Monday, 3 February 2014

Corruption in the EU costs business €120bn a year, study finds

Corruption in the EU costs business €120bn a year, study finds
By James Fontanella-Khan in Brussels

Corruption has increased since the sovereign debt crisis hit the eurozone and costs the EU economy about €120bn a year in lost tax revenues and foreign investment, according to a European Commission study.
The impact of rising corruption is having a devastating impact on business activity, the study found. A third of companies participating in a public tenders for government contracts have been prevented from doing so due to corruption, according to a Commission survey of European businesses.

The Commission’s report, which found that EU member states have continuously failed to address conflicts of interest between politicians and business, could taint the bloc’s image as a relatively clean place to do business.

Sixty-nine per cent of the 7,842 business surveyed by the EU said paying bribes and exploiting political connections were the easiest ways to obtain certain public services.

Countries under scrutiny in the wake of the eurozone crisis continue to have corruption problems, the study found, despite reform efforts mandated by Brussels.

Nearly all companies interviewed in Greece, Italy and Spain, for example, complained that corruption was widespread in their country.

Cecilia Malmstrom, the European commissioner for home affairs, said corruption was undermining democratic accountability in all 28 members of the EU.

“Corruption erodes trust in public institutions and in democracy, it undermines our internal market, it hampers foreign investment, it costs taxpayers millions, and in many cases it helps organised crime groups do their dirty work,” she said on Monday.

According to the survey, three quarters of EU citizens believed corruption was widespread, while more than half said that it had increased over the past three years. Companies were also asked whether they had been expected to pay a bribe.

“Trust in Europe’s leaders is falling because relations between business and the public sector take place in the dark, leaving citizens with questions about whose interests are being taken care of,” said Miklos Marschall, deputy managing director of Transparency International.

“To bridge the gap between politics and people, there must be greater transparency in public life and more public officials held to account for their actions,” he added.

Denmark, Finland, Luxembourg and Sweden confirmed their reputation for being clean, with very low experience of bribery and where perceptions of widespread corruption were below the EU average of 74 per cent.

In the UK, experience of bribery was very low, at below 1 per cent, but 64 per cent of respondents thought corruption was widespread in Britain.

Perceptions and actual experience of corruption were highest in Croatia, the Czech Republic, Lithuania, Bulgaria, Romania and Greece.

Copyright The Financial Times Limited 2014. 

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