of the code of conduct.

Disclosure of Liabilities

The Ethics Acts provide for annual disclosure of ‘registrable interests’. The legislation provides for disclosure of the following categories of interests -

  • Occupational income, etc.
  • Shares, etc.
  • Directorships
  • Land (including premises)
  • Gifts
  • Property and services
  • Travel facilities, living accommodation, meals or entertainment
  • A remunerated position as a political or public affairs lobbyist, consultant or adviser
  • Contracts to supply goods or services to the public service

The Ethics Acts do not require disclosure of a person’s liabilities. The intention of the Ethics Acts is to provide for appropriate disclosure of any interests which could materially influence a public official in the performance of his or her official functions. It is clear to the Standards Commission that a public representative or public servant who has significant liabilities to, e.g., a financial institution, could be materially influenced in the course of performing their duties where such duties involve dealing with that financial institution and where the actions of the public servant could conceivably affect their own interests. It is therefore in the public interest that such liabilities be appropriately disclosed.

The Standards Commission notes that, in providing guidance to member states on managing conflicts of interests, the OECD has recommended that current liabilities, loans, mortgages, etc., other than minor debts be disclosed (Managing Conflict of Interest in the Public Sector - A Toolkit, OECD, 2005).

The Standards Commission also notes that the National Asset Management Agency Act 2009 requires a member of the staff of the National Treasury Management Agency who is under consideration for assignment to the National Asset Management Agency to provide a statement of his or her interests, assets and liabilities to the CEO of NAMA. The Standards Commission considers the disclosure of liabilities in that context to be entirely appropriate. It is clear that similar considerations apply to other public officials dealing with financial institutions. It is of the view that all public officials should be required to make similar disclosures under the Ethics Acts.

Accordingly, the Standards Commission recommends that the Second Schedule to the Ethics in Public Office Act 1995 be amended to provide that a liability above a certain threshold be regarded as a registrable interest for the purposes of the Ethics Acts.