Corruption costs EU €120 billion a year

Corruption is estimated to cost the EU economy €120 billion a year – just less than the annual budget of the EU – according to the European Commission.

The Commission’s first EU Anti-Corruption report, which is a survey of corruption in all 28 European member states, highlighted the urban development and construction sectors as being vulnerable to corruption.

At European level, the report said more than four out of ten companies considered corruption to be a problem in business, and this is true for patronage and nepotism too.

When asked specifically whether corruption was a problem for their business, 50% of the construction sector and 33% of the telecoms/IT companies felt it was a problem to a serious extent.

The smaller the company, the more often corruption and nepotism appeared as an obstacle when doing business, according to the report. It also found that corruption was most likely to be considered an issue by companies in the Czech Republic (71%), Portugal (68%), Greece and Slovakia (both 66%).

“Urban development and construction are sectors where corruption vulnerabilities are usually high across the EU,” the report said.

The report also highlighted the links between corruption and organised crime.

“In the Member States where organised crime poses considerable problems, corruption is often used as a facilitator. Links between organised crime groups, businesses and politicians remain a concern for those Member States, particularly at regional and local levels, and in public procurement, construction, maintenance services, waste management and other sectors.”

Procurement overhaul

The report – which the Commission said it would publish every two years – highlighted new EU-wide public procurement directives as one potential way to tackle Europe’s corruption challenge.

“The Commission has proposed provisions regarding conflicts of interest (for the first time defined in EU legislation); centralised data on corruption, fraud and conflicts of interest; stricter rules governing modification of contracts; broader exclusion criteria; and monitoring of concluded contracts,” the report said. The Commission’s proposal is currently under discussion in the European Parliament and the Council.

The new public procurement package is expected to be adopted in early 2014. However, FIEC (the European Construction Industry Federation) has already labelled the new directives as a missed opportunity.