‘Was there a dual role?’ Assessment of De Brauw reports about irregularities at the Dutch railways concerning the public tendering procedure in the Province of Limburg

Professor A.F.M. Brenninkmeijer Utrecht, 28 October 2015

Was there a dual role?

Summary On 28 April 2015 the preliminary investigation report by the law firm De Brauw Blackstone Westbroek (De Brauw) into the irregularities at the Dutch Railways (NS) in the public tendering procedure for public transport in Limburg was published. The preliminary report was followed by a ‘Final Report of Findings’ of 18 August 2015. The preliminary report has been brought in contention publicly and in the political debate between the Minister of Finance and the Dutch House of Representatives, and for the compilation of the report the impartiality of De Brauw has been questioned, because De Brauw provided assistance to NS as an attorney. What's more, in the report no involvement by the Board of Directors (RvB) was assumed, whereas prior to its publication there were reasons of doubt. The Minister of Finance promised the Dutch House of Representatives to have an independent assessment carried out on the investigation conducted by De Brauw. This assessment concerns the question whether the phrasing of the questions of the investigation and its execution contains loopholes, which could cause doubts about the findings. Then there's the question of whether the findings are a logical result from the facts collected via the investigation. De Brauw has had an own verification of its investigation carried out by Ms Tonkens-Gerkema. Partly on the basis of the outcome of that verification, I conclude that there are a number of inaccuracies attached to the De Brauw investigation. These inaccuracies involve, among other things, the concurrence of De Brauw's multiple roles, such as representation for the NS in the proceedings for the Netherlands Authority for Consumers and Markets (ACM), investigation into the irregularities at NS on behalf of the Supervisory Board (RvC) and preparation of measures relating to labour law by the NS as an employer against the employees involved. Initially the Board of Directors (RvB) – including the CEO – was the commissioning party, whereas, due to its involvement thereafter, the commissioning practice was taken over by the Supervisory Board. This transition led to an altered position for De Brauw, which should have meant that the CEO could no longer have any influence on the investigation and the reporting. As a result of poor management during the investigation, however, the CEO had ample opportunity to speak to other NS managers before and after the interviews, whereby undesirable influence could take place. The CEO still interfered intensively in the manner of reporting. Finally, the employment disputes with the NS managers – which were being handled by another attorney at De Brauw – obstructed the investigation into the irregularities. My response to the assessment questions states that the phrasing of the questions of the investigation contains no loopholes, yet that the inaccuracies in the execution of the investigation have lead to the suspicion of bias which arose when the preliminary report was produced, has not been remedied. In the final report, the investigation into irregularities and the weighing up of everybody's participation got all muddled up. The findings in the report as such arise logically from the facts. Though for a large part these findings only concern the presentation of contradictory statements on important points, which will probably be dealt with in more detail by the courts in the expected labour dispute cases.

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Was there a dual role?

For the political and public accountability in the NS case, it is essential that all persons and all actions that are of importance in connection with the irregularities in the public tendering procedure for Limburg, are adequately identified. Aside from the De Brauw reports, in its advisory service in view of compliance at the NS, Alvarez & Marsal conducted a survey among more than 3,500 NS employees and the NS set up a disclosure office. From both sources there was no evidence of other irregularities. Besides, Jones Day issued a comprehensive report about irregularities nationally and internationally at NS and its subsidiaries which don't mention any specifics. It is therefore plausible that all the relevant people involved as well as the irregularities in the public tendering procedure for Limburg, became known. My final conclusion based on the aforementioned states, that where it concerns establishing facts that must be used for the basis of assessment of the political and public accountability in connection with the irregularities in the public tendering procedure for Limburg, it is justified to close the NS case with this assessment and the De Brauw reports and the verification by Ms. Tonkens-Gerkema. In the various legal procedures which are a consequence of these irregularities (labour dispute, competition practices and possibly criminal proceedings), provided with further investigations and procedural guarantees, the facts that are of importance in those cases will further be dealt with in all their specifics. An important lesson to be learnt from the NS case, is that more clarity must be created regarding the boundaries of the manner in which law firms act in independent and impartial investigations. What, on the one hand, is the boundary between the role of the attorney who defends a party in legal procedures and, on the other hand, the attorney who investigates irregularities in businesses? This clarity is especially important when that investigation serves public accountability.

A.F.M. Brenninkmeijer

Utrecht, 28 October 2015

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Was there a dual role?

Table of Contents Summary

2

1

Reason for this assessment

5

2 2.0 2.1 2.2

7 7 8

2.3 2.4 2.5 2.6 2.7

Assessment Starting points The cause: Netherlands Authority for Consumers and Markets Inquiry The relationship between the commissioning party NS and the commissioned party De Brauw The contents of the investigation assignment and the management of the investigation Involvement of the NS Board of Directors The De Brauw investigation method The scope of the investigation Results of the De Brauw investigation

3 3.1 3.2 3.3 3.4

Responding to assessment questions and conclusion Does the phrasing of the questions of the assignment contain loopholes? Does the execution of the assignment contain loopholes? Do the findings arise logically and objectively from the investigation? Conclusion on the basis of investigation questions

12 12 12 13 13

4

Which way forward?

14

5

What lessons can be learnt?

16

4

8 8 9 10 10 11

Was there a dual role?

Chapter 1

Reason for this assessment On 28 April 2015 the preliminary investigation report by the law firm De Brauw Blackstone Westbroek (De Brauw) into the irregularities in the tendering procedure for public transport in Limburg was published. This report has been brought in contention publicly and in the political debate between the Minister of Finance and the Dutch House of Representatives. The actual cause for criticism is the statement in the report that no evidence was found in the investigation documentation that indicate involvement of the NS Board of Directors (RvB) in the irregularities. This being so, while various NS managers declared that the President of the NS RvB, ‘the CEO’ was indeed involved. In the Financieel Dagblad (FD) newspaper, chairman Fonteijn of the Netherlands Authority for Consumers and Markets (ACM) comments on the assignment by Dutch Railways (NS) to De Brauw1: “The internal investigation that law firm De Brauw conducts for NS must not be regarded as independent and objective.” (…) FD: According to Fonteijn, in itself there is nothing wrong with an internal investigation conducted by the regular lawyer of NS, but this must be considered as a ‘biased activity’ of the attorney who is fulfilling his role as a representative. In June 2015 members of the Dutch House of Representatives reacted to the discussions in the media on the suspicion of bias of law firm De Brauw. Ms De Boer and Ms De Vries questioned the Minister of Finance on how he appreciates the investigation of law firm De Brauw and whether he shares the opinion that this is a contradiction of interests and an undesirable situation2. Member of Parliament Ms Van Veldhoven wants “this investigation to be reviewed by an independent third party”. Her colleague Mr Recourt thinks that De Brauw cannot be impartial because an attorney “fundamentally” serves the interests of its client as good as possible. Lastly, Member of Parliament Van Helvert thinks that there is a need for an investigation where “no questions are left in the balance” 3. In his reply to the Dutch House of Representatives the minister stated that he had no cause to doubt the integrity and critical attitude of De Brauw4. In his response to the Dutch House of Representatives' questions he promised to have an assessment (‘second opinion’) carried out on the thoroughness of the final De Brauw investigation. This led to me receiving instructions from the State of the Netherlands, as shareholder of NS, and the Supervisory Board of NS to assess the De Brauw investigation. This assessment of the De Brauw investigation into irregularities at NS concerning the public tendering procedure of the Limburg concession, according to instructions, will give answers to the following questions5:   

Does the phrasing of the questions of the assignment contain loopholes which could cause doubts about the findings? Does the execution of the assignment contain loopholes which could cause doubts about the findings? Do the findings arise logically and objectively from the facts collected via the investigation?

1

http://fd.nl/economie-politiek/1108967/acm-voorzitter-de-brauw-onderzoek-bij-ns-niet-onafhankelijk-ofobjectief. 2 Parliamentary questions by De Boer and De Vries dated 25 June 2015 (Annex 1 Replies to Parliamentary questions on investigations at NS, letter from the Minister of Finance to the Dutch House of Representatives concerning requests for investigations at NS, 30 June 2015). 3 http://fd.nl/economie-politiek/1108944/tweede-kamer-de-brauw-moet-van-onderzoek-bij-ns-worden- gehaald. Members of Parliament: “De Brauw must be withdrawn from the NS investigation”. 4 Letter by Minister of Finance dated 30 June 2015. 5 Letter by Minister of Finance dated 10 August 2015. State of affairs of Alvarez & Marsal investigation and assessment on De Brauw investigation. 5

Was there a dual role?

The engagement letter specifically adds that no full reinvestigation is required by me. The ‘Preliminary Report’ by De Brauw of 28 April 2015 (Report 1; R1) was followed by a ‘Final Report of Findings’ of 18 August 2015 (Report 2; R2). De Brauw requested an independent external expert to carry out a verification. This led to the report of verification by meester Wil Tonkens-Gerkema, 9 September 2015 (Verification; V)6. This means that my assessment contains the contents of these three matters individually as well as in relation to each other.

6

The wording of this report will consistently refer to the relevant paragraphs from both De Brauw reports (R1 x.x) and (R2 y.y), and to the verification by Ms Tonkens-Gerkema (V z.z). 6

Was there a dual role?

Chapter 2

Assessment 2.0 Starting points In the execution of my assessment, I acted on the basis of my independence, experience and expertise. This means that I particularly strived for due care and transparency in conducting the investigation and in my reporting in consequence thereto. I declare that I have not allowed myself to be led in any manner whatsoever in the execution of my assessment task and have acted at my own discretion in the formulation of my opinion. For this investigation I have not requested or received any remuneration. My costs are reimbursed within reason. My investigation is based on an analysis of the situation around the public tendering procedure for public transport in Limburg and the context in which NS – in all its relevant divisions - has acted; on studying both De Brauw reports; on the verification of Ms Tonkens and the supporting documents; on interviews with key figures (Ms Lodder (RvC), Mr Kremers (RvC), Mr De Keijzer (De Brauw), Mr Haks (NS Legal) and Mr Robbe (NS RvB); on consultation with Mr Grummel of Alvarez & Marsal and Mr A. de Jong, on investigation into the contents of the contacts between the NS in all its divisions on the one hand, and De Brauw on the other hand in relation to the investigation by the Netherlands Authority for Consumers and Markets, and in relation to the investigation into irregularities in the public tendering procedure for Limburg, initially on assignment for the Board of Directors and at a later stage on assignment for the Supervisory Board. The investigation was concluded with a hearing of both sides of the argument by De Brauw and Ms Tonkens. Furthermore, the draft report was presented to both commissioning parties (the NS RvC and the Ministry of Finance on behalf of the shareholder) with the request to indicate whether this report complies with the given assessment task, and whether there are any questions to be addressed by me in more detail. Prior to making the questions about the integrity of the De Brauw investigation more explicit, I stated in advance that the ‘NS case - apart from the major interests that are at stake - in my evaluation is of a risky nature on two points. In the first instance, the fact that integrity and compliance received inadequate attention within the NS organisation and as a consequence, in associations with NS, facts have occurred which could cause a certain contamination of normal professional actions by parties who have to deal with NS. As the most prominent point I mention the fact that there is no portfolio holder for integrity on the NS Board of Directors and compliance was inadequately guaranteed. This is a subject for closer examination by Alvarez & Marsal with Mr A. de Jong as an external verifier7. In addition, it is obvious that on crucial points which affect his integrity, the CEO, in short, has not paid attention or appears to have had a bad memory. He has forgotten having had telephone contact and he has not been aware enough of the importance of a certain SMS message (R2, 7.3.6). One of the people involved declared that the CEO requested him to cooperate in the De Brauw investigation, but would also have said that: “eighty percent of the truth is also the truth.” A statement which the CEO denies that he had said that; he had merely welcomed the person in question to the interview (R2, 7.3.2). In the second instance – and in this respect – the fact that during the investigation De Brauw was confronted with a direct commissioning party, being the NS Board of Directors, who, during the course of the investigation in the person of the CEO, personally came under suspicion of integrity violations. A similar – remarkable – change of the position of the key figure on the Board (as the commissioning party legally authorised to act) however, creates risks for the unbiasedness of the role.

7

Letter by Minister of Finance dated 10 August 2015. State of affairs of Alvarez & Marsal investigation and assessment on De Brauw investigation. 7

Was there a dual role?

For the following topics I identify questions about the integrity of the De Brauw investigation: 2.1 The cause: Netherlands Authority for Consumers and Markets Inquiry By way of a complaint from the competitor Veolia the public tendering procedure for Limburg has led to proceedings at the Netherlands Authority for Consumers and Markets (ACM) which resulted in a decision of 6 March 2015. On the basis of a ‘framework contract’ De Brauw provided assistance in the complaints procedure. The ACM decision assesses that NS has contravened the Railways Act in two ways. Firstly, by passing on internal competition-sensitive information whereby the NS subsidiary Abellio could benefit as a competitive bidder in respect of Veolia; secondly, by omitting to provide a reasonable offer to competitors in respect of additional services and provisions so that they could be disadvantaged in drawing up the tender8. In respect of both actions the ACM established that the senior management at NS had been aware9. Alvarez & Marsal was initially asked by NS to investigate these integrity violations, called ‘compliance investigation’ (R2, 1.1.3.). Then on 19 March 2015, when it appeared that there were also integrity issues other than those stated by the ACM, De Brauw was commissioned by the NS to investigate, which eventually resulted in Reports 1 & 2. This investigation assignment was accepted by De Brauw in the situation in which De Brauw defended the party interests of NS in the ACM complaints procedure, and in that capacity had the task to refute the findings and the assessment of the ACM. This was the case until the beginning of June 2015 when the NS withdrew the appeal at the insistence of the State as shareholder, whereby the ACM assessments became final. 2.2 The relationship between the commissioning party NS and the commissioned party De Brauw For the unbiasedness of the role in the execution of the investigation by De Brauw that led to Reports 1 and 2, it was essential that it was clear who had given the assignment and what the contents of the assignment was. In its report De Brauw states that the commissioning party was ‘NS’ (R2 1.2.1). Formally it is correct that the legal person NS was the commissioning party. But the legal person acts through its bodies and those bodies are staffed by people who fulfil a certain function and as such can exercise competences on behalf of the legal person. During the ACM proceedings on the public tendering procedure for Limburg the Board of Directors was the commissioning party. Within the RvB, due to his function, the Chairman of the Board, ‘the CEO’, fulfilled a key role. The follow-up assignment of 19 March 2015 for investigating the irregularities, likewise fell under the commissioning practice of the NS RvB10. When it appeared, however, that also the actions of the CEO in the RvB were of importance in connection with the irregularities, a vacuum was created as regards the commissioning practice. The relevant attorney at De Brauw filled this vacuum by no longer keeping contact with the RvB and its CEO, but addressed himself to the Supervisory Board (RvC). Eventually the RvC itself took up the role of De Brauw's commissioning party11. However, during an important stage in the investigation De Brauw acted on assignment for the RvC which included the CEO as a key figure. His actions, however, simultaneously appeared to be of importance in connection with observed irregularities. An attorney serves the party interests of his commissioning party. De Brauw was forced to break with its direct commissioning party – RvB – and at its own initiative to search for a new commissioning party – RvC. Yet it is illustrative that although the RvC was the commissioning party on 1 May 2015, until the beginning of June the CEO, in direct contact with the De Brauw attorney, was intensively involved with the manner of reporting.

8

ACM decision of 6 March 2015, paragraph 169.

9

Ditto, paragraphs 164 and 242.

10

E-mail De Brauw, 20 March 2015, with draft of assignment confirmation to the NS Board of Directors (Ref. G5393587/3/N). 11 “Further assignment for NS” 6 May 2015, with final assignment confirmation from De Brauw to the President of the Supervisory Board (Ref. M23142860/2/94000301). 8

Was there a dual role?

2.3

The contents of the investigation assignment and the management of the investigation There was no specific assignment from the RvB as a basis for assistance to NS by De Brauw in the ACM procedure. De Brauw had a so-called framework agreement that applied for situations in which the NS called on De Brauw's services. The NS has similar framework agreements with several legal firms which form the basis for incidental assignments. For the investigation into the irregularities in the public tendering procedure for Limburg on 19 March 2015 – under the secretaryship of De Brauw – an explicit instruction was given to investigate and provide legal assistance, to which is added an investigation that would partly serve as the basis for further legal analysis, advisory service and representation12. The assignment confirmation is described in a letter from De Brauw to NS. The final assignment confirmation was only issued on 7 May and encompassed several legal issues, including issues relating to competition practice, criminal-law and employment-law13. With the assignments for ‘an investigation and providing legal assistance’ and ‘an investigation that will partly serve for further legal analysis, advisory service and representation’ (19 March and 7 May 2015) De Brauw has taken on different roles for itself. Furthermore, the investigation started with the RvB as the decision-making body on behalf of the NV14, but that the RvC took over the assignment on 1 May because of the involvement of the CEO in the RvB. This assignment, as a specific supplementary investigation was formalised in an assignment dated 6 May 201515, which was confirmed by the President of the RvC on 8 May. 2.4 Involvement of the NS Board of Directors The NS Supervisory Board decided to disclose the De Brauw Report 1 on 28 April 201516. In this, it was weighed up on the one hand that, taking into consideration the severity of the contents, the RvC estimated that non-disclosure was not possible. On the other hand, it was indicated by De Brauw that taking into consideration the preliminary character of the report, disclosure was undesirable. In the eyes of the RvC non-disclosure would make the NS vulnerable if the irregularities were to be revealed along a different route. Eventually De Brauw did not object to disclosure. On the front cover of this preliminary report De Brauw placed a reservation that it reflects “the present status” of the investigation17. Report 1 includes the sentence: “In the investigation documentation no indications were discovered that point towards involvement of the NS Board of Directors in the irregularities (R1, 6.4.1). On the grounds of statements from others involved within the NS organisation, this sentence is controversial and was mainly the cause for discussion on whether the De Brauw investigation had been impartial or not. According to verifier Tonkens, taking the known facts into consideration, De Brauw should not have maintained this sentence in the report to be published (V, 8.4). The sentence about the involvement or not of the RvB is particularly relevant in connection with the role of the NS CEO. The maintaining of this finding is given special significance because a pretext is created that De Brauw's loyalty towards the RvB, with the CEO in a key position, still prevailed, whereas there were relevant signals that could at least have led to serious doubts, and more explicitly should have been mentioned in the Report. These doubts were known to the RvC18. That is why this point also affects the responsibility of the RvC to disclose the report in this format, whereas in respect of a crucial point 12

E-mail De Brauw, 20 March 2015, with draft of assignment confirmation to the NS Board of Directors (Ref. G5393587/3/N). 13 Assignment confirmation to NS, 7 May 2015 (Ref. M23152540/1/94000301). On 16 April 2015 NS Legal requested by e-mail to formalise the assignment, referring to a presentation by De Brauw with an overview of the legal procedures expected. 14 E-mail De Brauw, 20 March 2015, with draft of assignment confirmation to the NS Board of Directors (Ref. G5393587/3/N). 15 “Further assignment for NS” 6 May 2015, with final assignment confirmation from De Brauw to the President of the Supervisory Board (Ref. M23142860/2/94000301). 16 Report by Supervisory Board 28 April 2015 (meeting 9:00 hours). 17 “This Report reflects the present status of the investigation. Further investigation is still being undertaken. Further investigative actions could lead to disclosure of other facts or circumstances than those on which the Report is based. These could then lead to one or more findings no longer being correct, or that an adaptation or supplement is required.” 18 Report by Supervisory Board 26 April 2015, Wassenaar and 27 April 2015, 20:30 hours. 9

Was there a dual role?

– the involvement or not of the CEO – further investigation was necessary. 2.5 The De Brauw investigation method Report 1 was published as a preliminary report on 28 April 2015 while the investigation into the contribution by various people into the irregularities in the public tendering procedure for Limburg had not fully been identified and an inadequate hearing of both sides of the argument had taken place (V, 8.2). Report 2 partly aimed to meet these inadequacies in Report 1. Verifier Tonkens observes that De Brauw had no protocol for the investigation (V, 6.2) and did not conduct proper management in the actual organisation of the interviews. Hence, it was not prevented that an undesirable influence of the people heard took place (V, 7.3). In other words, the CEO had ample opportunity to speak to others who were involved both before and after the interviews, and in that way there was room for him to influence, in his words “de-escalation”. In addition, inconsistencies in the consecutive statements from people who were heard a number of times during the investigation, were not identified in Report 2 (V, 7.2). The annotations made during the recording of the interviews with those involved have been processed, but in a number of cases a lack of clarity seems to have arisen about certain phrasing of questions at interviews, causing hesitancy about the significance of the statements that are set out in the reports, eventually incorporated in Report 2 (V, 7.2). Verifier Tonkens ascertains that in Report 2 each time the last – sometimes varying – statements made after hearing both sides of the argument, have been processed (V, 7.2). This means, however, that there was no emphasis on seeking the truth in the sense of determining which statement was correct. The report contains an overview of partly conflicting facts and the reader must draw his own conclusions. 2.6 The scope of the investigation In the ACM matter De Brauw fulfilled the role as the NS attorney and later conducted an investigation into the irregularities in the public tendering procedure. De Brauw even fulfilled a third role, namely, that of NS's attorney in the various matters relating to employment which arose from the irregularities (V, 6.4). These files were dealt with by another attorney at De Brauw. Only since July 2015, due to the transfer of these files to another law firm, did a separation of cases take place. Verifier Tonkens observes that this separation of cases was correct, but that same should have happened sooner (V, 6.4). In order to maintain the integrity, the investigation into the irregularities which were reported in Reports 1 and 2, should have been separated from the handling of the labour dispute cases against those involved. This separation between the investigation into the irregularities and the investigation in preparation of the labour dispute cases is important, because these investigations have different approaches. For the irregularities it concerns the involvement of each person in question in the coming about of an undesirable situation at NS, including the CEO's role. For the labour dispute case it concerns the question on which facts the NS, as an employer, is entitled to take certain measures regarding legal position (for example on suspension of contracts or disciplinary suspension and dismissal). The role of the CEO could have an influence on this in the interpretation of those facts, particularly because the CEO's knowledge of the irregularities could give the position of others involved a certain distortion which is relevant for the weighing up of the lawfulness of the employment measures. As verifier Tonkens states, it brings about “the risk that within the investigated company stakeholders try to mitigate their own role or that of the company, at the expense of others involved.” (V, 6.3). The approach taken by those involved after the appearance of Report 1 on 28 April 2015 that the CEO was aware of the irregularities, was partly prompted by the desire to secure their employment interests. They had the feeling of being victimised19. In other words, the investigation into the irregularities was hindered by the employment interests of those involved. Both topics, however, were being dealt with by De Brauw.

19

Report by Supervisory Board 28 April 2015, 00:15 hours. 10

Was there a dual role?

2.7 Results of the De Brauw investigation Report 1 – which came about without hearing both sides of the argument, in short, shows that the NS played an unfair game in the public tendering procedure for Limburg due to passing on competitor information which was relevant for the bid to the NS subsidiary who was preparing for the bid. Moreover, it appeared that employee X who worked for a competitor, despite being subject to a non-competition clause, was engaged by an NS subsidiary via a U-turn mechanism to provide assistance in the preparation of the public tendering procedure. X passed on competition-sensitive information to the NS. Report 2 concerns the appointment of X, as well as the question whether the RvB in the case of ‘the CEO’, has influenced the investigation. An important shortcoming of Report 1 is the fact that no hearing of both sides of the argument took place. In Report 2 questions arise about the integrity of the investigation methods employed by De Brauw (see 2.5). For both reports it seems that inadequate separation was made between ascertaining the irregularities in the public tendering procedure for Limburg as such on the one hand, and the investigations into the precise roles of the various persons concerned resulting in labour dispute on the other hand. In respect of important actions, in Report 2 De Brauw extensively presents the diversity of and partially contradictory statements of the persons concerned (to illustrate, see R2, 7.3). This has also consequentially resulted in confined value of the various statements which differ on significant points, for a final assessment about which irregularities were committed by whom in the public tendering procedure for Limburg. The aforementioned questions that could be posed for the integrity of the investigation by De Brauw, assessed in their mutual relationship to each other, are the basis for the responses to the assessment questions presented to me.

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Was there a dual role?

Chapter 3

Responding to assessment questions and conclusion The assessment questions to be answered by me of the investigation by De Brauw into irregularities at the NS concerning the public tendering procedure of the Limburg concession Limburg stated:   

Does the phrasing of the questions of the assignment contain loopholes which could cause doubts about the findings? Does the execution of the assignment contain loopholes which could cause doubts about the findings? Do the findings arise logically and objectively from the facts collected via the investigation?

3.1 Does the phrasing of the questions of the assignment contain loopholes? Report 1 concerned the irregularities on the commencement of employment of X, a former Veolia employee, at the NS subsidiary Qbuzz, and the sharing by X of sensitive information from Veolia (R1, 1.1.3). Report 2 additionally concerns the involvement of the RvB in the irregularities, as well as the RvB’s knowledge of these irregularities, and possible attempts by the RvB to influence the investigation (R2, 1.2.3). This phrasing of questions in Reports 1 and 2 by De Brauw contains no loopholes that could cause doubt on the findings. To make it perfectly clear I've added the following. Reports 1 and 2 do not concern an investigation into all irregularities in the public tendering procedure for Limburg. In order to create a complete picture it is important to mention that the ACM has ascertained that another form of information sharing has taken place. In a number of e-mails information about the competitor was passed on by the CEO to the NS subsidiary Qbuzz by including the addresses of members of the board in copy (cc) of those e-mails. Another irregularity concerns the omission by NS of providing a reasonable offer to competitors in respect of additional services and provisions. 3.2 Does the execution of the assignment contain loopholes? From the discussion of the questions posed on the integrity of the De Brauw investigation (see chapter 2), as seen relative to each other, it comes to the fore that the execution of the assignment contains loopholes which do not cancel out the suspicion of bias. This doubt is expressed in two points. Firstly, for the reader of both NS reports by De Brauw there is a lack of sufficient assurance that a complete and accurate picture has arisen of what happened between the key figures at NS. The first report merely presented an interim position of an ongoing investigation and was not subjected to hearing both sides of the argument. The second report depends on an investigation method which reveals inadequacies (no investigation protocol, poor management, thus creating room for the CEO to influence the interviews, inconsistencies in statements not made explicit, and vagueness about the questions posed so that the answers which form the basis of the reporting are difficult to interpret). Secondly, Report 2 leaves the reader with a dissatisfied feeling, because it is not clear what the outcome of the investigation is, now that the report merely reflects contradictory statements on important points about the irregularities in the public tendering procedure for Limburg. Here an important aspect is the fact that in both investigation reports there are two topics. The relevant investigative question for the investigation into irregularities in the public tendering procedure for Limburg, in short, is the exposure of unfair play by NS (and subsidiaries) in the preparation of their bid and the possible role of the management(s) and other people. Aside from this investigative question, however, there is the question regarding what the individual involvement of the NS employees was in the coming about of the undesirable situation, partly taking into consideration the possible employment-law measures that will be taken against them. Verifier Tonkens observes that De Brauw has contributed to the fact that the investigation into both questions (investigation into irregularities and the weighing up of everybody's involvement) got mixed up with each other. 12

Was there a dual role?

3.3 Do the findings arise logically and objectively from the investigation? Due to the absence of hearing both sides of the argument and thus a possibility of verification for Report 1, I have directed the response to this question to Report 2. The statements by the persons involved who are included in the report are based on documents and interview reports which were subject to hearing both sides of the argument and which were checked afterwards by verifier Tonkens. She signed her report which means that an additional surety has been created about the correctness of her verification. In itself, this offers an adequate guarantee that the statements of those involved which are incorporated in Report 2, are based on a correct representation of the contents of the underlying evidence and interview reports. In that sense it can be said that the findings follow logically from the facts gathered via the investigation. At the same time it must be remarked that ‘the findings’ on significant points do not contain more than the different, and on important points contradictory, statements of the persons concerned. And it is for this reason, that on important points there is no question of conclusions about the actual circumstances, which are supported by the findings. 3.4 Conclusion on the basis of investigation questions It should be noted upfront that there is no objective proof of bias on the part of De Brauw in the sense of giving in to pressure from the NS or those involved. However, due to the various roles that De Brauw fulfilled after the appearance of the preliminary report, the suspicion of bias has arisen. On the basis of my investigation I conclude that the contents of the De Brauw reports gives rise to a number of questions about the integrity of that investigation. The suspicion of bias that adheres to the report of 28 April 2015 into the irregularities at NS has not been dispelled by the second report of 18 August 2015. The suspicion of bias, once it has come about, is difficult to dispel. This leads me to two follow-up questions:  Which way forward after the investigation into the irregularities surrounding the public tendering procedure for Limburg?  What lessons can be learnt from the state of affairs covered by these reports?

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Was there a dual role?

Chapter 4

Which way forward? The inaccuracies in the De Brauw reports, as was apparent, concern two points. Firstly, the method and execution of the investigation. Secondly, the fact that these reports contain too many facts which could be controversial in their specific detail, because an inadequately strict line was drawn between the irregularities in the public tendering procedure for Limburg as such, and the relevant facts pertaining to dealing with employment-law issues of various people. The irregularities in the public tendering procedure for Limburg have various consequences which were or are interpreted, among other things, in the ACM investigation and the subsequent irreversible judgment of NS that arose from it, and a follow-up investigation by the ACM into possible abuse by NS of its market position; a criminal investigation by the Public Prosecution Service (OM) assisted by the Fiscal Intelligence and Investigation Service (FIOD) into both the legal persons as well as the natural persons; an investigation and advisory service by Alvarez & Marsal into compliance at the NS and finally, the investigations into national and international irregularities by Jones Day et al.20 The CEO has been removed from his post and by engaging other legal firms, employment-law measures against key figures in the NS organisation are being prepared, or employment-law procedures are underway at the initiative of those involved. Finally, the Dean of the Amsterdam Bar Association Order has instituted an investigation into the role of De Brauw in bringing about Reports 1 and 2, which could perhaps give rise for the Dean to institute disciplinary proceedings against one or more attorneys at De Brauw. These various investigations and procedures each have their own phrasing of questions, investigating method and procedural aspects. Applicable to all these procedures is: “The law must run its course”. Reports 1 and 2 and the irregularities exposed therein, as well as the underlying supporting evidence could perhaps play a role in all the various investigations and procedures, but in relation to my assessment, the only issue that is relevant here is whether the RvB and the RvC of NS are well informed, so that they – partly in a new composition – can fulfil their statutory tasks. What is also under discussion, is the question whether the information offered is adequate for the public accountability that falls in line with the role of NS as a state enterprise. This public accountability comprises information that the Minister of Finance can offer to the Dutch House of Representatives and thus becomes public knowledge. It questions whether Reports 1 and 2, the verification by Ms Tonkens, the survey by Alvarez & Marsal, the notifications to the disclosure office, the reporting by Jones Day and this reporting, contain sufficient information for this political and public accountability. In order to be able to answer these questions, I pose two further questions. Firstly, the question whether all the persons are adequately identified whose actions are of importance in connection with the irregularities in the public tendering procedure for Limburg. Secondly, the question whether all actions that are related to those irregularities, were adequately identified. My answer to both questions is affirmative.

20

Jones Day et al.: This concerns reports of national and international irregularity investigations (excluding Limburg). These include the Netherlands (JonesDay), Sweden (Houthoff), Germany (Bird&Bird), and the UK (OsborneClarke) with a final report of findings and investigation conclusions of 16 September 2015 (JonesDay). 14

Was there a dual role?

The description of the irregularities in the public tendering procedure for Limburg that are important elements for the public and political accountability, in short, are: the (possible) sharing of competition-sensitive information in the NS organisation, the engaging of employee X and the sharing of information arising from it, and the possible influencing of the De Brauw investigation by the CEO. Because the CEO has subsequently been removed from his post, in that respect this matter is resolved. The irregularities in the public tendering procedure for Limburg consisting of sharing information within the NS organisation, the engaging of employee X and the manner in which the sharing of information took place, in broad terms can be found in Reports 1 and 2. Moreover, the circle of people who are important in relation to the irregularities in the public tendering procedure for Limburg, are known in an anonymous form based on these reports. Having said that, however, there is still a chance that there are other actions and other people that should be identified in relation to the irregularities in the public tendering procedure for Limburg. In order to make this chance as small as possible, I have posed the question to Alvarez & Marsal, who are charged with the compliance-investigation (with Mr A. de Jong as an independent verifier), about the possible omission of notifications or signs by way of replies to open questions in their survey among 3,500 NS employees. Alvarez & Marsal responded to me on 8 October: “As we discussed this week I have read the responses to the questionnaire in detail. To this end, and for the purpose of your activities, I paid particular attention to the risks that you mentioned. In particular “the risk that there could 'incidentally' still be a question of integrity incidents regarding the public tendering procedure for public transport in Limburg. In view of hedging those risks, you wished to refer to possible outcomes of the system-oriented investigation by A&M, and in particular the omission or not of notifications or signs by way of responses to open questions in the questionnaire. I hereby inform you that the questionnaire has no notifications of incidents concerning tenders.” As the supervisor of the disclosure office, the NS has declared that on the basis of a general appeal in September 2015, until then no notifications were made that are relevant for the irregularities in the public tendering procedure for Limburg. I have no reasons to assume that there are any misgivings about the accuracy of this statement. Furthermore, I have taken note of the investigations by Jones Day et al. In those investigations no persons or actions were identified that are of importance for obtaining a complete picture of the irregularities in the public tendering procedure for Limburg. On the grounds of the aforegoing I conclude that, on the basis of the information in Reports 1 and 2, the verification by Ms Tonkens, the survey by Alvarez & Marsal, the notifications at the disclosure office and the reporting by Jones Day, adequately relevant information about the irregularities in the public tendering procedure for Limburg is available for the political and public accountability. My final conclusion states, that where it concerns establishing facts that must be the basis for the assessment of the political and public accountability in connection with irregularities in the public tendering procedure for Limburg, it is justified to close the NS case with this assessment and the De Brauw Reports 1 and 2, and the verification by Ms Tonkens. In the various procedures that ensue from the irregularities, the law will have to run its course and the role of those individuals involved – provided with appropriate procedural aspects - will be identified more accurately.

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Was there a dual role?

Chapter 5

What lessons can be learnt? In the answer to the question of what lessons can be learnt from the ‘NS case, differentiation must be made between issues that are of an incidental nature and more structural issues. The report of the irregularities at the NS in the public tendering procedure for Limburg partly has an incidental character. The fact that the CEO of a public enterprise such as the NS entered the picture, where it concerns being actively involved or not in irregularities, is a rare characteristic. This means that his involvement would have surprised bystanders to a greater or lesser degree. In the first instance this applies to De Brauw who conducted an investigation on commission for the RvB which included the CEO as a leading officer, but in the second instance for the RvC too, who, bit by bit gained more clarity about the CEO's participation and eventually lost confidence in the CEO at the beginning of June 2015. In essence, this was caused by the serious doubts whether the CEO had fully and accurately informed the RvC about his knowledge of and contribution to the observed irregularities. The fact that NS fulfilled at least two roles and wears two hats, also played a role. On the one hand the NS must be a competitive company in the transportation market and succeed in being awarded public tenders. On the other hand the NS must provide information to competitors in the same tendering procedures and to make provisions available. The CEO attached a high degree of importance to winning the public tendering procedure for Limburg and risked everything for NS to beat the competitors. Within the NS there was a lack of well organised institutional counterforces. This is partly the subject of the investigation and advisory service by Alvarez & Marsal with Mr A. de Jong as an independent verifier. The scandals and malpractices that have been discovered at companies in the recent past have revealed that for businesses operating in the market, topics like a lack of integrity and not obeying the rules and regulations are very important. To that end it not only concerns the interests of the business involved, but increasingly also public interests. When things go wrong, there is a need for independent and impartial investigation, particularly where it concerns objective information for shareholders or for political and public accountability. Various types of professionals like accountants, forensic experts and attorneys can conduct such an investigation, and within the various occupational groups professional standards and disciplinary law can contribute to the integrity of their actions and the confidence that is held in the occupational groups. To this end, it is important how the various roles that must be fulfilled in these kinds of cases must clearly be separated from each other. In this NS case it appears that De Brauw, by its very nature, fulfilled the 'biased' role of NS's advocate in the ACM complaints procedure, but in turn also got an investigative task to ‘impartially’ conduct a full investigation. What's more, De Brauw simultaneously handled a significant number of NS matters relating to employment-law and thereby it supported the employer's interests in respect of the employees concerned. This NS case shows the extreme importance of drawing clear boundaries between these roles. After all, doubts about the unbiasedness of the role can detract from the confidence that is expected from the outcome of an investigation. There are ongoing discussions about these boundaries both within and outside the occupational group of attorneys. Where this subject is concerned, the standards of conduct for attorneys are really quite general and not specific. Section 46 of the Counsel Act on the one hand states “any actions or omissions contrary to the care that they must exercise as an attorney vis-à-vis those whose interests they manage or are supposed to manage as such” and, on the other hand “any actions or omissions that do not befit a respectable attorney.” The Rules of Professional Conduct for attorneys do not provide for any special elaboration of this (V, 4.1). The pronouncements in disciplinary cases eventually provide contents to these generalised standards, but the standard is then only recognised by listing several 16

Was there a dual role?

disciplinary case pronouncements. Having regard for the major importance of the independence and impartiality of attorneys in an investigation at this time, more clarity is desirable. Particularly regarding the boundaries of the actions of attorneys on the one hand in the role as an advocate who defends a party in legal procedures, and on the other hand the advocate who conducts an investigation into irregularities in businesses, especially when that investigation is relevant for public accountability.

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