On February 3, 2014, the European Commission published its first-ever report on the state of anti-corruption programs across the European Union. Summaries of the national chapters can be found here along with FAQs, and a new webpage linking to related documents.  The Report covers all types of corruption, including political corruption, bribery of public officials, and private or commercial corruption.  The Report acknowledges that the nature and scope of corruption varies widely among Member States but estimates that corruption affects every Member State in the European Union and costs the bloc 120 billion euros every year.  The Report assesses the extent to which anti-corruption measures implemented by the Member States are working and identifies those measures that could be improved.  Not surprisingly, it also concludes that the issue of corruption generally deserves greater attention in all EU Member States.

A Eurobarometer survey released in conjunction with the report showed The survey shows that three quarters (76%) of Europeans think that corruption is widespread and more than half (56%) think that the level of corruption in their country has increased over the past three years. One out of twelve Europeans (8%) say they have experienced or witnessed a case of corruption in the past year. 

The Report identifies a number of trends found across the EU, including:

  • Uneven Control Measures.  There are great differences among Member States with respect to systems in place to prevent corruption (e.g., ethical rules, awareness-raising measures, easy access to public disclosure information).  For some countries, effective prevention has contributed to a strong reputation of little corruption, whereas other countries have implemented preventive mechanisms in an uneven way and with limited results.  In many Member States, internal controls on procedures within public authorities (particularly at the local level) are weak and uncoordinated.  Rules on conflicts of interest vary across the EU, and the mechanisms for checking declarations of conflicts of interest are often insufficient. Sanctions for violations of public procurement rules are rarely applied and often weak.
  • Ineffective Prevention Policies.  The 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 manner.  The efficiency of law enforcement in investigating and prosecuting corruption varies widely across the EU.  Procedural rules, including rules on lifting immunities of politicians, obstruct corruption enforcement proceedings in certain Member States. 
  • Risk areas.  Within Member States, corruption risks are generally higher at regional and local levels than at the central government level.  Sectors proven to be most vulnerable to corruption within the EU Member States are urban development and construction, as well as health care.  Shortcomings continue to exist regarding the supervision of state-owned companies, increasing their vulnerability to corruption.  Petty corruption (involving small amounts) remains a problem only in a few Member States.
  • Problems in Public Procurement. Public procurement is an important area for the EU economy, but also remains an area that is vulnerable to corruption.  According to the Report, the most frequently occurring corrupt practices in the EU Member States relating to public procurement are: (1) bid rigging (in the form of bid suppression, complementary offers, bid rotation and sub-contracting when the contract is promised to one sub-contractor without the consent of public officials); (2) kickbacks; (3) conflict of interest; and (4) other irregularities including deliberate mismanagement when public officials do not carry out proper diligence checks or follow the required procedures and/or tolerate or ignore overt mismanagement of public funds by public contractors. 

Interestingly, the report devotes little attention to the issue of foreign bribery, that is, how much Member States are cracking down on bribery beyond a country’s home borders, under counterpart laws to the Foreign Corrupt Practices Act.

The Report did highlight that some specific nations are faring much better at anti-corruption than others:  Denmark, Luxembourg, and several other Western or Scandinavian countries all boast strong ethical cultures; the United Kingdom took a solid step forward by passing the Bribery Act in 2010, even if prosecutions are still few; Germany has made enormous anti-corruption strides since the Siemens scandal. 

Governments around the world have become more aggressive in enforcing anti-corruption laws and continue to increase their investigations of alleged wrongdoing.  Generally, companies have focused most of their anti-corruption compliance efforts recently on activities in emerging markets (such as China, Russia, Brazil, and India).  This Report reminds us that corruption within Europe, particularly in the public sector, remains problematic and companies need to remain vigilant about such risks.