Netherlands

Netherlands Corruption Report

(Want to receive more corruption report updates? Subscribe here!)

Snapshot

Netherlands_249x162.jpgCorruption does not represent a constraint to business in the Netherlands. Petty corruption is almost non-existent, and the public administration is transparent, efficient and holds high ethical standards. The Dutch Penal Code makes it illegal for anyone to give or receive a bribe in the public or private sector, including a foreign public official. Dutch and foreign companies and their subsidiaries can be held liable for corruption offences committed by individuals working on their behalf and can be ordered to pay up to 10% of their turnover. Facilitation payments are not permitted, while gifts and hospitality may be considered illegal depending on the intent and benefit obtained. The legal framework to fight corruption generally complies with the provisions of the major anti-corruption conventions. Despite increased efforts to crack down on transnational bribery, the country has been criticised by the OECD for insufficient investigation and prosecution activities. Bribery is not widespread in the Netherlands.

November 2015
GAN Integrity

Judicial System

European_Commission.svg.pngJudicial corruption is not an obstacle to business in the Netherlands. Members of the judiciary have a longstanding reputation of independence, impartiality and high public trust (FER 2013). Companies consider the judiciary very independent and effective in settling disputes and challenging government regulations (GCR 2015-2016). The Enterprise Chamber, a special court established and dedicated to commercial disputes, is well-renowned among investors (ICS 2015). Settling disputes in the Enterprise Chamber takes an average of 3 to 12 months (ICS 2015). A growing workload coupled with the urge to uphold timeliness and efficiency has at times, resulted in poor legal certainty and/or erroneous argumentation of verdicts (SGI 2014). Fees required to start legal procedures have been significantly raised, making it unaffordable for smaller companies to access legal dispute resolutions (SGI 2014). Less than a fifth of citizens are surveyed to perceive bribery and abuse of power common in courts and tribunals, and no respondents report paying bribes to the courts (European Commission, Feb. 2014). The Netherlands is a member of the International Centre for Settlement of Investment Disputes (ICSID) and is a signatory to the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

Police

The Dutch police are not affected by corruption, and the reliability of police services to protect companies from crime is considered very high (GCR 2015-2016). The government has effective mechanisms to investigate and punish police abuse and corruption (HRR 2014). More than one-third of citizens perceive corruption and abuse of power as widespread in the police forces, but respondents do not report paying bribes to police officers (European Commission, Feb. 2014). 

Public Services

The Dutch public administration does not pose corruption risks for companies operating in the Netherlands. The integrity of service provision throughout the public administration is very high, with very few reported incidents of corruption between citizens, businesses and public authorities (EUACR 2014). It is not considered very burdensome to deal with government administrative requirements (permits, licences, reporting, etc.), and companies report that irregular payments and bribes almost never occur when obtaining public utilities, business permits, licences and other related services (GCR 2015-2016; European Commission, Feb. 2014).

Land Administration

While companies are not likely to encounter corruption when dealing with the Dutch land authorities, findings reveal that the building and real estate sectors are more vulnerable to corrupt practices (RICS, Feb. 2014). Although instances of corruption in these sectors are isolated, evidence of bribery and collusion between civil servants and companies in municipalities have been shown, with several individuals found guilty of bribery (NISA 2012). Very few surveyed companies report that bribery is used when obtaining building permits (European Commission, Feb. 2014). Property rights are well protected in the Netherlands, and expropriation or nationalisation requires a special act of Parliament (ICS 2015).

Tax Administration

The Dutch tax administration is not affected by corruption and does not constitute a constraint for investors. While tax regulations and tax rates are considered a problematic factor to doing business (GCR 2015-2016), tax authorities provide a high degree of customer service to foreign investors in the form of transparent and precise guidance regarding long-term tax obligations (ICS 2015). Companies should note that Dutch law prohibits the tax deductibility of bribes and facilitation payments (OECD, May 2015). The Dutch tax administration is considered almost free from corruption and abuse of power by citizens (European Commission, Feb. 2014).

Customs Administration

Corruption in the Dutch customs administration is not an obstacle to doing business. Burdensome procedures and tariffs are among the main constraints for importing and exporting in the Netherlands, but companies do not consider corruption at the borders a problematic factor for trade (GETR 2014). The transparency and efficiency of the border administration is considered very high (GETR 2014), although isolated incidents of alleged corruption involving border authorities have occurred (NISA 2012). More than one third of citizens consider the customs administration to be affected by corruption and abuse of power, but survey respondents do not report paying bribes to customs officials (European Commission, Feb. 2014). Trading across boarders in the Netherlands is on average less-time consuming and less costly than the regional average (DB 2015).

Public Procurement

The Netherlands is ranked among the best countries in the EU in its ability to develop mechanisms to control corruption in public procurement (European Commission 2013). While procurement corruption does not impede doing business in the country, risks of corruption are reportedly largest in the construction sector, in which previous cases have revealed irregularities, collusion and cartel practices between local public officials and businesses (NISA 2012). Around one-fifth of businesses believe that corruption has prevented their company from winning a public tender in the past three years (European Commission, Feb. 2014), but very few companies report it being common practice to use bribery in their sector to win contracts (NTCBR 2013). Companies also report that procurement officials rarely show favouritism when deciding contracts (GCR 2015-2016). It is recommended for businesses to implement special due diligence procedures to reduce the likelihood of encountering corruption in the procurement process.

In an increased effort to crack down on foreign bribery, the Dutch public prosecutor’s services reached an out-of-court settlement with SBM Offshore, a Dutch multinational company that bribed its way into winning lucrative contracts with Brazil's state-run oil firm, Petrobras. The SBM/Petrobras case is regarded as the biggest corruption scandal in Dutch history, involving high-ranking officials, including Brazil’s President, Dilma Rousseff. The SBM settled the bribery case for USD 240,000,000. SBM committed to the Dutch Openbaar Ministerie (OM) to implement anti-corruption measures to prevent re-offending (OECD, May 2015; Vrij Nederland, June 2015).

Natural Resources

Environmental rules and health and safety regulations are non-discriminatory, and apply equally to foreign and domestic firms (ICS 2014). Very few surveyed companies report being asked or expected to pay a bribe for environmental permits (European Commission, Feb. 2014).

Legislation

The Dutch Penal Code makes it illegal for anyone to give or receive a bribe in either the public or private sector, as well as bribing a foreign public official. It criminalises extortionabuse of officefraud and money laundering. Dutch and foreign companies and their subsidiaries can be held liable for corruption offences committed by individuals working on their behalf. There exists no corporate liability defences which could mitigate sentencing (CMS Legal, 2014). Individuals can be fined up to EUR 78,000 and/or sentenced with up to four years imprisonment. The parliament amended the Dutch Criminal Code in late 2014 to raise penalties to a maximum of six years for active bribery, and a maximum sentence of twelve years for the bribery of judges (OECD, May 2015). The maximum corporate fine was raised to 10% of the given organisation’s annual turnover (OECD, May 2015). The government has effectively enforced its anti-corruption laws, and the country has stepped up its efforts in investigating and prosecuting foreign bribery cases (OECD, May 2015). Dutch law does not distinguish between bribes and facilitation payments, and bribes do not have to be of monetary value, but will be considered illegal depending on the intent and benefit obtained. Facilitation payments are not prosecuted on the condition that these only represent small amounts, do not distort competition, are provided at the initiative of the official, represent payments to junior public officials, and are included in company's financial accounts (Global Compliance News, 2014).

The Netherlands is a signatory to the OECD Anti-Bribery Convention, the United Nations Convention Against Corruption (UNCAC), the Council of Europe’s Civil and Criminal Law Conventions against Corruption, and the Group of States Against Corruption (GRECO).

Civil Society

The Dutch media environment is free and independent, and censorship is very rare (HRR 2014). The media is active in reporting about government affairs, and in some instances, media outlets have brought cases of corruption and fraud to the public's attention (NISA 2012). The Government Information Act allows individuals and the press to demand information from the public administration or from private companies conducting work for a public body. The Dutch media environment is considered 'free' (FotP 2015).

Freedom of assembly is guaranteed and generally respected by the government in practice (HRR 2014). Many national and international civil society organisations (CSOs) are registered in the Netherlands and enjoy a high-degree of independence. There are very few CSOs that work on the issue of corruption, and CSOs generally do not cooperate with the government to develop anti-corruption policies (NISA 2012).

Sources

Topics: Europe & Central Asia