Amsterdam - the new financial capital of Europe
The Dutch Act on Public Administration Probity Screening, the Bibob Act (promoting integrity assessment by public authorities) allows government bodies in the Netherlands like municipalities and other administrative bodies to investigate the integrity of an applicant for a licence, subsidy, or tender. Integrity tests will also be carried out in the case of ‘scarce licenses’, such as real estate projects, catering operations and coffee shops, financial permits and exemptions, and major events. The government often uses the Bibob Act to refuse an application for a permit, so it is wise to engage the services of a Dutch business lawyer to assist with the license application or assess that your application has been treated properly by the Dutch authority.
A Bibob procedure starts with the request of licensing authority (or other Dutch administrative body) to fill in a "Bibob form". I often assist clients in filling out this form. The form is usually comprised of extensive lists that request certain information. This information is used to check the integrity of the applicant. The requested information relates predominately to the involvement of individuals in the company, the financing of the company, the control of the company and so forth. It is important to provide as much of the requested information as possible. Incomplete information may result in a refusal under the Bibob procedure.
In addition to their own investigations, administrative bodies can also call on the Landelijk Bureau Bibob (LBB), the Dutch federal bureau for integrity screening, part of the Dienst Justis of the Ministry of Justice and Security. Upon request, this agency will examine whether there is a serious risk that a permit, subsidy, real estate transaction, gambling license or public contract will be misused for criminal activities. On the basis of this advice, Dutch government bodies may refuse to deal with the applicant. The Public Prosecutor's Office (OM) provides information under the Bibob Act for this purpose and so does the Tax Authority.
Article 3 of the Bibob Act applies to the granting of a licence in the Netherlands, as well as to whether a licence is being used for a proper purpose. The key elements of the test under Article 3 of the Bibob Act are as follows:
1) Under the Bibob Act, an administrative body may refuse or withdraw a licence or subsidy if there is a serious risk that the grant for a licence or subsidy will be used for:
(a) using the proceeds of criminal offences
(b) the commission of criminal offences.
In assessing whether there is a 'serious risk' of a licence being 'misused', account shall be taken of the facts and circumstances which demonstrate, or give reasonable grounds for suspicion that, an offence (e.g. forgery or bribery) has been committed to influence the decision to issue a licence (which has been applied for or already issued).
The National Bibob Bureau will carry out the Bibob investigation and give advice to the administrative body that is issuing the licence, or wishes to revoke or refuse a licence. The Bibob advice can lead to three conclusions:
(1) There is no risk that the desired licence will be misused for criminal activities. The permit will then be granted.
(2) The investigation may also reveal that there is a lesser degree of danger. The municipality may then impose additional requirements on the granting of the permit.
(3) National Bureau Bibob can also establish that there is a serious risk that the licence will be misused for criminal activities and not recommend the licence’s approval.
This advice is not binding on the government body involved. The administrative body can choose not to follow the advice, but must consider it when coming to its own conclusion.
According to established Dutch case law of the Administrative Jurisdiction Division of the Council of State (compare the judgments of 18 July 2007, ECLI:NL:RVS:2007:BA9799 and 20 July 2011, ECLI:NL:RVS:2011:BR2279), a mayor who processes the application for a permit may, in principle, rely on the advice of the National Bureau of Bibob, on account of the expertise of this bureau. The mayor must, however, make sure that the advice and investigation have been carried out with due care, and that the conclusion is substantiated by the evidence. This will not be the case, for example, if the facts do not provide sufficient (direct) evidence for the conclusion reached or do not all point in the same direction, are mutually contradictory or are not in line with what is otherwise known.
Due to a change in Netherlands law, Bibob research can now be applied to all public contracts. Integrity research was limited to the construction, ICT and environmental sectors. This was on account of the fact that these particular sectors remained vulnerable to crime due to government contracts with a considerable social or economic value. However, the need to prevent abuse of public procurement also exists, for example, in public transport and health care. After the amendment of the law, governments can request judicial data when investigating the business environment of a company or person. This includes people who, for example, lend a lot of money to a licence applicant. But it can also include an administrator, director or shareholder who is mentioned on the application for a subsidy. At present, governments are only allowed to use data from the applicant themselves and not from their business relations.
The vague terms and wording of the Bibob Act has created issues in its application. An example of such a term is "serious danger" (ernstig gevaar). Certain mayors are more likely to find something to have a higher degree of seriousness than others. Predicting what will happen in the future is also a subjective judgement that can easily be abused by an administrative body. An additional unclear term, that has resulted in a number of lawsuits, is the term 'bad behaviour' (_slecht levensgedra_g). In the Drinks and Catering Act (Drank- en Horecawet), this can be used as a reason to revoke a Catering Licence. In the Catering and Coffee Shops sector, the mayor can refuse (or leave) a permit or revoke an existing permit on the basis of 'bad behaviour’, within the meaning of the Catering Act and the Bibob Act. Issues arise in relation to this, as case law has showed that the refusal of a permit on account of 'bad behaviour' is often unjustified.
Legal protection in the application of the Bibob Act follows primarily from the application of the principles of subsidiarity and proportionality. The administrative body will first check whether there are any existing grounds for refusal outlined in the General Local Bye-Laws and the Drinks and Catering Act. These existing grounds for refusal can also relate to the integrity of the permit applicant or permit holder. Examples include the requirement "not to be of bad behaviour in any way" (Besluit eisen zedelijk gedrag), or the requirements set out in the "Decree on Requirements for Moral Behaviour", which forms part of the Dutch beverage hospitality law. There is a compulsory application form to be used in relation to the Drinks and Catering Act that has been created by the central government.
In addition, the licensing body must investigate whether it cannot independently apply the Bibob Act. This examination is carried out by using the application forms described in Section 30 of the Bibob Act. This Bibob form is in addition to the compulsory application form created by the central government. Along with other questions, this form asks who the managers, shareholders and financiers of the person(s) involved are, the so-called "Bibob relations", and who, for example, is a subcontractor and what their method of financing is.
If, on the basis of a Bibob recommendation, a permit is refused or revoked, the applicant can lodge an objection with the administrative body to start a review procedure. Th decision in the review procedure is subject to appeal with the Dutch Court. It is also possible to apply, simultaneous with the complaints procedure or in case of appeal, for a provisional injunction with the Dutch Administrative Court against refusal or revocation of a Dutch license. As the Bibob Act is sometimes interpreted and applied very broadly, it may be useful to consult a Dutch lawyer. It is advisable to seek advice from a Dutch lawyer in good time in order to understand the legal possibilities of challenging a Dutch government decision. Case law on the Bibob Act shows that decisions based on a Bibob recommendation are regularly invalidated by the Dutch Court. This is usually the case if the Bibob decision is insufficiently substantiated. If you have a question about the Dutch Bibob Act, please contact Mark van Weeren.
Amsterdam - the new financial capital of Europe
Eenzijdige wijziging pensioenregeling vergt maatwerk en zorgvuldigheid
Slecht levensgedrag: onduidelijke maatstaf voor horecabedrijven