Karel’s Legal Blog

Top fund lawyer joins Spigthoff Curacao

Sabine Altena joined Spigthoff and will start working in the Curacao office as of the first of March 2008. She will strengthen Spigthoff’s fund & regulatory team. This team further consists of Maike Bergervoet and Karel Frielink.

Sabine obtained a law degree at the University of Groningen in 1997. She subsequently started working at the Amsterdam office of the law firm: De Brauw Blackstone Westbroek, as a junior civil law notary (’kandidaat notaris‘). During her ten years with De Brauw she worked in the fields of corporate law, banking and finance law.

Sabine specialized in advising investment funds and other financial institutions on the structuring, formation, taxation and regulation of investment structures.

Sabine’s characteristics may be summarized as:

• Straight forward
• Urban flair
• Result focussed

Sabine’s contact details are:

Sabine Altena
Tel: (+599-9-) 461 8700
Fax: (+599-9-) 461 8073
Email: sabine.altena@spigthoff.an

Karel Frielink
Attorney (Lawyer) / Partner

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Calls to kill Mr. Wilders should be strongly condemned

Freedom of expression is one of the cornerstones of the Dutch democracy. Within the boundaries of the law, one may say whatever one wants to. However, even within these boundaries, expressing one’s view can be highly irresponsible, especially if the purpose thereof is to demonize and offend others. The Dutch politician Geert Wilders is a symbol of zero-tolerance and a champion of disrespectful remarks, and thus of irresponsible behavior.

I very much oppose the ideas and tactics of Geert Wilders, and if only half of what is said about the provocative movie he is making about the Koran (Quran) is true, I strongly disapprove of his movie too. Mr. Wilders is demonizing and offending millions of people because of their religious beliefs. He very much goes against Dutch norms in doing so. According to Wilders the Islam itself (thus not only certain followers) is a dangerous and violent religion, and in his opinion Muslims should get rid of half of the Koran and moreover, the Koran should be legally banned. He uses cheap rhetoric and chauvinistic views to gain political power. He uses and stirs up fear of others. It should be clear to the world that the vast majority in the Netherlands opposes Wilders’ behavior and tactics. There should be no doubt about that, period.

We recently learned that broadcasting the movie (which no one has seen yet) would not only cause damage to the economy and security of the Netherlands, but may endanger Mr. Wilders’ life as well. It appears that certain radical Muslims wish to kill Mr. Wilders. There is apparantly an Al-Qaida-related website calling for a jihad against Mr. Wilders. This is also unacceptable. However much Mr. Wilders belies the Dutch way of thinking, the government of the Netherlands may not (and will not) shirk its responsibility to protect Mr. Wilders from any physical attack whatsoever. The government should also strongly condemn calls to kill Mr. Wilders, period.

However, let’s not make the same mistake as Mr. Wilders. We should condemn the radicals not the Muslims or the Koran in general. What, above all, should be promoted is a dialogue among Muslims and others in a spirit of respect for religious and other beliefs and convictions.

Karel Frielink
Attorney (Lawyer) / Partner

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150 + 75 members seems too much

The Dutch House of Representatives or Lower House (‘Tweede Kamer’) has 150 members (MPs). Members of the Lower House receive an allowance for expenses for their work. This is called a compensation. The amount of the compensation is € 83,398.32 per MP per year. They also receive a holiday allowance of 8% and an end of the year allowance in December. MPs are elected by the voters.

The Dutch Senate or upper house (‘Eerste Kamer’) has 75 members. Members of the Senate receive an allowance for expenses for their work. The amount of the compensation is approximately € 20,000 per member per year. Senate members are not elected directly by the voters. The voters elect the members of the Provincial Councils, who in turn elect the members of the Senate.

Members of the House of Representatives are full-time politicians, whereas members of the Senate are part-timers who often hold other positions as well. The Senate meets only once day a week. The Senate is concerned only with the broad outlines of policy and has a revisionary role in relation to draft legislation only. Its members do not have the right to amend bills. They can only vote on them and either accept or reject them.

There is no clear need for a Senate, although its existence can be understood from a historic perspective. In my opinion, the Senate could be abolished without any negative effect on the parliamentary democracy or the functioning of the House of Representatives. Some believe that the Senate safeguards and fosters the stability and quality of our parliamentary democracy. I don’t believe that to be true. There are enough ‘checks and balances’ without the Senate. Look at Denmark for example. Most of what the Senate does is merely duplicative.

Another issue is whether the House of Representatives should consist of 150 members. If approached in business terms: it is all about efficiency and downsizing. In business one cannot afford to hold on to activities, practices, divisions, or subsidiaries that have become outmoded, inefficient, and a financial drain on the company. The House of Representatives should focus on its core business. The goal should be to earn back the confidence of the voters.

In fact many MP’s are under undue pressure and I would suggest that the question be asked, time and again, whether a problem is truly an MPs responsibility. The problem could perhaps be better handled by local government or certain - private - organizations. MPs should stop micromanaging the entire society. They should focus on the broader picture. MPs are not members of the government, yet they keep grasping on the steering wheel.

In my opinion, we don’t need such a large body: 75 MPs would do. Let’s not forget that they have a large staff contingent, too. So there is no need for any fear that a smaller body would lack a diversity of expertise, points of view or knowledge. A smaller body would be fully competent to legislate; and an electoral threshold (‘kiesdrempel’) would add to the efficiency as well. Reform is needed, however I would not expect the - majority of - MPs or the members of the Senate to support this.  A debate should be started however, both inside and outside parliament. Hopefully, this will lead to a new consensus and a more effective democracy. According to D66 in its 2002-2006 election program “Political renewal is never finished”. I pose the question however, when will it start?

Karel Frielink
Attorney (Lawyer) / Partner

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It’s not merely a mailbox

According to the OECD (Organization for Economic Co-operation and Development), a tax haven (or offshore jurisdiction) is a jurisdiction which actively makes itself available for the avoidance of taxes which would otherwise be paid in a higher tax jurisdiction. There are more and less advanced offshore jurisdictions. The concessions and benefits may come in different forms. It may be, e.g., zero tax on receipt and distribution of dividends (holding companies in Cyprus, Denmark and the Netherlands) or favorable tax treatment through treaties and agreements with the investor’s home country (Cyprus, the Netherlands and Malta).

In its November 2006 report ‘The Netherlands: A Tax Haven?‘, SOMO (‘Stichting Onderzoek Multinationale Ondernemingen’; Centre for Research on Multinational Corporations) concludes that the Netherlands is a tax-haven. The Netherlands hosts nearly 20,000 so-called ‘mailbox companies’ primarily for fiscal reasons, which companies do not have a substantial commercial presence. What are mailbox companies?

For example, Netherlands-based companies or institutions whose shares are held directly or indirectly by non-residents, which specialize in raising funds outside the Netherlands and on-lending or investing them outside the Netherlands are mailbox companies. Such companies are not ‘mailbox companies’, in the sense, that they, e.g., do not use office space in the Netherlands and have no activities whatsoever in the Netherlands. Mailbox companies are companies that have no substantive connection with the country of incorporation.

Karel Frielink
Attorney (Lawyer) / Partner

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The lessee will be protected (in principle)

As a general principle, the rights of a lessee must be protected in the event leased property is sold.

Therefore, according to Dutch Caribbean law, in the event of the sale of a leased property, either a regular sale or through a foreclosure sale, the (material) obligations in the lease agreement with respect to that property will automatically transfer to the new owner.

The mortgage holder can usually initiate foreclosure anytime after a default on the mortgage. With respect to a foreclosure sale, i.e. a sale initiated by a mortgage holder, an exception to the above principle is made in the event the mortgage holder can invoke a so-called ‘lease clause’. A lease clause is a provision in the mortgage deed that prohibits the owner of the real property from entering into a lease (a.k.a. rental) agreement without permission from the mortgage holder.

Karel Frielink
Attorney (Lawyer) / Partner

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It is common practice

It is common practice around the world for (dealing rooms of) banks and brokers to tape conversations with their clients in order to avoid misunderstandings as to the selling or buying instructions given by the clients. There are no specific laws or regulations in the Netherlands Antilles applicable on this aspect of telephone taping.

In various countries there are laws protecting the privacy of individuals, within the scope of which taping of incoming calls do fall. In particular on the basis of the EU Directive on personal data protection (Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data) various European countries have implemented in their jurisdiction legislation relating to the protection of personal data.

The scope of such legislation is that it applies to any operation or set of operations which is performed upon personal data. Personal data are the data relating to any identified or identifiable individual. Furthermore, it provides for a certain obligations for data collectors, requirements for data processing, rights of data subjects and the transfer of data to other countries.

In absence of Netherlands Antilles legislation, for this aspect of telephone taping a guideline could be sought in the personal data collection and privacy legislation in Europe and in particular in the Netherlands. From this entails that the following requirements are to be met:

1. prior notification (through account opening documentation and general terms and conditions);
2. taping and use of the tape only for the specific purpose to record instructions with respect to a security transactions;
3. tapes are kept in a form which permits identification of the individual, and
4. data should be destroyed after certain retention period (e.g. after five or more years, which given its evidentiary value also depends on the applicable limitation period).

Karel Frielink
Attorney (Lawyer) / Partner

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A license is required

In many international group structures, one or more Netherlands Antilles legal entities or companies (offshore companies) are inserted. This is mainly done for tax reasons. Another reason for using a Netherlands Antilles company may be to have a company with a seat in a respected jurisdiction with a well functioning legal and court system. The ‘ultimate beneficial owner’ of these companies will generally, directly or indirectly, put the board of these Netherlands Antilles legal entities and the administration of these companies in the hands of company service providers a.k.a. trust companies.

Netherlands Antilles company law grants the management boards of companies, NVs (which are public limited liability companies) or BVs (private limited liability companies), the authority to set their own policy. However, the management board may be bound (in fact) to act upon the instruction of another company or person. This is common practice for subsidiary companies within a group structure. There is a factual power of instruction of the (grand) parent company (an unwilling board member may be suspended or dismissed by the general meeting of shareholders). This is also common practice for (offshore) companies whose board member is a trust director.

Supervision of trust companies is dealt with in the National Ordinance on the Supervision of Trust Service Providers 2003 (‘Landsverordening toezicht trustwezen’, the ‘NOST’). Supervision of trust companies (a.k.a. fiduciary service providers) falls in the category integrity supervision and not in the category prudential supervision. The supervisor is the Central Bank of the Netherlands Antilles. The ordinance prohibits anyone from rendering fiduciary or trust services without a license.

Karel Frielink
Attorney (Lawyer) / Partner

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Permanent establishment creates a taxable presence

Foreign companies may wish to promote their products in Aruba. Do marketing activities result in taxable activities in Aruba?

In Aruba the profit tax law applies the concept of the permanent establishment that creates a taxable presence without providing a definition. In practice one believes that the concept includes the representative and also that certain activities will not lead to a taxable presence as is the case in the definition used in the Tax Arrangement for the Dutch Kingdom which applies to Aruba, the Netherlands Antilles and the Netherlands.

The most relevant exemption being the one that says that the renting of a space is not a permanent establishment if it is only used to advertise or to provide information and that the activities are as such auxiliary activities. Since representatives are seen as a taxable presence if such employees of the foreign company would conclude contracts in Aruba, that would create a taxable presence for the profit tax law. The Aruba profit tax rate is 28%.

Karel Frielink
Attorney (Lawyer) / Partner

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Undercover operation and huge TV circus ethical?

Crime reporter Peter R. de Vries paid the 34-year old business man who befriended and secretly recorded Joran van der Sloot some US$ 35,000. Bounty hunters are a well-known phenomena, also on TV, as are rewards offered by police or private persons. We have all seen episodes of ‘America’s Most Wanted’. I guess nowadays practice shows that one could serve both the law and one’s own wallet simultaneously.

The business man gained Joran’s trust, also by smoking marijuana together (click here). So the question is, actually how stoned were these two man during their conversations? Shouldn’t there be at least a code of ethics for crime reporters and the people they hire?

De Vries runs a TV-show and by building a huge television circus around this particular episode (e.g. by showing up in talk shows beforehand and not disclosing what was on the tapes for several days) he showed that he needed (and got) his ratings: 7 million people in the Netherlands watched his show last Sunday. Are we talking about a trial by media here? Considering the fact that Peter R. de Vries stated time and again that he has solved the case (which is not a certainty at all), Joran seems to be convicted by this TV show. The business man who secretly taped Joran said on ABC News: “We’re going to punish him. His punishment will be very simple, sir. He’s gonna get a lifetime sentence. Maybe not in jail. But I would not want to be Joran van der Sloot after everybody in the world sees these undercover tapes. … There ain’t no rock in this world you can crawl under.”

The media plays an increasing role in solving criminal matters, but prosecutors they are not and they should refrain from acting as if they are. In my opinion, the media should balance out a suspect’s right to a fair trial and the public’s right to be informed. The question is whether Peter R. de Vries crossed a line here. This issue remains yet to be determined, but I’m at the very least sceptical towards this style of reporting.

From what I understand, Joran was videotaped for approximately 25 hours. It goes without saying that in order to form an educated opinion about all conversations between Joran and his ‘friend’, one should view all the tapes, not just the part that was aired. That certainly goes for a public prosecutor. The interpretation of  Joran’s account  is not merely a simple grammatical matter. Also of significant relevance is the context in which it was told. And the tapes that were not aired might very well offer more insight in the relevant context of his wording. After all, to determine the trustworthiness of a conversation, and in particular a confession, one should also take into consideration the circumstances surrounding it (e.g. the influence of drugs or pressure, the mental state of the person involved, etc.).

As far as confessions under U.S. law are concerned, I refer to the Fulminante decision (Arizona v. Fulminante, 499 U.S. 279, 111 S. Ct. 1246, 113 L. Ed. 2d 302). Fulminante confessed a murder to a fellow inmate, who actually was a paid federal informant, in return for protection. Fulminante was subsequently indicted for the killing, and his confession was used at trial despite his objection. A jury found him guilty of murder and sentenced him to death. The U.S. Supreme Court applied the so-called harmful error test (with respect to the Miranda rights: the right to be informed expressly of the constitutional rights before interrogation begins) and found that the jurors most likely would not have convicted Fulminante had they not heard his coerced confession, thus its use at trial was harmful. The Court ordered the case back for a new trial, this time without use of the confession.

Karel Frielink
Attorney (Lawyer) / Partner

p.s.

1. For an update on the case itself see CNN’s website
2. See also the comments of the Dutch Public Broadcasting Ombudsman (in Dutch)
3. Patrick van der Eem, the man who secretely videotaped Joran van der Sloot, was secretly taped himself. He expects to become a millionaire with this entire case. He asserted that he himself has organized the entire operation and that he knows who has thrown the body in the sea.

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Not yet, not yet at all

Dutch television aired a videotape last Sunday, in which Joran van der Sloot says he was with Natalee Holloway on an Aruban beach when she apparently died and that a friend of his with a boat disposed of Holloway’s body (further details here on CNN and here). According to crime reporter Peter R. de Vries, the case is now solved. But is it really? To be honest: not yet, not yet at all.

From a legal point of view, there are at least two major issues:

1. Will the Aruba courts accept the tape as evidence? (This is not certain at all given a recent judgment of the European Human Rights Court; the tape could fall into the category of illegally obtained evidence) and 
2. How much weight has Joran’s confession (if it is a confession at all)? One cannot get convicted on one’s own confession only. Without sufficient supporting evidence, Joran cannot get convicted of any crime whatsoever. Moreover, Joran’s confession could turn out to be completely false. Some elements of said ‘confession’ were proven untrue already.

In that respect, it should be noted that suspect Joran van der Sloot is known for a particular habit: lying. A couple of weeks ago, his parents revealed on Dutch television, when on the talk show of Pauw & Witteman, that Joran habitually tells lies. He himself admitted in said talk show that he lies more often and that lying had become a bit of a habit. It could even be pathological, which would make Joran a mythomaniac. This would mean that he tells stories in a way that he believes will impress other people. Some pathological liars do and others don’t know what they are doing: how to tell the difference?

As for  his videotaped confession, or better so-called confession: we simply don’t know whether he was telling the truth or lying again, wanting to give the impression that he is bigger or tougher than he actually is. Being interviewed about the videotape last week, Joran ‘confessed’ yet again to a ‘false confession’…

The question therefore remains, how does one know when a serial liar tells the truth? To be continued!

Karel Frielink
Attorney (Lawyer) / Partner

P.S.

1. See for ethical questions Morgan Geller’s Weblog: “Having a reporter deal drugs hurts the credibility of the media and raises the question as to how far the media will go in order to collect information.“
2. On 14 February 2008, the Joint Court of Appeal of the Netherlands Antilles and Aruba ruled that Joran van der Sloot’s secretely recorded statements were inconsistent with other evidence and insufficient to re-arrest him: “The court is of the opinion that there is a lack of sufficient facts and circumstances substantiating serious grounds for the suspicion of the suspect’s involvement in the crimes for which he is being held responsible by the prosecution“ (click here). Although maybe hard to accept for (part of) the general public, the court’s approach is fully in line with the international standards on the grounds for (re-)arresting suspects. Some people are accusing Aruba’s legal system (including its courts) of ‘corruption’: they are simply wrong. And of course, mistakes can be made in each court system: one should read Timothy Master’s story and the stories of many others, for example.

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