On November 22, the Netherlands Public Prosecution Service (NPPS) published a long-awaited instruction - see our unofficial translation here - outlining the framework and conditions for self-reporting and cooperation in criminal investigations into possible offences committed by legal entities. Although the instruction will only enter into force on 1 January 2025, the NPPS recently went ahead and applied the instruction to a case where a penal order was imposed on a large Dutch company.

The instruction marks a significant step towards greater transparency and clarity for companies navigating the complexities of self-reporting and cooperation. But many questions remain: much will depend on how the new guidelines are applied to actual cases and whether they gain political acceptance. Despite these uncertainties, the new NPPS instruction does provide a structured avenue for companies to follow when confronted with indications of potential irregularities. By adhering to the guidelines, companies may benefit from a significant reduction of penalty exposure as well as more predictability on the process towards resolution.

Key feature

The core of the new NPPS instruction - see our unofficial translation here - is that where a legal entity voluntarily, fully and timely reports possible wrongdoing and fully cooperates with a criminal investigation into this, it may be eligible for a reduction of up to 50% of the fine that the NPPS would seek or impose if no self-reporting and/or cooperation took place.

Background

In recent years, there has been significant debate regarding settlements between companies and the NPPS. Because of this, the Dutch Bar Association highlighted the need for clarity on what companies can expect when self-reporting. This call for transparency was supported by the Organization for Economic Cooperation and Development (OECD) in its review of the Anti-Corruption Convention, which recommended clear policies and guidelines for internal investigation.

A major step towards achieving this transparency occurred in 2021, where three subsidiaries of a large Dutch company entered into a settlement with the NPPS for nearly EUR 42 million. The underlying criminal offences included foreign commercial (private sector) bribery, bribery of a public official, forgery, and sanctions violations. The NPPS awarded the company a credit for self-reporting (25%) and cooperation (25%). However, the NPPS clarified that this type of credit was only awarded in cases of foreign bribery, as the NPPS heavily relies on information shared by companies to build such cases.

As a final step leading up to the new instruction, the Dutch WODC (Research and Data Centre) was commissioned to investigate internal investigations and self-reporting by companies for financial-economic crime. The report was presented to the Dutch House of Representatives on 21 February 2023. The policy response in February 2024 indicated that further regulation of both internal investigations and self-reporting was desirable, with broad support from experts and stakeholders. The instruction that the NPPS has now drawn up is expected to lower the threshold for companies to self-report to prosecutors, increasing legal certainty and leading to more reports and enforcement.

General remarks

The instruction outlines the framework and conditions for self-reporting, conducting internal investigations, and cooperating in criminal investigations related to possible criminal offences – or signs of them. Although the wording of the instruction is broad, it is binding on the NPPS.

The instruction applies exclusively to criminal offences committed within the scope of a legal entity, with the exception of direct violations of the physical integrity of individuals. It is important to note that the instruction applies only to legal entities and not to individuals.

The instruction discusses the amount of the fine imposed, but does not cover the disgorgement of illegally obtained benefits or compensation for damages. Also, the basis on which the percentages will be applied remains a black box.

The primary goal is to reach a settlement. So if - in line with the instruction - self-reporting and cooperation took place, the idea is that a settlement will be reached.

If the case does not lend itself to an out-of-court resolution, which could also entail a penal order, then self-reporting and cooperation could give rise to a trial.

Application of this instruction does not affect the use of investigative powers by the NPPS. If a legal entity, due to fear of legal measures by third parties, cannot or does not want to voluntarily provide certain data and source or other documents to the investigative service and/or the NPPS, the investigative service or the NPPS can obtain these data and documents through criminal coercive measures if necessary. If the legal entity requests this with valid reasons, it will not be considered non-cooperation under this instruction.

Timeline

The process begins when a company becomes aware of potential wrongdoing and seeks legal advice on the matter. If the company is considering self-reporting the issue or wants to determine whether it falls within the scope of the instruction, an exploratory meeting with the NPPS can be scheduled. This meeting aims to assess whether self-reporting and/or cooperation in a criminal investigation could apply under the instruction. During this initial meeting, the facts can be presented on a no-name basis, allowing the company to remain anonymous.

If the Public Prosecutor determines that the instruction does not apply to the outlined case, the content and communications made during the exploratory meeting will not be used by the Public Prosecutor in any subsequent criminal investigation.

Self-reporting

If, in the opinion of the NPPS, self-reporting significantly contributes to the detection and prosecution of offences and the conditions are met, the public prosecutor can apply a reduction of up to 25% on the fine that would otherwise be deemed appropriate without such self-reporting.

To be eligible for this reduction, the involved legal entity must voluntarily, fully, and timely report possible offences. This report must be clear, structured, and submitted in writing to the investigative public prosecutor of the responsible District Public Prosecutor's Office. Additionally, all relevant data and source or other documents must be made available at the time of the report. This includes information about:

• the individuals and legal entities that are involved;
• all possible criminal offences, including indications of such offences, that are suspected to have been committed by and within that legal entity or its scope;
• assets that are directly or indirectly derived from those offences and/or that can be used for the recovery of that damages and unlawfully obtained benefits from those offenses.

The NPPS can still make use of investigative powers, with the attachment of certain assets being a significant measure.

If the NPPS determines that the above conditions have not been sufficiently met, the public prosecutor can apply a lower reduction percentage or refrain from giving a reduction altogether. For example, if during the criminal investigation it appears that not all possible offences (or indications of possible offences) that could reasonably be expected to be known to the legal entity at the time of the report were voluntarily and timely reported.

The reduction granted is limited to a fine for offences that were voluntarily and timely reported. Therefore, if a company has indications that offences A, B, and C were committed but only reports on offence A, any reduction will only apply to that offence and the NPPS may choose to apply a lower reduction percentage.

The instruction leaves a few questions unanswered, such as what constitutes a timely report, how long a company can wait, and what "fully" means. Additionally, the relationship between voluntary reporting and certain reporting obligations, such as those in the financial sector, is not explicitly addressed. Although it is assumed that being subject to certain reporting obligations does not in itself preclude a report being considered to be submitted voluntarily, this is not made clear in the instruction.

Cooperation

The public prosecutor can apply an additional reduction of the fine (of up to 25%) if the legal entity, in the opinion of the NPPS, fully cooperates with a criminal investigation.

To qualify for this reduction, the legal entity must cooperate voluntarily, fully, and in a timely manner with the criminal investigation. The NPPS expects companies to adopt a proactive attitude in addition to complying with requests from the investigative service and/or the NPPS. This cooperation includes, but is not limited to, the following actions:

• Keeping all relevant data from both domestic and international sources, including underlying documentation, available and providing it timely and unsolicited to the investigative service and/or the NPPS.
• Delivering the data and source or other documents in a clear, structured manner, in a format that is readable and searchable by the investigative service, with necessary explanations and translations.
• Ensuring that employees and, as much as possible, former employees from both domestic and international locations are available for questioning without unnecessarily informing them about the investigation.
• Preventing the influence of witness statements and/or other evidence, and immediately reporting to the investigative service and/or the NPPS if there are indications that this has happened or is about to happen.
• Refraining from any behaviour that could obstruct the investigation or procedure, such as tactical delays or information overload.
• Identifying relevant data and source or other documents to which the legal entity has no access or that are in the possession of third parties, and facilitating their availability to the investigative service where possible.
• Identifying and keeping available assets derived from the possible offenses and/or that can be used for fines, compensation, forfeiture, and/or confiscation of unlawfully obtained benefits.

Regarding the influence on witness statements, this requires coordination from the company if it is conducting its own investigation parallel to the NPPS. If the company intends to interview a witness, it may be prudent to liaise with the NPPS in advance, and only to proceed if the NPPS does not object.

The investigative service records the extent of cooperation provided during the criminal investigation so that the NPPS can make an informed assessment when deciding on the settlement and determining the amount of the credit.

The public prosecutor can apply a lower reduction percentage or refrain from giving a reduction if, in their opinion, the conditions have not been sufficiently met. The granted reduction is limited to the fine for the offences for which full, voluntary, and timely cooperation was provided in the criminal investigation.

Internal investigations

In addition to the criminal investigation conducted by the investigative service and the NPPS, companies can undertake or commission an internal investigation into possible involvement of the legal entity in offences before, during or immediately following a self-report, or into indications of such involvement.

The NPPS can consider the results of such an internal investigation when determining a reduction percentage. In assessing whether, and to what extent, the outcomes of an internal investigation are used in a criminal investigation, the NPPS considers several factors, including whether:

• the internal investigation contributes to uncovering the truth.
• the rights of victims and injured parties are sufficiently safeguarded.
• the internal investigation is conducted in a manner that ensures its thoroughness and reliability, and the soundness of the sources used can be established. This includes evaluating:
  • the objectivity and expertise of the internal investigation.
  • adherence to applicable laws, regulations, and, if relevant, codes of conduct or professional rules during the internal investigation.
  • the traceability of the origin and authenticity of sources.
  • the freedom of those involved in the internal investigation to determine their position and seek legal assistance if desired.
  • the independent provision of source or other documents from the internal investigation to the NPPS and the investigative service.
  • the sufficiency of information provided to the NPPS and the investigative service about the nature and scope of the internal investigation.
  • periodic updates to the investigative service and the NPPS on the progress of the internal investigation.

If a criminal investigation is also ongoing during the internal investigation into the offences, coordination with the NPPS and the investigative service is necessary to prevent interference with the ongoing criminal investigation.

Legal privilege

In the context of self-reporting and/or cooperation in a criminal investigation, the NPPS respects justified claims to legal privilege. This means that privileged information does not need to be provided in order for the company to qualify for self-reporting credit or cooperation credit.

The NPPS expects that the legal entity will also respect legal privilege and only submit findings, data, and source or other documents that can be used in the criminal investigation. If the legal entity provides documents that may fall under legal privilege, it must obtain the opinion of any holders of privilege (or derived privilege) and provide their written consent to the NPPS. If no written consent is provided, the NPPS can return all documents submitted under this instruction to the legal entity. The legal entity will then have the opportunity to resubmit the documents after removing any privileged material.

Practically speaking, this means that the investigation report will not be provided to the NPPS since this is covered by legal privilege. Only source materials will generally be provided.

First case where instruction is applied

On December 17 2024, a press release was published on the NPPS website stating that a penal order of EUR 30,000 had been imposed for forgery in connection with a completed project in Africa where a tax dispute was settled with the local tax authorities. The company in question self-reported to the NPPS and investigated the bribes paid. The NPPS then imposed the fine in accordance with the newly issued instruction. However, the press release does not clearly explain the exact impact of the instruction on the fine amount. For instance, it does not specify how much credit was applied.

What next

The instruction marks a significant step towards greater transparency and clarity for companies navigating the complexities of self-reporting and cooperation. However, many questions remain: much will depend on how the new guidelines are applied to actual cases and whether they gain political acceptance.

Additionally, the first instance where the instruction was applied does not provide much clarity, as the NPPS has not specified how much credit was applied. Despite these uncertainties, the new NPPS instruction offers a structured avenue for companies to follow when confronted with indications of potential irregularities. By adhering to the guidelines, companies may benefit from a significant reduction in penalty exposure as well as more predictability in the resolution process.