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Netherlands: Strengthening of Prosecution of Foreign Bribery Cases

(Feb. 8, 2013) In response to an evaluation report published on January 8, 2013, by the Organisation for Economic Co-Operation and Development (OECD), the Cabinet of the <?Netherlands has adopted measures aimed at strengthening the investigation and prosecution of bribery cases involving foreigners and Dutch citizens or companies. Ivo Opstelten, the Dutch Minister of Security and Justice, stated that the Cabinet has also taken steps to increase sentences and fines. (The Netherlands Does More Against Foreign Bribery, Government of the Netherlands (Jan. 8, 2013); The Netherlands Is Failing to Tackle Bribery Claims: OECD, DUTCHNEWS.NL (Jan. 8, 2013); Phase 3 Report on Implementing the OECD Anti-Bribery Convention in the Netherlands (adopted Dec. 14, 2012), OECD website.)

The report was prepared by the OECD’s Working Group on Bribery (WGB), whose task is to monitor the performance of signatories to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. This Anti-Bribery Convention entered into force in 1999, with the aim of curbing illicit payments made by companies to government officials in furtherance of winning or holding on to contracts. Since the Convention’s entry into force, however, “few signatories have successfully convicted more than a few individuals or companies for bribery,” and “as of the end of 2011, only 14 of the 38 signatories had ever imposed a penalty for bribery.” (Paul Hannon, OECD Slams Austria, Netherlands and Spain on Bribery, NASDAQ (Jan. 8, 2013).) The Netherlands has been a state party to the Convention since 2001. (Bribery in International Business: OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (last visited Feb. 5, 2013) [has link to text of the Convention and related instruments].)

OECD Assessment

The WGB’s main criticism of the Netherlands was that the Dutch authorities had not made enough of an effort to prosecute foreign bribery cases. (The Netherlands Does More Against Foreign Bribery, supra.) According to the report, the Dutch have yet to launch an investigation into 14 of 22 foreign bribery allegations, “and this calls into question ‘the Netherlands’ ability and pro-activity in investigating and prosecuting this crime.'” (The Netherlands Is Failing to Tackle Bribery Claims: OECD, supra.)

The OECD evaluation calls for Dutch law enforcement authorities to be given adequate personnel to investigate claims, noting that only two public prosecutors have been assigned to handle international corruption cases, and for fines for bribery to be increased. (Id.) The OECD also requested that the Netherlands allocate more funds to the investigative agencies and the country’s Public Prosecution Service, to further their more effectively investigating and prosecuting foreign bribery. (The Netherlands Does More Against Foreign Bribery, supra; Phase 3 Report on Implementing the OECD Anti-Bribery Convention in the Netherlands, supra.)

On the other hand, the OECD report commended the Netherlands on its efficient approach towards criminal proceedings and on the steps the country has taken to raise awareness among governments and the business community on the need to address foreign bribery. The report also commented favorably on the measures the Cabinet had adopted to improve the bribery reporting procedures followed by Dutch diplomats. (The Netherlands Does More Against Foreign Bribery, supra.)

The WGB also plans to examine the Netherlands’ investigation and prosecution of “mailbox companies,” which, according to the OECD, have been involved in a number of the foreign bribery allegations. Such companies, while incorporated in the Netherlands, pursue their activities entirely from outside the country. (The Netherlands Is Failing to Tackle Bribery Claims: OECD, supra.)

The Dutch Response

According to Minister Opstelten, the Netherlands has already begun to put some of the recommendations in motion. He reported near the end of 2012 that the investigative capacity of the specialized financial-economic police would be expanded by 585 to 1,156 fulltime personnel; that supervision at the Tax and Customs Administration would be strengthened; and that the Fiscal Intelligence and Investigation Service (FIOD) forces would be reinforced by 150 investigative officers, 50 to investigate tax structures and other matters and 100 to combat complex money-laundering structures. (The Netherlands Does More Against Foreign Bribery, supra.) Aside from making a commitment to be more actively engaged in foreign bribery cases, the Public Prosecution Service (OM) recently tightened its guidelines on dealing with foreign corruption in response to the OECD evaluation report. The OM will report in a year on the progress it has made in cases involving foreign bribery that it is currently handling. (Id.)

The Cabinet’s proposal on combating financial and economic crime has been formulated and is expected to be sent to the Dutch House of Representatives soon. The proposal may make it possible to link the amount of a punitive fine imposed on companies to their sales. The draft legislation also provides for the offense of international bribery to be punishable with a term of imprisonment of six years, instead of the currently applicable four-year term. (Wetsvoorstel versterking bestrijding financieel-economische criminaliteit [Bill Strengthening the Fight Against Financial-Economic Crime], Government of the Netherlands website (Feb. 5, 2013).)

Evaluation of Some Other Countries’ Anti-Bribery Efforts

At the same time that the OECD issued the report on the Netherlands, it published evaluations of the anti-bribery efforts of Austria and Spain. The OECD criticized Austria’s anti-bribery law enforcement as being “far too weak” and Spain’s enforcement as “extremely low.” (Hannon, supra.) According to WGB data for the period 1999 to December 2011, the United Stateshas been the most active Convention signatory in applying criminal sanctions against bribery, having imposed penalties on 58 individuals and 28 companies; the next most active enforcers were Hungary and South Korea, which imposed penalties on 28 individuals and 16 individuals, respectively. (Working Group on Bribery: 2011 Data on Enforcement of the Anti-Bribery Convention (June 2012), OECD website [scroll down to view table]; see also OECD WORKING GROUP ON BRIBERY, 2011 ANNUAL REPORT (2012), OECD website.)