#06: The Dutch hunt for professional facilitators
In the Netherlands not only the (alleged) offender of a crime can be prosecuted. The professional who advised on certain matters relating to the object of a criminal investigation can become a suspect as well. The notary who advised on a legal document which is possibly false can be prosecuted. The tax advisor who advised his client on how to evade taxes can be complicit to tax fraud. Any professional that is involved with alleged criminal offences of his client can thus be faced with a criminal investigation on his involvement. The legal ‘weapons’ of Dutch law enforcement have increased over the last years and the so called ‘facilitators’ of financial fraud are the targets of these weapons. In the fall of 2015 the prosecutor’s office announced in the media that they will open their ‘fight against fraud’ by aiming to punish accountants and notaries who assist mala fide entrepreneurs. In this hunt for professional facilitators, suspects may not only be faced with administrative penalties or criminal prosecution, but also with disciplinary complaints. Which legal ‘weapons’ does Dutch law provide for?
The Dutch Criminal Code (DCC) contains a wide variety of criminal offences such as forgery, swindle, embezzlement, money laundering and tax fraud. These offences can only be proven if they are committed with (conditional) intent to the offence. The DCC also provides for a wide variety of criminal participation forms which make it possible to also prosecute the person who facilitated someone to commit a crime. Not only the co-perpetrator can be prosecuted but also the aider and abettor. These criminal liability forms are used on a regular basis by the prosecutor’s office. Recently, the Supreme Court rendered a decision about the fine line between co-perpetration and aiding and abetting. The Supreme Court’s decision has led to more critical judges regarding these participation forms.
Other participating forms in Dutch criminal law are incitement of a crime, ordering someone to commit a crime or making someone commit a crime who doesn’t know he commits a crime (article 47 DCC). Even a legal entity can commit a crime individually. And when it comes to crimes committed by a legal entity it is also possible that a natural person will be prosecuted for factual leadership over the crime (article 51 DCC). These provisions also form the basis to prosecute facilitators whilst their clients (allegedly) perpetrated the offence.
In our practice we also handle administrative penalties regarding tax matters. The General Law on Government Taxes (GLGT) provides the legal basis to impose a penalty to a tax payer who intentionally does not file an accurate tax return or does not file such a return at all (article 67d GLGT). Articles 67e and 67f of the GLGT provide a legal basis to penalize tax returns that were determined to a wrong amount or taxes were not paid, provided this is due to intent or gross neglect. These provisions aim to penalize the tax payer.
Since 1 November 2009, the General Administrative Law provides a legal basis to also penalize the co-perpetrator. This provision is relevant for all administrative penalties, not only tax related penalties. Since 1 January 2014, however, a special provision in the GLGT was created to penalize all people that were involved with a tax offence and qualify as a co-perpetrator, aider and abettor, inciter or solicitor. This provision integrates the more classic participating forms as we are familiar with in criminal law into administrative sanctions law.
Practice shows that the prosecutor’s office is not shy to file a disciplinary complaint against the facilitator alongside the criminal prosecution of the facilitator. For instance, accountants in these complaints often face the charge of a lack of integrity while executing their profession. This is a different accusation than can be made in the criminal case, but it is a direct threat to the professional’s future since the disciplinary chamber for both accountants and notaries, but also lawyers, can sanction the professionals by redeeming them from their profession. Even though the same objective can be attained in a criminal procedure (article 28 DCC provides the legal basis for a judge to exclude someone from their profession for a certain period of time), in practice the harsh disciplinary procedure is turned to more often in order to redeem facilitators from their profession. The reason seems to be that judges in a criminal procedure do not often impose this penalty. Also, in disciplinary procedures in general rules are more easily proven to be breached than in criminal law. Hence, a disciplinary complaint procedure is more likely to have a stronger effect on the facilitator.
Practice shows that facilitators get caught up in the prosecutor’s office fight against fraud. Sometimes the facilitators seem to be a victim of mala fide entrepreneurs and sometimes they were not paying enough attention to a certain client. But that does not necessarily mean that the facilitator crossed any (professional) lines. One of the key issues in the defense in these cases is the question whether or not the professional acted intentionally.
In order to convict someone of an offence or to impose an administrative penalty the law requires criminal intent (‘opzet’) of the involved party on the offense. This legal term consists of two components; 1) the involved party has to have knowledge of a criminal offence and 2) the involved party has to want the criminal offence to occur. The lower limit of the legally required intent is conditional intent (‘voorwaardelijke opzet’). Deliberately accepting the considerable chance that a criminal offense occurs qualifies as conditional intent. The evidence for (conditional) intent can also be derived from facts and circumstances under which the alleged offence occurred.
Case law on this topic shows that judges are not always on the same page when it comes to qualifying conditional intent. There is case law which shows that in some situations intent is considered proven because the suspect ‘should have known’ there was a considerable chance of a criminal offense and the suspect accepted that chance deliberately. This way of reasoning results in an objectification of conditional intent, whereas this formula – ‘should have known’ – in our opinion actually proves that the suspect had no knowledge of a possible criminal offense. In that respect the decision of the Supreme Court (Tax Chamber) of 31 May 2013 is interesting. In this case an advisor was not aware of certain information. Because of that a wrong tax return was filed. The Supreme Court decided that the fact that the advisor in that specific case did not ask for further documentation and that he did not explore the legal merits further – even if he was supposed to do so – does not lead to the conclusion that the advisor deliberately accepted the considerable change of a criminal offense.
Practice shows that tax inspectors who impose administrative penalties, public prosecutors and sometimes even judges are not always aware of the case law on this topic or find themselves assuming or imputing ‘knowledge’ of certain information to a suspect. It is crucial– both in administrative and criminal investigations – to present a case in the right perspective. And if it does not come to a penalty or prosecution it is more likely that a disciplinary complaint will not be made or will be withdrawn.
What is your experience in your country? Does law enforcement aim for professional facilitators in their fight against fraud as well?