US authorities take forceful action against foreign corrupt practices, including against Dutch companies. This can result in serious financial and reputational consequences. The Netherlands has recently started dealing firmly with foreign corrupt practices. This trend may prompt the US to leave anti-bribery cases against Dutch companies to Dutch authorities. To persuade the US authorities to do so or at least agree to a coordinated approach, Dutch authorities need to be involved at an early stage. Also, the investigations and the dialogue between the authorities engaged on both sides of the Atlantic should be managed effectively. This is why it is wise to involve both US and Dutch counsel from the beginning.
Companies are increasingly becoming subject to enforcement actions related to bribery, violations of economic sanctions and export control, and other related types of misconduct. The associated reputational and financial risks are grave, especially when US authorities are involved. Companies subject to this type of enforcement action should aim for enforcement by Dutch authorities, as it may prove a more prudent alternative to US enforcement.
Over the last few years, public outrage over corporate misbehaviour has surged. As a result, national legislatures and enforcement authorities are increasingly pressured to take firm action. The enforcement of anti-corruption regulations is a prime example.
When the OECD Anti-Bribery Convention came into force in 1999, US enforcement of foreign corrupt practices under the Foreign Corrupt Practices Act (FCPA) increased swiftly. The DoJ and the SEC, the US authorities involved, apply a very expansive interpretation of their own jurisdiction in this regard. They do not refrain from prosecuting foreign companies with respect to bribery in third countries, even when there is hardly any link with the United States.
FCPA cases are invariably settled and the settlement amounts are substantial. In 2013, after an extensive investigation, French company Total S.A. agreed to a settlement amount of USD 398 million with US authorities for allegedly paying a USD 60 million "bribe" in order to get Iranian oil and gas contracts during the mid-90s. In doing so, it secured a fourth place on the list of largest FCPA settlements. In another case, Snamprogretti Netherlands B.V., a subsidiary of the Italian ENI S.p.A., paid USD 365 million in 2010 in connection with alleged bribery practices in a Nigerian joint venture. The Snamprogretti settlement is sixth on the FCPA top-10 list. Only two companies on this list are US companies.
Until recently, enforcement of foreign corrupt practices in many countries, including the Netherlands, strongly lagged behind the US approach. In 2013, the OECD criticised the Dutch government for this, after which reproach the Dutch government committed to take stronger action against foreign corrupt practices by Dutch companies. We have indeed witnessed an increased willingness of the Dutch Public Prosecution Service to tackle foreign bribery cases. The Dutch penalty amounts in these cases have also increased substantially. In December 2012, a EUR 17.7 million settlement was reached with Ballast Nedam and other big settlements are expected in the near future. This trend is generally to be welcomed by Dutch companies with foreign bribery issues, as prosecution by Dutch authorities is often to be preferred over prosecution by US authorities. The reason for this is that investigations are generally less far-reaching and the penalties are significantly lower than in the US.
The OECD Treaty and the United Nations Convention against Corruption provide that, when the same facts come within the jurisdiction of various countries, these states should agree on the most suitable jurisdiction for prosecution or coordinate their actions. This can provide a basis for the US authorities to leave the prosecution of Dutch foreign bribery practices to Dutch authorities. US authorities may, under certain conditions, consent to that approach. A necessary condition is that the Dutch authorities are capable and willing to effectively prosecute the infractions concerned. Also, the punishment imposed must be credible from a US perspective. In both aspects the Netherlands now scores better than it did in the past.
For a company to persuade US authorities to leave its case to Dutch authorities or to at least agree to a coordinated approach, it should involve Dutch authorities at an early stage. Additionally, the company should actively manage the investigations as well as the dialogue between the authorities engaged on both sides of the Atlantic. This is why it is wise to involve both US and Dutch counsel from the beginning.
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