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Recent anti-corruption initiatives in the EU

  • Netherlands
  • Corporate

06-06-2014

Introduction 

EU Member States have traditionally retained anti-corruption regulation (much like other criminal legislation targeting fraud or legislation which criminalizes aspects of anti-competitive conduct) within their national remit. The UK’s Bribery Act is well known and places the UK among the countries with the strongest anti-bribery rules in the world, with extra-territorial jurisdiction. Other Member States, such as the Netherlands, although not having a special piece of legislation aimed specifically at bribery and corruption, deal with bribery and corruption under their national criminal legislation (as embodied, in the case of the Netherlands, in the Dutch Criminal Code and the Economic Offences Act) and adopt an integrated approach in dealing with corruption detection issues.

Although there was an EU Framework Decision (2003/568/JHA) in 2003 on combating corruption in the private sector, this has been transposed by Member States into national law in an uneven way. Still, although there are no EU-wide rules as such, the cross-border nature of most commercial transactions, the adverse economic effects of corruption and the internationally relevant political consequences resulting from European companies caught offering bribes in other Member States or in non-EU countries, means that it is in the EU’s interest to monitor this area and to ensure that adequate anti-corruption measures are being taken.

Recently there has been renewed interest on the EU level. In February this year the European Commission (the “Commission”) tabled its first EU Anti-Corruption Report and published its two Eurobarometer Surveys (conducted by TNS) on citizens’ (“Special Eurobarometer”) and businesses’ (‘Flash Survey’) attitudes on corruption in the EU. 

The following are some of the key conclusions of the Report: corruption affects all 28 EU Member States, in various ways (and not just European countries confronted with economic difficulties); it costs the European economy around EUR 120 billion per year; Member States have taken many initiatives in recent years, but the results are uneven and more should be done to prevent and punish corruption; public procurement deserves a special focus. A summary of the Report is provided below. There are also various recommendations in respect of the Netherlands (as to which please see below).

According to the Eurobarometer Surveys, the majority (75%) of companies think that corruption is widespread in their own country and more than half (56%) of Europeans think that the level of corruption in their country has increased over the past three years. A summary of the results of the surveys (including the Netherlands’ results) is provided below. 

EU Anti-Corruption Report 2014

In 2011, the Commission had adopted an anti-corruption package announcing its intention to publish an EU Anti-Corruption Report every two years on Member States’ efforts to tackle corruption. According to the Commission, although Member States have in place most of the necessary legal instruments and institutions to prevent and fight corruption, the results they deliver are not satisfactory across the EU as anti-corruption rules are not always vigorously enforced, systemic problems are not tackled effectively enough, relevant institutions do not always have sufficient capacity to enforce the rules and genuine political will to eradicate corruption appears to be missing.

The 2014 Report is the Commission’s first report and provides a clear picture of the situation generally and in each Member State, providing a snapshot of the situation and highlighting good practices which may inspire others. It analyses corruption-related trends across the EU and corruption within each of the EU’s Member States, the steps being taken and measures in place to prevent and fight corruption and possible ways to improve these policies and identifies outstanding issues and how the European dimension can help. It includes a special chapter on public procurement.

In line with international legal instruments (e.g. UNCAC), the Report defines corruption broadly as any “abuse of power for private gain”. It therefore covers all types of corruption, including political corruption, bribery of public officials, private-to-private corruption, bid rigging, providing kickbacks, conflicts of interest.

The Report shows that the nature and scope of corruption varies from one Member State to another and that the effectiveness of anti-corruption policies is also quite varied. It also shows that corruption deserves greater attention in all EU Member States.

It is the aim of the Commission that the Report and the corresponding surveys will launch a wide debate about anti-corruption measures with active participation of the Member States, national parliaments, the private sector and other stakeholders. The Commission will put in place a mutual experience-sharing program to identify best practices and overcome shortcomings in anti-corruption policies, raise awareness and provide training

The Commission has provided a useful summary of the corruption-related trends across the EU together with suggestions taking into account the specificities of each Member State:

I. Control Mechanisms

1. Use of preventive policies (standards, measures): There are large differences between Member States with effective prevention in some but need for strengthening in others. In particular, the Commission recommends implementing more effective policies at local level and in respect of specific sectors and implementing effective protection mechanisms for whistleblowers.

2. External and internal control mechanisms: In many Member States, internal controls on procedures within public authorities (particularly at local level) are weak and uncoordinated. In particular, the Commission recommends strengthening asset disclosure systems and limiting risks of foreign bribery, notably in vulnerable sectors such as defense. It also recommends further developing e-tools to enhance transparency of public spending and decision making in public administration. 

3. Conflicts of interest: 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 are rarely applied and are often weak. The Commission recommends improving the effectiveness of policies for addressing conflicts of interest. 

II. Prosecution and punishment 

1. Criminal law: Criminal law rules making corruption a crime are largely in place.

2. Efficiency of law enforcement and prosecution: This varies widely across the EU. In many Member States successful prosecutions are rare. In particular, the Commission recommends safeguarding the independence and capacity of anti-corruption agencies, where such agencies are in place. 

3. Comprehensive corruption statistics: These are missing in most Member States. Procedural rules, including rules on lifting immunities of politicians, obstruct corruption cases in certain Member States. In particular, the Commission recommends ensuring that criminal proceedings on corruption charges concerning elected politicians are not obstructed.

III. Political dimension

1. Political accountability: Codes of conduct within political parties or elected assemblies at central or local level are often missing or lack teeth. In particular, the Commission recommends taking more determined measures to ensure transparency of lobbying. 

2. Financing of political parties: Considerable shortcomings remain and sanctions against illegal party funding are rarely imposed in the EU. 

IV. Other risk areas

1. Corruption risks are generally higher at regional and local levels than at the central level.

2. Sectors particularly vulnerable to corruption are healthcare and urban development and construction.

3. State-owned companies. The Commission recommends developing mechanisms and policies to effectively address corruption risks related to state-owned and state-controlled companies.

4. Petty corruption remains a widespread problem only in a few Member States.

Public procurement 

This is a very important area for the EU economy (as approximately one fifth of the EU’s GDP is spent every year by public entities buying goods, works and services), which the Commission refers to as vulnerable to corruption, resulting in clear barriers to competition in the EU internal market. Public procurement is covered by extensive EU legislation and subject to significant corruption risks. A 2013 study concluded that the overall direct costs of corruption in public procurement in 2010 for only five sectors in only eight Member States (including the Netherlands) ranged from EUR 1.4 billion to EUR 2.2 billion.

Some of the improvements in control mechanisms suggested for a number of Member States include:

  • Need for systematic use of corruption risk assessments within public procurement;
  • Implementation of high transparency standards for the entire procurement cycle as well as during contract implementation;
  • Strengthening of internal and external control mechanisms for the entire procurement cycle as well as during contract implementation; 
  • Ensuring a coherent overview of and raising awareness about the need for prevention and detection of corrupt practices at all levels of public procurement;
  • Strengthening sanctions for violations of the procurement rules.

Netherlands 

Integrity, transparency and accountability are actively promoted in the Dutch public administration. Established by the Ministry of Home Affairs, the Office for the Promotion of Public Sector Integrity (BIOS) is an independent institute that encourages and supports the public sector in the design and implementation of integrity policies. In addition, many Dutch cities and communities are implementing a local integrity policy which has improved the detection of integrity cases (increased from 135 in 2003 to 301 in 2010). Local integrity policies have evolved over the past 20 years and have become a part of local governance.

Recently the Dutch State Bank has published its Good Practices in Combating Corruption, which is a result of its 2013 investigation into corruption in the banking and insurance sector in the Netherlands. 

According to the Commission, although the Dutch integrated approach to prevent and detect corruption could serve as a model elsewhere in the EU, political parties have only recently agreed new rules on the transparency of financing, and evidence that foreign bribery (i.e. by Dutch companies abroad) is tackled adequately is lacking. The Commission suggests that the categories of assets of elected officials that must be declared are extended and that the Netherlands should focus its efforts on prosecuting cases of corruption in international business transactions, by increasing the capacity to proactively investigate foreign bribery.

Eurobarometer Citizen Survey

The majority (76%) of Europeans think that corruption is widespread in their own country. The Nordic countries are the only Member States where the majority think corruption is rare.

81% of European citizens think that too-close links between business and politics in their country lead to corruption, 69% think that favoritism and corruption hinder business competition and 67% think that corruption is part of the business culture in their country.

More than half (56%) European citizens think that the only way to succeed in business in their country is through political connections. 

One of out of 12 Europeans (8%) say they have experienced or witnessed a case of corruption in the past year, but only 12% of those who have encountered corruption say that they have reported it.

Netherlands

61% of the Dutch agree that corruption is widespread in their home country. 2% of the Dutch (compared to 4% of Europeans) say that they have been asked or expected to pay a bribe in the past year.

Eurobarometer Business Survey

This survey focused on the following broad sectors: EMOGC (energy, mining, oil, gas, minerals); healthcare and pharmaceuticals; engineering and electronics; motor vehicles; construction and building; telecommunications and IT; financial services; banking and investment.

43% of European companies see corruption as a problem when doing business and, as mentioned above, 75% of European companies think that corruption is widespread in their own country. Countries where companies are most likely to think so are Greece (99% of companies surveyed), Spain (97%), Italy (97%), Czech Republic (94%), Slovenia (94%), Slovakia (92%), Hungary (91%), Romania (91%), Portugal, (90%), Croatia (90%). Construction companies are the most likely to consider that corruption is widespread (79%) and telecoms/IT companies the least likely (62%).

According to the Commission, other key findings include:

  • Almost half (47%) of companies agree that the only way to succeed in business in their country is to have political connections.
  • Favoring friends and family in business (43%) or public institutions (43%) are considered the most widespread corrupt practices, followed by tax fraud and non-payment of VAT (42%).

As far as public procurement is concerned, 32% of companies that have participated in public tenders/public procurement say corruption prevented them from winning a contract, and this view is most widely held among construction (35%) and engineering sector companies (33%).

Netherlands

The countries where respondents are most likely to think that there is widespread corruption among officials awarding public tenders include the Netherlands (64% of Dutch companies were of this view).

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