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  • Compliance & Business Integrity
  • January 10, 2019

As long as our society does not make sufficient resources available to handle major, complicated criminal cases expeditiously but with due care, mega settlements will continue to exist. A judicial review of mega settlements should focus primarily on improving legal protection.

The Dutch Parliament has petitioned the minister to give courts a role in mega settlements that are currently often agreed behind closed doors. The judiciary believes that it is better that settlements be reached after a court has reviewed and granted permission for them. One argument that is often put forward in favour of courts playing a role in mega settlements is the lack of transparency and the lack of legal protection in such cases. However, not all cases require judicial review. Giving accused parties the opportunity to a have their settlements reviewed offers sufficient legal protecting.

The judiciary and the Public Prosecution Service (Openbaar Ministerie, ‘OM’) have had an excessive workload since time out of mind. As a consequence, it takes a considerable amount of time for criminal courts to hand down judgments in average complicated criminal proceedings. The mega settlements that have been reached in recent years often concern cases where criminal offences were committed in multiple countries. Criminal investigations in cross-border matters and cases involving a plethora of punishable acts generally cause an even greater delay. Prompting a court judgment that addresses each of those acts means that each criminal offence must be charged separately and that the OM must investigate and record each and every criminal offence in detail. That takes a great deal of time. If a case is brought before a court, the OM usually selects a limited number of criminal acts to list in the indictment. Only the selected acts are addressed in detail during the trial. If the accused party is a company – which is usually the case with mega settlements – and a convicting judgment is handed down, then, ultimately, the court can only impose a fine on the company.

Settlements make it easier to include all criminal acts committed by companies in the amount of the fine (i.e. the settlement amount) imposed by the OM. The acts are described in a settlement agreement which is then published. In the case of settlements (both minor and mega settlements), the accused companies often cooperate with the investigation. This saves the OM and the Fiscal Intelligence and Investigation Service (FIOD) time and money. In short, the option of settling major, complicated criminal cases by means of a mega settlement is most efficient and produces a great deal of money for the treasury.

The judiciary and the political body have raised two sore points of this system, being the lack of transparency and the lack of legal protection. The lack of transparency is less of an issue. In the case of mega settlements, the OM not only issues press releases, but also publishes the settlement agreements and extensive accounts of the facts. The account of the facts in the ING settlement consisted of no less than 24 pages that described not only the facts, but also the background to those facts and the circumstances under which the acts were committed. Only scarcely do court judgments contain 24 pages of substantiation. Anyone who is interested in accounts of facts can simply download them. Those accounts also contain a lot more specific information about cases than is stated in many court records. OM press releases state why the OM preferred a settlement over a trial. By means of these publications, companies render account to the public for the acts that they have committed and the OM renders account to the public for the approach it took to its investigation, the findings of its investigation and the choices it made concerning how to settle the case. This accountability differs very little from the accountability rendered at a public trial, the difference being that, in the latter case, accountability is rendered several years down the road.

In practice, the lack of legal certainty is regarded as a bigger problem. The OM always adopts the position that settlements do not involve ‘real’ negotiations, since the OM decides whether cases will be settled and on what terms. The same is true for the contents of the accounts of the facts. This means that the relationship between the OM and the accused parties is imbalanced. Formally speaking, accused companies can always reject settlements, but do they have an actual choice? If convicted, the accused party will still face a fine at the end of the trial. Most companies want to explain what went wrong and implement and enforce measures to prevent the situation from reoccurring, and then devote their full attention to their core business again. Waiting for and undergoing lengthy criminal proceedings costs not only society, but also companies, a lot of time, money and energy. The imbalance means that the risk exists in practice that companies are ‘forced’ to agree to settlements which in reality they consider disproportionately high, or where it is unclear whether particular acts are in fact criminal offences. In practice, accused parties do not have effective options to defend themselves and to have a court assess their positions. If accused parties had a real opportunity to have their positions reviewed, their defence positions would become at least slightly more balanced, which is in the interest of the rule of law. It is not without reason that the principle of equality of arms for accused parties is enshrined in the ECHR. One of the main purposes of the principle of equality of arms is the justification of the punishment imposed.

The fact that the outcome of OM assessments concerning the settlement of cases is not always correct is also evident in practice based on the penalty orders issued by public prosecutors. This concerns cases (usually smaller cases) which, pursuant to the law, the public prosecutor may settle independently and in which he or she may impose fines and/or a limited number of hours of community service. If the accused party disagrees with the punishment imposed, the accused can as yet bring the case before a court. On 4 December 2018, NRC published an article about an internal investigation conducted by the OM, which found that only 14-16% of the accused parties raised an opposition, even though the chance of success in opposition cases is remarkably high. As a matter of fact, in more than 20% of opposition cases, the OM even withdrew the cases because it was established that the evidence had been insufficiently established. In almost 25% of opposition cases, the accused party was acquitted by the court. In another 25% of the cases, a less severe punishment was imposed. What this boils down to is that, in 2017, something went essentially wrong in roughly 2000 penalty orders. It is not inconceivable that there is a chance that the OM also adopts unilateral, incomplete and/or disproportionate positions in mega settlements as well. The foregoing means that some form of effective correction is appropriate here.

As long as our society does not prioritise and make resources available to handle major, complex criminal cases with due care but expeditiously, mega settlements will continue to be the only way to handle major, complex criminal cases involving companies within a reasonable period of time. The court’s role in mega settlements should above all provide effective legal protection, as it will to some extent restore the imbalance between the OM and accused parties. ‘Effective’ does mean, however, that the review proceedings must be short. If those proceedings are also lengthy, we will be back at square one.

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