Until recently some auditors have refused to cooperate with officials seeking to investigate possible breaches of company law, according to Mr Paul Appleby, a former senior civil servant with the Department of Enterprise, Trade and Employment.

Mr Appleby, now director of corporate enforcement, says that when auditors were asked why they had reported that a company, in their view, had not kept proper books of account, they have simply said they were not obliged to elaborate.

This is the sort of surprising - or perhaps not - practice that exists in the world of company law enforcement, but that may now be about to change.

From early next year, auditors who discover suspected breaches of company law will be obliged to contact Mr Appleby's office and answer questions about the reasons for their suspicions. The same will apply to liquidators and professional bodies, such as the accountancy bodies, who might come into the possession of information indicating an offence while conducting internal inquiries. Accountants are about to become whistle-blowers.

"Professionals such as auditors and liquidators are performing a public-interest role and we will be piggy-backing on the work they do," Mr Appleby says.

Overall, the official establishment of the Office of the Director of Corporate Enforcement (ODCE) this week is likely to bring about a sea-change in how business is regulated.

The office will have 30 staff, including solicitors and accountants, and seven seconded garda∅ with experience in the area of fraud investigations. The highest ranking officer will be a detective inspector.

While measures involving the obligations of auditors and liquidators will not become effective until early next year, on Wednesday Mr Appleby's office took over responsibility for investigations under certain clauses of the Companies Acts. From now on, inspectors and authorised officers will be appointed by Mr Appleby's office and not by a government minister. The independence of Mr Appleby's office is one of the points noted by the Tβnaiste, Ms Harney, this week when marking the establishment of the office.

The reports of the High Court inspectors investigating the Ansbacher deposits and National Irish Bank (NIB) will now end up on Mr Appleby's desk rather than that of a government minister. So no matter who replaces Ms Harney in the job of Minister for Enterprise, Trade and Employment, the possibility of a political "cooling" in the pursuit of wrongdoers caught by these inquiries has been eradicated.

The inspectors, in their reports, will outline possible breaches of company law. If these are serious enough, Mr Appleby will ask his garda∅ staff to advise him in a criminal investigation. The garda∅ have the power to arrest and detain people for up to 12 hours.

As the Attorney-General, Mr Michael McDowell, put it a few months ago, the days of company directors telling inquiring officials to talk to their solicitors are about to end.

"It is difficult to know what is going to come out of the Ansbacher report but we expect it to provide us with a lot of work," says Mr Appleby. If the relevant information is provided in the inspector's report, he expects his office to immediately commence criminal investigations.

An interesting aspect of this is that, in the wake of the inspector's reports being published, some highlighted cases will fall for investigation by the ODCE and others for investigation by the Revenue Commissioners. Which body proves more efficient in the pursuit of prosecutions will be watched with interest.

Mr Appleby already has some 100 cases that he brought with him from his old offices in Ms Harney's department. In his former role in the company law section of that department, he was at the heart of what he agrees was an "explosion" of company law activity in recent years.

This explosion occurred in the wake of the McCracken report and RT╔'s revelations about NIB. It was, he says, a very pressurised and exciting time, with investigations straying into new territory by appointing inspectors to banks (NIB, Guinness & Mahon and Irish Intercontinental Bank) and to companies that were not registered here (Ansbacher and Hamilton Ross, both Cayman Islands-registered companies).

He says the publicity created by these cases, and by a reprimand issued by Ms Harney to auditors a few years ago in relation to their reluctance to report instances of suspected breaches of company law, has led to increased numbers of suspected breaches of company law being reported.

"In general that is due to the greater awareness among professionals that these are no longer issues which can be swept under the carpet."

Overall, Mr Appleby believes the level of compliance with company law in a jurisdiction is a factor of the level of enforcement of that law, as against being a "cultural" phenomenon.

He believes that increased compliance is good for business, protecting creditors, reducing business risk and increasing general efficiency.

New powers to be given to the ODCE early next year are specifically designed to tackle the problem of the "phoenix syndrome". The phoenix syndrome is where people run down a company or misappropriate its assets, leaving creditors out of pocket, and then set up a new company to conduct a similar business.

"Work has not been done there and will have to be done now," Mr Appleby says. His new powers will include "very serious sanctions".

Mr Appleby's office will now be able to investigate insolvent companies and, should it be decided that the directors have acted improperly, chase the assets so they can be returned to the company and made available to creditors.

The ODCE will have the right to go to court to seek the seizure of property or to freeze assets taken from companies by unscrupulous directors. If it is suspected that a person is about to flee the State or otherwise evade due payments, the ODCE can seek a warrant for the person's arrest.

It can also seek to have damages assessed against directors believed to have acted improperly.

From next year all liquidators of insolvent companies will have to go to court to seek the restriction or disqualification of the directors unless the ODCE gives an exemption. In this way, the office will be regularly supplied with liquidators' reports, which it will review. This is the first time this type of work has been taken on by the State.

Because company law has not been enforced up to now, it is impossible to predict how busy the new office will be.

Mr Appleby says his £2.9 million (€3.7 million) budget for 2002 will be enough for next year. As the office gets up and running, the level of work needing to be done, and the resources required, will become clearer.