Seven tips relating to the integrity assessment when applying for a permit

The Dutch Public Administration Probity Screening Act – commonly referred to as the Bibob Act – allows municipalities and other administrative authorities to assess the integrity of applicants for permits and subsidies, as well as tender participants.

Scarce permits are also subject to a Bibob assessment, as in the case of real estate projects, the issuance of leaseholds, hospitality undertakings and coffee shops, financial permits and exemptions, and major events. Authorities quite often uses the Bibob Act to reject an application for a permit – that’s when it makes sense to engage a Bibob lawyer.

Completing the Bibob form when applying for a permit

The Bibob procedure starts with the request from the municipality (or other administrative authority) to complete a so-called Bibob form, which is something I assist clients with. This form usually comprises extensive lists requesting information. This information, which is used to verify the applicant’s integrity, largely relates to the participation of the people at the company, the company’s financing, the management, etc. It is important to fill in the information requested within the scope of the Bibob procedure as comprehensively as possible. Providing incomplete information could lead to a negative Bibob decision.

1. Permit applicant investigated by the National Bibob Bureau

Besides their own investigations, administrative bodies can also call on the National Bibob Bureau (NBB), which is part of the Justis screening authority of the Ministry of Justice and Security. On request, this agency examines whether there is any serious risk that a permit, subsidy, real estate transaction or public contract could be misused for criminal activities. Based on this recommendation, authorities may refuse to cooperate with the applicant. The Public Prosecution Service supplies information in accordance with the Bibob Act.

2. Assessment under Article 3 of the Bibob Act following application for a permit

Article 3 of the Bibob Act applies when granting a permit or verifying whether a permit is still being used correctly. In a nutshell, Article 3 of the Bibob Act provides for the following:

1) Based on the Bibob Act, an administrative authority may refuse or revoke a permit or subsidy if there is a serious risk that the decision will be used to:

1. a) utilise the proceeds of previous criminal offences
2. b) commit 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 taken into consideration that indicate or reasonably raise the suspicion that a criminal act has been committed in order to obtain the decision requested or provided (such as falsified documents or bribery).

3. Recommendation from the National Bibob Bureau

The National Bibob Bureau will perform the Bibob investigation and issue a recommendation to the administrative authority that is to issue the permit or wishes to revoke or refuse a permit. There are three possible outcomes. The NBB may find that:

(1) there is no risk of the requested permit being misused for criminal activities. In this case, the permit is granted;

(2) there is a certain risk. In this case, the municipality can attach additional conditions to the issuance of the permit;

(3) there a serious risk that the permit will be misused for criminal activities and issue a negative recommendation.

The recommendation is not binding for the municipality. The administrative authority should not accept the recommendation without question, but rather make its own deliberations based on the recommendation.

According to the established case law of the Administrative Jurisdiction Department of the Council of State (compare the rulings of 18 July 2007 ECLI:NL:RVS:2007:BA9799 (Dutch), and 20 July 2011, ECLI:NL:RVS:2011:BR2279 (Dutch)), the mayor handling the permit application may, in principle, base their decision on the National Bibob Bureau’s recommendation, given that agency’s expertise. However, the mayor must ascertain that the utmost diligence was put into the recommendation and the investigation, and that the facts support the conclusions reached. That is not the case, for instance, if the facts offer too little (direct) evidence for the conclusion, or if they point in different directions, contradict one another or are inconsistent with what is otherwise known.

4. Bibob assessment extended to all public contracts

An amendment to the law will mean that the Bibob investigation may be applied to all public contracts. Currently, the Bibob procedure is still limited to the construction, ICT and environmental sectors. The reason for this is that these sectors in particular were susceptible to crime on account of public contracts having a considerable social and economic value. There is also a need to prevent the abuse of public contracts in the areas of passenger transport and healthcare. Following a change in legislation, authorities can request judicial information when looking into the business environment of a company or person. This applies, for example, to a person who lends the permit applicant a large amount of money. But a manager, director or shareholder named in the application for a subsidy may also be taken into account. Currently, authorities can only use this sort of information about the applicant themself, and not their business relations.

5. Abuse of Bibob assessment due to vague terms in Bibob Act

Because the terms of the Bibob Act are vague – such as the term “serious risk” – it is susceptible to abuse. Some mayors may be quicker to brand something as “serious” than others. Assuming that something will happen in the future is also a subjective opinion that can easily be preempted by an administrative body. Another vague term that has led to many legal cases is the term “misconduct” (slecht levensgedrag), which constitutes a reason to revoke a foodservice license according to the Dutch Licensing and Catering Act (Drank- en Horecawet). In the case of hospitality establishments and coffee shops, the mayor has the right to refuse a licence (or permit) or to revoke an existing licence, e.g. if there are signs of “misconduct” within the meaning of the Catering Act and Bibob Act. By now, there is a lot of case law in which many refusals of a licence on the basis of “misconduct” were found to be unjustified.

6. Legal protection against the consequences of a Bibob assessment

Legal protection against the application of the Bibob Act must primarily follow from the principles of subsidiarity and proportionality. The administrative authority first examines whether there are any existing grounds for refusal as cited in the General Municipal Byelaws and in the Licensing and Catering Act. These existing grounds for refusal also relate to the integrity of the applicant or holder of the permit. They may include the requirement “to not exhibit any kind of misconduct” or the requirements cited in the “Decree on Moral Conduct”, which accompanies the Licensing and Catering Act. The central government has created a mandatory application form with regard to the Licensing and Catering Act.

In addition, the administrative authority must check whether it can apply the Bibob Act independently. This investigation is based on the application forms indicated in Article 30 of the Bibob Act. Such a Bibob form is in addition to the mandatory application form required by the central government. Among other things, this form inquires into who the managers, shareholders and financial backers of the subject(s) concerned are – the so-called Bibob relationships – as well as e.g. who the subcontractor is and how the undertaking is being financed.

7. Objecting to a Bibob decision

If a permit is refused or revoked on the basis of the 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. Because the Bibob Act is sometimes subject to broad interpretation and hence application, it may be advisable to consult a lawyer and to request a judge’s opinion. It is a good idea to seek a lawyer’s advice in good time to get an understanding of the legal options available when it comes to challenging the Bibob decision. Case law on the Bibob Act shows that decisions based on a Bibob recommendation are often dismissed. This is usually the case if the Bibob decision has been insufficiently justified.

Contact Blenheim if you have any questions concerning the Bibob Act.

Read more about this topic in my book “De strijd om Schaarse Vergunningen” (The Battle for Scarce Permits) (Kluwer. 2014).