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Corruption costs EU economy €120bn a year, EC says

Three quarters of Europeans think corruption is widespread, survey finds

3 February 2014

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By Manju Manglani, Editor (@ManjuManglani)

Corruption affects all EU member states and costs the European economy around €120bn a year.

That's according to the first ever EU Anti-Corruption Report published today by the European Commission.

A Eurobarometer survey on the attitudes of Europeans towards corruption, also published today, found that that three quarters (76 per cent) of Europeans think that corruption is widespread.

In addition, more than half (56 per cent) of respondents think that the level of corruption in their country has increased over the past three years.

One in twelve Europeans (eight per cent) said they have experienced or witnessed a case of corruption in the past year.

"Corruption undermines citizens' confidence in democratic institutions and the rule of law, it hurts the European economy and deprives states from much-needed tax revenue," said Cecilia Malmström, EU Commissioner for Home Affairs.

"Member states have done a lot in recent years to fight corruption, but today's report shows that it is far from enough."

Some of the main corruption-related trends across the EU include the following.

Control mechanisms

The study found large differences between member states on the use of corruption preventive policies (such as ethical rules, awareness-raising measures and ease of access to public interest information). For some, the report says effective prevention has contributed to a strong reputation of little corruption, while others have implemented preventive policies in an uneven way and with limited results.

In many member states, the report says internal controls on procedures within public authorities (particularly at local level) are weak and uncoordinated.

Rules on conflicts of interest also vary across the EU and the mechanisms for checking declarations of conflicts of interest are often insufficient. The report says that sanctions for violations of rules are rarely applied and are often weak.

Prosecution and punishment

Criminal law rules making corruption a crime are largely in place, in line with the standards of the Council of Europe, UN and EU legislation. But, the report says that EU Framework Decision 2003/568/JHA on combating corruption in the private sector has been transposed by member states into national law in an uneven way.

The efficiency of law enforcement and prosecution in investigating corruption varies widely across the EU. The report notes that outstanding results can be seen in some member states while, in others, successful prosecutions are rare or investigations lengthy.

Comprehensive corruption crime statistics are missing in most member states, complicating comparison and assessment. Procedural rules, including rules on lifting immunities of politicians, obstruct corruption cases in some member states, the report says.

Political dimension

The report notes that integrity in politics remains an issue for many EU states. For instance, it says codes of conduct within political parties or elected assemblies at central or local level are often missing or "lack teeth".

Although many member states have adopted stronger rules on party financing, considerable shortcomings remain. Sanctions against illegal party funding are rarely imposed in the EU, the report adds.

Risk areas

Within member states, the study found that corruption risks are generally higher at regional and local levels, where checks and balances and internal controls tend to be weaker, than at the central level.

Urban development and construction, as well as health care, are sectors identified as vulnerable to corruption in a number of member states.

Some shortcomings exist regarding the supervision of state-owned companies, increasing their vulnerability to corruption, the report found.

But, petty corruption remains a widespread problem only in a few member states, it notes.

Public procurement: vulnerable to corruption

The report includes a special chapter on public procurement, which has been identified as an area that is vulnerable to corruption. Approximately one fifth of the EU's GDP is spent every year by public entities buying goods, works and services.

The report calls for stronger integrity standards in the area of public procurement and suggests improvements in control mechanisms in a number of member states.

 

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