The DPPS Instruction on self-reporting, cooperation and investigation: policy with incentives in case of irregularities

Background  

In the Netherlands, several authors have long written about the need for policies in the Netherlands with incentives for companies to self-report and cooperate in the context of detected irregularities, with reference to other countries such as the United States of America ("the United States"), the United Kingdom and Germany.[1] Both the Organisation for Economic Cooperation And Development and the Research and Data Centre (in Dutch: het Wetenschappelijk Onderzoek- en Datacentrum) ("WODC") noted as early as 2020 that the absence of policies may cause companies in the Netherlands to be more reluctant to report detected irregularities. According to the WODC, not only companies would benefit from such a policy; potential returns would also apply to investigating and prosecuting authorities as well as society.[2]

Self-reporting

According to the Instruction, self-reporting means that a company voluntarily, fully and timely reports possible criminal offences in writing to the DPPS in a clear and structured manner. When making the report, the company should hand over to the DPPS the data and (source) documents currently available that are relevant within the framework of the criminal investigation into the reported offences.

If, in the opinion of the DPPS, a self-reporting contributes significantly to the criminal investigation and prosecution of criminal offences, the DPPS may apply a discount of up to 25% on the fine that the DPPS would deem appropriate in the absence of that self-reporting. However, if, in the opinion of the DPPS, the aforementioned conditions are not (sufficiently) met, the DPPS may apply a lower discount percentage or refrain from giving a discount. For example, if it appears during the criminal investigation that not all (signals of) possible criminal offences that could reasonably be considered to be known to the company at the time of the report were voluntarily and timely reported.

Cooperation with criminal investigations

The DPPS may apply an (additional) fine reduction of up to 25% if, in the opinion of the DPPS, the company voluntarily, fully and timely cooperates in a criminal investigation. To this end, the company must adopt a (pro)active attitude and also cooperate with requests from the investigating authority and/or the DPPS.

Cooperation with a criminal investigation can be provided, inter alia, by conducting (or having conducted) self-investigations and making the (source) documents thereof available to the investigation service and the DPPS. This cooperation further includes, among other things, that the company provides all relevant data and documentation from home and abroad to the investigative service and/or the DPPS in a timely and unsolicited manner, provides them in a structured and searchable manner, keeps employees available for interrogation, prevents evidence from being influenced, refrains from conduct that impedes the investigation, identifies data in the possession of third parties and keeps assets available for possible sanctions.

Also with regard to cooperation, the DPPS may apply a lower discount percentage or refrain from giving a discount if, in its opinion, the conditions for cooperation are not sufficiently met.

Self-investigation

In addition to the criminal investigation by the investigation service and the DPPS, the Instruction allow a company to conduct self-investigations into possible involvement in criminal offences. Companies are free to conduct self-investigations as they see fit, provided they are sufficiently verifiable by sharing source documents, for example. The DPPS will take the quality and completeness of the self-investigation into account when determining a discount percentage on the final sanction. This will consider the contribution to truth-finding, the safeguarding of victims' rights, the objectivity and expertise of the investigation, compliance with laws and regulations, the traceability of sources, the freedom of those involved to seek legal assistance, and the transparency and progress information of the self-investigation. If there is an ongoing criminal investigation, coordination takes place to avoid crossover.

Exploratory discussion

Before a company proceeds to self-report and/or cooperate in a criminal investigation, it (or its counsel) may contact the DPPS to check whether the self-reporting and/or cooperation falls under the Instruction. This is called an exploratory discussion in the Instruction (in Dutch: verkennend gesprek). The company can outline the case position, anonymously or otherwise, to the DPPS. An exploratory discussion can contribute to a better understanding of the conditions and how companies can shape their cooperation. If the DPPS rules that the Instruction does not apply, the content and communications of exploratory discussions will not be used in a criminal investigation.

Main disadvantage

In the United States, under certain conditions, a company can receive a 'declination', meaning a decision to forego criminal prosecution. In the Netherlands, however, the outcome of self-reporting remains uncertain, as the Instruction explicitly leaves open the possibility of going to court. This may make companies reluctant to self-report and/or cooperate fully with the criminal investigation.

Conclusion

The Instruction provides an initial basis for a more proactive attitude on the part of companies, but to be truly successful, more certainty is needed. In our view, if all conditions for self-reporting and cooperation in a criminal investigation are met, the case should in principle be eligible for out-of-court settlement. After all, the added value of cooperation often lies not only in the amount of the fine, but also in a faster turnaround of proceedings and closure of past cases.

Because the DPPS now keeps the door open to taking the case to court, it remains to be seen whether companies will now be less reluctant to report detected irregularities. This new Instruction by the DPPS is a step in the right direction, but more certainty on an appropriate and efficient settlement is needed to really encourage companies to self-report and cooperate when irregularities are detected.

[1] Mr M. Velthuis & Mr W.M. Warnaars, 'Dealing with detected irregularities? Policy with incentives for companies for self-reporting and self-cooperation is needed, Tijdschrift voor Sanctierecht & Onderneming 2023, no. 4/5, pp. 205-214; M. Hutten MSc LLMMA, 'Internal investigations and the cooperation reward in corruption cases; good example follows good practice?', Tijdschrift voor Bijzonder Strafrecht & Handhaving 2022, pp. 330-342. M. Velthuis, 'Cooperation by companies in a criminal investigation. Do new developments require the introduction of Dutch policy on internal investigations?', Journal of Special Criminal Law & Enforcement 2020 I, no. 3; A.J.M. de Swart & F. Mattheijer, 'Self-reporting and cooperation, what does it slide?', Journal of Sanctions Law & Business 2018-2, pp. 97-103.

[2] Dr C.A. Meerts et al, Self-investigation and self-reporting of fraud and corruption by Corporations, WODC: 2023.