Shortly before midnight, the streets in The Hague are quiet. But there is a line in front of one ATM. The men who, at the end of last year, alternately withdraw a few thousand euros – their daily limit – are packed: their faces hidden behind hats and scarves. Just after midnight, they withdraw part of the 30,000 euros that had been deposited into their account a few days before.
These men are errand boys, the Public Prosecution Service suspects. Last year, on behalf of a criminal gang, they applied for a corona subsidy for ailing entrepreneurs, even though they are not entitled to it. Their task: to secure the money obtained as quickly as possible before the government discovers the abuse and freezes the bank accounts.
Shortly after the corona pandemic reached the Netherlands, the cabinet set up an extensive support package for entrepreneurs who saw their turnover evaporate. With subsidy schemes such as the NOW, with which distressed employers can continue to pay wages. And the TVL: a compensation for the fixed costs with which small entrepreneurs received a maximum of 50,000 euros in the summer months of last year, then 90,000 euros, and now 550,000 euros, for a period of three months.
These arrangements have helped to keep the economy afloat – they are hardly discussed. Unemployment rose only slightly and the number of bankruptcies was not that low in twenty years.
Also read this interview with former UWV CEO Fred Paling (2020): ‘We came up with the NOW scheme in one weekend’
But not only entrepreneurs have benefited. Investigative agencies see how criminal gangs and fraudsters have also plunged into the corona schemes, according to a tour of NRC. The TVL subsidy for fixed costs was especially popular, because it also enabled small entrepreneurs to apply for large amounts.
Until last month, the Netherlands Enterprise Agency (RVO), the implementing agency that pays out the TVL subsidies, reported 1,133 fraudulent applications. Out of a total of more than 240,000 applications, that may be little: half a percent. But the number of complaints is increasing. There is a delay in the figures, because every declaration is preceded by an investigation. It also involves large amounts. According to the RVO, these 1,133 fraudulent applications alone involve an amount of 60 million euros, out of a total of 4 billion euros.
Party for recruiters
The TVL scheme, according to the Public Prosecution Service, was a feast for criminal ‘recruiters’ in 2020. They allowed entrepreneurs – whether or not under duress – to apply for a TVL subsidy, even if they were not entitled to it. The entrepreneur was allowed to keep part of the money. The rest was for the recruiters.
The line at the ATM in The Hague at the end of last year is an example of this method, says public prosecutor Nelleke Klip. On behalf of the functional public prosecutor’s office, she leads investigations into fraud with corona support schemes.
These recruiters are among the “standard criminals who hang out in big cities,” she says. “Who seize every opportunity for money.” They let others, errand boys, withdraw thousands of euros. “At different vending machines, days in a row.” By the time the judiciary or the RVO discovered the subsidy fraud, says Klip, “the money had often already run out or disappeared abroad”.
Rarely do the investigative services come across ‘ordinary’ entrepreneurs who commit fraud, says public prosecutor Marjolein Verwiel, who, like Klip, is involved in aid scheme fraud. They mainly see the usual suspects. “Companies we already know from previous studies.”
The Hague gang is now under criminal investigation. At the end of January, detectives from the FIOD, the tax investigation service, searched a house in The Hague that is associated with this group. From here, several grants were wrongly requested for dozens of entrepreneurs, most of whom reside abroad. Several suspects have already been arrested.
The applicants – and a number of the entrepreneurs – are suspected of fraud and forgery, according to the FIOD.
Becoming rich while sleeping
While some criminal recruiters, such as the Hague gang, look for errand boys within their own network, others do so online. On chat app Telegram, a number of chat channels are teeming with criminal calls in which contact is sought with entrepreneurs who were already registered with the Chamber of Commerce before 15 March last year: that is a requirement to qualify for TVL.
For example, one ‘Spangi’ writes in a channel on chat app Telegram, in December 2020: “Do you have Chamber of Commerce before March 15, 2020 message me if you want to earn big up to 90k you need Digi D and debit card with inta. Can be fixed every 3 months. No banging no bullshit no frozen card no illegal work. I get the most out of the Corona subsidy Pm me if you want to work.”
Such calls even appeared on platforms such as Marktplaats.nl, says Edo Edens, director of intelligence at the FIOD. “About making money fast and getting rich while sleeping. For us, the trick is to discover the connections between such calls.”
Dozens of fraudsters went one step further and committed identity theft: they made TVL applications on behalf of a company, without the owners’ knowledge.
They were able to log in via eHerkenning, a kind of business DigID, which is available at five reliability levels. The RVO was satisfied with level 1, the lowest level. A fraudster can then fill in a few basic details of the real entrepreneur, which can be found in the trade register of the Chamber of Commerce and then request an eHerkenning account with his own contact details. An identity check is missing.
However, these fraudsters still had to evade a check of their bank account number, for example by falsifying bank statements.
It was only in March of this year that State Secretary Mona Keijzer (Economic Affairs, CDA) announced that security would become stricter. Since April the RVO requires eHerkenning at level 3 for new applications, where an identity check does take place. Keijzer wants to “protect entrepreneurs against abuse (…), such as identity theft”, she wrote to the House of Representatives.
At the same time, the Secretary of State defends the initial choice for minimum security. She wanted to make the TVL application ‘as accessible as possible’.
Banks sound the alarm
The TVL application contained more vulnerabilities. For example, it was possible to apply for TVL with a ‘dormant’ company that had no turnover in 2019, and therefore could not possibly have lost turnover in corona year 2020. Applicants could enter an incorrect, higher turnover for 2019 without the RVO noticing.
At the end of last year, the banks sounded the alarm at the RVO. Their monitoring systems for unusual transactions did see a lot of TVL subsidies end up in bank accounts that they knew the company behind had no turnover in 2019.
During the second TVL period alone, the last three months of last year, this happened at least 643 times, according to the banks. In almost all of these cases, abuse of the scheme has now been identified. 42 million euros in advances have been paid to these companies, according to figures that State Secretary Keijzer has shared with the House of Representatives.
The UWV benefits agency, which pays the NOW wage subsidy, has encountered much less fraud so far. This is partly because the scheme is inconvenient for many fraudsters: the amount of the NOW depends on how many staff you have.
But it also helped that NOW applications were checked with data from the tax authorities. In principle, the NOW advance is only transferred to a bank account that, according to the tax authorities, belongs to that company.
Shocked by the fraud, the RVO introduced an extra check at the beginning of this year, with data from the tax authorities. The turnover entered by the applicant for 2019 is now checked against data from the tax authorities before the advance is paid.
The Public Prosecution Service has warned about the lack of such checks since the start of the corona crisis, say the two public prosecutors, Klip and Verwiel. “We have tried to make adjustments,” says Klip. “We said several times: ‘Guys, the floodgates are open. Is that the intention?’” According to the RVO, the Public Prosecution Service only warned them once, after the banks had reported.
The new checks by the RVO seem to be having an effect. The banks hardly see any unusual transactions involving TVL subsidies. The Public Prosecution Service now also receives fewer new fraud reports, says Klip. “But that could also mean that the fraud with TVL is now less noticeable.” FIOD director Edens emphasizes that criminals learn quickly. “It’s a cat-and-mouse game.”
Since the start of the corona crisis, the cabinet has acknowledged that fraud can be committed with the support schemes. Speed was the number one priority. “Normally we take a year to set up such a scheme and to introduce all kinds of checks,” said Minister Wouter Koolmees (Social Affairs, D66) about this in the Senate. “There just wasn’t time for that now.”
Moreover: with strict checks beforehand, entrepreneurs would have to wait weeks for their money, the cabinet feared. Now companies often received the money in their account within a few days.
Also read this retrospective with Minister Wouter Koolmees on the corona year 2020: ‘It’s psychologically tough. You think: companies will go bankrupt, people will lose their jobs’
Nevertheless, the government has underestimated the importance of checks in advance, according to the public prosecutors. “Everything was aimed at paying an advance quickly,” says Klip. “And then we would check afterwards whether that was right. But then the money probably isn’t there anymore. That is in Turkey or I know-a lot-where.”
The RVO says that so far it has sent bailiffs to fraudulent TVL receivers 530 times. So far, we have managed to recover the money seven times.
Public Prosecutor Verwiel calls the government’s billions of support “helicopter money”. “It was that easy to get,” she says. “There is so much money being scattered: you only have to bend down and you have it.”
Whether the total extent of the fraud with aid schemes will ever become completely clear is questionable, says Verwiel. “We are only seeing the tip of the iceberg.”
One thing the prosecutors want to say is that they understand that their ‘criminal view’ is not decisive when assessing aid schemes. “These regulations are not intended to be watertight, but to keep the economy afloat,” says Verwiel. Klip: “It’s a nice Marshall Plan, and it has brought us a lot of good. But also a lot of misery. And we mainly see that here.”
A version of this article also appeared in NRC in the morning of June 15, 2021