I amsterdam - Speech by Mayor Cohen (130308)

Ladies and gentlemen,

Thank you very much for the invitation to say a few words at this seminar which adresses an issue which is a topical subject in Amsterdam.

I do not know if you are aware of the fact that we are not far away from the famous Red Light District In Amsterdam, which is the birthplace of the administrative approach to organised crime in the Netherlands.

This part of the City, originally built in the Middle Ages, has obtained some fame around the world. This is not so much for the many beautiful monuments, but, and this may surprise you, primarily because of the unique economic activities that take place there. Some 450 windows in the monumental canal houses are being used for window prostitution in the City centre, and furthermore there are 8 large gambling machine arcades and a number of coffee shops selling cannabis. Let me emphasise that these are all legalised functions!

The area also contains an extremely large number of cafes, restaurants and hotels. The nuisances caused by drug use and the nightlife in the area, including large groups of drunken youths, puts a lot of pressure on the area, where also a large number of ordinary residents are living. You can understand that this unique area enjoys the constant attention of the City Administration, the police, the courts and other law enforcement organisations.

About ten years ago, there was a parliamentary inquiry into investigational methods performed by the professors Fijnaut and Bovenkerk, that came to the conclusion that the government was no longer in charge in the Red Light District. Criminal networks had gained positions based on economic power in the neighbourhood, and the government was left in the cold. This news hit the City Administration hard.

In 1997, the City set up a Red Light District project with the goal of fighting crime, not only using the police and the justice system, but also the public administration, including the Tax Administration. The Red Light District project was remodelled into the current Van Traa team in 2000, and from that moment the team’s experiences in the Red Light District were also applied in other vulnerable areas and sectors elsewhere in the City.

The mission of the administrative approach to organised crime in Amsterdam is: Attack criminal infrastructures and do not facilitate criminals.

An example of non-facilitation is that the City does not issue permits for economic activities that result from criminal activities or that will be used for criminal activities.

Attacking criminal infrastructures is currently a hot topic. One good example is the closure of the streetwalker’s zone, because criminals had begun to take over there. At the end of my presentation I will return to the concept of the criminal infrastructure.

In Amsterdam, we have a special team that investigates suspected criminal infrastructures in society, called the Van Traa team. The team supervises a number of integral law enforcement activities. Their investigations begin with building a strong intelligence foundation: the Van Traa team is allowed to gather information from confidential sources, such as the police registers or the tax records, based on decrees from the Ministers of the Interior and of Justice. This information can then be linked to information from open sources, such as the land registry, the commerce register, the population register and the media, which provides them with a fairly complete image of an area or a sector of the economy.

The public administration must have the ability to gather information in order for the administrative approach to work. In addition to the Ministerial decrees, we also have separate agreements with the National Criminal Investigation Agency and the Tax Administration.

At the national level, therefore, we are increasingly able to exchange information effectively. Unfortunately, that is not the case at the international level. I will return to this subject later on.

Our approach was one of the stimuli for the Public Administration Probity Screening Act, known by its Dutch acronym Bibob. This law provides the public administration in the Netherlands, including myself as Mayor of Amsterdam, with the ability to refuse or even cancel permits and subsidies if there is a well-founded suspicion that the applicant is somehow involved in criminal activities or if he or she is financed by criminal funds. Amsterdam actively enforces this law, and from the beginning we have been able to capitalise on our experiences over the past ten years. Since 2003, the Van Traa team has had a separate Co-ordination Bureau Bibob, or CBB, which performs the following duties:

-Enforcing the law per sector and in phases throughout the City. The law is currently applicable throughout the City in the hotel and catering industry, gambling machine arcades, prostitution, environment and the construction industry.

-The CBB provides training to permit officials in the City boroughs and the City departments.

-The CBB is the required counter within the City’s organisation for consulting related to possible referral to the national Bibob bureau. This bureau is part of the Ministry of Justice and advises Dutch municipalities. It also has access to all confidential sources.

-The CBB reviews the recommendations of the national bureau and supervises the City Boroughs and the City Departments in implementing these recommendations.

-Based on the recommendations of the national Bibob bureau, the CBB performs investigations of other affiliated businesses in order to enforce the Public Administration Probity Screening Act in those businesses too.

This last point is very important. When a permit request is denied, for instance because there may be a risk that the applicant will misuse the permit for criminal activities, then all of the other permits that that applicant has are also withdrawn. And if that same person turns out to be a financier [spreek uit: fainénsiu:] for other businesses, then those permits will be investigated as well. In this way, the application for one prostitution permit can lead to the withdrawal of a large number of permits in the Red Light District, because they are all connected to one criminal financier. One recommendation of the national Bibob bureau can therefore have a significant impact on an entire criminogenic sector of the economy.

We try to sift the wheat from the chaff in the application phase for permits. For instance, all permit applicants in Amsterdam must answer questions about the origins of their financing. The answers to these questions and other information can in turn lead to new questions. Some of the indications of criminal activity are:

-Dubious financiers involved in the applicant’s business.

-Availability of specific police information.

-Inconsistencies in the annual accounts.

Applicants are sometimes also asked to submit a declaration from the Tax Administration to prove that the application is accurate.

This results in a significant preventative effect. For instance, if it is not clear where the financing for the business comes from and we indicate that next time we will wish to see more information, we rarely ever see that applicant again. In this way, we can stop them before they even get started.

If there are things that are not clear in an application, and the City does not have its own instruments to refuse the permit, then we can always call in the national Bibob bureau.

From 2003 to 7 February 2008, Amsterdam has referred a total of 73 applications to the national bureau. Of these, the bureau has labelled at least 83% as “serious risk”; the most serious ground for refusal.

In all of these cases, the applicants scored high on all three criteria of the law:

1.   integrity: the applicant had a serious criminal record

2.   origin of financing: money laundering

3.   business associations: the applicant had what we call ‘business relations on the wrong side of the law’

The Bibob results gained international publicity at the beginning of 2007 when we withdrew a total of 33 brothel permits from three large permit holders. This had an effect on a total of 105 windows in the Red Light District. We were able to buy most of these windows last year, which again resulted in international publicity. We’ll discuss this subject later on.

In a moment, the staffers from our Co-ordination bureau will give a detailed presentation on the Public Administration Probity Screening Act and its enforcement in Amsterdam.

But the administrative approach is much broader than simple enforcement of Bibob.

Another effective instrument in implementing the administrative approach is the integral enforcement activities supervised by the City.

A number of government services, especially the tax authorities, work together to inspect whether certain industries comply with the administrative and fiscal regulations.

The police also provide assistance, initially through protection and security for the other law enforcement organisations. If criminal acts are observed at the scene of the inspections, or if the suspects resist the inspections, then the police can decide to interfere with the co-operation of the public prosecutor.

There are 9 of these large enforcement operations each year.

These operations are part of the Amsterdam ‘Havens’ covenant (Vrijplaatsen) that is based on agreements between the City, the tax authorities, the police and the Public Prosecution Service.

The term ‘haven’ was borrowed from the tax authorities and implies an area with considerably less fiscal enforcement than is usual. In other words, these are areas where the Tax Administration is systematically defrauded. Usually, the activities in these havens avoid compliance with other regulations as well, so that an integral enforcement operation by the entire government is usually the best tactic to apply.

Haven operations take place per street, where we inspect all properties with a business function or per industry in a certain area. Some examples of havens are prostitution, massage parlours, cannabis grow shops and call shops.

I have now come to our most visible and spectacular instrument; the purchase of properties in the Red Light District.

At the beginning of the 1980s, part of the Red Light District around Zeedijk had become a no-go area, where drug dealers and junkies controlled the neighbourhood from the run-down buildings. The government had lost its grip on the area, and decided that it was time to clean it up. The City formed a public limited company together with a number of banks called NV Zeedijk, which is now the owner and manager of most of the properties in the street. As the legal owner, NV Zeedijk arranges legal businesses to lease the shops on the ground floor and for legal occupants of the apartments on the upper floors. Strict rental contracts and good management keeps crime out of the street, and when you walk on Zeedijk today, you can see that it is one of the prettiest and most diverse streets in the centre of Amsterdam.

On Zeedijk you can see that the manner of exploitation of the properties is closely related to the public domain, the street. When we guarantee legal ownership of the real estate combined with proper occupancy, then that is also visible on the exterior of the property and has an influence on the immediate surroundings.

Together with a housing corporation, about 100 properties in other parts of the Red Light District have been purchased at the initiative of the Van Traa team. This has proven to be an effective means to create a proper social-economic structure as a counterweight to criminal economic networks in a sensitive area.

This is a struggle of legitimate capital versus criminal capital, and if the government is itself uncorrupted, it will eventually come out as the winner.

By purchasing real estate in an intelligent manner where criminogenic sectors of the economy are located, we can achieve three goals:

1.   We can prevent properties that come up for sale from falling into the wrong hands.

2.   We can suppress criminogenic sectors of the economy and prevent the criminal underworld from seeping into the society at large, and;

3.   We can realise economic development from low-value to high-value functions.

In working to attain these goals, we can apply the administrative approach to organised crime.

Unfortunately, it is not always appreciated when we purchase these properties. For example this anecdote:

 One of our NVs took over a property with a large number of renters from an owner who was later liquidated in a gangland killing. Once the property had changed hands, the renters approached the rental committee en masse with complaints about overdue maintenance and exorbitant rents. They had not dared to do so while the building was under the control of the criminal elements. The Rental Committee agreed with the plaintiffs and the value of the property dropped immediately, so the NV had to write off part of the investment as a loss.

As a jurist, I try to comfort myself by thinking that in this case at least the rule of law was victorious.

Ladies and gentlemen,

this administrative approach is applied intensively throughout the Red Light District. The conclusion reached 10 years ago, that the government was not in control of the area, is certainly not justified now, at least not in the same degree.  The government is extremely active in the neighbourhood. Businesses are rigorously screened, properties are changing hands into more proper ownership and intensive enforcement operations take place regularly.

In addition, the City of Amsterdam and the national government have intensified their co-operation in the so-called Emergo project. This project provides support from research and analysis to all of the partners, including the tax authorities, involved in working together to gain an insight into the concentrations of criminal power and the opportunity structures behind these concentrations in the centre of Amsterdam.

Ladies and Gentlemen,

this is a convincing story, and yet criminal organisations are still active in the area, as shown by our own Bibob files. The current concentration of crime-sensitive sectors such as prostitution, coffee shops, and so on, is still present. This means that the area still attracts organised crime.

Take prostitution for example. It is becoming clear that traffic in women and forced prostitution still occur, as proven by a study by the National Criminal Investigation Service. Prostitution in the Netherlands has been legalised for some very good reasons, but we cannot act as if it were an ordinary industry like all of the others. With money laundering and other criminogenic activities, this area is still not under complete control. We therefore aim to suppress the criminal infrastructure in the area by reducing the activities of a number of sectors, including window prostitution.

To do so, we presented plans to the City Council in January. These plans have also received a great deal of attention from the (international) media.

Let me clarify for a moment that we do not intend to make the Red Light District disappear. The prostitution industry is just too large at the moment and it occurs in a very large area. It must be reduced in size and in the space allotted to it in the City. Only then can we reduce the criminality behind it and exercise more effective supervision.

The proposed approach is not only repressive, however. Parts of the area will be redeveloped so that it will again become attractive for those Amsterdammers and visitors who currently avoid the area.

This means that we will have to invest even more in real estate than we have in the past. This will enable us to renovate and redevelop the properties, such as by turning them from brothels into restaurants. Unfortunately, the City cannot raise the funds necessary for these investments itself, so we have sought the co-operation of private investors, banks and housing corporations. The City creates the conditions to make redevelopment of the area possible and the private parties do the actual work by investing in the properties in the area.

Some results have already been achieved. As I remarked earlier, we purchased a large number of window brothels from a prostitution business in 2007, and these properties will be redeveloped for other functions. Since then, other legal private parties have purchased more properties in the area.

Ladies and Gentlemen,

Amsterdam’s administrative approach is well under way. I hope that what I have said will inspire you to implement a similar approach in your own situations. I agree with the European Commission, which is of the opinion that the administrative approach should be studied and disseminated throughout the European Union. We would be happy to co-operate with you in exchanging information, because crime is not limited by borders. An important segment of criminality in our Red Light District has an international component. Women are smuggled from Eastern Europe and forced into prostitution, not only in the Netherlands but throughout Europe. We are limited in this area because we are tied to our national borders. For instance, we cannot reject a permit application based on Public Administration Probity Screening Act if we suspect that the applicant has a criminal record somewhere else, or if the applicant hides behind a legal entity in another country. We cannot receive this information because the national legislation in most countries forbids provision of criminal records for administrative purposes, or to foreign countries. I therefore strongly plead for making the exchange of criminal records to benefit the administrative approach at the European level as soon as possible. My idea is for an office where municipalities or the national Bibob bureau can apply for information. Perhaps this is a role for Europol in The Hague.

Ladies and Gentlemen,

thank you for listening. Have a pleasant and educational day.