“The collapse of the domestic banking sector in Ireland has created the greatest challenge to the State since it was founded in 1922.” The Irish parliamentary Committee of Public Accounts did not mince its words when it published its Report on the crisis in the domestic banking sector in July.

The ‘unprecedented’ direct cost to the State – through the recapitalisation of the banks – is now estimated to be €64.1 billion, the equivalent to 41% of GDP in 2011. In other words, approximately seven times what the State spends annually on education; over four times what it spends annually on health and almost twice the State‘s total tax revenue.

An IMF Working Paper last June was just as blunt. “Ireland holds the undesirable position’ it said, as having ‘the costliest banking crisis in advanced economies since at least the Great Depression.'

My book, Political Corruption in Ireland 1922-2010, A Crooked Harp? makes the argument that the extraordinary depth of Ireland’s economic collapse was partially due to undue influence in policy making.

Key political decisions on property tax reliefs and incentives schemes for property developers, which ultimately inflated the price of land and overheated the market, were executed within a closed system, allowing regulatory capture to occur. Ireland had the highest per capita building rate in Europe in 2005 and by 2007, Ireland, along with Spain, was producing more than twice as many units per head of population than elsewhere on the continent.

Over a third of the disclosed donations to Fianna Fáil, the main party of government from 1997-2007, originated from the construction and property related sectors who directly benefited from these tax incentives. The decision makers who failed to counteract the property-market bubble were dependent on these same vested interests for their political funding.

The upshot of the Ireland’s property crash was the subsequent intervention by the troika of the International Monetary Fund, the European Central Bank and the European Commission in 2010 and the loss of Irish economic sovereignty. It is in this context that the Criminal Justice (Corruption) Bill 2012 is revolutionary.

Under this statute, the Minister for Justice and Equality will consolidate a raft of legislation dating back to the Prevention of Corruption Act 1889. It will also meet the obligations of the United Nations Convention against Corruption in 2011, which Ireland finally ratified in late 2011. The proposed legislation incorporates measures recommended by the Mahon corruption tribunal report.

The Corruption Bill introduces new concepts which capture broader definitions of corrupt activity. The concepts and penalties are innovative and fly very close to the wind in terms of the presumptions of innocence and the right to privacy of an individual's financial affairs. It will make it easier to prosecute corruption and provides new tools in the armoury of the judiciary, prosecutors and police.

The offence of ‘Active and Passive Trading in Influence’ is one of the most radical measures. The direct or indirect inducement by means of corruptly offering, giving, attempting or agreeing to give any gift, consideration or advantage, in order ‘to exert an improper influence over the acts or omissions of an Irish public official’, is deemed an offence.

The 'Presumption of Corrupt Enrichment' shifts the onus of proof to the individual under suspicion. If an Irish public official has a standard of living above their official income then it is presumed that it comes from corruption.

This clause comes too late for Charles J Haughey, a Prime Minister for seven years in the 1980s and 1990s and subsequently found corrupt by an official inquiry. The controversial politician had  dismissed his unexplained wealth, which included an island, a 60 foot steel-hulled yacht and a 270-acre estate as “jealousy” of political opponents.

The offences of “Active and Passive Corruption” and “Making Reckless Payments” recognize that impropriety is as much implicit as it is explicit. For instance, if a businessman ‘gives, attempts or agrees to give any gift, consideration or advantage’ to a politician for the purpose of inducing or rewarding her for a decision or omission they made, then that is deemed corrupt.

An implicit threat or intimidation of a public official is to be an offence as is the employing an intermediary to bribe or corrupt a public official. Disclosure by a public official of confidential information for gain is outlawed, for example, tipping off to facilitate insider dealing.

The onus of responsibility is shifted to business under Head 13 of the Bill, “Offences by Bodies Corporate and Unincorporated Bodies.”

The new law provides that corrupt practices by ‘a director, manager, secretary, officer, employee, subsidiary or agent of a body corporate’ are to be automatically imputed to the company. Businesses are accountable for the sins of their employees and must “take all reasonable steps” and “exercise all due diligence” to avoid criminal liability.

Punishments have been strengthen so that unlimited fines now apply for all offences. If a public officeholder is found guilty of an offence, a court can order the forfeiture of her public office for up to ten years. This also applies to elected office. The sovereignty of the people is deemed to be overruled when the public trust has been broken and a politician removed from office is constitutionally barred from running in an election for a decade.

The last of Ireland’s three corruption inquiries finally reported in 2011. Established in 1997, these inquires into political donation scandals, local government graft and unorthodox procurement decisions, found that misuse of power had occurred due to trading in influence and not just explicit corruption.

The proposed new law signals an intent by government and the wider political class that past “political culture” and influence by vested interests is no longer acceptable. This Bill is part of a quartet of laws to update the Irish ethical framework, the others being proposals on whistle-blowing, lobbying regulation and political donations.

An ethical revolution.