#82: Is your data in safe hands?

Investigative authorities all over the world collect a great deal of criminal data. The Netherlands is no exception. It can include seizures or hacks of large data carriers in the interest of a criminal investigation based on a suspicion of criminal acts. Examples are the cracked messages of Ennetcom, Encrochat or Sky ECC. But also, full sets of administration of companies can for instance be seized. All this data is of course relevant for a specific investigation but is this data “in safe hands” afterwards? Will it be destroyed? Or may this data also be used for other purposes?

This is the subject of the Dutch WODC study “Processing of criminal data” published on 25 October of this year. This study offers an exploratory study into the standardization of the processing of personal data for criminal justice purposes. What does this research teach us?

The WODC notes that rules regarding the acquisition of data is included in the Dutch Code of Criminal Procedure, but that this code says nothing about the retention or use of data. This is relevant because investigative agencies today are also paying close attention to advanced technologies, which increasingly combine and analyze data. This means that seized data may not only be used for a specific investigation but also for data analysis, for example. How seized data should be kept and for what purposes it may subsequently be used is not in the Code of Criminal Procedure, but in the Dutch Police Data Act. It is unclear how the rules in this law relate to the rules in the Code of Criminal Procedure. The WODC notes that this makes the regulations insufficiently clear. For example, the law does not answer the question of whether and when seized data may be used for data analysis at a later time. The research team recommends that data processing will be more explicitly and clearly defined in the Code of Criminal Procedure.

Another important aspect is the use and processing of bulk data. The report shows that nothing is actually stipulated about this in current and/or forthcoming regulations. While legal regulation is necessary for the processing thereof to be in accordance with European law. So here too, according to the WODC, Dutch regulations are insufficient.

But one of the most important observations in the report is that current supervision is inadequate. The criminal courts, for example, test only briefly against the Police Data Act because a violation often does not lead to any legal consequence in a specific case against a specific suspect. The research team therefor recommends the creation of an oversight committee that can monitor investigations and also control the processing of the data.

As these recommendations are to be acted upon in the future, we believe that the criminal courts should take this role more seriously as long as there is no effective oversight body. Personal data should be “in safe hands” once it has been used for the purpose it has been collected for: a criminal investigation. We believe that violations of the law regarding the processing of personal data should be subject to judicial review, even if this often ‘only’ results in a perceived violation of the right to privacy which does not lead to serious impact on the decision of that court. The fact that such a violation is recorded in the decisions, provides more insight on what is happening with the data. We should not forget that protection of personal privacy is an important pillar in a democratic constitutional state. It is imminent that the judiciary monitors whether the executive power abides the law to safeguard that our principles of the rule of law are met. So (obviously) this also applies to the processing and use of criminal records.

Do you have any questions about the above or would you like to exchange views? Please contact boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl.

#81: I force you to cooperate

No one can be forced to cooperate with their own conviction. This principle is known in criminal law as the nemo tenetur principle. An important rationale behind this principle is that a certain amount of force might affect the reliability of a statement, but also that undue coercion on a suspect is not desirable. A suspect’s right to remain silent is perhaps the most absolute and well-known right that has its origins in the nemo tenetur principle. But the principle encompasses more aspects. For example, discussions exist on how much physical pressure may be put on a suspect to cooperate with an investigation, think about giving fingerprints. In financial or tax cases the question is mostly whether you can be obliged to hand over incriminating documents to the authorities and whether these documents may be used to impose a fine? The latter question was at stake in a case before the European Court of Human Rights (ECtHR) against the Netherlands.

In criminal investigations this question hardly ever arises since documents are seldom asked from a suspect. Investigative agencies have ample opportunities to seize documents such as bank statements. In administrative penal procedures the authorities have less far-reaching powers to seize documents in the Netherlands. Take for example the tax authorities, who have the possibility to request documents for tax purposes but are not able to conduct house searches for instance. Thus, for the most part – apart from third-party examinations – the tax authorities depend on information provided by the taxpayer himself. However, if the tax authorities want to impose a tax penalty, the right to a fair trial as laid down in article 6 from EHRC applies. This means that the nemo tenetur principle applies the moment the tax authorities suspect that, for example, an incorrect tax return was filed intentionally.

The question before the ECtHR was whether enforced information may be used for the proof of a fine. A taxpayer is in principle obliged to hand over tax-relevant information and documents pursuant to Article 47 of the ‘Algemene Wet Rijksbelastingen’, the general state tax law. If someone fails to do so or does so incorrectly or incompletely, this constitutes a punishable offense. The tax authorities can also enforce bank statements through summary proceedings by means of a penalty payment. The question is whether the evidence that has been gathered through coercion is admissible as proof for a fine or whether this is contrary to the nemo tenetur principle.

A Dutch taxpayer filed a complaint with the ECHR. The facts were as follows: the tax authorities requested bank statements from Mr. Lege. At the same time a suspicion existed that he had failed to declare assets regarding a foreign bank account in his income tax returns. The requested documents were eventually enforced through penalty proceedings in civil court and then used to impose a fine. The question for the ECtHR is whether this practice and use of evidence violates the nemo tenetur principle.

In the present case, the Court recognizes that coercion was used to obtain documents that were then used to impose a fine. However, the question is whether this situation is also protected by the nemo tenetur principle. To this end, the Court considers that the documents existed independently of the defendant’s will and that the authorities knew in advance about the existence of these documents. To that extent, therefore, there was no fishing expedition. Furthermore, the degree of coercion is not such that one can speak of a violation of Article 3 of the ECHR, the article prohibiting torture, inhuman or degrading treatment. The Court thus concluded that there was no violation of the nemo tenetur principle.

This ruling offers the Netherlands an important lesson. Yes, it is possible to enforce documents through a penalty procedure and use them for a fine, but only if the documents have a pre-existence before the request and there must be no fishing expedition! This means the authorities need to know about the existence of the documents that they are requesting. The Court refers to two other ECtHR cases in this regard where the requests were formulated far too broadly and generally. Thus, the requests must be concrete and specific and the tax authorities must have concrete evidence of the existence of the documents before they can be used in the present situation to prove a fine.  We believe that many requests from the tax authorities can be qualified as fishing expeditions.

Do you have any questions about the above or would you like to exchange views? Please contact boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl.

#80: Getting your right

Being right and getting your right are different things. Especially in law. In criminal investigations, the defendant who is convinced of his innocence obviously wants to get his right. And that makes sense in society nowadays, in which a wrongful accusation impacts so many other factors in life. A criminal investigation or prosecution has quite some consequences for which “collateral damage” is a euphemism. Of course there is an interest in not being wrongly convicted by a court, but there is also an interest in getting your right in case of an out of court dismissal. In the Netherlands, this often results in a discussion for dismissal code “01” – unjustified suspicion – and dismissal code “02” – insufficient evidence. This usually is the final battle to fight.

In practice in the Netherlands the accused who is convinced of his innocence cannot or will not simply accept dismissal code “02,” which implies insufficient evidence. Dismissal code “01” means that there is an unjustified suspicion and in a lot of cases does more justice to the situation. For some suspects, this has (mainly) to do with a sense of honor and justice. From a negative approach, the label “insufficient evidence” might imply that the evidence of a criminal act should be there, but that the evidence was not discovered. For others, the main issue is the effect of the wrongful decision. This is especially relevant for the suspect who is repeatedly facing problems with various institutions to be granted financial credit or, for instance, a statement of good conduct (“VOG”).

If a former suspect disagrees with the dismissal code, a complaint can be filed with the chief public prosecutor via the route of Chapter 9 of the General Administrative Law (Awb). And if the former suspect disagrees with the chief officer’s judgment, a complaint can be filed with the National Ombudsman. If the case prosecutor appears unwilling – after substantiated request – to adjust the dismissal code from “02” to “01”, experience shows that chances are that the chief prosecutor is also unwilling to do so. Going to the National Ombudsman is then the last resort.

This route however usually takes a lot of time. And practice shows that there are various other – creative – ways to getting your right. For instance there are examples of persons starting a procedure after a dismissal with code “02”, to request the court to order the prosecutors office to prosecute. The goal then is to receive an acquittal from the criminal court judge. Other examples are those of persons who try to obtain to get their right through the cost reimbursement procedure and request this judge to grant a reimbursement of costs as if the case would be dismissed with code “01″.

This discussion is also taking place in the Caribbean parts of the Dutch Kingdom, such as Curaçao. The administrative route to file a complaint at the chief prosecutors office against a specific dismissal code does not apply there. The Code of Criminal Procedure, however, does provide there the entrance to summary criminal proceedings. Article 43 of the Code of Criminal Procedure offers the following possibility: “In all cases, in which the interest of the proper administration of criminal justice makes a remedy urgently necessary and the Code itself does not contain any regulation in this regard, a request for such a remedy may be made by the accused or the person who has a direct interest therein that directly affects him specifically.”

If the dismissal decision was made during the preliminary investigation then, according to article 43, paragraph 3, Code of Criminal Procedure on the islands, the investigating judge is authorized to decide on the request to change the dismissal code from “02” to ” 01″. Based on (unpublished) rulings, it appears that this route can successfully solve the problem. In a specific case, a former suspect whose case was dismissed with a tremendous amount of determination got his right in the end. And that is what counts.

Do you have any questions about the above or would you like to exchange views with us? Please contact boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl.

#79: AML; the end does not justify the means

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. This week the FATF published its report on the Dutch anti-money laundering system and the extent to which it complies with FATF measures and the degree of effectiveness. The report shows several interesting findings. One of these findings relate to the effectiveness of the FIU. We question the report on this point based on the findings of the Netherlands Court of Audit.

First, the FATF praises the Netherlands for its robust domestic co-ordination and co-operation on AML/CFT issues at both the policy and operational levels. On the role of the FIU it reports that the FIU plays a major role in the production and dissemination of financial intelligence to the investigating parties, both proactively and upon request. It receives a significant amount of information from obliged entities on subjective and objective money laundering indicators. The report states that the FIU analytical products are of high quality. Remarkable is that the FATF asserts that the lack of comprehensive statistics on the usage of FIU disseminations in police investigations and on the number of disseminations left unattended in the police database is a minor concern. We question however the effectiveness of all the AML notifications that have to be done and whether it ways up against the burden that is put on the professionals and if it does not violate some basic human rights.

The past year showed a sharp increase in the number of notifications of unusual transactions, according to the FIU in its recently published annual review 2021. Especially banks and since recently also crypto service providers, are (increasingly) reporting unusual transactions under the Dutch AML laws. In 2021, for example, more than 1.2 million reports were made. This is an increase of more than 500,000 compared to the previous year. It is striking that this enormous increase in reports of unusual transactions did not lead to more suspicious transactions. In fact, the number of suspicious transactions fell by 7% to less than 100,000.

The report by the Dutch Court of Audit states that this information is still too inadequate for investigative agencies to easily select the transactions that are most suitable for a criminal investigation. The 80 or so FIU employees probably have difficulties keeping up with the flood of notifications and filtering them for the investigative authorities. This is completely understandable, as 1.2 million reports is no small matter. In addition, deliberately failing to comply with the obligation to report is a punishable offence in itself. Together with legislation that is too broad in scope, this may mean that reports of “uninteresting” transactions are made too quickly for fear of negative consequences, while it is already clear in advance that the FIU will not follow up on these notifications. This calls into question the effectiveness of the system in its current form.

The Court of Auditors is also critical of the current state of affairs. In the aforementioned report it says that the Dutch approach to the risk of money laundering is progressing, but is still not enough. In particular, the very substantial efforts of private parties – such as the many reports from banks – could be better utilized. “There are therefore opportunities to combat money laundering more efficiently and effectively, (…) In our opinion, the reporting chain for unusual transactions is ripe for a next step,” the Court of Audit said.

However, the Council of State that recently published its advisory report on a new Money Laundering Action Plan Bill of law is critical. Although this report is focused on a bill of law, the criticism could be taken at heart in general. First of all, it recognizes the important function of (among others) banks as gatekeepers in the fight against abuse of the financial system. Nevertheless, it believes that the joint approach to money laundering by banks, supervisors and investigative authorities entails major risks. Risks of unjustified exclusion from society, the infringement of fundamental rights, and even risks of stigmatization and discrimination. In light of a lack of efficiency of the current system, one may question whether these risks are acceptable. Proportionality should always be the starting point. “The end does not justify all means, especially if those means imply far-reaching infringements of fundamental rights,” according to the Council of State.

In our practice we regularly encounter cases where the risks mentioned by the Council of State become reality. We endorse the goal of combating money laundering and terrorist financing. However, we must guard against a system in which a large number of reports prove to be ineffective, while entailing far-reaching risks for those involved. We therefore welcome the recent published reports in the Netherlands and hope that the FATF will also keep the human rights in mind.

Do you have any questions about the above or would you like to exchange views with us? Please contact boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl.

#78: There is (no) smoke without fire

When the tax inspector was given the legal means in 2009 to impose tax fines on co-perpetrators, this caused quite the commotion among tax advisors. Initially the professional literature reassured them it would not be such a big deal. After all, according to the prevailing case-law, the required proof of (conditional) intent was not easily met. Besides, the right to impose a fine came with a safeguard: prior permission by the ministry is mandatory (section 2.6 BBBB). Until then, however, case law also showed all too often that the minimum rules of evidence for conditional intent were not justly applied by investigative authorities and the tax authorities. More than a decade has now passed. Were the soothing words (un)justified?

The case law that has now appeared shows that fines for tax advisors are mainly an issue in disputes on whether a foreign located company actually has its place of effective management (POEM) in the Netherlands and therefore is subject to Dutch corporate income tax. Whether this is the case is not always clear; these types of cases are very casuistic. It is remarkable that the inspector often concludes in one go that if the company is subject to Dutch corporate income tax, it probably has acted in bad faith and should be fined, besides the management or shareholder(s) of the company. The idea seems to be that where there is smoke (taxation), there is also fire (conduct liable to penalty).

But this is all too short sighted.

Recently, the Amsterdam Court of Appeal ruled that the tax inspector had correctly concluded that the effective management of the Malta-based company was in the Netherlands. However, the Court of Appeal considers this does not automatically mean that the tax advisor was also aware of this. On the contrary, the Court of Appeal assumes the good intentions of the tax consultant: “The Court of Appeal rather considers it plausible that if the interested party had realized this, she would have pointed out to the other parties involved that the required substance was threatened and that another course of action was required.” The Court of Appeal ruled that the proof of intent was not convincingly demonstrated by the tax inspector. This also applies to the claim that the tax advisor would have acted grossly negligent. It is also not up to the tax advisor to prove his innocence. That burden of proof lies with the inspector.

The Court of Appeal ruled that the advisor could have been expected to take action with respect to the domicile of the company. The Court of Appeal considered: “The failure of the interested party is culpable. More adequate action could have been expected from her.” However, according to the Court of Appeal, this failure to act does not justify the conclusion that there is serious fault: “This culpability, the failure to intervene or distance oneself where this could have been expected of her, is not so serious that it borders on intent in reprehensibility. There is therefore no question of gross negligence either.” The court adds that in this case, even if intent or gross negligence could be assumed, the required complicity could still not be proven. The contribution of the tax advisor was simply of insufficient weight.

In our opinion an entirely correct decision.

The judgment provides lessons to both tax advisors and the tax administration. For potential new cases it would be wise to assume the good intentions of the involved consultant, as the Court of Appeal does in this case, while analyzing whether there is proof of (conditional) intent. In our opinion only cases in which there is concrete evidence that the tax advisor realized that the effective management of a company was in the Netherlands but nevertheless the advisor consciously took no action, should be eligible for a penalty. If there is no such evidence during the request for permission, then imposing a penalty is disproportionate.

And to answer the question from the introduction: although this case may not be over yet, the soothing words for advisers so fare have proven to be correct. However, it is a long-term procedure with a lot of negative effects for both the personal as the professional life of the tax advisor involved.

If you would like to know more about the case-law we refer to, please reach out to us at boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl. We are happy to share an English translation and discuss any questions you might have on the topic.

#77: Bank relationships

The pressure on banks has increased tremendously by various regulators. These days banks are taking their anti-money laundering controls very seriously. After being firmly reprimanded a number of times by the Public Prosecutor’s Office and having paid their dues by high transactions, banks have set up extensive departments to carry out checks on the origin of transactions. These departments conduct numerous and intensive checks by asking customers a variety of questions based on extensive Know Your Customer (KYC) checklists. If the answers to those questions show that the customer is not complying with all the rules and requirements or if not all the questions are being answered, termination of the customer relationship can follow. And additional stricter legislation for banks is already forthcoming. This way of working is not only criticized by the bank’s customers, the banking world itself is also critical. Is the method overshooting its goal?

An example in which we believe the banks’ KYC controls are beyond the legal requirements is a case of a dermatologist who had been banking with ING Bank for over 40 years, both privately and professionally. During a Know Your Customer (KYC) investigation it was established that over a period of seven years more than € 200.000 of cash had been withdrawn from the private account and almost € 500.000 of cash from the business account. It is also important to mention that the dermatologist in question had been linked several times in the media to an infamous criminal in the Netherlands. Partly for this reason, the doctor was asked how he spent the cash money he withdrew.

His answer is clear. He used the cash payments in particular for the restoration of a building in France. He no longer has the invoices or receipts. The ING response is that the bank cannot verify the cash expenditure and for this reason the banking relationship will be terminated. The discussion in these proceedings was whether the bank may terminate the relationship if the purpose for which the cash was spent remains unclear while it is certain that the money was legitimately earned. According to us, the fact that the money was earned legally means that the money cannot be laundered. Money laundering is about concealing or disguising the criminal nature of the money, trying to bring ‘black’ money back into the white economy. Whereas in this case the suspicion is about the opposite situation, namely that ‘white’ money is supposedly used for criminal activities. According to us in this situation the bank is overachieving in its KYC controls, but it also shows that cash money is viewed as something criminal in general. Also the Court decided that the bank could terminate the relationship given the fact that the dermatologist could not proof where he spent his cash money on.

With new legislation coming up banks can even go a step further in which highly sensitive information about private life can be monitored through (PIN) transactions. This means that the bank takes an intrusive look into someone’s life. Examples include paying a therapist’s bill or pinning a drink at a specific bar. According to the Dutch Personal Data Authority (AP), the current proposals do not make it sufficiently clear which of the highly sensitive data may be used. Incidentally, the AP is not the only one concerned. The rest of the European privacy regulators, united in the European Data Protection Board (EDPB) also support the criticism.

In our practice we also see the effects of the anti-money laundering measures at banks. In some cases, the bank’s investigation is the starting point for other investigations by the Public Prosecutor’s Office and sometimes the Tax Authorities. Even in cases where there are no indications that criminal money laundering might be lurking, a discussion about money laundering can surface with far-reaching consequences. And that is unnecessarily harmful as far as we are concerned. It is good that more and more parties recognize that the controls cause a lot of unnecessary ‘collateral damage’, while there is no serious risk of money laundering. Preventing the possibility of certain data being involved in these investigations would be step forward.

What are your experiences in the rest of Europe?

If you would like to know more about the case-law we refer to, please reach out to us at boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl. We are happy to share an English translation and discuss any questions you might have on the topic.

#76: Trial agreements in the Netherlands

The desire for criminal proceedings to be more efficient is present among all those involved. Enforcement of criminal offences is more effective for society if proceedings do not take too long. In addition, suspects do not benefit from a long period of uncertainty and nor does the Prosecutor’s Office in terms of capacity. In February 2019, the Prosecutor’s Office in the Netherlands already expressed its desire to make trial agreements with the defense more often. The outlines of the possibilities and impossibilities slowly begin to unfold.

The desire to come to such agreements can be explained by the fact that once a case has gone to court, the Prosecutor’s Office cannot withdraw the case anymore. It is then up to the court to take a decision. Various developments in time could cause the Prosecutor’s Office to request a certain outcome of the case, however the court is not obliged to follow the Prosecutor’s Office. In this respect the Prosecutor’s Office expressed in 2019 that it wanted to start experimenting with trial agreements with the purpose of saving time and capacity. This would involve, for example, the public prosecutor limiting the scope of the investigation, followed by limited investigation requests  by the defense. There is no legal basis needed for trial agreements, but a draft instruction is being prepared by the Prosecutor’s Office that spells out the guidelines  under which trial agreements can be made.

The first experiences with trial agreements show that it depends on the court involved whether the Prosecutor’s Office and the suspect can count on support for their agreement. In addition, trial agreements seem to have the best chance of success if they help to “unclog” the criminal justice system. It is therefore preferable to make agreements with all parties and not, for example, with only some of the defendants.

In 2019 the Prosecutor’s Office also expressed a desire to come to agreements regarding a potential sanction, such as the duration of imprisonment: “A sentencing agreement is a joint request from the prosecutor and the lawyer of a confessing defendant to the judge.” The initial findings are a mix of positives and negatives. For example, also in 2019 agreements between the prosecution and the defense on the sentence in the so-called Cymbal case were submitted to the court. The court, however, disregarded these agreements and ordered a (much) higher duration of the imprisonment. In a recent case, the Arnhem-Leeuwarden Court of Appeal also did not follow the agreements made between the Prosecutor’s Office and the defense. The suspects in this case were accused of having defrauded the parties by promising them that they would be able to safely achieve high returns from investing in real estate in Poland. However, that money was lent to a Polish company without any security being obtained. The court emphasizes that a large number of victims are still experiencing the negative financial consequences of the defendants’ actions. The fact that the trial agreements would not lead to any certainty for the injured parties within a “very short period of time” played, among other things, a role in not accepting the trial agreements, as the defense indicated to be able to file an appeal at the supreme court with respect to the decision on the compensation of the victims.  

However there are also positive experiences. In another case, during a pre-trial hearing, it was the Rotterdam District Court who encouraged the Prosecutor’s Office and the defense to make agreements about the trial and the sentence. So they did and the court went along with their agreement after it had tested whether the trial agreements are fair, whether the suspect understands the trial agreements and whether they have been entered into voluntarily. This resulted in substantial save of time and money.

If you would like to know more about the case-law we refer to, please reach out to us at boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl. We are happy to share an English translation and discuss any questions you might have on the topic.

#75: Legal privilege in the Netherlands; an update

In Lawlunch #73 we wrote about an ongoing summary proceeding regarding the infringements on lawyer client privilege in a specific case. Last month the judgment was rendered. In the judgment it was confirmed that the right to legal privilege had been violated in this specific case. However, the judgment of the interim relief judge also contains a multitude of more general interesting points. We will highlight a few of these points in this Lawlunch.

First, a quick look back on the case: in March 2015 a search by the FIOD took place at an asset management company. On the same day, a defense lawyer informed the authorities that he would represent this company. In September 2015, on behalf of the Public Prosecution Service (PPS), the FIOD demanded, pursuant to Article 126ng/ug of the Dutch Criminal Procedural Code (DCPC), all email messages at the defendant’s external email provider. Following this demand, approximately 2 million files were handed over to the FIOD, including 3,115 email messages between client and lawyer. These files were viewed by several investigating officers. The case focused, inter alia, on the question whether it was up to the PPS (126aa DCPC) or to the investigating judge (98 DCPC) to review whether the data was covered by the lawyer client privilege.

In its judgment the Court ruled that the right to legal privilege had been violated in this specific case, but that it is indeed up to the PPS to review the data on legal privilege since it was demanded based on 126ng DCPC and not seized. The system in which a so-called ‘secrecy officer’ assesses whether the data falls under legal privilege, can itself be legitimate.

However, the court did find that the manual used by the PPS for dealing with information possibly subjected to the privilege was in conflict with Article 126aa DCPC. According to this manual, a staff member of the investigating authorities assesses whether the digital documents fall under the right of privilege, whereas according to Article 126aa of DCPC, the public (secrecy) prosecutor must take that decision. The PPS objected that this manual no longer corresponds to the current practice, but the judge ruled that the current practice of the PPS does not guarantee that the privilege of the lawyers, who act as plaintiffs in this case, is respected. Furthermore, the judge stated that the proposition is justified that there is at least a real risk that the privilege has been or will be violated in several criminal investigations. This is an important consideration of the Court. As a result, the state must disclose the future version(s) of the manual. A new, temporary manual has now been published by the PPS. A first look reveals that this manual still leaves a lot of questions unanswered, but it goes beyond this article to go into detail now.

In addition to the obligation to disclose the new manuals regarding the handling of privileged information, the interim judge concludes the judgment with a number of other pros and cons. It is explicitly stated that this judgment only relates to the situation that the special investigative power 126ng/ug Sv is used – thus not to seizure – and to (future) cases in which (one of) the Stibbe lawyers are involved. Within these frameworks, the following is decided:

  • The state may not use the power under article 126ng/ug (demanding certain data from the provider of a communication service) insofar as it concerns information that is covered by the right of legal privilege. The Court blamed the state for the fact that all email messages were demanded while it was already clear at that time that the defendant was being represented by a defense lawyer. “With that knowledge, the State could and should have prevented the violation of the privilege by instructing the provider company to provide only certain data of which – almost – it was certain that they were not privileged data.”
  • If an investigating officer in exercising the power under Article 126ng/ug comes across potentially privilege material, the public prosecutor must be notified without delay. If the prosecutor determines that the information is indeed covered by the privilege, destruction must be ordered immediately.
  • The destruction must be done in such a way that the information is no longer accessible. This may not be recovered later.

These considerations of the Court hold interesting questions in itself. Because how can digital data really be destroyed? Or will there always be footprints available? And in what way may the digital data be reviewed? May the public prosecutor take a quick look in the privilege data to review it or should all data be digitally filtered?

In any event, it turns out to be of great importance to always question the course of events in detail: who viewed the requested documents, and in what order? How quickly and in what way was the prosecutor informed that there was privileged material among the documents? When was destruction ordered? And how exactly was that order implemented?

Also very relevant is the consideration that the PPS should put a limitation in the demand at information upfront, instead of reviewing and destroying the documents afterwards. The PPS should formulate the demand in such a way that files which contain possibly legal privileged information fall out of the scope of the request. Here lies a task for the defense to check that not too much data is requested.

The last word on this has not been said. So to be continued!

Do you have any questions or would you like to exchange views with us? Please contact us at boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl.

#74: Is non-conviction based confiscation desirable?

This month, the Council for the Judiciary in the Netherlands (“Raad voor de Rechtspraak”) published its advice on the draft bill to strengthen the approach to subversive crime. The most striking point in this proposal is the introduction of non-conviction based confiscation (NCBC) in the Dutch law. This would make it possible to confiscate illegally obtained benefits in situations where there has not been a conviction. The Council for the Judiciary criticizes this proposal in its advice and urges the legislator to make substantial changes. And rightly so: the proposed NCBC procedure is, in our view, unnecessary and undesirable.

At the moment, the confiscation measure is only allowed under Dutch law once a suspect has been convicted for a crime. The draft bill would change that. NCBC can be used in situations where there is no concrete criminal offence, nor a known suspect, but when it is plausible that the object was obtained by criminal means.

The procedure is not a criminal but a civil procedure, which focuses on the criminal origin of the object instead of on the criminal liability of the entitled party. In this procedure, the government has to proof it is likely (plausible) that the object is related to criminal conduct. The rightful owner of the object can only prevent confiscation by providing an explanation that the object has a legal origin. In doing so, a statement that is “not highly improbable in advance” would explicitly not suffice.

The proposal to enshrine NCBC in law is based on the wish to seize criminal assets more quickly and effectively. The current approach is considered to be inadequate in this regard, as the burden of proof currently is on the state and the procedures are usually quite lengthy. However, the question is whether the NCBC would be more effective and whether this procedure would be the right solution.

Our colleagues Luce Smithuijsen and Linda Gruijthuijsen have argued before that on the one hand the current possibilities for confiscation appear to be sufficient to overcome situations in which there is an unknown suspect or a link between the alleged criminal assets and a specific criminal offence is lacking. A 2017 study by the Justice Ministry also found that the problems for which NCBC could provide a solution are limited in scope in the Netherlands. On the other hand, there is a risk that the application of NCBC will not only be limited to cases involving an unknown suspect or offence, but will also be used in cases where the Public Prosecutor has a suspect or offence in mind, but finds himself hampered by the criminal law presumption of innocence and burden of proof in cases such as in money laundering cases (Lawlunch #65).

The Judicial Council identifies these risks as well. The Council fears that NCBC will gradually be used not in addition to criminal enforcement, but as a replacement. The NCBC procedure is a tempting alternative to criminal law enforcement because it is faster and cheaper. In addition, the proposed NCBC procedure is not limited to the situation without a concrete suspect due to which criminal prosecution is not possible. This means that the NCBC procedure can be used to circumvent penal safeguards, according to the Council. This is not only undesirable in the light of the rule of law, but also with regard to efficiently combat crime.

The Council therefore advises to apply the NCBC procedure only in cases in which criminal law does not provide possibilities, but confiscation is still necessary and proportionate. We fully agree with this recommendation. But as far as we are concerned, the added value of this draft bill is not a given and therefore first has to be assessed thoroughly. After all, no one benefits from a bill which is not only undesirable, but also unnecessary.

Do you have any questions or would you like to exchange views with us? Please contact us at boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl.

#73: Legal privilege endangered in the Netherlands

This week a very important summary proceeding took place in the Netherlands in which the protection of lawyer client privilege played a central role. In a criminal investigation which has been ongoing for years now the lawyers managed to find out that several infringements were made on their legal privilege by the Public Prosecutor’s Service (PPS). These lawyers took action against this in the investigation against their client, but they also started several civil proceedings themselves as individual lawyers. Recently these procedures have led to the publication of an internal manual of the PPS, that describes how prosecutors and investigation teams should deal with possible privileged data which has been seized or came in their possession via other legal means. This manual brought a shock to the legal profession as, according to the lawyers, this manual shows that the prosecution is deliberately violating the right to privilege by reading the information, selecting the information to use in a criminal investigation or not and by not involving a judge in the process. The summary proceeding showed that the PPS has its own interpretation of the law, which – in our opinion – erodes the legal privilege and undermines our confidence in the rule of law.

Legal framework

There are two articles in the Dutch Criminal Code of Procedures (CCP) that relate to the handling of privileged information. The procedure set out in article 98 of the CCP dictates that in principle privileged information will not be seized and that an investigative judge has the authority to decide upon the seizure. This procedure has been finetuned in jurisprudence.

Article 126aa of the CCP deals with the situation in which data has not been seized but gathered by other investigative methods such as telephone taps or specific demands of information. Especially in this specific situation the PPS is of the opinion that no intervention is needed of the professional entitled to the legal privilege nor of an investigative judge.

In addition to these laws the Supreme Court has clearly stated that digital data, such as e-mails, should be treated in the same way as the legislator has set out the rules and regulations around letters and documents. Furthermore, the Supreme Court has ruled that in principle it is in first instance the professional entitled to the legal privilege who should assess whether data falls under his or her privilege. It is a judge and a judge only who can take a final decision on whether the document falls under the legal privilege.

The manual

The PPS manual deserves a thorough analysis of how the PPS deals with possible legal privileged information. But what it comes down to is that in specific circumstances a public prosecutor himself or special selected ‘confidential prosecutor’ – a function which is not recognized in the law – analyses the documents and decides whether the information is privileged information and can or cannot be used for the criminal investigation. To take this decision the public prosecutor or the ‘confidential prosecutor’ reviews the possible privileged information briefly, according to the manual. The PPS is of the opinion that only in specific circumstances the professional entitled to the privilege, or an investigative judge comes into play to review the possible privileged information and takes the decision whether this information is privileged or not. And this is where the legal discussion basically evolves around.

The discussion

The PPS claims to honor the lawyers legal privilege and states that the manual is not common practice. However, the PPS does claim to have the right to review possible privileged data if this data has not been seized but gathered via other legal means. The PPS explains its actions based upon the sole legal provision on this topic, while the lawyers are of the opinion that the method of operation by the PPS is clearly in violation with the law as interpreted by the Supreme Court.

We agree with the lawyers who pleaded that it is clearly set out why this interpretation of the law is contrary to the rules as formulated by the Supreme Court but also contrary to the wishes of the legislator.

For instance, the PPS ignores the parliamentary history of the law which states that investigative powers may not be used in such a way as to obtain privileged information through other investigative powers. The legislator was of the opinion that this was such a no brainer that no additional rules and regulations were needed. The PPS therefore ignores the explicit purpose of the legislator.

Was the legislator naïve? Perhaps. The PPS has so many methods to demand digital data via various ways that the law with regard to article 98 of the CCP can be circumvented. In this specific case for instance the PPS demanded all e-mail correspondence of a specific suspect from a hosting company. By doing this it received a ton of privileged information which a ‘confidential’ public prosecutor apparently reviewed, claiming this is legal based on article 126aa of the CCP.

 Conclusion

We highly question the statement of the PPS that this manual is not common practice and we feel that the PPS should be transparent about its methods of investigations at all time and should have published its working methods. Furthermore, we highly disagree with the interpretation of the law by the PPS. We are of the opinion that the PPS erodes the right to privilege relying on an outdated article in the law en by using this methods, grossly violates this right.