‘The naughty notary’

‘Fraude bij Pels Rijcken – De onderste steen moet boven’ (‘Fraud at Pels Rijcken – Getting to the bottom of the case’) is the title of the article written by Marcel Pheijffer, Professor of Accountancy at Nyenrode Business Universiteit, and Jeroen Princen, partner at DVDW Advocaten, for the Nederlands Juristenblad (NJb, May 2021) about the notarial fraud affair at Pels Rijcken. Pheijffer has described their findings and the impact of the study they carried out for the article in the impact case ‘The naughty notary’, published on the Nyenrode website this month.

'The naughty notary' is a study describing the importance of adequate internal controls and compliance at law firms and notary’s offices.

Insights

The article in the NJb discusses the notarial fraud case, showing that the fraud was less sophisticated than Pels Rijcken claims and that the firm was not just the victim. The study by Pheijffer and Princen, based on public sources, shows that the internal control measures at Pels Rijcken were inadequate, giving the notary the opportunity to commit fraud. The study provides insight into how the notary committed the fraud and shows how the firm trivialized its own role. The case also provides new insights into the firm’s media strategy after the fraud was detected.

Clarity

The study for the article provides important insights into how the fraud was set up by the notary. For example, that he used (former) colleagues from his firm to set up the entities he used for his fraud. That insight has, for example, led to discussions about whether or not it is wise for colleagues from the same firm to be involved in such an assisting and related supervisory role regarding those same entities. Furthermore, the article refutes various lines of defense of Pels Rijcken, for example, that the fraud was sophisticated and that Pels Rijcken was mainly a victim of the actions of the notary. These statements are not or only partly true, as they were more a result of the firm’s own media strategy than fact-based information.

Impact

The article highlights the importance of adequate internal controls and compliance within law firms and notary’s offices. It triggers these firms, but also supervisors and auditors, for example, to assess whether they are sufficiently in control. Pheijffer: “With this case, I also want to contribute to raising awareness among lawyers, civil-law notaries, accountants, supervisors and directors about the harmful consequences and effects of fraud, not least the financial damage and negative publicity it causes.”

Bo van der Rhee, research director at Nyenrode, welcomes the socially relevant perspective of the study: “A major benefit of the study and the article for our students and participants is that the lectures have a current case as their main topic. We can explain themes that are familiar to us, such as governance, integrity, the role of management and supervision, accountancy and control on the basis of these case studies. The combination of theory and practice makes clearly shows us how our knowledge can be used to study current cases with social relevance. This is how we as a university want to add value to society.”