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The Anti‑Bribery and Anti‑Corruption Review Third Edition Editor Mark F Mendelsohn

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The Anti-Bribery and Anti-Corruption Review

The Anti-Bribery and Anti-Corruption Review Reproduced with permission from Law Business Research Ltd. This article was first published in The Anti-Bribery and Anti-Corruption Review Edition 3 (published in November 2014 – editor Mark F Mendelsohn). For further information please email [email protected]

The Anti-Bribery and Anti-Corruption Review Third Edition Editor

Mark F Mendelsohn

Law Business Research Ltd

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ACKNOWLEDGEMENTS

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i

Acknowledgements

PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP STEPTOE & JOHNSON LLP STUDIO LEGALE PISANO YOON & YANG LLC

ii

CONTENTS

Editor’s Preface

��������������������������������������������������������������������������������������������������vii Mark F Mendelsohn

Chapter 1

AUSTRALIA�������������������������������������������������������������������������������1 Robert R Wyld and Jasmine Forde

Chapter 2

BRAZIL������������������������������������������������������������������������������������24 Adriana Dantas and Luiz Eduardo Alcantara

Chapter 3

CANADA���������������������������������������������������������������������������������38 Mark Morrison and Michael Dixon

Chapter 4

CHINA�������������������������������������������������������������������������������������50 Susan Munro

Chapter 5

ENGLAND & WALES������������������������������������������������������������63 Shaul Brazil and John Binns

Chapter 6

FINLAND��������������������������������������������������������������������������������75 Kai Kotiranta

Chapter 7

FRANCE����������������������������������������������������������������������������������87 Kiril Bougartchev, Emmanuel Moyne and Sébastien Muratyan

Chapter 8

GERMANY����������������������������������������������������������������������������102 Thomas Richter

Chapter 9

GREECE��������������������������������������������������������������������������������112 Ilias G Anagnostopoulos and Jerina (Gerasimoula) Zapanti

iii

Contents

Chapter 10

INDIA������������������������������������������������������������������������������������122 Shiraz Rajiv Patodia and Priyanka Sharma Goswami

Chapter 11

ITALY�������������������������������������������������������������������������������������136 Roberto Pisano

Chapter 12

JAPAN������������������������������������������������������������������������������������149 Masato Suzuki, Takashi Domon and Takaki Sato

Chapter 13

KOREA�����������������������������������������������������������������������������������164 In Jong Chang and Kyoung Ho Hong

Chapter 14

MEXICO��������������������������������������������������������������������������������178 Oliver J Armas, Luis Enrique Graham and Thomas N Pieper

Chapter 15

NETHERLANDS������������������������������������������������������������������190 Aldo Verbruggen and Tessa van Roomen

Chapter 16

NORWAY�������������������������������������������������������������������������������204 Tarjei Thorkildsen, Jon Christian Thaulow and Atle J Skaldebø-Rød 

Chapter 17

RUSSIA�����������������������������������������������������������������������������������217 Vladimir Melnikov and Sergei Eremin

Chapter 18

SOUTH AFRICA�������������������������������������������������������������������227 Darryl Bernstein and Nikita Shaw

Chapter 19

SPAIN�������������������������������������������������������������������������������������243 Jesús Santos Alonso, María Massó Moreu and Ana Torres Pérez-Solero

Chapter 20

SWEDEN�������������������������������������������������������������������������������259 Peder Hammarskiöld, Joakim Sundbom and Sandra Hein Kaznova

Chapter 21

SWITZERLAND�������������������������������������������������������������������271 Roman Richers and Martin Karl Weber

iv

Contents

Chapter 22

TURKEY��������������������������������������������������������������������������������281 Orçun Çetinkaya, Filiz Toprak Esin and Bensu Aydın

Chapter 23

UNITED STATES�����������������������������������������������������������������292 Mark F Mendelsohn

Appendix 1

ABOUT THE AUTHORS�����������������������������������������������������317

Appendix 2

CONTRIBUTING LAW FIRMS’ CONTACT DETAILS���333

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EDITOR’S PREFACE

This third edition of The Anti-Bribery and Anti-Corruption Review presents the views and observations of leading anti-corruption practitioners in jurisdictions spanning every region of the globe. The worldwide scope of this volume reflects the reality that anti-corruption enforcement has become an increasingly global endeavour, resulting in a challenging environment for anti-corruption practitioners and the clients they advise. Over the past year, a growing number of countries enacted or amended significant anti-corruption and anti-bribery legislation and, perhaps more importantly, increased their enforcement of those laws. This volume touches upon a wide range of such legislative developments. A few highlights include: Latvia’s May 2014 accession to the Organisation for Economic Co-operation and Development Anti-Bribery Convention, the German Federal Cabinet’s May 2014 resolution to adopt the Act on the Ratification of the UN Convention against Corruption, and the European Parliament’s April 2014 adoption of the Directive on Disclosure of Non-Financial and Diversity Information by Certain Large Companies and Groups, which will require covered companies to disclose information on their policies, risks and results regarding anti-corruption and bribery issues. In the United States, enforcement authorities continue to vigorously enforce the Foreign Corrupt Practices Act (FCPA), with the past year’s cases showing both an increase in the number of charges against individuals and a continued focus on corporate conduct. The investigation and enforcement focus cuts across a  range of industries including: pharmaceutical and medical device companies, the financial, mining and aviation industries, and the energy sector. In January 2014, the Department of Justice (DOJ) and the Securities and Exchange Commission announced settlements with Alcoa Inc and its subsidiary Alcoa World Alumina LLC. These settlements, involving $384 million in criminal fines, administrative forfeitures and disgorgement, constitute the fifth largest FCPA settlement in US history. In September 2014, Marshall L Miller, Principal Deputy Assistant Attorney General for the DOJ Criminal Division, announced his office’s intention to ‘vigorously employ proactive investigative tools that may not have been used frequently enough in white-collar cases in past years: tools like wiretaps, body wires, physical surveillance and border searches’. These investigative tools appear to have

vii

Editor’s Preface been employed during the recent investigations of French citizen Frederic Cilins and a  group of executives at BizJet International, a  US-based subsidiary of the Lufthansa Corporation. Companies and their counsel continue to struggle with the issue of whether or not to self-report potential violations of the FCPA in light of the enforcement climate and concerns regarding the risk/reward calculus. And, as in previous years, we have continued to see the uncovering of bribery in mergers and acquisition diligence as well as an increase in various forms of private litigation related to FCPA investigations. The foreign bribery landscape grows increasingly complicated for multinational companies, as China, the United Kingdom, Norway and Canada, among other countries, have each launched significant investigations and brought a  substantial number of corruption actions in the past year related to international business transactions. The growing number of enforcement actions around the world are supported by a significant trend toward greater international cooperation in anti-corruption enforcement efforts. In a 17 June 2013 keynote address, then DOJ Acting Assistant Attorney General Mythili Raman commented: ‘Through our increased work on prosecutions with our foreign counterparts and our participation in various multilateral fora like the OECD and United Nations, it is safe to say that we are cooperating with foreign law enforcement on foreign bribery cases more closely today than at any time in history.’ I wish to thank all of the contributors for their support in producing this volume. I appreciate that they have taken time from their practices to prepare chapters that will assist practitioners in navigating the complexities of foreign and transnational business. Mark F Mendelsohn Paul, Weiss, Rifkind, Wharton & Garrison LLP Washington, DC November 2014

viii

Chapter 15

NETHERLANDS Aldo Verbruggen and Tessa van Roomen1

I INTRODUCTION The Dutch Criminal Code (DCC) includes several provisions on domestic and foreign bribery. A distinction is made between bribery of public officials and private commercial bribery, depending on the capacity of the person bribed. A further distinction is made between active and passive bribery. Active bribery relates to the briber’s conduct in making a gift or a promise or rendering or offering to render a service. Passive bribery, on the other hand, refers to the recipient (i.e., the person being bribed or allowing himself or herself to be bribed by accepting a gift, promise or service). II

DOMESTIC BRIBERY: LEGAL FRAMEWORK

i

Bribery of public officials

The bribing of a  public official with the aim of inducing him or her to perform a  non‑permitted or unlawful act (Section  177 DCC), and the bribing of a  public official with the aim of inducing him or her to perform a  permitted or lawful act (Section 177a DCC) are both punishable offences. For the recipient to be punishable, the decisive factor is whether the public official knows or should reasonably suspect that the gift has been made to induce him or her to act or refrain from acting in a  given manner, regardless of whether or not he or she acted ‘in breach of his duty’ (Sections 362‑363 DCC). Sections 178 and 364 DCC provide for the penalisation of the bribery of judges, including both national and international judges and arbiters.

1

Aldo Verbruggen is a partner and Tessa van Roomen is a senior associate at Houthoff Buruma.

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Netherlands ii

Definition of a public official

There is no overall definition for the term public official in the DCC. Section 84 DCC explicitly states that public officials include members of general representative bodies, judges and those who belong to the armed services. However, the scope of this term is much broader. The Supreme Court of the Netherlands, the Hoge Raad, defined a public official as ‘an person who, under the supervision and responsibility of the government, has been appointed to a  function which undeniably has a  public character to carry out some of the powers of the Kingdom or its agencies’.2 This definition includes the following three criteria: (1) the function of the official is to a large part influenced by governmental institutions, notably if the official has been appointed under the supervision and responsibility of the government; (2) the function of the official is of a  public nature; and (3) the official’s tasks entail the execution of governmental tasks.3 It is not relevant whether this person is also considered a public official from an employment law perspective.4 It follows from case law that the conditions for being considered a public official should not be set very high. Depending on the circumstances, employees working in privatised organisations that perform a public service will be considered public officials as well. However, persons employed by private companies with commercial objectives, and having the Kingdom of the Netherlands as a (majority) shareholder, are generally not considered to be public officials, because they do not perform any portion of the government’s duties and are not appointed by the Dutch state. iii

Commercial activities

There is no general rule preventing public officials from participating in commercial activities while serving as a public official. However, several laws prescribe that public officials are not allowed to have any ancillary functions the exercise of which is undesirable in view of a proper performance of the public office. Members of representative bodies and judges should list all additional functions in a public record. iv

Gifts and gratuities

In general, providing favours to public officials is not allowed. The Dutch provisions use the terms ‘gift’, ‘promise’ and ‘service’ to describe the advantage that is offered by the briber. This can involve both material and immaterial advantages. Although the favour must have some sort of value for the recipient, this could be of a non-commercial nature and may be of value only to the person who receives it. The law does not provide a distinguishing criterion for unacceptable and acceptable gifts. This implies that customary gifts of little value – for example, representational gifts such as a bottle of wine, a cup of coffee or a cigar – also potentially fall within the scope of the provisions on bribery. Only something that could not possibly have any value at all to anyone and is completely worthless cannot be regarded as a gift.

2 3 4

HR 30 January 1911, W 9149. HR 30 May 1995, NJ 1995, 620, Section 6.2. HR 18 October 1949, NJ 1950, 126.

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Netherlands Business gifts are allowed under certain conditions only. It follows from several administrative regulations and codes of conduct that most public officials may accept up to €50 worth of business gifts. Furthermore, the 2011 Instructions for the Investigation and Prosecution of Corruption of Public Officials in the Netherlands set out several factors to be taken into account when determining the expediency of prosecuting the briber and the bribed person. The precise boundaries are set by the courts in their case law. v

Private commercial bribery

Subsections 1 and 2 of Section  328ter DCC provide for the offences of passive and active bribery of persons that are not public officials: private commercial bribery. This is as opposed to the provisions in which public official bribery is penalised, for Section 328ter DCC to apply it is irrelevant whether or not a private commercial person acts in breach of his or her duty. No distinction is made in respect of sectors of society (profit or non‑profit). Passive private commercial bribery is punishable if the employee or agent, in violation of the requirements of good faith, conceals the advantages offered or gained from his or her employer or principal. However, if the employee or agent gives the employer or principal full disclosure, his or her conduct is not liable to punishment. Active private commercial bribery is punishable if the person making the gift or promise or providing or offering a service can reasonably assume that the employee or agent, in conflict with the requirements of good faith, will conceal the gift or promise from his or her employer or principal. The concealment of the gift, promise or service constitutes the central element of the offence. The Parliamentary Commission that drafted the provision argued that it is the concealment that violates the integrity of labour relations. Because of that, this provision does not require that the recipient acts ‘in breach of his duties’, but only that the gift, promise or service is rewarded for acts or omissions in relation to the recipient’s occupational capacity. In a  sense, the concealment of the gift could be regarded as a breach of an employee’s or agent’s general duty of transparency towards its employer or principal. The additional requirement that the employee or agent must have concealed the gift (promise, etc.) in violation of the requirements of good faith stresses this argument. vi

Legal entities

Dutch criminal law provides that it is possible to prosecute legal entities for every kind of criminal offence. The Dutch Supreme Court has held that whether or not a  legal person is criminally liable for an offence has to be assessed with regard to the special circumstances of the case, as determined by the court. Whether or not criminal liability can be attributed to a corporation depends upon the question of whether the offence can ‘reasonably’ be imputed to the legal entity. This may be the case if the (illegal) conduct took place within the ‘sphere’ (scope) of the legal entity.5 Such conduct can be considered to have taken place in the sphere of the legal entity in one or more of the following circumstances: (1) the act was committed by someone who is employed by or works for

5

HR 21 October 2003, NJ 2006, 328 (Drijfmest/Zijpe).

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Netherlands the legal entity; (2) the act was part of the normal business activities of the legal entity; (3) the legal entity benefited from the act; and (4) the legal person had the power to decide whether or not the conduct took place and accepted such or similar behaviour. If the offence can be imputed to a legal entity, the persons within that entity who ‘directed’ or ‘ordered’ the prohibited conduct may be held criminally liable as well. There must be a certain level of knowledge and responsibility to act as well as an awareness of such conduct taking place or an appreciation that such conduct would occur without taking appropriate measures to prevent such an occurrence. vii

Third parties and intermediaries

If bribes to public officials are paid through third parties or intermediaries, the latter may be guilty of either participation or complicity. Participation applies when two or more persons jointly commit an offence and where a close and intentional collaboration is presumed. Complicity requires that a person provides assistance before or during the commission of a serious offence, which is actually committed by another person. Participation and complicity cannot be punished unless intent has been proved. Conditional intent (dolus eventualis) suffices as well. This is the case when someone deliberately accepts the considerable possibility of bribery of public officials taking place. Anyone who fails to supervise or monitor the activities of a third party engaged to perform certain duties may, under certain circumstances, be considered an accomplice if the prosecution succeeds in proving that this person deliberately accepted the considerable possibility that the third party would commit the offence in the exercise of these duties. viii

Political contributions

On 1 May 2013, the new Political Parties Financing Act entered into force. Prior to 1 July of each calendar year, a political party shall disclose to the Minister of the Interior and Kingdom Relations a  summary of contributions of €4,500 or more per donor received by the party in that calendar year. If a political party receives an anonymous contribution exceeding €1,000, the portion exceeding this amount shall be transferred to the Minister’s account designated for such a purpose. The punishment for any breach of these obligations is a maximum administrative fine of €25,000. ix

Defences and leniency

For legal entities, the appropriate course for defending bribery acts committed by its employees will usually be to contest the reasonableness of attributing the offence to the relevant legal entity. In principle, this means that a company could escape liability if it has established effective internal controls, ethics and compliance rules and if it did everything in its power to prevent the act. The existence of adequate supervision and control measures is often important to determine whether the offence was part of the normal business activities of the legal person and whether the corporation accepted the commission of the offence. Whether a  corporation has taken adequate due care will be assessed against statutory obligations, requirements emanating from contractual obligations, customary professional standards and other self-regulatory measures. Case

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Netherlands law seems to be quite strict in this respect: in many cases, measures have been considered to be inadequate to prevent criminal liability.6 Dutch law does not permit authorities to provide leniency to self-reporting offenders. However, cooperation with the authorities, self-reporting of incidents and taking adequate measures to prevent wrongdoing generally will be taken into account by the authorities and courts in deciding how to prosecute and penalise such offenders. x Penalties The punishment for bribing a public official to induce him or her to act in breach of his or her duty (Section  177 DCC), is a  maximum prison sentence of four years or a maximum fine of €81,000 for private persons and €810,000 for corporations. Where the bribed official does not act contrary to his or her duties, the maximum term of imprisonment is two years and the same maximum fine. The punishment for a  public official who receives or accepts a  bribe in breach of his or her duty (Section 363 DCC) is a maximum prison sentence of four years or a maximum fine of €81,000. If the public official has a specific authority by virtue of his or her office (e.g., a government minister or a secretary of state), the punishment for the offence is a maximum prison sentence of six years. A public official who receives or accepts a bribe to induce him or her to act in a manner not in breach of his duty (Section 362 DCC) is punishable by a maximum prison sentence of two years or a maximum fine of €81,000. If the public official concerned has the above-mentioned specific office, the prison sentence is four years at the most. The punishment for active and passive private commercial bribery is a maximum prison sentence of two years or a  maximum fine of €81,000 for private persons and €810,000 for corporations. III

DOMESTIC BRIBERY: ENFORCEMENT

The National Police Internal Investigations Department – which is independent from all other investigation authorities – is charged with investigating instances of public official bribery involving high-ranking officials, judges and politicians. In other public bribery cases, the regular police forces may be charged with the investigation as well. The Public Prosecution Office in Rotterdam has appointed a special prosecutor in charge of coordinating bribery cases, the National Public Prosecutor on Corruption. This prosecutor has specialist expertise in investigating and prosecuting bribery cases. If and whenever necessary, he or she will head criminal investigations into suspicions of bribery. Local public prosecutors are authorised to prosecute cases of bribery committed within

6

See TR van Roomen et al, ‘Corporate Criminal Liability for Corruption Offences and the Due Diligence Defence: A Comparison of the Dutch and English Legal Frameworks’, Utrecht Law Review, Volume 10, Issue 3, June 2014 (https://www.utrechtlawreview.org/index.php/ ulr/article/view/283).

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Netherlands the boundaries of their own districts, but they may ask the National Public Prosecutor on Corruption for assistance. After the completion of the police investigation or the judicial investigation, the prosecutor must decide on whether to drop the case, to reach a settlement in the case or to issue a writ of summons against the offender. Where appropriate the prosecutor may also decide to conditionally suspend prosecution. It is entirely at the public prosecutor’s discretion whether a case is brought before the court or is dropped – for lack of evidence, for example – or to settle the matter out of court. Injured parties may, however, object against the public prosecutor’s decision not to prosecute a  suspect by submitting a complaint to the court of appeal. As bribery is a criminal offence, it is considered an unlawful act under civil law. It is therefore possible for persons to file a lawsuit to obtain full compensation for damage they may have suffered as a result of bribery. For example, if a company is not awarded a contract in a tender procedure because one of the other competing companies paid bribes, it may have a cause of action against the party who paid the bribe. There have been several prosecutions for domestic corruption offences, although the number of cases brought to trial is limited. Two well-known corruption cases – both still before the court – are the Rotterdam Port scandal and a  large real estate fraud (Klimop). In the Rotterdam Port scandal, a former director of the Rotterdam Port Authority was sentenced, in the first instance, to a  suspended eight-month prison sentence on account of a variety of charges, including bribery.7 The court considered it proved that the former director had accepted gifts in exchange for favourable treatment. The alleged briber, a businessman, was sentenced to 30 months’ imprisonment. Both parties filed an appeal against the court’s judgment. Klimop is the largest real estate fraud case ever to have been tried in the Netherlands, and seven major real estate projects were involved in the investigation. In January 2012 the Haarlem District Court ruled that in these projects, employees of a pension fund and a real estate developer had been bribed. The main suspect was given a four-year prison sentence for being found guilty of, among other matters, leading a criminal organisation, workplace embezzlement, forgery, money laundering and bribery. Seven co-suspects were given prison sentences varying from one to four years. The remaining suspects were sentenced to community service, with terms varying from 40 to 240 hours. The private companies involved in the offences were sentenced to pay fines.8 About €12 million in fines and confiscation of €15 million were imposed on Dutch companies involved in this case. Moreover, €135 million had to be paid to fraud victims. Both the public prosecutor and the convicted persons and entities filed appeals against the verdicts. Although prosecution of public official and private commercial bribery does not occur very often, media coverage and press releases published by the Public Prosecution Office have shown that there is an increasing focus on investigating instances of alleged bribery in the semi-public sector, such as housing

7 8

District Court Rotterdam 15 October 2010, LJN BO0530. See for example, District Court Haarlem 27 January 2012, LJN BV2194 (main suspect).

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Netherlands corporations and educational institutions. Also, in the past few years a  few more serious corruption allegations involving local politicians have been investigated. IV

FOREIGN BRIBERY: LEGAL FRAMEWORK

Partly in response to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the Dutch legislator has introduced Section 178a into the DCC. This article provides that persons in the public service of a foreign state or of an organisation of international law (e.g., the United Nations) are considered public officials, as included in Section 177 and 363 DCC. It follows from this that foreign and domestic officials are treated equally and the same offences apply to both kinds of officials. There is neither a definition for the term ‘foreign public official’ nor any case law defining which criteria are applicable. However, based on the legislative history one may assume that the same criteria for domestic officials will apply to foreign officials. The rules governing jurisdiction of the DCC provide that the (legal) persons that can be prosecuted in the Netherlands are: a any person who bribes a  public official (foreign or domestic) from within the Netherlands; b a Dutch public official (not necessarily having Dutch nationality) or Dutch national bribed abroad; c any person bribed abroad who is in the public service of an international organisation having its seat in the Netherlands; d a Dutch citizen who bribed a public official – foreign or otherwise – abroad; and e a Dutch public official or the person in the public service of an international organisation having its seat in the Netherlands and who committed the offence of bribery abroad. The foreign public official bribed abroad by a Dutch citizen cannot be prosecuted in the Netherlands unless that public official is in the service of an international organisation having its seat in the Netherlands or (part of ) the act of bribery has been committed within the territory of the Netherlands. i

Gifts and facilitation payments

Dutch Statute does not provide criteria to distinguish between payments to foreign officials that are punishable and those that are not. Making facilitation payments is an offence under Dutch criminal law, since such payments are covered by the above definitions of public and private commercial bribery in the Netherlands. According to the Instructions for the Investigation and Prosecution of Public Officials Abroad of 2012, however, in most circumstances prosecutions for such payments made abroad are unlikely. Some of the factors listed as tending against prosecution are: a the public official concerned was required by law to do or not do something (whichever the payment intended to achieve); b the amounts involved were small – either in absolute or in relative terms; c the payments were made to lower-tier public officials;

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Netherlands d e

the gift was shown in the records of the business in a transparent, non-secretive manner; and the initiative for the gift was taken by the foreign public official.

ii Penalties The penalties for foreign bribery are the same as mentioned above for domestic bribery cases. V

ASSOCIATED OFFENCES: FINANCIAL RECORD KEEPING AND MONEY LAUNDERING

i

Record keeping: forgery and reporting obligations

The Dutch Civil Code includes several record-keeping obligations. However, in these rules no specific reference is made to the obligation to record the payment of bribes. When public prosecutors are presented with public official or private commercial bribery, they seldom use provisions on financial record keeping. However, it is an inherent possibility in bribery cases that there has also been a violation of these provisions. If bribes paid by a company are covered up by false descriptions on the invoices and in the corporate books, the company may be prosecuted for the possession or the drafting of false documents within the meaning of Section 225 DCC. The prohibition on forgery is not an ‘accounting rule’ in the strict sense of the word, but forgery may obviously be an accessory to concealing bribery. If the bribes are very substantial compared with the overall costs and revenue of the company, this could also constitute the offence of publicising false annual accounts (Section 336 DCC). The punishment for forgery is a  maximum prison sentence of six years, or a maximum fine of €81,000 for private persons and €810,000 for legal entities. The Dutch Money Laundering and Terrorist Financing (Prevention) Act (WWFT) requires that auditors, as well as credit, financial, investment and other institutions, inform the Financial Intelligence Unit of intended or completed unusual transactions. Unusual transactions are defined as transactions that may give rise to a  suspicion of a  connection with money laundering or terrorism financing. Money laundering includes, among other matters, the possession or the transfer of money originating from a criminal offence. As bribery is a criminal offence, the payment of a bribe may qualify as an unusual transaction. The violation of specific provisions from the WWFT is considered a  serious offence if the violation was committed with intent. Without intent it constitutes a lesser offence. The punishment for serious offences under the WWFT is a prison sentence of not more than six years or a maximum fine of €81,000 (or €810,000 for legal entities). The punishment for lesser offences under the WWFT is a prison sentence of not more than one year or a maximum fine of €20,250 (or €810,000 for legal entities). ii

Tax law

On 1 August 2006 the Dutch Income Tax Act was amended to exclude bribes as a tax deduction. This provision was incorporated accordingly into the Dutch Corporation Tax Act 1969.

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Netherlands When a  company includes a  bribe in its financial records, the bribe becomes visible to the tax authorities, whose duty it is to report bribes paid to public officials to the enforcement authorities. For the bribed persons, the received advantages will usually be considered additional income connected to his or her employment as defined in the Dutch Income Tax Act. Excluding such income in the annual tax return constitutes a separate (tax) offence. iii

Money laundering

Pursuant to Section 420bis DCC, intentional money laundering is an offence, provided that at the time the offence is committed the suspect was aware of the fact that the object he or she possesses, disguises or conceals had been acquired by means of a criminal offence. Only conditional intent has to be proved, (i.e., intentionally exposing oneself to the considerable likelihood that the object was acquired by means of a criminal offence). The knowledge of the suspect may be inferred from objective circumstances. Habitual money laundering is when intentional money laundering is committed repeatedly, an offence punishable under Section 420ter DCC. Pursuant to Section  420quater DCC, the act of negligent money laundering is also an offence. The prosecution must prove that the suspect could have reasonable suspicions of the object concerned having been acquired by means of a criminal offence. The offence of money laundering pertains to all assets that are the proceeds of any criminal act. The onus is on the public prosecutor to prove that the proceeds were acquired by means of a criminal activity. No proof is needed for the specific predicate offence itself and for the exact origin of the laundered proceeds. Bribes are funds acquired by means of the offence of bribery. The person accepting the bribes could therefore also be guilty of money laundering. In accordance with recent case law, it may be required that in such a case an additional element has to be proven. To be punishable for money laundering, for example, the one receiving the bribe must also have concealed the source of the money. The punishment for intentional money laundering is a  prison sentence of not more than four years or a maximum fine of €81,000 for natural persons and €810,000 for legal entities. The punishment for habitual money laundering is a prison sentence of not more than six years and a maximum fine of €81,000 for natural persons or €810,000 for legal entities. When someone is found guilty of negligent money laundering, he or she is liable to a prison sentence of not more than one year or a maximum fine of €81,000 (€810,000 for legal entities). VI

FOREIGN BRIBERY: ENFORCEMENT

To date no cases of foreign bribery have been tried in the Netherlands. A number of out-of-court settlements were reached in 2008, within the context of the Oil-for-Food investigations.9 In the past few years, however, the Dutch media and the Public Prosecution Office reported about ongoing investigations into suspected foreign corruption offences

9

Press release Public Prosecution Service, 15 July 2008, see www.om.nl.

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Netherlands committed by Dutch-based multinational companies. A number of these investigations are the result of voluntary disclosure of internal investigations to the Dutch authorities or cooperation with the US authorities. A recent example of a  foreign bribery case in the Netherlands is the Ballast Nedam case. The prosecution was initiated by an internal investigation by Ballast Nedam itself. The prosecutor alleged that Dutch-based construction and engineering company Ballast  Nedam bribed foreign intermediaries between 1996 and 2004. This case concluded with a €5 million transaction in December 2012. Also, the company agreed with the fiscal authorities to surrender a €12.5 million tax reduction. The investigation into several former managers of Ballast Nedam suspected of having personally gained from the payment of foreign agents is still continuing. In addition, the Dutch Public Prosecution Service investigated KPMG and three former KPMG auditors (partners) for their alleged involvement in concealing payments made by Ballast Nedam. In December 2013, KPMG reached a settlement of €7 million for its role in the audits. The investigation into three suspects, former auditors, will continue. On 5 April 2013, the Securities and Exchange Commission (SEC) imposed a cease-and-desist order against the Dutch electronics firm Koninklijke Philips Electronics NV (Philips). The SEC documents list at least 30 instances of Philips employees in Poland bribing hospital personnel to ensure the sale of Philips Healthcare medical equipment. Philips has been ordered to pay $4.5 million in disgorgement to the US Treasury. Contrary to the American position, the Public Prosecution Office decided in September 2010 that Philips would not be prosecuted in the Netherlands. According to the Dutch authorities, the reason for this decision is that the role of the Dutch part of the company was ‘very very small’, the Dutch investigation had not led to any criminal suspicion regarding the Dutch part of the company, no Dutch nationals were involved and the company’s board of directors had taken measures to prevent the acts that had occurred in the foreign company. VII

INTERNATIONAL ORGANISATIONS AND AGREEMENTS

The Netherlands is a party to:10 a the Convention drawn up on the basis of article K.3(2)(c) of the Treaty on European Union on the Fight against Corruption involving Officials of the European Communities or Officials of Member States of the European Union (Brussels, 26 May 1997); b the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Paris, 17 December 1997); c the Statute of the Group of States against Corruption (GRECO) (Strasbourg, 5 May 1998); d the Criminal Law Convention on Corruption (Strasbourg, 27 January 1999) and its additional protocol (Strasbourg, 15 May 2003);

10

www.minbuza.nl/en/key-topics/treaties/search-the-treaty-database (corruption).

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Netherlands e f

the Civil Law Convention on Corruption (Strasbourg, 4 November 1999); and the United Nations Convention against Corruption (New York, 31 October 2003).

The instruments of the OECD, the UN and the EU are of particular interest. For each instrument an organisation has been created, responsible for monitoring the implementation and enforcement of the anti-corruption instrument. Below, we will shortly address three recent reports of these organisations regarding the Netherlands. In December 2012, the OECD Working Group on Bribery concluded that the Netherlands fails to vigorously pursue foreign bribery allegations and must do more to enforce its foreign bribery laws. The OECD Working Group recommended that the Netherlands should proactively investigate foreign bribery cases concerning Dutch individuals or companies, including where other jurisdictions may be involved, and should provide adequate resources to Dutch law enforcement authorities to more effectively investigate and prosecute foreign bribery.11 In its EU Anti-Corruption Report, dated February 2014, the European Commission stated that while there is no dedicated agency for the fight against and prevention of corruption, anti-corruption and integrity policies are central to the Dutch public administration both at national and local level. The European Commission concluded that there are two points that require further attention. Firstly, the Netherlands should extend the rules on the assets and interests of elected officials and members of government, and ensure an effective and transparent verification system and develop a  framework for post-employment conflicts of interest. Secondly, the Netherlands should focus efforts on prosecuting both natural and legal persons for corruption in international business transactions, also by increasing capacity to investigate and prosecute foreign bribery in a more proactive manner. Furthermore, the Dutch should considering broadening the range of sanctions and raising the level of fines applicable to legal persons.12 In May 2014, the Implementation Review Group of the United Nations Convention against Corruption published its review of the Netherlands. The Implementation Review Group praised the Netherlands for its involvement of a large number of law enforcement agencies in investigations of money-laundering and the relatively high number of prosecutions and convictions for money laundering, the existence of courts and judicial authorities specialised in fraud and financial crime, and the possibility of pre-trial voluntary asset forfeiture. However, the Implementation Review Group also formulated several ‘challenges in implementation’, such as finalising the process of enacting the bill that increases the maximum sanctions for bribery and makes the fines against legal persons

11 12

OECD Working Group on Bribery, www.oecd.org/daf/anti-bribery/ Netherlandsphase3reportEN.pdf, December 2012. European Commission, http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organizedcrime-and-human-trafficking/corruption/anti-corruption-report/docs/2014_acr_netherlands_ chapter_en.pdf, 3 February 2014.

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Netherlands more flexible, completing the process of enacting new legislation in the field of reporting persons, and reconsidering the establishment of the offence of trading in influence.13 VIII LEGISLATIVE DEVELOPMENTS In 2012, the Dutch government launched a bill to reform financial and economic crime legislation.14 The aim of the bill is to improve the effectiveness of means of dealing with financial and economic criminality. The bill is currently under review in the Senate. The new legislation is expected to enter into force by the end of 2014. In this bill the distinction between bribery of public officials inducing legitimate acts (Section 177a DCC) and inducing unlawful acts (Section 177 DCC) is abolished entirely. According to the Minister, courts increasingly disregard the importance of this distinction. Such a  distinction would, however, return to the statute books where private commercial bribery is concerned. The Minister’s proposal is the replacement of the current key element ‘concealing the gift from the employer in violation of the requirements of good faith’ by a new element: ‘in breach of their duties’. In the proposed description of the offence, the central question is whether the gift offered or received relates to behaviour by the employee undertaken in contravention of that employee’s duties. According to the Minister of Security and Justice, it is no longer exclusively a question of the (internal) relationship between the (bribed) employee and his or her employer, but (also) the interests of the consumer, the economic sector and society as a whole in the honest provision of services by the private sector. In addition to concealing the receipt of gifts from his or her employer, there can also be other forms of dereliction of duty, such as acting in contravention of obligations arising from the employment relationship or applicable rules of professional conduct. By way of (self-evident) examples, the legislator referred to valuers who are bribed to provide an inaccurate valuation of a  real estate property, accountants who allow themselves to be lavishly entertained so as to overlook obvious irregularities in their examination of the accounts, lawyers who allow themselves to be paid for predating official documents or medical specialists who accept money in return for prescribing specific medicines. In the bill, the maximum penalty to be imposed on public officials receiving favours in the performance of their duties is a  six-year prison sentence. The penalties for private commercial bribery will be increased from two to four years’ imprisonment, while the maximum fines remain the same.

13 14

CAC Implementation Review Group, www.unodc.org/documents/treaties/UNCAC/ WorkingGroups/ImplementationReviewGroup/2-6June2014/V1403524e.pdf, 28 May 2014. Amendment of the Dutch Criminal Code, the Dutch Code of Criminal Procedure and the Dutch Economic Offences Act with a view to increasing the possibilities of investigation, prosecution, as well as the prevention of financial and economic crimes (increasing the possibilities of combating financial and economic crimes). See www.government.nl/ documents-and-publications/press-releases/2012/05/15/opstelten-white-collar-criminals-willreceive-a-stiff-bill.html.

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Netherlands

a

b

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The bill also includes the following important changes: with regard to money laundering, the bill increases the maximum prison sentences to six years for intentional money laundering, eight years for habitual money laundering and two years for the offence of negligent money laundering. When someone is found guilty of money laundering in the exercise of their profession, moreover, they should be liable to an eight-year prison sentence; and the fines for companies guilty of financial and economic offences are increased. Under the new bill the courts may impose maximum fines of up to 10 per cent of a company’s annual turnover instead of the current amount of €810,000. OTHER LAWS AFFECTING THE RESPONSE TO CORRUPTION

i Whistle-blowing Dutch law provides for only a  limited number of statutory policies with regard to whistle‑blowing. In the public sector whistle-blowers’ policies are included in the Reporting Suspected Abuse within Central Government or Police Organizations Decree and in the public official regulations for defence staff and for staff of provincial authorities. The only policy on whistle-blowing for the private sector is in the Dutch Corporate Governance Code, applicable to listed companies. Transparency International and the National Ombudsman have repeatedly expressed that there is a lack of adequate protection to whistle-blowers in current Dutch law. This criticism was responded to by the launch of an independent body, the Whistleblowers’ Advisory Centre, on 1 October 2012.15 The aim of this centre is to inform and advise whistle-blowers in the private and public sectors, but critics still argue that the centre merely refers them to other agencies instead of properly investigating the whistle‑blowers’ disclosures. Another body, the Committee on Integrity in the Civil Service, conducts its own investigations.16 At the request of the whistle-blower, the Committee investigates a suspicion of abuse by the public authorities and the police. On 1 October 2012, the Committee was relaunched as the Government Integrity Board.17 Recently, a legislative proposal was introduced for setting up a Whistle-blowers’ Centre.18 The Centre would be authorised to investigate abuse in both the public and private sectors and would fall under the office of the National Ombudsman. It is not clear yet whether and, if so, when this bill will be enacted into law. X COMPLIANCE When a company is suspected of bribery, it may argue in a specific case that the company exercised due care to prevent the bribery by, for example, providing for adequate procedures or other measures to prevent bribery offences. If accepted, such a  defence

15 16 17 18

See www.adviespuntklokkenluiders.nl. See www.commissieintegriteitoverheid.nl. See www.onderzoeksraadintegriteitoverheid.nl/home. Parliamentary Papers II 2011-12, 33258, no. 2 (legislative proposal).

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Netherlands will not automatically prevent criminal liability. Should the company still be held liable, however, such a defence will have a mitigating impact on the penalty and, if accepted, will also negate the liability of directors. In October 2012 a  brochure called ‘Honest business without corruption’ was published by the Dutch central government.19 This brochure provides companies with guidelines for doing business abroad, it gives an explanation of what bribery is, it offers practical advice to prevent corruption and it also provides brief guidelines on how to draw up an integrity programme and a code of conduct. In February 2014, De Nederlandsche Bank NV (DNB) published good practices to help banks and insurers fight corruption in the form of bribery or conflicts of interest.20 These good practices reflect the outcome of an  examination performed by DNB, which showed that these sectors can do more to identify and effectively tackle corruption risks. DNB also states that incidents revealing inadequate integrity and putting public confidence in the financial sector to the test still occur with some regularity in the Netherlands. According to DNB, it is therefore essential for Dutch financial undertakings to take measures to prevent such incidents from arising. To support banks and insurers in their efforts to combat corruption, DNB has identified good practices for fighting corruption. In general, multinational companies tend to implement anti-bribery compliance systems based on rules and guidance relating to the US Foreign Corrupt Practices Act and the UK Bribery Act 2011. XI

OUTLOOK AND CONCLUSIONS

It seems that in the past years an increased number of bribery cases have been investigated in the Netherlands. Press releases from the Public Prosecution Office show an increasing focus on investigating instances of alleged bribery in the Netherlands in the real estate, housing association and pension sectors. The Public Prosecution Service, however, does not appear to be willing and able to take up substantive cross-border cases yet. This is likely to be the next development.

19 20

See www.rijksoverheid.nl/documenten-en-publicaties/brochures/2012/10/02/eerlijkzakendoen-zonder-corruptie.html. See www.dnb.nl/en/news/news-and-archive/dnbulletin-2014/dnb308952.jsp.

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Appendix 1

ABOUT THE AUTHORS

ALDO VERBRUGGEN Houthoff Buruma Aldo Verbruggen specialises in financial and economic criminal law, as well as environmental criminal law. Aldo has a wealth of experience in handling high-profile cases in complicated international contexts, also based on an impressive career with the Public Prosecution Service. He is considered an opinion leader in the field of anti‑corruption and bribery law. Aldo has been a successful defence counsel in several high-profile and complex fraud and environmental cases (e.g., as a lead counsel to Trafigura in the Probo Koala case). Recognised for smart out-of-court settlements, Aldo is often consulted by professional and governmental organisations on compliance issues in general, including health and safety issues. The majority of his clients are (international) companies and their management. When a trial cannot be avoided, he has a considerable reputation as an effective courtroom operator. Aldo is a  frequent keynote speaker at (international) congresses and lectures on a  freelance basis for several universities and institutes, including the Training and Study Centre for the Judiciary (Stichting Studiecentrum Rechtspleging (SSR)). Aldo is a member of the editorial board of the Dutch legal journal on financial and economic criminal law, Tijdschrift voor Bijzonder Strafrecht, and one of the authors of the explanatory notes on individual sections of the Dutch Criminal Code. Aldo acts as a chairman for two NGOs, Friends for Life and Amade Mondiale. TESSA VAN ROOMEN Houthoff Buruma Tessa van Roomen participated in the two-year Prestige Master Legal Research master’s programme at Utrecht University, focusing on criminal law. After graduating from law

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About the Authors school with a  first-class honours degree, she started her career as a  criminal defence lawyer in 2008. In May 2014, Tessa joined Houthoff Buruma. Tessa specialises in corporate criminal law and penal administrative law. She assists individuals and – the management of – corporates suspected of, or confronted with, fraud, corruption, money laundering and trade sanctions. Besides being a litigator, Tessa also advises clients on compliance and regulatory issues. Tessa is a member of several professional associations specialising in criminal and financial law, including the Dutch Association of Defence Counsel (NVSA) and the Dutch Financial Law Association (VVFR). Tessa regularly publishes and lectures on her areas of expertise.

HOUTHOFF BURUMA Gustav Mahlerplein 50 1082 MA Amsterdam Netherlands Tel: +31 20 605 6374 Fax: +31 20 605 6704 [email protected] [email protected] www.houthoff.com

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