#30: The end does (not) justify the means

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A well-known and truthful saying is that ‘power corrupts’. Even though the public prosecution fights this phenomenon, the same can happen to a public prosecutor. The public prosecution service has a lot of power against civilians. As soon as a suspicion of a criminal act arises, the law provides a wide range of possibilities to investigate. Everyone would agree that misuse of these powers is unacceptable. This unfortunately does not mean that the prosecution service always uses these powers with prudence. A recent case in the Netherlands sows that the prosecution services went far beyond what is acceptable in order to ‘help’ the tax department to receive information. The Court of Appeal declared the prosecution service inadmissible because of this misuse of powers.

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#29: The proceeds of tax fraud

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Fighting corporate fraud and other misconduct is a top priority of the Department of Justice. One of the main goals is to confiscate illegally obtained profits. One important legal exception is that the Public Prosecutor cannot confiscate profits gained through tax fraud. Article 74 of the State Taxes Act holds this prohibitions since these proceeds should be recovered by the tax inspector by imposing a(n additional) tax assessment. But what if the tax authorities do not have the means to impose a tax assessment? For instance because the recovery period elapsed?READ MORE

#28: Big brothers have responsibilities

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The digitalization of our life leads to an enormous amount of data: e-mails, documents and exchange of information like SMS and WhatsApp. Digital data leaves its footprint. This footprint can be of great interest to, for instance, investigation or prosecutions services as they might lead to evidence of criminal offences. Consequently, in practice, large amounts of data are seized under criminal law. And the question is whether it is possible to communicate anonymously in a digital way. It seems Big Brother is always watching you. But Big Brothers have responsibilities. Dealing with this data in a careful manner is a responsibility of the investigating services in our opinion which comes along with this development. In an increasing amount of criminal investigations the seized data is of such an amount that the criminal defense can no longer see the forest for the trees. In our opinion a lot of progress can be made in data-structuring and transparency of the data investigation in the investigation process.

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#27: AIJA seminar on anti-corruption in Brazil

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On 23 and 24 March we attended the AIJA seminar on the challenges of Anti-Corruption in Brazil. The seminar presented a general overview and discussions on current topics of the anti-corruption legislation and compliance programs in different jurisdictions all over the world. Brazil was the perfect place to host this seminar, as Brazil has one of the largest ongoing anti-corruption investigations, also known as Operation Carwash as explained in Lawlunch #26. The ongoing criminal investigation is of such a scope that it is even ‘rewarded’ with a Netflix series called ‘The Mechanism’.

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#26: Exotic settlement agreements

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A relatively new phenomenon in fraud cases is the multi-jurisdictional settlement agreement. Various of these agreements – in which a suspect settles prosecution with multiple countries – have been subject of media attention and therefore it is unlikely that they escaped the attention of professionals in this field. Also in the Netherlands the phenomenon of multi-jurisdictional settlement agreement has set foot on the ground. A settlement with a Dutch company and the US authorities resulted in a transaction of USD 795 million of which the Dutch authorities got their fair share (USD 397,5 million). A profitable deal for the Dutch as this deal – according to a letter of the Dutch Minister of Justice to the government  – made it possible for the Dutch authorities to reach their financial goals in the fight against fraud. In principle, these agreements however do not lead to the result that all parties involved are ‘off the hook’. Various entities and private persons are still under criminal investigation by the Dutch authorities. In our opinion it is wise to guarantee their rights of defense in an early stage of the investigation, as every party involved has an interest that possible future issues deriving from such an investigation and settlement agreement land on their feet. Time to take a closer look into this phenomenon.

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#25: Taking notice of opinions

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#25: Taking notice of opinions

An infringement to your private life is easily made by the authorities, especially in criminal cases. Whether it is a telephone tap or a house search, both qualify in principle as an infringement to your right to privacy. This can only be qualified as rightful when this interference is in accordance with the law. It has to have a legitimate aim and it has to be necessary in a democratic society. A lot of jurisprudence on these criteria has been produced over the years. Two years ago we addressed this topic in Lawlunch #01. A fairly recent case – Dragos Ioan Rusu v. Romania – gives reason to address this topic again, especially the relationship between the right to privacy of article 8 of the European Convention for Human Rights (ECHR) and the right to a fair trial of article 6 (1) ECHR.

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#24: See you in 2018

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Only two days left until 2017 comes to an end.

What a year it has been. It has been a year of interesting, frustrating and wonderful developments in our legal field. It is also safe to say that 2017 has been an exciting year for us. Our firm Hertoghs advocaten has started a new office in Amsterdam. And we are able to say we made an amazing start.

The year 2017 was a good year in which the various legal development highs and lows have passed in review. One thing is certain; these developments provide opportunities which we can and should share and use. We hope to have given you inspiration to do so.

For now; happy holidays and see you in 2018!

#23: Double jeopardy European style

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The non bis in idem principle gives the right not to be prosecuted or to be punished twice for the same facts. This principle is acknowledged in article 4 of Protocol No. 7 to the European Convention on Human Rights. But also in article 14, sub 7, of the International Covenant on Civil and Political Rights and article 50 of the European Convention. This principle is thus widely accepted in the Europe Union. Although this principle is recognized as one of the basic principles in our law system, the interpretation of this principle is exposed to developments. It is even possible that the European Court for Human Rights (ECtHR) and the European Court of Justice (ECJ) will give a different interpretation to this principle. We hereby give you a brief overview of some recent developments in the case law of the ECtHR and the ECJ.READ MORE

#22: A sledgehammer to fight tax fraud?

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Is the Dutch government using a sledgehammer to crack a nut in the fight against tax evasion and tax fraud? In lawlunch#13  we discussed the upcoming tax measures which were announced by the Dutch state secretary of finance concerning the prevention of tax evasion and tax fraud. One of the announced measures that especially caught our eye was the abolishment of voluntary disclosure. We discussed the implications of the abolishment in lawlunch#19. The abolishment however seems to be more extensive than expected; it also impacts the protection from criminal liability after voluntary disclosure. Furthermore, the state secretary announced a measure that enables authorities to publish administrative penalties imposed to so call professional facilitators, such as tax advisors and lawyers. So what is changing? And what is the current state of affairs?

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#21: Presumed guilty unless proven innocent?

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The presumption of innocence is a basic principle in the criminal law system. It is based in article 6 (2) of the European Convention of Human Rights. It states that ‘everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law’. The presumption of innocence dictates that the burden of proof lays with the prosecuting authority. This also entails that in principle the right to remain silent cannot be used against you. However, In Dutch case law we see a development – especially in relation to money laundering – that remaining silent can be held against you. Are suspects nowadays presumed guilty unless proven innocent? Does the presumption of innocence no longer exist?

The Dutch Supreme Court is quite clear on the fact that using the right to remain silent by a suspect cannot be used as evidence. The Supreme Court repeated its earlier ruling of 1997 in its decision of 16 September 2014: the circumstance that a suspect refuses to give a statement or refuses to answer a certain question cannot be used to proof the suspicion. The silence of the suspect can be used in elaborations on the evidence if the suspect did not give a reasonable explanation for a circumstance which in itself or in relation to the further evidence can be considered as a reason for the crime. The Dutch Supreme Court finds itself in good company on this matter. The European Court of Human Rights is also strict when it comes to the prohibition to use the fact that the suspect used his fundamental human right to remain silent as evidence. In this respect for instance the cases Murray against the United Kingdom and Telfner against Austria are interesting.

 

The possibility to use the ‘silence’ of the suspect is mostly used in money laundering cases in the Netherlands. As explained in Lawlunch #09 the money laundering jurisprudence shows who committed the crime from which the money originated or at what moment or where does not have to be proven. If ‘there is no other explanation possible that the source of an object is a crime or if it is ‘common knowledge’ it is sufficient to come to a conviction. The circumstances on which it is based that the objects derived from a crime vary greatly. As soon as money laundering typologies are at stake an explanation can be asked from the accused about the source of the money. This statement has to be concrete, verifiable and not beforehand unreliable. If the suspect does not give a verifiable explanation for the heritage of the money the ‘circumstantial’ evidence is enough to come to a conviction.If the explanation of the suspect is concrete, verifiable and not beforehand unreliable the prosecutors office has to investigate this explanation in order to further substantiate their suspicion. If the prosecutor fails to do so the suspect needs to be acquitted.

The foregoing thus means that the suspect is ‘forced’ to not use his right to remain silent in money laundering cases, if the circumstances need an explanation. The Dutch Supreme Court allows this to happen. Is this a breach of the right to remain silent? Or is this a breach of the presumption of innocence?

In this respect the case of Zschüschen versus Belgium  on which the European Court on Human Rights decided on 2 May 2017 is interesting. The suspect in this case, Mr. Zschüschen is convicted of tax fraud in the Netherlands. The European Court of Human Rights was to decide upon the question whether not giving a statement while he was suspected of money laundering was a breach of the presumption of innocence. The suspicion related to five transactions of in total € 75.000 Mr. Zschüschen made on a Belgian bankaccount. These transactions were reported by the bank as ‘unusual transactions’. These reported ‘unusual transactions’ in combination with the fact that no income was known of mr. Zschüschen created a suspicion of money laundering. In that respect Mr. Zschüschen was asked were the money came from. He stated that he earned this money but he refused to give the name(s) of his employee(s). The Belgian Court convicted Mr. Zschüchen for money laundering, the fact that he did not give a concrete clarification on the source of the money was used to support the indirect evidence. The court also takes into account that Mr. Zschüschen has a criminal record with drug related crimes and that there is no known income of him in the Netherlands, were he lives.

The question before the European Court of Human Rights is whether this burden of proof on the suspect in these circumstances breaches article 6 of the European Convention of Human Rights. The European court judges that there is sufficient indirect evidence in order to require a statement on the source of the money. If this statement is not given, this absence of a statement is allowed to be used support of other (sufficient) indirect evidence. The European Court however emphasizes that using the right to remain silent as such cannot be used as evidence. Hence, there has to be enough indirect evidence in order to trigger the requirement for the suspect to give an explanation. Not giving an explanation only supports the indirect evidence that the money has a criminal origin.

Returning to the questions raised in the introduction of this Lawlunch; yes, the presumption of innocence still exists. The defence however has to be very critical towards the indirect evidence presented in order to avoid that the presumption of innocence would be breached. Only if there is enough indirect evidence when it comes to a suspicion of money laundering that the money origins from a crime it is not a breach of article 6 of the European Convention if the absence of an explanation on the origin of the money is used as a circumstance which supports the indirect evidence.

In our opinion the defence has to be very critical on the indirect evidence the prosecutors service presents. Is this evidence sufficient to require an explanation of the suspect? It is up to the defence to assist the judge in assessing the indirect evidence in these kind of cases.

Do you have any questions about this subject, are you confronted with a related issue and would you like to discuss this with us? Please feel free to contact us via boezelman@hertoghsadvocaten.nl and boer@hertoghsadvocaten.nl.