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#348 Corruption, self-disclosure and lessons from abroad

12 februari 2024

The Corruption Perceptions Index (CPI) is out and the Netherlands ranks 8th place. Is this something to be proud of? I’m not too sure; there’s more to the story. Transparency International notes that countries that are often perceived as “less corrupt” face significant challenges in prosecuting corruption effectively. In particular, the Netherlands has shown notable lapses in prosecuting domestic companies involved in bribery abroad, despite international obligations requiring such actions for over 25 years. For instance, the Dutch authorities have been criticised for their failure to prosecute Shell for its involvement in a Nigerian oil bribery case. This highlights broader issues of accountability in transnational corruption.

The lack of penalties for foreign officials who accept bribes is a particular problem. However, new laws in places like the United States and proposed laws in the European Union are emphasizing the illegality of these actions by foreign officials. But laws alone don’t prosecute.

So, what can be done in the Netherlands, given that the criminal justice system is completely overwhelmed? One answer might be found in establishing attractive self-reporting policies for corruption. Currently, no rules or regulations exist in the Netherlands, making it difficult for a company to decide whether to self-report misconduct.

Typically, when a company discovers misconduct within the company, the internal conversation might go as follows: ‘Do I have an obligation to report this to the authorities? In most cases, no. Will the authorities find out? That depends on many factors. If I self-report, what’s the benefit? Not sure, but there seems to be some. But to what extent ? There are examples, but past results are no guarantee for the future. So, if I get a discount, how is it calculated? Sorry, I don’t have an answer to that.

This is, of course, an exaggeration. However, as you can imagine, this does not lead to a very fulfilling conversation nor a solid basis for decision-making. Corporate self-investigations and self-reporting of fraud and corruption still occur regularly in the Netherlands. Yet, there is no policy framework or regulations on how self-investigation and self-reporting should be conducted or used in criminal proceedings, including the consequences (if any) of self-reporting and submitting the investigation report. However, change is on the horizon, as the public prosecution service is working on policy,

The question is, what will this entail? Likely, there will be some discounts in percentages and rough guidelines on what a self-investigation should include, but are we taking enough lessons from abroad? Are we eager enough to improve? Just to name one example, I hope we are considering the legal position of directors thoroughly. When a company self-reports misconduct, it’s easy to scapegoat a director, change management, pay a fine, and move on. In some cases, the director is prosecuted and does not benefit from the company’s self-disclosure.

A question that I have is: what information can the director’s defence access? Is it just the company’s investigation and underlying documents, or should the defence have access to all company information to search for exculpatory evidence? Should the prosecution office keep a backup of more information, considering the director might no longer have access to the company files?

This highlights just one of the contradictions between a company and its (former) directors. But since the Netherlands is quite late in developing rules and regulations on self-investigation and self-reporting, let’s take advantage of this, think things through, and learn from abroad. In this way, the Netherlands can improve its standing in the CPI index and truly have reason to be proud of its ranking.

Gepubliceerd door onze specialist:

Mr. J.N. (Judith) de Boer