“Shocked”, state attorney Pels Rijcken announced the mega fraud of board chairman Frank Oranje at the beginning of March. From behind the facade of the office colossus New Babylon in The Hague, notary Oranje for years funneled away a total of about 10 million euros in a ‘refined way’. Money that Pels Rijcken managed for duped investors in internet company World Online, insurer Converium and for municipalities and provinces that had sold waste processor Attero.
Orange, who committed suicide in November, was one of the leading notaries in the country. He even helped ministers to put their business interests ‘at a distance’ before taking office. His theft sparked national outrage and is known as the largest fraud case ever within the Dutch legal profession and the notarial profession.
One hundred days after the announcement, the money is still missing. There is little urgency to solve the fraud mystery and to learn lessons from politics, Pels Rijcken, BFT supervisor and the Public Prosecution Service (OM).
The current investigative strategy of the Public Prosecution Service is to sit back. After it tracked down the fraud and informed Pels Rijcken about it last September, the investigation is now underway on hold. The justice system allows Pels Rijcken to investigate the fraud himself. This is done by Deloitte, a commercial accountancy and consultancy firm. The Public Prosecution Service says that “after reviewing the Deloitte investigation reports, it will examine whether additional investigation is necessary”.
This attitude is in line with the trend that the Public Prosecution Service wants companies to conduct their own fraud investigations more often. It is questionable whether the large accountancy and law firms that are proficient in these ‘independent investigations’ will uncover the full truth. Controversial fraud investigations at, among others, oil platform builder SBM Offshore and tax advisor Baker Tilly show that the interests of the investigated company dominate – for example by keeping the fraud case ‘small’ and placing the blame on a few.
That Deloitte’s key question – where is Orange’s 10 million? – answers is not likely. Unlike the judiciary, it does not have the authority to trace money flows and view bank accounts.
In March, the Public Prosecution Service stated that it sees Pels Rijcken as a “victim”. There does not appear to be any interest in prosecuting the legal entity Pels Rijcken. However, that would be possible if Orange’s fraud can be attributed to the office, for example because the internal organization was not in order.
Also read: how could the chairman of the Pels Rijcken office steal 10 million euros unseen?
There are, however, the necessary indications. “Pels Rijcken bears joint responsibility for the fraud,” say curator Jeroen Princen and fraud expert Marcel Pheijffer, professor at Nyenrode and Leiden University. The two recently published a research article in the Dutch Lawyers Magazine in which they analyze the fraud. By comparing hundreds of pages of public deeds and documents – for example from the robbed claims foundation that had to compensate duped investors in Converium – they arrive at a harsh judgment. Orange’s fraud was not that sophisticated at all. According to them, the door was ‘open at Pels Rijcken to such an extent that the fraud could have happened’.
For example, a fellow civil-law notary twice changed the name of the foundation with which Orange committed fraud and of which he was the sole director. That is highly unusual, but no alarm bells went off at Pels Rijcken. Orange was also able to transfer large amounts from Pels Rijcken accounts unnoticed, without anyone smelling danger.
According to Pheijffer and Princen, the fraud shows that politicians must take action and that the law needs to be tightened up on a number of points.
But the fraud is not on the political agenda. Only SP MPs Michiel van Nispen and Renske Leijten have asked Minister Ferdinand Grapperhaus (Justice and Security, CDA) for clarification. After all, it is one of the largest law firms in the country (290 employees), which acts as a state lawyer every year in hundreds of – sometimes very confidential – cases for the national government.
The limited political attention is in stark contrast to other affairs at business service providers, such as ING that waived money laundering checks and accountancy firms that checked lax books. In those cases, fraud cases were used politically to scrutinize legislation and regulations and the supervisory regime.
It is known that the capacity for supervision of the notarial profession at the supervisory authority does not remain with the BFT. The Court of Audit pointed this out in 2008 and little has changed since then. The BFT annual report for 2019 shows that six employees carry out the financial supervision of the country’s 770 notary offices and 3,300 (junior) civil-law notaries.
Also read: Stolen foundation: ‘Pels Rijcken must bear all costs’
The BFT has been investigating Pels Rijcken for months now and, when asked, reports that the investigation is “expected” to be completed this year. That is also politically relevant: Minister Grapperhaus only wants to discuss the issue in more detail after the BFT investigation, he responded to parliamentary questions from the SP in March. That choice is special. After all, the BFT informs you on request that the investigation will not be made public due to its statutory duty of confidentiality, nor may it be provided to the minister.
Pels Rijcken also does not want to comment further on the case, pending the BFT investigation. The state lawyer has, however, done some introspection over the past hundred days. In a recent press release, Pels Rijcken no longer calls himself a ‘victim’, as in March, but ‘responsible for the fact that this fraud could have taken place’.
You can talk about suicide at the national helpline 113 Suicide Prevention. Phone 0800-0113 or www.113.nl.