(Horeca) in Belgium

Programme Future and Society

TA/00/020 Project DANGER

WORKING PAPER SERIES No. 10

Vulnerability to Crime of the Hotel, Restaurant and Café Business (Horeca) in Belgium

Noel Klima

Accepted for publication in Governance of Security, Maklu: Antwerp

Vulnerability to crime of the hotel, restaurant and café business (Horeca) in Belgium

Abstract

This paper reports on explanatory qualitative research into vulnerabilities to crime within the Horeca (hotels, restaurants and cafés) sector in Belgium. The sector’s vulnerabilities expose its members to becoming a victim, but also a perpetrator (an accomplice, facilitator, etc.). Low profitability, exacerbated by pricing pressures from Horeca customers and suppliers, predispose Horeca entrepreneurs to attempting a variety of non-legal modes of economic survival, including involvement in a ‘black market’ (‘off the books’ trading) between Horeca providers, suppliers and some customers. There are similar arrangements for the highly fluid workforce, whose hours and wages are only partially declared to the authorities, the untaxed payments then partially compensating for the low wages prevalent in the sector. Certain aspects of rules and regulations ‘backfire’, for example high VAT rates stimulate the grey economy; these and other evasions are being facilitated by sympathetic accountants skilled in hiding illegal transactions, and by complicit customers and suppliers. Illegal service providers and suppliers emerge to create an underground economy, and disputes are solved without recourse to the authorities. These sector conditions create an attractive, fertile soil for more serious criminal activities like human trafficking and money laundering activities.

Key words

Hotel, Restaurant, Café, Horeca, Crime, Vulnerability, Opportunity, Belgium

Introduction In recent years Belgium’s hotel, restaurant and café sector (in Belgium and the Netherlands abbreviated Horeca1) has been considered one of the chief legal sectors (next to construction,

1 This sector consists of two codes (NACE-Bel 55-56) that are part of a classification system defined and applied through the European Union and its Member States to facilitate the comparison of economic activity data between the member states and statistics. The code system NACE (Nomenclature générale des Activités économiques dans la Communauté Européenne) is based on the International Standard Industrial Classification of All Economic Activities (ISIC) of the United Nations. The classification system is comparable to the North American Industry Classification System (NAICS). The NACE sections are classified by the EU but the subsections may be amended by the Member States after approval of the European Commission. For Belgium the amended NACE-Bel 1

transport, export–import and textile) related to organised crime in Belgium according to the published organised crime reports of the Belgian Federal Police (DSB-SPC 2001, 2003, 2005, 2008). The Belgian Federal Police differentiate between legal economic sectors and companies as a ‘victim’, and the ‘use of commercial structures’ which consists of three sub - categories: (i) mixing legal and illegal structures, (ii) the use of existing fully legal structures and (iii) the use of front organisations (DSB-SPC 2001, 2003, 2005, 2008). The line between the different forms of interaction with crime and the legal economy is obscure and blurred, as some researchers have found. Passas (2002, 2003), for example, has developed typologies of the ‘interfaces’ between the legal economy and (organised) crime activity with respect to cross-border crime. Some other contributions studied the situation from the perpetrator’s perspective (see for example Kleemans & de Poot 2008, Kleemans & van de Bunt 2008), highlighting the use of legal structures for illegal activity or infiltration. Vander Beken and his colleagues examined the interaction by looking at the existing legal structures in economic sectors and their weak points (vulnerabilities) that might be exploited by (organised) criminals (Vander Beken et al. 2003, 2004; Vander Beken 2005, 2007a, 2007b; Vander Beken & Van Daele 2008; Klima et al. 2009). In these studies different roles of the legal sector and enterprises are considered such as perpetrator (accomplice), victim or facilitator.

Following this line, we also hold the view that the sector’s vulnerability should be considered from different perspectives taking the different roles into account. However, it is sometimes not easy to make a distinction between the perpetrator and victim in this sector. Therefore this study considers both perspectives, while maintaining a clear distinction between them to avoid misunderstandings. The nature of the relationship between crime and the legal environment is particularly important in vulnerability studies, and this is reflected in our analysis. Many interviewees from the sector believed that its vulnerability was a risk of victimisation, whereas police interviewees viewed sector participants as both victims and perpetrators, and focused particularly on perpetrators when discussing vulnerability. This shows that vulnerability depends strongly on one’s perspective. Only a few studies attempt to analyse the sector from both perspectives, but a theoretical approach should cover both perspectives. As most crime-explaining theories focus on victims or perpetrators, these theories need to be integrated to explain the sector’s vulnerability to crime. Integrated approaches that bring together different criminological theories, for example Vila (1994), provide a basic idea for studying vulnerability to crime. This approach discounts a mono-causal reasoning for crime and is willing to take models and theories from other disciplines into account. Earlier research on crime vulnerabilities also took a ‘holistic’ view, but did not always make a clear distinction between the different roles a sector might

2008 nomenclature is valid since 2008 (see http://statbel.fgov.be/nl/statistieken/gegevensinzameling/nomenclaturen/nacebel/index.jsp).

play with respect to crime (Vander Beken 2005). However, as precedent vulnerability studies we initially focussed on opportunities and in the legal environment settings that might be exploited by criminals.

The settings in which criminal events take place and the recognition that opportunity is an important causation for crime has been extensively studied by environmental criminologists during the last three decennia (for a good overview see Wortley & Mazerolle 2008). The three recent (complementary) theoretical perspectives within environmental criminology are Routine Activity Theory (Cohen & Felson 1979), Crime Pattern Theory (Brantingham & Brantingham 1993) and Rational Choice Theory (Cornish & Clarke 1986). While Crime Pattern Theory helps to explain the relation of crime and places, Rational Choice Theory deals with the decision-making processes of offenders. The complemented version of Routine Activity Theory (Cohen & Felson 1979, 1995, Eck 1994, 1995) explains crime as a convergence of a target and an offender in a place at a time in absence of a guardians, place managers and handlers.2 This vision serves as the basis for several practical applications such as e.g. Situational Crime Prevention (Clarke 1980, 1997) and is applied to several crime types (see for an overview Clarke 2009). Opportunity approaches are thus no longer limited to property crimes like theft, burglary and vandalism but also to more complex crime phenomena such as organised crime (Bouloukos et al. 2003, Cornish & Clarke 2002, Felson 2006, van de Bunt & van der Schoot 2003, van der Schoot 2006, Bullock et al. 2010).

The present study approaches the legal hotel, restaurant and café sector by looking for opportunities and the circumstances that facilitate and stimulate (organised) crime in the sector. Our starting point is not a certain crime type, but the Horeca sector and its structures and conditions with regard to crime. In this context, criminal activity refers to all ‘unlawful activity’ that was detected in the case files we studied, and that was mentioned by the interviewees. The central question was: what is it that makes the Horeca sector vulnerable to criminal activity?

With the exception of Hoogenboom & Hoogenboom -Statema’s Foute Kroeg (1996), no reported criminological research has concentrated on the Horeca as one single economic sector (although Hoogenboom & Hoogenboom -Statema did not consider the hotel business in their research). Most of the international literature focuses on nightlife (Hobbs et al. 2000, Hadfield et al. 2009), exploring crime phenomena such as violence (Hobbs et al. 2003, Recasens 2007, Hadfield 2006, Graham & Homel 2008), drugs (Decorte 1996, Morris 1998, Hunt et al. 2010), bouncers (Lister et al. 2000, Hobbs et al. 2002, 2003, Pratten 2007, Rigakos 2008), theft (Sidebottom & Bowers 2010) and public nuisance (Van Duyne 1978). For an

2 Recently, Sampson et al. (2010) proposed to add a third dimension to the crime triangle, the ‘super controllers’, the people, organisations and institutions that control guardians, place managers and handlers, having merely an indirect effect on the criminal event.

overview of the nightlife and crime situation in different European countries see Hadfield (2009). Analyses of other Horeca business, such as the hotel business, are less widespread and reduced to some single contributions, such as Ho et al. (2009). The link between restaurants and crime, in particular, is rarely researched although restaurants are often mentioned in Chinese organised crime research, for example Lintner (2004).

This chapter begins with an outline of the Belgian Horeca sector, highlighting particular weaknesses it currently faces. It is argued that some of these factors might lead to crime being committed. Drawing on interviews with players in the sector, law enforcement agents, criminals that “know” the sector and police case files we discuss the vulnerabilities identified by the different sources. Particular attention is paid to the organisation and the processes within the sector. It is argued that some of the vulnerabilities are not exclusive to the Horeca sector but are rooted in the rules and regulations governing the sector. We also focus on the specific control mechanisms within the sector, exploring whether they contribute to vulnerability. It is argued that the physical, social and/or economic make-up of organisations within the sector influences their vulnerability to particular types of criminal activity.

Methodology In order to meet the research goal of exploring vulnerabilities to crime in an economic sector like the Horeca, we used an explanatory qualitative research approach. During a bottom-up and circular research process (Strauss & Corbin 1998, Flick 2002, Boeije 2010), we undertook 17 interviews with professionals, public servants, NGO and law enforcement agents, 2 interviews with convicted criminals, 21 case files from the Belgian Federal Police, 1 case file from the customs office and 2 informal conversations with administrative city servants. The first data was gathered in 4 pilot interviews and 5 pilot case file studies that were approached in an ‘open’ manner under the question “what makes the sector vulnerable to crime”. The pilot interviewees were chosen on basis of their expertise in the sector and were used for ‘snowballing’ to find other interview partners with special expertise and knowledge. The two imprisoned criminals were volunteers out of 9 that were approached and who were known to have sophisticated knowledge of the structures of the Belgian Horeca sector. The case files of the Belgian Federal Police were part of the organised crime data base and all case files were registered as having a relation to the hotel, restaurant and café business.

In combination with an extensive literature review, a topic list was developed on basis of the pilot data and used as guideline for the next interviews and case file studies in a second phase. The topic list consisted of both an open part and the collected topics concerning vulnerability to crime in the sector. All different data sources (interviews, case file studies) were approached with the same topic list, they were analysed jointly on basis of content analysis (Krippendorff 2004). We looked to see if there were similarities mentioned by the

different sources. If there was substantial basis of facts that were also mentioned by other sources the issues found their way on the topic list. The topic list was thus flexible in nature and open for induction. In particular it was searched heuristically for new topics and categories of vulnerability. Supported by the qualitative analysis programme for computer- based analysis MAXQDA 103 the sources could be compared, conflated, relationships identified and categorised to draw conclusions about the sector’s vulnerability to crime (Kuckartz et al. 2004).

Horeca “the Belgian way” According to economic definitions (NACE-Bel 55-56), the Horeca consists of several subsectors, including accommodation facilities, and food and drink facilities. The number of companies varies between sources, but in 2002 there were around 55,000 registered tax- paying companies, with a decreasing trend for cafés and hotels and an increasing trend for restaurants (Vilrokx & Geens 2003, Deguel et al. 2004). About 60% of all companies are located in Flanders, about 30% in Wallonia and about 10% in the Brussels area (Idem.). This approximately reflects the population distribution. There are more cafés and restaurants than caterers and overnight accommodation such as hotels (Deguel et al. 2004, 10). The number of self-employed entrepreneurs in the Horeca sector is almost twice as high as in other economic sectors. Over 50% of companies in the sector have only one member of staff, and almost 90% have fewer than five employees (Idem.) In 2003 145,300 people worked in Horeca, of whom about 100,000 were employees and about 45,000 were self-employed (3.5% of the total labour provision) (Deguel et al. 2004). However, the number of part-time workers in the sector is twice as high as the average for the Belgian economic sector (Figure 1).

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Hotels & 43.6% 46.0% 44.7% 43.0% 46.9% 45.3% 47.7% 50.1% 46.5% 46.1% 43.2% restaurants (Nace H)

Belgian 19.5% 20.0% 19.5% 20.3% 21.6% 22.6% 23.4% 23.8% 23.7% 24.2% 25.0% average

Figure 1: Percentage of part-time workers in Horeca and in Belgium as a whole.

Source: FPS Economy, SMEs, Independent Professions and Energy.

In this chapter we elaborate on vulnerabilities within the sector to criminal activity. These vulnerabilities are as diverse as the sector itself. A few key points are fleshed out, to show

3 http://www.maxqda.com/

that the sector’s physical, social and economic environment influences its vulnerability to crime.

High turnover of personnel and black-market labour The Horeca sector combines a relatively rapid turnover of employees with a high percentage of part-time workers. More part-time workers in a sector means higher labour costs (Vilrokx & Geens 2003). Night and weekend shifts, irregular labour hours and overtime are usual and make the sector a very labour-intensive one. The salaries are relatively low compared to other economic sectors, with the result that employees with low levels of education are attracted to work in the sector (Idem.). Paying gross wages in cash, without deductions or declaring them to the authorities, is seen as a way of compensating employees in the short term (though the potential long-term harms through not paying pension or health benefits are not taken into account). Hoogenboom & Hoogenboom -Statema (1996) reported the same phenomenon and called this sort of fraud ‘premium fraud’.4

There appears to be considerable dissatisfaction and lack of commitment among staff in the sector. For instance, a catering interviewee expressed the view that if people work one month for one company and the next month somewhere else, employees develop a lack of commitment to a company. Interviewees from catering, hotel and café enterprises reported that they, and other work colleagues, were unhappy with the high workload and inadequate payments. A hotel security manager stated that in his hotel chain, temporary employees were the most likely to commit employee crime such as theft. He argued that his company’s ability to provide crime prevention and awareness training is limited due to the high turnover of employees, and control of temporary staff is restricted by the high administrative costs. A permanent employee may need diplomas, is pre-screened and may undertake training before starting work. The manager stated that this is impossible for temporary staff. They usually trust the screening done by employment agencies. However, he reported cases where accomplices of organised groups of thieves started working for the hotel, sent by the employment agencies. In one case the person used a false ID, and reported back to the thieves in which rooms they would find valuables. The thieves arrived and broke into several rooms systematically to steal the goods. The high staff turnover makes supervision difficult, and prevents a corporate culture from being developed, especially the development of commitment to the company. The importance of commitment has already been explored by Hirschi (1969), and the lack of it was stated to be one of several indications for crime occurrence and criminal behaviour. In addition, the low-income structure in the sector does not motivate employees and as a consequence employees are not as committed as they should be (Vilrokx & Geens 2003).

4 In Dutch, ‘premiefraude’. 6

One of the consequences of the high staff turnover is black-market, or illegal labour. The annual figures in 2009 of the SIOD, the coordinating organ of the social inspection services, confirmed estimates from earlier research (see, for example, Vilrokx & Geens 2003). In almost half of all checks an infringement was noted in the Horeca sector (De Morgen 2009). It is difficult to estimate the size of the black-market labour economy in the sector (see Pacolet et al. 2009 for one attempt). However, our interviews confirmed that black-market labour is still a cornerstone of the Horeca. Police and a city servant reported that huge multinational chains (less than 10% of the sector) with an international reputation to protect tend to comply with the rules and are not involved in such processes, as it would be too risky and result in costly damage to reputation. A catering interviewee gave the following example, which shows the interconnection of diverse factors playing a role:

“Black-market labour occurs mainly among chefs. They have a low rate of pay but have to work long hours. More than the law prescribes. Especially during the season. You can’t register the amount of hours, because it would show they work too much. That implies you would have to hire more chefs which means that the personnel cost would raise. You can overcome this by paying in ‘black-economy’ money. That’s what they live from. They thrive on this money. When you don’t offer a chef black- economy money, he’s off.”

This quote demonstrates the nature of Horeca working conditions, the economic impact on the business of complying with the rules and the socio-economic demand of a low salary. A restaurant owner stated that there is a interchanging demand and supply relation between employees and employers. A convicted restaurant owner reported that he hired a chef for 2,500 Euro a month. On top of that he had to pay the same amount in black-economy money. Otherwise the chef wouldn’t have come to work. A catering interviewee mentioned that it is difficult to find good chefs. This implies you have to pay a very good salary, partly through illegal, black-economy payments. The employers need to hire people via the black economy, the employees depend on illegal black-economy payment, and in addition to this the customer demands lower prices, which strengthens the situation in the Horeca. It was reported by a catering interviewee that about 90% of customers of catering companies ask what can be done to enable them to pay less for the service, meaning making black-economy payments.

Under the new labour registration law (Dimona5 law), one must record the days an employee works, but not how long they work. Thus, it is still possible to record that an employee worked for four hours and to let him work another four unofficially, as the interviewee quoted above explained. If an employee is officially employed, one can record that he worked for the full amount of time he actually worked, or one can pretend he started working at a later time. Due to the specific working hours at night and the weekends, the

5 Déclaration immédiate/onmiddellijke aangifte. 7

checks are reported to be rudimentary. The following day the employees are asked if there was a check, and on this basis the Dimona is filled in. A catering interviewee stated that since the law changed to the current registration system one had to be more careful with black- economy labour but the regulations show that there is always a hole you can exploit. The interviewee supposed that the rules are intentionally created to contain holes, to keep the sector running.

Companies’ approach to managing low profitability Macroeconomic research reveals that 40% of Horeca enterprises are operating at a loss (Ooghe et al. 2005). 28% of the Horeca enterprises have negative equity (against 11% of the rest of the economy) and therefore low financial independence. This results in dependence on external capital (Ooghe et al. 2005). Due to the sort of service, high cash payment and minimum stocking of goods, fixed assets like property that cannot be liquidised signifies the majority of value in the sector, as opposed to current assets like cash and accounts, in contrary to other sectors (Vilrokx & Geens 2003). This results in cash flow problems and illiquidity among the small and medium-sized companies. The poor profitability is demonstrated in the bankruptcy rates illustrate in Figure 2. The bankruptcy rate for the Horeca sector is notably higher than for other parts of economy such as construction (bouw), industry (industrie), wholesale (groothandel) and the retail trade (kleinhandel).

Figure 2: Bankruptcy evaluation Horeca and other economies.

Source: FPS Economy, SMEs, Independent Professions and Energy.

Our interviews and case studies revealed that this situation might be connected to crime occurrence in two ways. First, entrepreneurs in financial trouble search for ways to save money, such as using cheaper (illegal) products. Second, they contact criminals, who ‘help out’ in return for ‘favours’. During an interview with a staff member from the food security agency concerning the situations of the enterprises he stated:

“Yes, it happens on a regular basis that some businesses that don’t do well, having a lack of customers, trying to survive, and in order to do so they don’t invest. They practice fraud with food. That happens, yes. It’s mostly one of the reasons why they practice fraud. Because they struggle to survive.”

In another case, a café owner reported a request by handlers of stolen goods to store some goods from time to time. If he had done so, they would have paid his bills to keep the café alive. He rejected their offer, but he reported that other enterprises had started to cooperate with drug dealers in such a way. This type of development was also found by Kleemans & de Poot (2008), who studied 80 case files in the Netherlands inter alia , concluding that in particular ‘new starters’ in organised crime are often those who are “financially down and out, become bankrupt or are heavily in debt and subsequently become involved in organized crime” (Kleemans & de Poot 2008, 81).

Several interviewees from the sector reported that VAT fraud was necessary in order to run a Horeca business properly, due to the low profitability. Asked about the bankruptcy of entrepreneurs in the Horeca, a convicted drug dealer with Horeca experience stated:

“Most bankruptcies are due to the fact that they weren’t able to work in the black economy, or did something wrong or… That’s why they go bankrupt. You can’t go bankrupt when you can work in the black economy. You can’t go bankrupt, that’s impossible.”

Hoogenboom & Hoogenboom -Statema (1996) reported on VAT fraud practices involving buying or taking over Horeca objects partly with black-economy money. One of their interviewees reported that more than half of all Horeca organisations in the Netherlands had been bought partly using black-economy money. An administrative city servant stated in this respect:

“I know a certain amount of people that buy businesses and immediately let their businesses go bankrupt with the intention to commit fiscal fraud. They swarm around from Horeca enterprise to enterprise and they manage to stay undetected with their way of working.”

In individual cases, one or several other reasons for criminal activity might occur. But we may conclude that vulnerability to crime can be detected in cases where enterprises work with low profitability.

Inadequate tax and VAT legislation – ol’ time trouble “We belong to the top tax payers in Europe ... We already have to pay so much tax, why should we pay extra tax if we have the opportunity not to do so? All that we do officially is maximum -taxed in Belgium … So why shouldn’t you, if you get the opportunity, pay less tax or VAT?”

This statement from a catering interviewee gives the impression that high tax and VAT regulation might be a cause of fraud. With 21% tax on drinks, 12% on food,6 6% on food delivery, 21% on service and 6% on accommodation, the VAT rates differ and some are above the European average. Due to the particular socio-economic, structural and business situation of the Horeca sector, a high VAT rate enforces vulnerability, especially for cafés and restaurants. Interviewees considered VAT obligations as a threat that they had to bypass in order to survive. A convicted restaurant owner stated:

“Taxes, yes of course. You lose a lot with taxes. Especially when you’re self-employed. When you start calculating you notice that there’s a huge difference between paying taxes and not paying them.”

It is interesting to note that a vast majority of interviewees from the sector, authorities and law enforcement mentioned that not paying taxes is and has always been part of the ‘culture’ in Belgium. This belief might be the reason why many of the interviewees did not consider tax infringements as crime. A catering interviewee commented:

“We don’t see this as misleading government; we don’t see this as crime. It’s about how we can pay less. It’s rather wrong to say that it’s criminal to look for ways to do so. How can we avoid paying a huge amount to the government? You’re born with this question; you’re brought up with it.”

The interviews and case files demonstrated a wide range of VAT infringements that occur due to inadequate VAT legislation. Such infringements include black-economy labour and money, and the whole underground economy. Whether or not legislation results in unintended criminal consequences was studied by other authors (Vander Beken & Balcaen 2006, Morgan & Clarke 2006, Savona 2006, Levi & Dorn 2006; see also Albrecht & Kilchling 2002). In many reported cases the entrepreneurs relied on professional aid to deal with their tax and VAT obligations. Accountants were apparently key players in terms of tax and VAT fraud mechanisms in the case files and were mentioned in interviews with law enforcement and sector professionals.

Accountants as facilitators of illegal activity Given the fact that a majority of the companies in the Horeca sector are self-employed and do not have many employees, most have to carry out their own financial management. Many outsource this to professional accountants to save time or because it is too complex for them. A convicted restaurant owner reported that he was young when he started his business and did not know anything about fiscal issues. Via word-of-mouth recommendation he obtained the name of an accountant who recommended that he should bypass tax and VAT

6 After a long wait the 2009 European accord amended the Belgian VAT ratings for the Horeca, but only for food, from 21% to 12%. Drinks and service VAT still remains the same. 10

obligations and work with black-economy money, and advised him how to do so. Another interviewee (a convicted drug dealer with Horeca experience) stated:

“Your accountant is your best friend. That’s a fact. Your lawyer and your accountant are the only two people in whom you can confide, to whom you have to tell the truth at all times.“

This point is crucial. Usually entrepreneurs have to be honest with the accountant, because the accountant has the expertise to find the ‘holes in the Belgian tax and VAT legislation’, as another entrepreneur expressed. The recent Anti-Money-Laundering (AML) legislation obliges accountants to report any signs of ‘organised fiscal fraud’ but not ‘regular fiscal fraud’! But when is it considered organised, and when is it not? This question will have to be addressed on another occasion, due to space limitations. A catering interviewee stated that your relationship with an accountant needs to be based on trust, in order to create a good double-bookkeeping system. Accountants have professional discretion; in cases of suspected fraud it is difficult to prove their participation in or joint knowledge of a crime. In the case files we studied for this research few accountants were convicted, even though, according to a police interviewee from the money laundering section, several names repeatedly come up in the cases they treat. One officer went on to say:

“... sometimes we think: they must have noticed this, they must have been aware. But it doesn’t often happen that they are convicted.”

Due to the profession’s independence, there are not many regulations that control accountants or their compliance. The new AML-legislation7 came into force in 2010 and laid down stricter requirements for bookkeepers to verify their customers’ identity. However, the control mechanism for accountants still seems to be inadequate. The position is comparable with lawyers and notaries, who have been studied by a number of authors (Levi et al. 2005, Lankhorst & Nelen 2005, Middleton & Levi 2005, Di Nicola & Zoffi 2005). They labelled these roles as ‘facilitators’ in criminal networks, concluding that a lack of control and integrity was to be found among these professions.

A catering interviewee stated that, in cooperation with their accountant, they implemented a double-bookkeeping system that allowed them to administer their tax and VAT frauds.

“We have double-double-bookkeeping. As a company with limited liability you need a double- bookkeeping system: debit and credit. But you need to double up that system as well. You also need a black-market bookkeeping system to check up on the black-economy money. Of course this one is quickly removed. You need this to keep on track with your financial developments.”

Data was often recorded on hand-written sheets or as an Excel table containing only numbers, and no labels. Customers usually require some sort of documentation from a

7 Law of 18 January 2010. 11

transaction, for their own records. But this makes fraud more difficult to carry out, and therefore entrepreneurs in the sector often ask for cash payment initially. If a customer requests an invoice it can be created in a way that protects the fraud. Two invoices are created, one for the custom er, without the name of the company and only containing the basic financial figures, and one official invoice for the tax authorities. Usually nothing is written down in letters or emails, contact is by phone, and during a personal meeting the illegal payment is mentioned at some point. A certain manner of speech has developed for such discussions. In many cases it is pointed out that there are ‘certain possibilities’ in handling the process. Terms such as ‘paying per fax’, ‘a piece on the table, a piece under the table’, ‘with or without music’ or ‘for the king, not for the king’ are used in Belgium to express this dual approach to finances. According to several of our interviewees, independent accountants have advised one-man enterprises, and especially corporations with limited liability, to use this double-bookkeeping approach. The accountant has the experience and expertise the enterprises rely on. It is estimated that 50% of the Horeca is working with black-economy money, so it would be surprising if an accountant were not informed about the activity at some point, or advising on how to handle such money. Given that many entrepreneurs in the sector have low levels of formal education, it makes it even more likely that they need the advice of their accountant.

It was reported by an ex-employee of a Chinese restaurant that, rather than use a regular legal accountant, many Chinese restaurants rely on computer programs to manage their black-economy finances. The double-bookkeeping can easily be maintained with computer- based bookkeeping and accounting applications that have automatic deleting functions, etc. The interviewee reported that a man in Brussels specialised in creating these computer programs and providing the necessary support for many restaurants. He provides the expertise that is needed and that is not otherwise available to the perpetrators. This sort of ‘facilitating’ function for criminal activity has also been reported elsewhere in relation to some legal professions (Kleemans et al. 2002, van de Bunt & Kleemans 2007). However, in this case the facilitator is working ‘underground’, completely illegally. Therefore he remains invisible to the authorities and their supervision or routine controls.

Demanding customers and suppliers According to our catering interviewee, customers, especially wealthy customers, regularly ask for reductions in the price of goods and services. The interviewee said that there is always a risk that something can go wrong when offering black-market services. The authorities might suddenly take an interest, or employees could be involved in an accident. Less wealthy customers might take fewer risks, whereas wealthy customers might have enough financial back-ups to take greater risks, he argued. Customers regularly ask for invoices to be addressed to their company, even though they used the service privately, according to the interviewee. Even large, well-known companies and public services were 12

reported to benefit from ways of paying less. For instance, they take advantage of the difference in VAT applicable to service (21%) and to food and drink provision (6%). Catering enterprises provide both, and are flexible enough to provide services and declare it on the invoice as food and drink provision. The invoice can be altered at a later date, if it is investigated. This modus operandi is reported as a regular occurrence among public customers at provincial and federal levels, as well as among private individuals.

Interviewees suggested that another operator in the supply chain, the supplier, also demands black-market contracting. A police officer from the VAT section reported that suppliers systematically offer products on the black market to Horeca enterprises. Products like hops or flour were examples from the case files. The crucial point is that these kinds of primary products are stored and sold in large amounts, and are therefore difficult to count or check. They are processed to create other goods and no one can trace or check the actual amount you needed to make your beer or bread. Black-market supply was also reported by an ex- employee of a Chinese restaurant. Usually the restaurants in Belgium rely on a few suppliers for Chinese ingredients such as specialist vegetables and other Chinese foodstuffs, and on local Belgian suppliers for meat and wine; the same suppliers are always in the chain. It was reported that in many cases there is no choice but to join the black market and buy illegally from the suppliers, in order to keep up with competitors. If they don’t buy at least partly from the black market they cannot offer the prices that fully black-market competitors can offer. It was reported to be a ‘competition disadvantage’ if one tries to comply with the existing rules and ‘keep the business clean’. A convicted restaurant owner summarised the situation as:

“When you buy via the black market, you can sell in the black market and partly pay your employees in black-economy money. But what it is really about, is that when you work without employees, like a café owner, then you have to buy via the black market because otherwise you don’t earn any money here in Belgium.”

A restaurant owner claimed the relationship between supplier and Horeca entrepreneur was a ‘win–win’ situation for all parties – everyone gains, and can thereb y survive. If you were to reject certain customer demands, the customer would go to your competitor and you would be at an economic disadvantage, a catering interviewee testified.

Illegal services and supply The fact that all players in the supply chain are working in the same way (partly illegally) might explain why other excesses of the black economy occur, such as organised illegal mobile waiter groups. This phenomenon is relatively new and can persist because black- market ways of working are so embedded in the supply chain. It was reported that different groups of bartenders, from 5 to 35 members, can be hired by companies that organise events, or by catering companies to work on big events. They are usually Belgians or other 13

registered people, but the work they do is totally unregistered and therefore their work is invisible to the authorities. Because companies and customers already do their business via the black market such groups can be paid with black-economy money without any difficulty. They are flexible and much cheaper than official waiters. They are often preferred due to the low price they can offer by not subscribing to legal employment requirements. According to economic logic, this business activity would not survive without a demand from customers. Even though the waiters’ competitors do not want to work in the black economy they are forced to do it anyway to be able to resist the competition from waiters offering black-market services. This demonstrates that people who work in the sector can be hidden from the authorities but nonetheless take part in the sector.

Other ‘hidden’ workers were reported by an ex-employee of a Chinese restaurant and a police agent from the money laundering section. It was reported that there are illegal employees particularly in the kitchens who, in comparison to the above-mentioned example, do not even have a permit to stay in Belgium. It was reported that employees were provided via family contacts in China. Most of the Chinese restaurants owners in Belgium com e mainly from two provinces and therefore have a tight network of contacts. When a Belgian Chinese restaurant needs a Chinese cook, for example, the restaurant owner requests one via their family in China, who make contact with relevant people who are interested in going to Belgium (or other European countries) to earn some money. The employees move between various restaurants over the years, and most return to China after a few years, replaced by others that come over to earn some money. The interviewee reported that if a restaurant customer did not take his or her bill with them when they left, these were used for laundering white money into black-economy money, in order to pay the illegal kitchen employees and the suppliers.8 The phenomenon of ‘black-mark et money laundering’ in the Horeca was also reported by Hoogenboom & Hoogenboom -Statema (1996).

The respondent said that such employees are coming to Belgium voluntarily. However, the interviewee mentioned that they sometimes travel from China to Europe via professional human trafficking networks, because the infrastructure to do so is already established. In 2008 a victim aid organisation documented 45 Chinese victims out of 184 cases, 37 of whom were destined for economic exploitation (Payoke 2008). According to an interviewee from this organization, most Chinese economic victims worked in the Horeca. This shows that not all employees arrive voluntarily, but that human traffickers sell employees to restaurants for exploitation.

A third example of fully illegal services is the case of bouncers in nightclubs and discos. A bouncer interviewee with 25 years’ experience in the business, who works in a large city,

8 In one police case file studied, a completely illegal Chinese food production company was detected that was producing food exclusively for Chinese restaurants in Belgium. 14

reported that before the 1990s bouncers used to be paid by the customers’ tips. Later on nightclub or disco owners paid them fully in black-economy money, changing to partly black later on. Owners of dance clubs confirmed that bouncers were treated the way other employees were treated, “if possible then preferably in black-economy cash”. The club owners used to retain the same bouncers since they knew the establishment and the preferred policy of the owner. Due to the amendment to the ‘bouncers’ law’ regulation and the feeding into the private security law, bouncers are now considered to be private security and particular preconditions like a limited criminal record, trainings and certifications are required to receive permission to work. As a consequence, many of the working bouncers had to leave their profession due to their unacceptable criminal records. Others became self-employed, some as a second job but for most it was their primary job – they became full-time bouncers, licensed and checked on a regular basis by the authorities.

These changes had some consequences that affected the stability of the illegal circuit. First, those who lost their licence (“those who did not learn something else in their life”) stayed in the Horeca, doing the same job but doing so unofficially. Mostly they were asked to do so by the club owner because he wants to keep ‘his man’. They attend the club as if they are a customer, but remain close to a bouncer that has a license and has been officially employed by the club (who is acting almost as a straw man), and the ‘illegal’ bouncer will then intervene when there is any trouble and disappear afterwards. As a consequence, these men are paid fully in black-economy money. In this way, they stay completely outside the radar of the authorities and VAT obligations. In addition, it was reported, other bouncers who had lost their licences were hired by criminals to work fully in the illegal milieu. A bouncer said about losing a license:

“Because afterwards, he becomes a criminal, since he has nothing left. He can’t go anywhere.”

Informal dispute resolution It was reported by sector professionals that if an incident such as employee crime or supply fraud occurs within the black market, the victims do not usually report it to the police. They know that if any irregularities are reported, an investigation might shed light on their own illegal activities too. Therefore, a restaurant owner stated that he tries to solve such matters without the police. The employees, suppliers and the entrepreneurs all know how risky an investigation would be. And again a ‘win–win’ situation is created outside the law. Shapland & Ponsaers (2007) suggested something similar to this. In their findings, not reporting to the police was not a win–win situation, but a result of fear, threat or violence. Even though it was reported that in some cases a fired employee reported the illegal activities of his ex- employer to the police in revenge, it still stays an informal and unsupervised sphere of mutual trust and cash payment in a local setting.

Food is attractive to money launderers This sector is attractive not only to people starting a legal business, but also to professional criminals involved in money laundering. In the organised crime case files we studied, where money laundering (for example, drug money) was indicated, the basic offence was fiscal fraud. According to a convicted restaurant owner, the Belgian Horeca is a good place to launder money coming from criminal activity because of the existing ‘double economy’. One can easily invest illegally obtained money in the sector by using it to pay staff and suppliers, and to pay for Horeca businesses (Hoogenboom & Hoogenboom -Statema 1996). A convicted drug dealer with Horeca experience declared that it is possible to launder most of the money in the food sector. In this sector, he explained, the price difference between primary product and sold product is at its highest. The price difference with drinks is less. He gave an example of a calculation of a simple meal with bread, two eggs and some salad. He said that the official purchase price of these ingredients is already five times lower than the meal costs in the restaurant, and if it is purchased on the black market it is up to ten times cheaper. According to him, the simplest and most often-used ingredients are the most efficient to launder money with. In contrast, other authors have concluded that money laundering exists in the Horeca but discount the widespread picture that the Horeca is systematically used in large-scale money laundering activity inter alia , due to the business-economic situation in the Horeca (Hoogenboom & Hoogenboom -Statema 1996).

How to infiltrate the Horeca sector According to the Belgian Federal Police, in 2006 some 165 (73.6%) of all criminal organisations under investigation (226 in 2006) made use of commercial structures as part of their activities (DSB-SPC 2008). In 2006 the Horeca sector was, as in previous years, one of the major economic sectors that criminals use for employing (organised) criminal activity (together with construction, transport, export–import and property) (DSB-SPC 2008). Using front corporations and dummy firms whose commercial purpose is secondary is one possibility. In most of the case files studied, and as stated by police agents we interviewed, this form was repeatedly mentioned. But why has it become such a problem? Two reasons can be identified. On the one hand, there are few preconditions to starting a business, and they are easy to bypass, and on the other hand there is insufficient control by the administrative authorities at the start of and during the commercial activity.

For example, no special preconditions are needed to start a café. The only things needed are a certification of basic business knowledge (diplomas or working experience), or if this is not available, a partner or ‘someone who will execute the business’.9 Then one registers at the

9 All preconditions can be found on the website of the FPS Economy, SMEs, Independent Professions and Energy. All preconditions can be found on the website of the FPS Economy, SMEs, Independent Professions and Energy (http://economie.fgov.be/en/index.jsp). 16

FPS Economy, SMEs, Independent Professions and Energy to obtain a company number. With that number one may activate a VAT number. A Belgian bank account is also required. Then you need membership in a social security foundation within the first 90 days after starting your business. To complete the process you need to inform your health insurance of your status and then you may start trading. All this can be done within a single day. Of course, for certain legal company forms additional preconditions are required, for instance for a corporation with limited liability the notary needs to be involved, to verify the financial requirements. In order to complete the legal act, he has to publish this information. For certain businesses additional environmental licences or food security licences are needed. However, this short overview demonstrates how few controls there are. It is even possible to let someone else start the business for you officially. In the case files we studied, and according to police interviewees, criminals regularly rely on opening or taking over a Horeca business to commit further crime.

The low level of preconditions for entering the sector has many facets. Front men are used to start the business to limit the liability, and criminals stay in the background. Or a criminal is a shareholder in a corporation with limited liability. The fact that they commit crimes does not necessarily mean the company has to be closed, as there are other ‘clean’ members continuing the business. In one case file a café was known to be the cocaine hub of a big city. One of the owners was convicted for large-scale drug trafficking, whereas the other owners were not proven to be involved. The café still exists and carries on being a focus of police interest. The police have no reason to intervene in these companies, even if they know things are going on, a police agent from the drug section stated.

An ex-Chinese restaurant employee reported that many Chinese restaurants are opened by a Dutch or French speaker, standing in for the real owners, who do not speak the language. For the rest of the business (suppliers, etc.), they prefer to be surrounded by Chinese speakers. In one case file a drug dealer who was convicted in Turkey started a business in Belgium to organise large-scale heroin trafficking. In other case files, companies were started up by people who did not have official residential status. A police agent mentioned that there is no real control over whether a person starting a business is officially registered in Belgium or not. In one fraud case file a fictitious person was the ‘owner’ of a café. As well as starting a new company, in several cases a so-called ‘sleeping‘ company was taken over, including the VAT and company number. The company is inactive but keeps all its structure and licences. These numbers can be used for criminal acts, such as customers fraud or intended bankruptcy. A judicial investigation in Antwerp has recently detected professional sellers of ‘sleeping companies’ offering diverse corporation forms, both national and international (De Tijd 2009). In our case files we studied, such companies were particularly found in cases of VAT (carousel) fraud and customer fraud. Starting a company is thus not a big problem in Belgium, at least for criminals. Other authors report similar fraud mechanisms in the Netherlands, where Horeca businesses are bought and immediately sold 17

before the first tax payment is due (Hoogenboom & Hoogenboom -Statema 1996). However, nothing is said about the preconditions to start such a business in that context. A convicted drug dealer with Horeca experience said that starting a café to launder money is nothing special, and is done quite frequently, because the risk of official checks is so marginal.

The second issue with respect to control is that when an enterprise has been started up (as we have found, in a day or so), sector interviewees, police interviewees and administrative servants reported that it takes months or even years before administrative services check social security, VAT, or other needed certifications. Usually, the first tax assessment has to be completed by the entrepreneurs three months after the company is established; if it is not done, it is requested in the next quarter. There were cases reported where cafés or restaurants that were not properly registered were not officially checked for years. For many, frauds carried out in the first three months of business are enough to create a substantial amount illegal business via this enterprise. These companies go bankrupt after the first official check, and another enterprise is started, whether a Belgian or a non-Belgian company registered in Belgium. In other cases, where the VAT number was officially withdrawn, the company carried on doing business for years without being checked. On the one hand, new enterprises are not sufficiently checked, but on the other hand, an ex-employee of a China restaurant said, the longer the restaurant is in business the fewer checks are done. The interviewee stated that the frequency of official checks is well documented by the restaurants, in order to be prepared to hide their illegal workers. According to the interviewee, the food security authorities carry out the most regular checks. But even they only make their first check a year after the business has started, according to an employee of the food security authorities.

These examples demonstrate that the liberal idea of making an enterprise easy to start has a flip-side. Anyone with criminal intentions can open a business without too many checks being done, and can run it for months or even years before their low, or non-existent, level of legal economic activity catches someone’s eye. The preconditions to setting up a business refer to general economic legislation, and are not Horeca-specific. Given its thriving black economy and the ease with which a Horeca business can be established, the Horeca seems to be an ideal sector for employing crimes like fraud and money laundering. The lack of controlling and supervising authorities varies, and depends on the respective service. There might be reasons why control is so poor, like the comment by an administrative city servant and a controller of the FASFC10 that the authorities do not have enough manpower to check on a regular basis. Rather, businesses are investigated only after they have come to the notice of the authorities (such as via an informant or the police). There is therefore very little preventive activity, and instead the authorities are heavily dependent on people reporting misdemeanours. Given that many in the sector are involved in VAT and other tax

10 The Belgian federal agency for the safety of the food chain (FASFC) (see http://www.favv.be). 18

infringements, it shouldn’t be surprising that not many people come forward. Another reason for a lack of information might be the highly local and informal social cohesion within the professions in certain areas.

It is crucial that supervision and detection of infringements has consequences. In one case file, a South American cocaine trafficker and known criminal was convicted. The police file showed that he owned a café. He was well known to the police as a cocaine dealer. He was also a shareholder of a corporation with limited liability, with two other individuals. One of them was known to the Federal Police for committing fiscal fraud. In addition he was a shareholder in a fast food snack-bar with two others, one of whom again had been convicted of fiscal fraud. Before participating in these companies he had owned four other businesses that were connected with money laundering and drug dealing. A police agent from the drugs department said that regular control is impossible, since it involves a public place and since there are also ‘non-criminals’ involved. This demonstrates the limited administrative effectiveness relating to such cases.

Horeca as meeting point for criminals – vulnerability? According to reports and some authors (Klerks & Kop 2004), the Horeca is a classic meeting point for criminals as these are publicly frequented places in which to socialise or do business (at least, to build business contacts). As a convicted drug dealer with Horeca experience reported, initial contacts are built by meeting-up at restaurants, with wives and girlfriends attending. For big business, all involved parties book separate flights to a holiday destination, where they can meet in public and don’t have to look out for the police. In several of the case files we studied, criminals met regularly in cafés. In bigger cities in Belgium, such as Brussels and Antwerp, some cafés are known generally, and to the police, as meeting points for known criminals. Klerks & Kop (2004, 46) reported that their research in a medium -sized town in the Netherlands showed that 6 out of 12 Horeca companies that were known as a meeting point were actively involved in criminal activity in one way or another. Klerks & Kop (2004) gave the example of a disco owner who is well known in criminal circles and apparently involved in drug-related crimes, who was aware of illegal activities in his location. In our data set a dance club owner (18 years in the business) in a medium -sized town in Belgium told of a well-known drug dealer who had been providing the city’s nightlife with drugs for years and was eventually banned from several clubs, who eventually opened a large disco of his own in the same town.11 This is an example of a criminal starting a Horeca business. It is not known if he set up this business as a meeting point for other criminals, whether he invested drug money or whether he gave up crime and ran a legal business.

11 It is not known if the dealer was ever convicted for drug dealing, or other crimes. 19

In another case a bouncer and security company owner reported that in some larger discos in a major city, high-ranked (organised) criminals are regular visitors. He added that these people do not come to carry out criminal activity, but just for leisure time. In their study Klerks & Kop (2004) equate a meeting point for criminals with a danger of criminal activity. This point of view is not underpinned by the present research. A clear differentiation is needed for the reasons why criminals gather at a certain place.

First, they may frequent these places for leisure time. Like any professional, criminals need some time off from the demanding job they do, so they go out with friends to a bar. In this instance there is no indication at all of the Horeca facilitating crime or criminals.

Second, they may frequent these places for criminal activity. In some countries in Europe12 this sort of gathering is already considered a crime. Hoogenboom & Hoogenboom -Statema (1996, 48–49) call this function of the Horeca ‘place provider’13 whereas Klerks & Kop (2004) call it ‘facilitating’. But is this a necessary part of criminal activity or more part of the criminals’ social milieu? According to the case files studied, Horeca facilities such as cafés, restaurants, tea houses, sauna clubs, fitness clubs or dance clubs are regularly used to meet or arrange things. More often the first contact with crim inals is made in these kinds of leisure facilities (van de Bunt & Kleemans 2007). The Federal Police notes that Moroccan teahouses are used for the recruitment of drivers in hash trafficking (DSB-PSC 2003, 43). The simple reason is the high number of people frequenting these places and the fluctuation in these public locations. Leisure time activities are what Kleemans & de Poot (2008) express as “a catalyst for contacts between parties from different social worlds”. It creates an anonymous environment where people do not look suspicious if they are hanging around. Disappearing into the ‘wallpaper’ of everyday life is considered a functioning protection measure (counter- strategy) against being discovered by law enforcement. A convicted drug dealer with Horeca experience widened this concept, and asked where else would one find potential collaborates or customers, if not in public places frequented by people?14 Another example of this sort of

12 See e.g. Art. 106-111 Belgian Penal Code or § 30 German Penal Code. 13 The Dutch word is: ‘gelegenheidgever’. In the Van Daele Dictionary Dutch-English ‘gelegenheid’ is translated either as place, site, room or opportunity, chance. As Hoogenboom & Hoogenboom- Statema (1996, 49) explain, they see the Horeca as “een uitstekende plek voor allerlei handel” (“an excellent place to do business”), so ‘gelegenheid’ has to be interpreted as ‘place’. This example shows the linguistic potential for miscommunication concerning issues relating to crime in international or, like in Belgium, national crime-tackling cooperation. This problem is, according to a police officer, misused in the context of VAT carousels by perpetrators who constantly moved the location of their dummy company from the Dutch speaking part to the French speaking part and back, aware that administrative communication is a weakness in the Belgian system. 14 This might be as interesting starting point for further research – where do people first come into contact with criminals who they then get involved with to aid and abet, offer jobs to or request help 20

passive involvement is given by Van Daele (2009, 4), who observed that fencing stolen goods goes on in cafés without the knowledge of the owner. A dance club owner, whose club was frequented by street dealers, reported a similar story. Until he installed cameras he had no idea about how many of them were meeting there.

Third, the active involvement of Horeca companies was reported and could be found in the case files. In one case a restaurant was selling stolen goods. In other research, like Van Daele (2009), this kind of modus operandi was also reported.

In all these cases the Horeca is involved somehow. The question is, to what extent? The role the Horeca plays should be differentiated according to the nature of the criminal activity. In many cases the Horeca plays a secondary role. The question is: does this make the Horeca vulnerable? The public nature of the Horeca makes it difficult to state that is the case. One might consider whether it is public space, or private space that is publicly accessible. One should discuss the role of the owner in prevention issues. But in many cases it might be difficult to find a criminal act to prevent.

Discussion and conclusions This paper shows that there are structural opportunities and stimuli within the Horeca sector that enable criminal activity to occur. In this setting the role of offender, victim and facilitator is not always easy to distinguish as the example of demanding suppliers ‘offering’ black market supply to newcomers in the sector shows. In this case the line between extortion and bribery (newcomer being a victim or an offender) appears to be very thin. This poses problems when it comes to the situational prevention of criminal activities. In the case of extortion one might start from the extorted victim to create measures against extorting suppliers. In the case of bribery this would lead to nothing as the newcomer would be an offender as well and might not be willing to prevent any activity at all. Another example is the (part) payment of employees with black-money in relation to employee crimes that remain unreported to the police. The role of the employer in these cases is on the one hand that of offender and on the other, the ‘facilitator of one’s own victimisation’.15 Also here prevention measures are limited to the ones the employer may be willing to apply. But no other instances might be involved due to the risk of detection of one’s own illegal activities.

We have demonstrated that opportunities for criminal activity are not always created through direct features or conditions inherent to targets or guardians but through structural conditions that have a more indirect effect on the criminal event such as weak or inadequate legislation. Different VAT rates within the same sector makes it easy to make false from? Does this occur more frequently via the Internet, or is the classical approach of the café meeting still as popular? 15 This expression stems from one of the anonymous reviewers.

declarations to the tax authorities, especially because these different rates have to be applied by the same company as the example of the catering shows (where 6% VAT can be officially declared for food delivery even though service is offered that has to be taxed at 21%). The controlling instances such as the tax authorities don’t have the capacity to guard and cross check all declarations made in the sector. The weak spot in this respect is on the one hand the lack of guardianship by authority, but more striking is the indirect effect caused by the structure of the VAT legislation. This more indirect effect on the criminal event can be amended by the regulatory institutions. Sampson et al. (2010) calls these institutions ‘super controllers’. The point is that the criminal event of more complex crimes such as VAT fraud should be considered in a wider context than the known crime triangle consisting of offender, target, place, guardian, handler and manager. Especially with respect to prevention measures this wider consideration should be taken into account. A simple equalisation of VAT rates within the sector would at least prevent the opportunity for VAT fraud by false declarations. This example demonstrates that some features of the crime triangle are less important namely the place. The offender (Horeca entrepreneur) and the target (state) don’t need to be in the same place at the same time. It is inherent to most cases of VAT fraud that offender and target do not converge at the same place. This raises the question as to whether this practical view based on property crimes is systematically applicable to intangible versions of crimes such as VAT fraud or whether it should be reduced by time and place.

We also have documented that checks and controls in the sector are weak for some situations such as starting and running a hotel, restaurant or café business with mala fide intentions. The procedures are simple, and checking procedures are not able to cope with the general economic rules that support the liberal policy of keeping the preconditions to start an enterprise in Belgium low. Possible administrative guardians (for example tax, social security, food security, municipal authorities, etc.) fail to control the procedures and detect and prevent illegal practices. This can be seen as opportunity to invest in the legal sector and to use the legal economy for illegal activities such as money laundering. In the Netherlands an administrative approach was introduced to cope with these kinds of shortcomings with respect to organised crime and to reduce the opportunities and incentives for crime by the responsibilisation of the administrative authorities in organised crime prevention (van de Bunt & van de Schoot 2003, van de Schoot 2006, Huisman et al. 2005, Huisman & Nelen 2007, Huisman & Koemans 2008, Nelen & Huisman 2008, Nelen 2010). Even though the effectiveness of the Dutch integrated approach to organised crime has not yet been empirically tested (Huisman & Koemans 2008) the situations studied in Belgium indicate that in some cases not even the regular administrative tasks of control are conducted, far less measures relating to known mala fide enterprises or prevent misuse. Whether pre-screening measures would have an effect in preventing criminal activity must remain unanswered at this moment as the usual checks are not done consistently or can be bypassed easily.

Another vulnerability is connected to certain facilitative positions in the sector. In our study we found that accountants provide the expertise and knowledge to advise, incite or collaborate in starting and maintaining the grey and black circuits within the sector. There are three difficulties herein. First, accountants are not truly part of the Horeca sector but a profession that has connections to several different sectors. In an analysis of an economic sector it is therefore worthwhile to ask which professions form part of the sector and which do not. This expresses the complexity of economic activity and the fact that an economic sector is not a homogeneous structured construct but a heterogeneous chaotic one. The question is how far can these practices be prevented? And who is responsible for the initiation of prevention measures? The second problem is that self regulation is a feature of this profession but there are no instances that control this regulation. This raises the question of integrity and the measures required for compliance. The third difficulty is that the facilitator is not directly involved in the criminal act. He provides knowledge or tools but these can be provided without knowing what the customer may use it for. The burden of proof is high in these cases. Prevention might start with control instances for this profession.

Finally, the grey or black economy in the sector creates an attractive, fertile soil for more serious criminal activities like human trafficking and money laundering activities. The fact that operators of the supply chain know about, take part in or demand grey or black-market economic conditions creates a climate of informality that stays out of sight of the authorities. Disputes remain within the sector and criminals are attracted to its lack of guardianship. Potential guardians such as the business partners are hors de combat due to their participation in illegal practices. This diminishes the risk for detection of criminals. Crime prevention measures that might address the entrepreneurs in the sector are at this moment difficult to introduce as there is no interest in prevention from that side. This is exploited by criminals, who infiltrate the sector and benefit from the unregulated climate.

The boundaries of the legal and illegal economy are not always evident, either, because people do not consider their black-market activity as related to crime. However, vulnerability has multiple facets and can be approached with theories and concepts from environmental criminology such as Routine Activity Theory or Situational Crime Prevention. The question is whether these approaches are sufficient to grasp the complexity of economic sectors. This paper demonstrated that this is partly the case. But it seems worthwhile to think about other dimensions that might reflect vulnerability to crime.

Acknowledgements This research has been carried out under the auspices of the Belgian Science Policy Office in the programme "Society and Future". The author would like to thank Prof. Dr. Tom Vander Beken and Prof. Dr. Nicholas Dorn for their sustained support and advice. In addition we

would like to thank the three anonymous reviewers for their fruitful remarks to improve this paper.

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