In context

Dutch guidance on investigation and prosecution of foreign bribery renewed

October 15, 2020
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In context

While at first glance, the renewed guidance, effective as of 1 October 2020, does not appear to introduce far-reaching changes, several aspects are worth mentioning. Like the previous version, the guidance contains a non-exhaustive list of factors that can be taken into account by the Netherlands Public Prosecution Service (DPPS) when deciding whether prosecution of foreign bribery is opportune or not.

 

Whereas a previous conviction in another country for the same facts would be a “contraindication” for prosecution under the previous guidance, the new guidance makes no mention of it. This raises the question of whether the DPPS is considering exercising extraterritorial jurisdiction.

 

The wording on facilitation payments in the guidance is more stringent than before. The policy of the DPPS on this topic seems to have changed. On a positive note, the new guidance touches upon voluntary self-reporting and provides that where suspects report foreign bribery, either committed by them or within their organisation, the DPPS will take this into account when deciding about prosecution-related steps.

 

Background

Bribery of foreign officials is considered a very serious offence in the Netherlands. The DPPS is exclusively responsible for prosecuting this type of offence; the decision to prosecute falls within its discretionary power. The Board of Procurators General, which forms the ultimate leadership of the DPPS, establishes guidelines on various topics related to the investigation and prosecution of criminal acts. The renewed version of the guidance on the investigation and prosecution of foreign bribery is a recent example.

 

Under Dutch law, multiple forms of bribery are criminalised in the Dutch Criminal Code (DCC). A distinction is made between bribery of public officials and private commercial bribery, depending on the capacity of the person being bribed. Bribery of public officials can concern Dutch or foreign public officials. A further distinction is made between active and passive bribery. Active bribery relates to the briber’s conduct. Passive bribery, on the other hand, refers to the recipient.

 

The bribery offences in the DCC are broad in scope. They include anyone who offers a public official a gift, promise or service with the aim of inducing the official to perform any official act or omission and any official who accepts a gift, promise or service while knowing or reasonably suspecting that the purpose is to induce the official to act or to refrain from acting.

 

The legislature has left the setting of concrete limits to the DPPS. For this purpose, the DPPS has issued two sets of guidelines. One focuses on the investigation and prosecution of the bribery of public officials in the Netherlands, the other on the investigation and prosecution of bribery of foreign public officials.

 

The advantage of such guidelines is that they can easily be adapted to new developments, insights or case law. As a result, they are often renewed every few years. This was recently the case for the guidance on the investigation and prosecution of foreign bribery.

 

Relevant factors in deciding whether to prosecute

Bribery of foreign officials is taken seriously and, according to the guidance, cases brought to the attention of the DPPS will, as a general rule, be investigated and prosecuted. Nevertheless, the DPPS assesses each case on its individual merits and then decides whether prosecution is opportune or not, based on a non-exhaustive list of factors:

  • How significant in size the offer, promise or benefit is, in absolute terms or relative to, for example, the total amount of a contract);
  • Whether bribery is a structural element of the conduct of business;
  • Whether influential foreign officials or politicians or those close to them are involved;
  • The bribes are directly or indirectly extracted from the Dutch state budget or from funds intended for international development aid;
  • What damage was caused to the country where the official was bribed;
  • What the extent of distortion of competition is;
  • Whether this is recurring behaviour (recidivism);
  • What the possibilities are for further investigation and the chances of a successful prosecution.

 

The guidance also states that, in view of the OECD anti-corruption treaty, due consideration be given to national economic importance, the possible effect on relations with another state, or the identity of the natural or legal persons involved must not play a role in decisions about investigation and prosecution.

 

The previous version of the guidance also mentioned that a “contraindication” for prosecution by the DPPS would be that the suspect has already been convicted in another country for the same facts. The removal of this wording in the new version raises the question of whether the DPPO is considering exercising extraterritorial jurisdiction.

 

Foreign intermediaries and facilitation payments

Companies active in multiple jurisdictions often use local intermediaries, such as agents and distributors. When exploring opportunities abroad, they often find themselves in unfamiliar environments with a wide variety of cultural, legal, financial and accounting complexities and obligations. Intermediaries with local knowledge can help companies navigate such uncharted territory. The use of agents is, however, increasingly seen as a high-risk aspect of doing business and sometimes associated with corruption.  

 

What constitutes a bribe in this regard is not always clear. In some countries, unofficial payments made with the purpose of expediting or facilitating the performance by a public official of a routine government action to which the payer is legally entitled, are not uncommon. These “facilitation payments”, however, are illegal in most jurisdictions; albeit small, they are considered bribes.

 

While the Dutch Criminal Code does not specifically identify facilitation payments, they are considered benefits and can therefore constitute bribery. The previous version of the guidance stated although facilitation payments strictly speaking constitute a criminal offence, facilitation payments to foreign public officials would not be prosecuted in the Netherlands if the following conditions (derived from the OECD Anti-Bribery Convention) were met:

  • small amounts (in absolute or relative terms) were paid;
  • the official’s act or omission was required by law and the payment did not distort competition in any way;
  • the payment was provided at the initiative of the foreign official;
  • It concerned payments to lower-level public officials; and
  • the payment was not concealed by the company and was reflected transparently in the company’s financial accounts.

 

The new guidance is more concise when it comes to facilitation payments, and no longer lists these conditions. It seems that the DPPS is taking a stricter stance on facilitation payments . This notion is reinforced by the stringent wording that has replaced the above conditions. The new guidance states that there should be no misunderstanding about conducting business internationally: engaging a third party such as a local agent, representative or consultant does not exempt the company or organisation from criminal liability. According to the DPPS, it is a well-known fact that “such parties” are often used when paying bribes abroad. Dutch companies and organisations that are insufficiently attentive to the nature and scope of the activities of third parties can therefore be prosecuted.

 

Voluntary self-reporting

Unlike other jurisdictions, such as the US, where companies are encouraged to self-report violations of the FCPA in exchange for leniency, the DPPS has provided no official guidance on voluntary self–reporting or on anti-bribery and corruption compliance programmes. This practice has not changed with the coming into force of the new guidance. Where the subject of voluntary self-reporting was completely absent from the previous version, the guidance now mentions that where suspects voluntarily report foreign bribery, this will be taken into account when deciding how the case will be dealt with. Although various practitioners have criticised the lack of PDDS guidance in this area in recent years, that the new guidance now explicitly mentions that the DPPS will take self-reporting into account, could be considered a small step in the right direction.

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