7 issues on probity testing for permit applications
The Bibob Act (Bevordering Integriteitsbeoordeling door het openbaar bestuur) enables municipalities and other administrative bodies in the Netherlands to investigate the integrity of applicants for permits, subsidies or tenders. Bibob testing also takes place for scarce permits, as well as for real estate projects, the issuance of long leases, the operation of the hospitality industry and coffee shops, financial permits and exemptions, and large events. The government often uses the Bibob Act to refuse an application for a permit, in which case it is advisable to engage a lawyer specialized in Bibob proceedings.
Filling in a Bibob form when applying for a permit
A Bibob procedure starts with a request from the municipality (or other administrative body) to complete a “Bibob form”. We also assist clients in filling out this form. It usually concerns extensive lists in which information is requested. This information is used to check the integrity of the applicant. The information requested mainly relates to the involvement of the persons in the company, the financing of the company, the control and so on. It is important to provide the requested information as completely as possible within the framework of the Bibob procedure. Incomplete provision of information may also lead to a negative Bibob opinion. More on this you can read here.
1. Investigation of permit applicant by national Bibob office
In addition to their own investigations, administrative bodies may also call upon the National Bibob Bureau (LBB), part of the Justice Department of the Ministry of Justice and Security. However that is not necessary, the authority may also handle the integrity trest itself. Upon request, this agency assesses whether there is a serious risk that a permit, subsidy, real estate transaction or government contract will be abused for criminal activities. On the basis of this advice, government authorities can refuse to do business with the applicant. The Public Prosecutor’s Office (Openbaar Ministerie – OM) is a declarant of information when applying the Bibob Act.
2. Verification against article 3 of the Bibob act after application for a permit
Article 3 of the Bibob Act is applicable when granting a licence or checking whether a licence is still being used correctly. Article 3 of the Bibob Act includes, in brief, the following test:
1) An administrative body may refuse or revoke a permit or subsidy on the basis of the Bibob Act if there is a serious risk that the decision will also be used for:
(a) exploiting proceeds from criminal offences
(b) committing criminal offences
2) In order to assess whether there is a “serious risk” that a decision (permit) will be used “improperly”, facts and circumstances are considered that indicate or reasonably suspect that a criminal act has been committed to obtain the requested or granted decision (e.g. forgery, bribery).
3. Advice by the LBB on integrity of the applicant
The LBB will conduct the investigation and provide its advice to the administrative authority which is to issue the permit, or which wishes to revoke or refuse the permit. The Bibob recommendation may have three outcomes. It may be concluded that:
(1) There is no risk that the desired permit will be abused for criminal activities. The permit is then granted.
(2) The investigation may also show that there is a lesser degree of danger. The municipality may then attach additional requirements to the granting of the permit.
(3) LBB can also establish that there is a serious risk that the permit will be misused for criminal activities and issue a negative advice.
The advice is not binding for the municipality. The administrative body cannot simply follow the advice, but must also make its own considerations on the basis of the advice.
According to established 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), the mayor who handles the application for a permit may, in principle, rely on the advice of the LBB, in view of this bureau’s expertise. However, the mayor must make sure that the advice and the investigation have been arrived at carefully and that the facts can support the conclusions. This is not the case, for example, if the facts offer too few (direct) indications for the conclusion, or point in different directions, are mutually contradictory or are inconsistent with what is otherwise known.
4. Extension of Bibob testing to all government contracts
An amendment to the law will make it possible to apply the Bibob test to all government contracts. Currently, this Bibob test is still limited to the construction, ICT and environmental sectors. The reason for this was that these sectors in particular were vulnerable to crime on account of public contracts holding significant social or economic value. The need to prevent abuse of public contracts also exists, for example, in public transport and health care. After the amendment of the law, authorities will be able to request judicial data when investigating the business environment of a company or person. This concerns the person who, for example, lends a permit applicant a lot of money. However, it could also be a manager, director or shareholder listed on the application for a grant. Now governments are only allowed to use this kind of data from the applicant themselves and not from his business relations. Specifically for gambling licences read more here.
5. Misuse of the probity test due to vague terms contained in the Bibob Act
Abuse is lurking in the application of the Bibob Act. This is because the terms in the Act are vague, such as the term “serious danger”. One mayor will be quicker to consider something more serious than another. Predicting that something will happen in the future is also a subjective judgment that can easily be pre-empted by an administrative body. Another vague term that has led to many lawsuits is the term “bad living behaviour”, which in the Licensing and Catering Act is a ground for revoking a catering licence. In the catering industry and in coffee shops the mayor can refuse a permit (or leave) or revoke an existing permit. For example, if there is evidence of ‘bad living behaviour’ in the sense of the Licensing and Catering Act and the Bibob Act. There is a lot of case law stating that the refusal of a permit due to ‘bad living behaviour’ is often unjustified.
6. Legal protection against the consequences of a probity investigation
Legal protection against the application of the Bibob Act must follow primarily from application of the principles of subsidiarity and proportionality. The administrative authority first examines whether there are any existing grounds for refusal, such as those mentioned in the General Municipal Bye-Laws and the Licensing and Catering Act. These existing grounds for refusal also relate to the integrity of the permit applicant or permit holder. For example, the requirement “not to have bad behaviour in any respect”, or the requirements set out in the “Decree on moral conduct”, accompanying the Licensing and Catering Act. For the Licensing and Catering Act. there is a compulsory application form established by the central government.
In addition, the administrative body must investigate whether it cannot independently apply the Bibob Act. This examination takes place by means of the application forms described in Article 30 of the Bibob Act. Such a Bibob form is in addition to the mandatory application form established by the central government. This form asks, among other things, who the managers, shareholders and financiers of the person(s) involved are, the so-called “Bibob relationships” and who, for example, is a subcontractor and what the method of financing is.
7. Objection to a Bibob decision on your integrity
If a permit is refused or withdrawn on the basis of a Bibob recommendation, the applicant may lodge an objection with the administrative authority. It is also possible to simultaneously request a preliminary injunction against a negative Bibob decision. Since the Bibob Act is sometimes interpreted and applied very broadly, it may be useful to consult a lawyer and ask the court for an opinion. It is advisable to seek advice from a lawyer in good time in order to get an idea of what the legal possibilities are for challenging a Bibob decision. Case law on the Bibob Act shows that decisions are regularly annulled on the basis of a Bibob recommendation. This is usually the case if the Bibob decision is insufficiently substantiated. Please contact lawyer Mark van Weeren if you have any questions about the Bibob Act.
More on this topic can be read in my book De strijd om Schaarse Vergunningen (Kluwer. 2014)