White-collar problems are becoming more and more complex. The numbers of regulations are increasing but when it comes to clarity, rules are getting less and less comprehensible. Each time, it gets more difficult for businesses and private individuals to determine whether they operate within the limits of the law.
The government is keeping an increasingly close watch on compliance with the rules, which can involve examining facts from as many as ten years ago from today’s perspective. Tax structures that used to be seen as ingenious recommendations are now portrayed as unacceptable forms of tax avoidance or even tax evasion. Nowadays, people who only take their own actions into account are considered to be conniving in a naive or even malicious way.
Presumption of innocence must give way to photos of confiscated shiny cars
The media eagerly put the spotlight on investigations into negligent supervision or into exploring the boundaries of what is possible when it comes to tax savings. The presumption of innocence must give way to society’s need for spectacular news about confiscated shiny cars and impressive yachts in chains. Photographs of a large number of tax fraud officers dressed in their blue uniforms entering the entrance hall of a well-known bank or a listed company will boost newspaper circulations and internet views. As lawyers, we do our utmost at such a moment to try to steer everything in the right direction and to calm things down. However, often the role of a lawyer in that phase is not a very satisfying one. The client who is eager to know all the ins and outs of his legal position will have a rude awakening because, as already stated, the law is anything but clear. In fact, not only do the regulations themselves fall short, often it is impossible for a lawyer to answer the question of whether a punishment or a fine is at stake. The interpretation of the concept ‘intent’ is so broad now that it is better for the person involved to keep a low profile. And for companies it is even harder to determine whether they have crossed the line. Is it fair that the acts of one rotten apple are imputed to the whole company? According to the Supreme Court this depends on the circumstances but the court did not concretise the nature of these circumstances.
Sifting through the data takes a lot of time
In addition, the FIOD (the Fiscal Intelligence and Investigation Service) and the Tax and Customs Administration are likely to plunge enthusiastically into the enormous amount of digital data that becomes available during an investigation and it often requires a lot of time to sift through these files. Then the person involved and his lawyer will have to assess the selection that was made. This is at least as labour intensive because it is important to figure out whether the selection was complete or just a one-sided search for incriminating material. During this period, the person involved remains under fire and even his business operations may be jeopardised. Regulatory authorities, professional associations, banks and municipalities will turn up and ask for chapter and verse. However, clarity cannot be provided while the investigation is ongoing and this situation could last for many years.
The possibility to settle out of court has become increasingly limited
Under these circumstances, it is therefore not surprising that those involved are seeking opportunities to nip a case in the bud. Often, a settlement is not a bad solution but unfortunately the possibilities for settling a criminal case or penalty civil-law cases have become increasingly limited over the years since the Public Prosecution Service in particular is under severe political pressure. After the ING settlement of 4 September 2018, a storm of criticism arose because it was said to be a matter of class justice. Heads had to roll and eventually they did, although on a limited scale.
The VAR to check a settlement
Fortunately, the other day the Public Prosecution Service cautiously announced a positive view on settlements, assigning a supervisory task to the court. This is a good sign. However, we prefer the hockey VAR to the football variant. This means that the court can be invoked only if a party believes – after a settlement has been reached – that a review is necessary. Then, the court will be able to assess whether the settlement is not too far-reaching because of the powerful social pressure. For that matter, we believe that this initiative deserves a warm welcome if it means that settlements regain popularity. As we stated before (Hertoghs Considers, 30 October 2018), showing a yellow card first before going to court (i.e. a red card) is often to be preferred. Especially companies and citizens that have never been confronted with a fraud allegation before deserve to be given a second chance.