Senators passed three bills to crack down on employers who fail to pay taxes and pension contributions yesterday.

Junior Finance Minister Kim Wilson told the Senate there was $27 million in outstanding taxes despite government units set up to recover the cash.

She said the Bermuda legislation followed Canadian and Jamaican laws where making directors and officers responsible for unpaid taxes had yielded millions.

She said: “As at July 2006, 66 directors and responsible officers faced prosecution by Jamaica’s Inland Revenue Department.

“Court action against these directors and their companies resulted in approximately $53 million (Jamaican) being paid.”

Also passed was the The Contributory Pensions Amendment Act 2006 which will allow action to be taken against directors and officers of ailing companies who use contributions to prop up their business rather than pay it into the Contributory Pension Fund.

More than 8,000 seniors currently receive a state pension, with 72 percent of those getting the basic amount of just over $826 a month. The maximum amount payable is about $1,075.

But for cheating employers many more seniors would be getting the maximum pension because all of their contributions would have been paid into the Fund said Sen. Wilson.

Some employers were liquidating their failing companies and walking away from their responsibility to employees in the form of unpaid pension contributions, she said.

As of July 31 last year there was more than $2.3 million of delinquent debt attributable to employers who owed more than $40,000 to the Contributory Pension Fund and whose debt was more than 90 days old. She said another $2.2 million was owed by employers whose businesses had gone into receivership.

However the clause making the legislation retroactive for up to 20 years, meaning it can apply to those who had ceased to be directors or officers raised concern for Opposition Senator Bob Richards who said the western world relied on the principle of limited liability within companies.

Changing that would attack one of the fundamental axioms of private enterprise and make people would think very hard about serving on boards he said.

While applauding Government’s efforts to fix the problem he said: “The medicine is worse than the disease.”

Suddenly directors could be held to account for not grilling managers over details of who was paid what said Sen. Richards who said even strict post-Enron legislation in the US had not gone that far.

He said not enough consultation had been done on the act.

If an employer spent money which was supposed to have gone into a pension plan then it was outright theft argued Sen. Richards who added: “That is a criminal act. We don’t need to have this kind of civil remedy. We have laws to deal with that.”

By making the laws retroactive Government was laying itself open to being successfully sued said Sen. Richards.

However the Bills had a robust defence from the Government side with Attorney General Phil Perinchief who said: “Government will not shirk from court challenges. “Those who want to craft their writs and draft their suits - we will meet them wherever we have to.”

He said whether directors knew there was wrongdoing or not they ought to have known.

And Public Safety and Housing Minister David Burch said he didn’t understand the quibbling. “What we are talking about here are criminals and the fact they might be prosecuted a little late seems to be a concern.”

Government’s concern was for those who had the money stole from them said Sen. Burch.

Senate president Alf Oughton said he thought most non-payers were in small firms unlikely to be under the scrutiny of boards and he backed the bill.

The third bill passed in the series was the National Pension Scheme (Occupational Pensions) Amendment Act which brought similar protection for those who have had money not paid as required under occupational pensions legislation.