#45: The wind has changed

Until a few years ago, criminal prosecution of tax offences in the Caribbean parts of our Kingdom was not very common. In recent years, the Public Prosecution Service of Curaçao has made its presence in the tax domain and is prosecuting tax offences. In some cases more successful than others. Nevertheless, it is clear that the Public Prosecution Service of Curaçao is wide awake. Very recently, agreements between the Public Prosecutor’s Office of Curaçao and the Tax Authorities of Curaçao were published. These Notification, Transaction and Prosecution Guidelines (ATV-guidelines) lay down which tax cases are eligible for criminal prosecution and which cases will be dealt with administratively. From our experience at Hertoghs Dutch Caribbean we learn that the wind has changed. What can we expect?

It is clear that tax fraud has been underexposed on Curaçao and this also applies to other Caribbean parts of the Kingdom of the Netherlands. The Curaçao Court of First Instance acknowledges this in so many words in earlier judgments. The Court seems to blame this on the tax morale on the island, or rather: the lack of it. On the other hand, Curaçao citizens  blame the Tax Inspectorate for acting arbitrarily against taxpayers, as the tax burden is not evenly distributed. The fact that the tax morale on the island is “underdeveloped” could then be considered a logical consequence. In our opinion, this factor plays a role in the defense in tax proceedings and in tax related criminal proceedings. After all, the principle of trust regarding how things were established in the past is applicable.

However, this does not change the fact that anyone can be pulled into a discussion with the tax authorities or the prosecution service related to not complying with tax law obligations. Especially now that the Public Prosecutor’s Office and the Tax Inspectorate are preparing themselves with the ATV guidelines in order to fight tax abuses. These guidelines are a publication of the agreements made between the Public Prosecution Service, Customs, the Tax Inspectorate, the Tax Affairs Sector (SFZ) and “Stichting Belastingaccountantsbureau” (SBAB). The guidelines describe 1) which cases must be reported, 2) on the basis of which information the cases are selected and 3) which cases are dealt with under criminal law and which cases are dealt with under administrative procedures. In the blog of our colleagues these agreements and the way in which the defense can benefit from them are further explained.

The guidelines suggest that, in addition to the Public Prosecution Service, the Tax Inspectorate will also play an active role in tackling tax fraud. The question is whether this is a realistic target. Only last year, the Tax Inspectorate and the Tax Collector stated in the press that there has been a huge backlog in sending out tax assessments and that the Tax Collector is also forced to leave money ‘on the streets’. The lack of capacity is therefore a problem. At the time, they also announced that they were no longer waiting for the ongoing projects to reorganize the Inspectorate, but that they were setting up the reorganization themselves. It will have to become clear whether the budget problems can be overcome in order to make up for lost time by hiring sufficient personnel.

In the meantime, the Public Prosecutor’s Office might not want to wait for this to be sorted and take matters into its own hands…

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.

#44: What is the value of a confession?

It is completely up to a Court to decide upon a punishment when a suspect is found guilty of a crime. The Courts are only bound by the maximum penalties as stated in the law. In fraud cases it hardly ever happens that the maximum sentence is ordered. It is quite an arbitrary process in which (the) judge(s) ha(s)(ve) to weigh all the facts and circumstances of the case to come to a reasonable punishment. A difficult question to answer in this respect is: What will the suspect get in return for a confession?

The LOVS guidelines, which have been drawn up by the Courts of Appeal, provide guidance for the courts to determine which penalty should be imposed in a specific case. However, in the end every punishment is ultimately tailor-made. After all, the LOVS guidelines also state that aggravating and mitigating circumstances must be taken into account. But how these circumstances should be weighed and what effect these circumstances have on the punishment remains mystical. This applies in particular to the question on whether cooperation of the suspect in the investigation yields in terms of punishment. To this question, lawyers often are unable to give an answer. The Court of Appeal in The Hague recently made clear what the effect of cooperating on a punishment can be and – we believe it is fair to say – should be.

The case concerns a suspect who is convicted by the regional court for forgery of documents. He had submitted false declarations for an expensive drug for a period of two years, while in reality that drug had not been provided at all. However, the reimbursements for it had been collected by the suspect. The sentence he was given for this was a prison sentence of 18 months, 6 of which were conditional. The suspect appealed against this sentence. For most part, the Court upholds the statement of evidence, but in particular deals with the penalty.

The Court considers that according to the LOVS guidelines the sentence should be an unconditional prison sentence between 18 and 24 months. Nevertheless, the Court believes that in this case there is no reason to impose an unconditional prison sentence. The Court of Appeal explicitly states the circumstances that reduce the sentence:

1. Immediately after the case has come to light, the suspect fully cooperated with the investigation;

2. He has repaid the amounts wrongly received;

3. During the trial, the suspect has shown that he is aware that he has acted wrongly;

4. The consequences of the criminal case have had an enormous impact on the life and family of the suspect, partly due to media attention;

5. The suspect is a first offender.

In view of these circumstances, the Court of appeal comes to a conditional 12-month prison sentence and a 240-hour community service. Because the Court of appeal explicitly provides insight into what the mitigating circumstances are and what they result in, lawyers can now provide better advice to their clients on the (positive) effects of cooperating with the investigation.

We welcome the result of this judgement. After all, an unconditional prison sentence comes with a great amount of damage for the suspect and certainly also for relatives and loved ones. In such a situation we find this disproportional, as does the Court of appeal. A second chance can be deserved by cooperating. We therefore hope that other courts will take an example of this judgement.

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.


#43: The fading and fallible memory

In many criminal investigations under the Dutch continental law system, the investigation à décharge on behalf of the defense is a challenge. Due to the inquisitorial system it is not a given that the defense can interview any and all witnesses. The defense has to convince the (investigating) judge on the interest of interviewing certain witnesses. Especially requests that are made during the investigation of the police or FIOD (financial intelligence unit) are hard to realize. Even though interviews à décharge can be of crucial importance in this early stage. The Court of Appeal in Amsterdam now acknowledges that interviewing witnesses in a later stage has influence on the memory of the witness. Therefore it also has an influence on the reliability of the evidence, which is one of the arguments for granting permission to interview witnesses on the request of the defense in an early stage.

In a recently published decision the Court of Appeal had to decide on a case regarding taxi rides without running a taximeter. The defense was first granted to interview a witness in the appeal phase. The defense argued that the right to interview witnesses in the sense of article 6 ECHR was breached. The reason was that the witness was interviewed 4 (!) years after the alleged criminal act was committed. Because of the passing of time the witness could remember the incident only on headlines.

The Court of Appeal however decided that in this particular situation article 6 ECHR was not breached. At first the suspect was offered to accept his punishment by payment of a fine (the so called “strafbeschikking”). The suspect however did not accept this and appealed to the regional court. Soon after this appeal the suspect received the indictment to appear before the court. Before the indictment was received, the defense had the possibility to ask the investigating judge to interview witnesses, this momentum was however not used. The criteria to decide upon such a request is whether there is an interest for the defense. Now the request was first made during the hearing at the regional court. At that moment the criteria is whether the request to interview the witness is necessary for the defense. This request was then denied.

The Court also states that if the witness would have been interviewed at the regional court, this would not necessarily have led to a more detailed witness interview, as at that time also a lot of time – 2,5 years – had already passed since the incident.

In our opinion the argument that the passing of time influences the ability of witnesses to give a useful interview in criminal investigations, should be taken more seriously. If the defense requests to interview witnesses during the investigation phase, these requests should be granted. With the passing of time it will become more and more difficult for the witness to remember certain matters, perhaps important details, which are relevant for the case. Even though this situation did not cause a breach of article 6 ECHR in this specific situation, this does not mean that this witness could have provided important information for the case if he would have been interviewed earlier. After all, the importance to interview this witness in the appeal case was acknowledged.

This case not only shows that the defense should make their interest to interview certain witnesses early in the investigation, it also shows that these requests should be taken more seriously to be able to establish all the relevant facts and find the truth.

If you have any questions about this subject or if are you confronted with a related issue please feel free to contact us via boezelman@hertoghsadvocaten.nl and boer@hertoghsadvocaten.nl.

#41: Tax: a dream, or a nightmare?

On 23 and 24 May 2019 we attended the Half Year Conference of the International Association of Young Lawyers (AIJA) in Hong Kong. One of the tax sessions was devoted to the changing landscape of professional liability of tax advisors across the world. We concluded that the transition of this landscape is in full force. The title of the conference “Tax: a dream, not a nightmare” therefore seems to be too soothing on this particular matter. The actions taken by the tax authorities and the prosecutions services against tax advisors are becoming harsher.READ MORE

#39: Blinded by the cause

From the previous Lawlunches it becomes clear that the fight against (tax) fraud is fierce. “Facilitators”, such as tax advisors and financial institutions, are targeted by the various government institutions as described in Lawlunch #33. In Lawlunch #37 we concluded from the annual report of the FIOD (the Dutch tax intelligence and investigative unit) that this fight against fraud by going after facilitators will continue. We also concluded that this annual report lacks a very important topic: the rights of the accused.

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#38: To proof or not to proof

Criminal judges are given a difficult task. They need to reconstruct what happened and decide whether they are convinced somebody committed a criminal offence. The Dutch system of proof gives a judge a free hand when taking this decision: he is free in the valuation of the evidence and needs to be convinced that the crime was committed by the suspect to come to a conviction. This freedom of a judge is just limited by the rules regarding the minimum of proof. The unus testis nullus testis-rule is one of the basic principles in this regard. However, this rule does not apply to police officers. If a police officer witnesses something and writes this down in an official report, this report has probative value and the unus testis nullus testis-rule does not apply. We wonder of the probative value given to an official report is legitimate and whether a decision of the court could be solely based on an official report. Before we get to that, we will first consider the decision scheme of the Court to know which questions the Court has to answer. Thereafter, we will pay special attention to the probative value of an official report.

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#37: High and mighty

While 2019 is still brand new, we have already been treated with lots of developments. Britain is keeping everyone occupied with their Brexit worries, as are the United States with the shutdown. Meanwhile the various authorities are continuously expanding their fight against fraud. This year, on 4th of January, the Dutch Tax Intelligence and Investigative Service (FIOD) published an annual report for the first time. The title of the report on 2018 is: ‘The silent revolution in the financial investigation’. In the report the FIOD looks back on the accomplishments of the last year and their goals for 2019. Reading the report however makes one wonder: are there only just accomplishments or is the FIOD getting high and mighty on itself?

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#36: The end is near…

Just a few more days to enjoy the great year of 2018! And what a year it has been.

The developments in our practice area have been both interesting and exciting as well as a bit frustrating at times. The developments however all have one thing in common; they bring a lot of opportunities. We hope to have given you inspiration to use them.

Of course we will continue to share our view on the legal developments with you in the new year. But for now; happy holidays and we wish you all the best for 2019!

# 35: What is real?

In almost every fraud case in The Netherlands forgery is part of the suspicions. The offense of forgery can be committed in two ways. It is an offense if someone intentionally makes a false document or falsifies a document that is intended to be used as evidence of any fact. The second way is to intentionally use such a false or falsified document as if it were genuine and unfalsified or intentionally deliver or possess such a document. But when is a document false or not in line with the truth? The Dutch Courts have set some boundaries with regard to question when an agreement is considered to be false.

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#34: Paper over the cracks of the system

The recent decision of the European Court of Human Rights (ECHR) of 9 October 2018 in the case of Corallo vs. the Netherlands makes us wonder whether the human rights of the European Convention are taken seriously. In this case the suspect complaints that the circumstances in his prison cell in the Sint Maarten police station where he had to await the decision on the request of Italy to extradite him were miserable. The defense attorneys had requested to ensure that his human rights would be taken seriously and therefore to suspend his arrest until a decision was taken or to take other measures. The poor decisions on these requests led to this complaint against the State of the Netherlands.

It started on 21 November 2017 when the court in Rome requested the arrest of the claimant in relation to an investigation into, amongst other things, tax evasion, money laundering and embezzlement. On 13 December 2016 Italy sent out a Red Notice via Interpol with the purpose to extradite the claimant to Italy. The claimant was arrested and stayed in a cell on the police station of Philipsburg in Sint Maarten until his extradition on 16 August 2017. At first he stayed in a cell with multiple others. Later on he was transferred to a cell on his own. His request to be transferred to a prison complex in Point Blanche instead of staying in a temporarily cell on a police station was impossible according to the authorities due to safety reasons. The claimant repeatedly requested suspension of his incarceration while awaiting the decision on the extradition request. However this was denied.

The claimant complaints at the ECHR that article 3 of the convention is breached because of the poor circumstances he was kept in for months. In the decision of the ECHR is stated that he was kept in a 16 square meter cell for the period of 13 December 2016 until 29 March 2017. Also from 4 until 12 April 2017 he was kept there. That was not a cell for him alone, he continuously had to share the cell with 5 to 6 persons.

In the decision it the circumstances are described vividly:

“The toilet in the multi-occupancy cell had leaked and had not been covered. Detainees had partitioned off the sanitary area with towels and sheets. The multi-occupancy cell had been equipped with two sets of bunk beds for four detainees. It was the rule rather than the exception that one or two additional detainees were held in the cell, who during the night would sleep on mattresses on the floor.”

 On behalf of the State it was argued that various improvements on the detention facilities of the police station in Philipsburg were made as recommended by ‘the Committee for the Prevention of Torture and Inhuman or Degrading Treatment of Punishment’ (CPT). The State further argued that because of a lack of detailed information they cannot respond to the circumstances as described by the claimant. These circumstances however were not denied. They were qualified as ‘not ideal’. However a breach of article 3 of the Convention was not the case according to the State.

The European Court however acts firmly upon this complaint of the claimant. The Court states that article 3 of the Convention has been breached because the claimant was detained for more than eight months – of which 114 days in a cell with multiple persons – in a cell of which the CPT was of the opinion that the cell is not suitable to keep detainees for a longer period than three days, and certainly not longer than ten days. The facility is simply not suitable to guarantee the minimum human rights for a longer period. The Court grants the complaint of the claimant and grants a compensation for damages of € 10.000.

This compensation of course is not more than paper over the cracks of the system the claimant had to endure. It should not be necessary to file a complaint against the State – also in areas overseas – for the miserable circumstances in prison. Human rights should be a higher priority on the agenda of the State. And not only of the State. A judge who is confronted with facts such as occurred in this case should give a strong signal to the authorities that the defense complaints cannot be put aside in such a case. Also if a solution is not easy accessible the judge still should order the authorities to put energy in finding a solution. And if that is not possible the judge should guarantee the human rights as laid down in the ECHR and suspend the detention. In our opinion that should have been the only right decision.

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