Is the Netherlands too soft on corruption?

Is the Netherlands too soft on corruption?

30th May 2011, Comments 1 comment

Don't even think about approaching Dutch companies with a bribe. Corporate corruption just doesn't fit in with Dutch culture. At least, that's what the Dutch like to think.

While US courts have handed down billions of dollars' worth of fines to companies found guilty of corruption and bribery over recent years, similar investigations in the Netherlands rarely get off the ground. But is that because Dutch firms don't do it, or because Dutch justice authorities don't deal with it?

Polish hospitals
MP Afke Schaart, trade and export spokesperson for the governing conservative VVD party, admits it's strange.

"It is odd, especially since we're the world's fifth-largest exporting country and seventh-largest importing country. The Netherlands is really dependent on export and trade abroad. But I do think that self-regulation within Dutch companies and legislation and regulations drawn up by parliament work well enough to ensure that there's less corruption than in other countries."

That it does actually happen was demonstrated this week in Poland. Prosecuting authorities there say a German office of the Dutch multinational Philips systematically bribed Polish hospital managers. They are alleged to have purchased Philips equipment in exchange for the money. The Philips branch is said to have set up a special fund to finance the bribes.


Photo © RNW

Iranian government
Philips is not the only Dutch company to have been accused of bribery in recent years. Shell, for instance, was under fire for a long time for making payments to officials in Nigeria. The Anglo-Dutch multinational got itself out of trouble by agreeing to a settlement with US justice authorities.


Chemical conglomerate AkzoNobel was fined around EUR 4.25 million by the US for paying bribes to members of the Iranian government. Less well-known Dutch companies have also been at the receiving end of US fines for bribery.

US courts were able to deal with the companies because the Foreign Corrupt Practices Act makes it possible to prosecute for bribery and corruption committed abroad.

Could a similar approach work in the Netherlands? Gijs van der Mandele from the anti-corruption group Transparency International says:

"Of course it could work here as well, but the law and regulations aren't as aggressively enforced as they are in the US."

Van der Mandele prefers not to say whether he thinks Dutch firms are more or less guilty of corruption than foreign ones. However, Transparency International has given a cautious estimate that about EUR 10 billion can be linked to bribery in the Netherlands.

Rogue incidents
The Organisation for Economic Cooperation and Development has for years been critical of the Dutch approach to corruption. It says it's remarkable that there have been so few investigations and prosecutions for bribery in a country so much involved in international trade.

Is the Netherlands too lax, and should its justice authorities follow the lead of the United States and be more pro-active? Schaart doesn't think so:

"I don't think we're easier on this than the United States, not at all. I think good agreements have been made and that people are keeping to them, and that the Dutch system works. There will always be rogue incidents, such as now with Philips. If it looks like we should tighten up the legislation and regulations in this area, I believe this should be done at the EU or global level, in order not to damage the competitiveness of the Netherlands unnecessarily.


Fraud in the property sector

In recent years the Dutch property sector has failed to report a billion euros in turnover to the taxman. Investigations carried out by the Tax Office reveal that estate agents and pension funds avoided hundreds of millions of euros in taxes. Public broadcaster NOS reports that they sometimes used front men and sometimes misrepresented the value of properties in order to mislead tax authorities.

In 2007 the Tax Office started its large-scale investigations into tax evasion and fraud within the property sector. As a result 600 companies were faced with 330 million euros worth of fines and retroactive tax payments. A total of 1291 companies were investigated, which means that nearly half were found to be guilty of irregularities.

This is not the first time the property sector has faced scandal. At the beginning of this century it became clear than the sector had cheated the government out of hundreds of millions in the construction of schools and hospitals. In 2007 it was shown to have misused pension funds to increase its own salaries. The current revelation of a billion euros in tax evasion is the third time the property sector has been disgraced.

Marco Hochgemuth
Radio Netherlands


1 Comment To This Article

  • Ann posted:

    on 30th May 2011, 14:52:07 - Reply

    Add "Trafigura Beheer and the Jamaican government" scandal to the list