DIRECTORATE FOR FINANCIAL AND ENTERPRISE AFFAIRS THE NETHERLANDS: PHASE 2 REPORT ON THE APPLICATION OF THE CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN INTERNATIONAL BUSINESS TRANSACTIONS AND THE 1997 RECOMMENDATION ON COMBATING BRIBERY IN INTERNATIONAL BUSINESS TRANSACTIONS This report was approved and adopted by the Working Group on Bribery in International Business Transactions on 15 June 2006. TABLE OF CONTENTS EXECUTIVE SUMMARY ...........................................................................................................5 A. INTRODUCTION ..............................................................................................................6 1. On-Site Visit ....................................................................................................................6 2. General Observations.......................................................................................................7 a. Economic system.............................................................................................................7 b. Political and legal systems...............................................................................................9 c. Implementation of the Convention and Revised Recommendation...............................10 d. Cases involving the bribery of foreign public officials .................................................11 (i) Investigations, prosecutions and convictions...........................................................11 (ii) Response to the Report of the Independent Inquiry Committee into the UN Oil-For-Food Programme...........................................................................................11 3. Outline of Report ...........................................................................................................12 B. PREVENTION, DETECTION, AND AWARENESS OF FOREIGN BRIBERY ..........12 1. General Efforts to Raise Awareness ..............................................................................12 a. Government initiatives to raise awareness.....................................................................13 (i) Awareness raising and training for civil servants and public agencies....................13 (ii) Awareness raising and training for the private sector..............................................14 b. Private sector initiatives to raise awareness...................................................................14 (i) Business organisations.............................................................................................15 (ii) Major enterprises .....................................................................................................15 (iii) Small and medium-sized enterprises .......................................................................16 (iv) Civil society and trade unions..................................................................................16 2. Reporting Foreign Bribery Offences and Whistleblower Protection.............................17 a. General sources of reporting..........................................................................................17 b. Duty to report crimes .....................................................................................................17 c. Whistleblowing and whistleblower protection ..............................................................17 3. Officially Supported Export Credits..............................................................................19 a. Awareness-raising efforts ..............................................................................................19 b. Detection of foreign bribery ..........................................................................................19 c. Duty to report bribery of foreign public officials ..........................................................20 4. Official Development Assistance ..................................................................................21 a. Awareness-raising efforts ..............................................................................................21 b. Detection of foreign bribery ..........................................................................................22 c. Duty to report bribery of foreign public officials ..........................................................22 5. Foreign Diplomatic Representations .............................................................................23 a. Awareness-raising efforts ..............................................................................................23 b. Detection of foreign bribery and the duty to report bribery of foreign public officials.23 6. The Tax Authorities.......................................................................................................25 a. Tax treatment of bribes..................................................................................................25 (i) Legislation prohibiting tax deductibility..................................................................25 2 (ii) Tax treatment of small facilitation payments...........................................................27 b. Detecting and reporting by the tax authorities...............................................................27 c. Awareness and training..................................................................................................27 7. Accounting and Auditing...............................................................................................28 a. Accounting and auditing standards................................................................................28 b. Reporting obligations.....................................................................................................29 8. Money Laundering.........................................................................................................30 a. Suspicious transaction reporting....................................................................................30 b. Exchange of information ...............................................................................................32 (i) Information exchange with Dutch law enforcement authorities..............................32 (ii) Exchange of information with international authorities ..........................................33 (iii) Obtaining information from financial institutions ...................................................33 c. Sanctions for failure to report ........................................................................................33 C. INVESTIGATION, PROSECUTION, AND SANCTIONING OF FOREIGN BRIBERY........................................................................................................35 1. Investigation ..................................................................................................................35 a. Investigative bodies .......................................................................................................35 (i) The police ................................................................................................................35 (ii) The FIOD-ECD........................................................................................................36 (iii) The Rijksrecherche ..................................................................................................36 (iv) Coordination between law enforcement authorities in corruption cases .................38 b. The Conduct of investigations .......................................................................................39 (i) Commencement of proceedings...............................................................................39 (ii) Investigative techniques...........................................................................................41 c. Mutual legal assistance and extradition.........................................................................43 (i) Mutual legal assistance ............................................................................................43 (ii) Extradition ...............................................................................................................44 (iii) Cooperation with Aruba and the Netherlands Antilles............................................45 2. Prosecution ....................................................................................................................46 a. Prosecutorial bodies and principles of prosecution .......................................................46 (i) The Public Prosecution Service ...............................................................................46 (ii) Decision to prosecute...............................................................................................48 (iii) The Directive on Investigation and Prosecution of Corruption of Officials............49 b. Jurisdiction.....................................................................................................................52 (i) Territorial jurisdiction..............................................................................................52 (ii) Nationality jurisdiction ............................................................................................52 c. Statute of limitations......................................................................................................54 3. The Foreign Bribery Offence.........................................................................................54