Corruption: The EC Fraud Dimension
| Pages | 168-172 |
| DOI | https://doi.org/10.1108/eb025770 |
| Published date | 01 April 1996 |
| Date | 01 April 1996 |
| Author | Simone White |
| Subject Matter | Accounting & finance |
CORRUPTION
Corruption: The EC Fraud Dimension
Simone White
Journal of Financial Crime — Vol. 4 No. 2 — Corruption
As part of a plan to combat fraud affecting the EC
budget, efforts are now being made at EU level to
fight corruption, which is particularly rife in public
procurement. As a result, two new legal instru-
ments have been put forward to harmonise the
treatment, in the laws of the Member States, of
corrupt officials handling EC funds and to
improve judicial and other forms of cooperation.
The author argues this can only be seen as the first
step in the fight against corruption. Cooperation
will remain a crucial issue in tackling corruption
successfully for the foreseeable future. The protec-
tion of informants, and the lifting of officials'
immunities will also need to be clarified.
SCALE AND NATURE OF THE PROBLEM
What is the cost of corruption in the Member
States? According to the Salish Report,1 commis-
sioned by the European Parliament, in most coun-
tries bribes amount to between 2 and 10 per cent
of the value of business transactions. In Italy, the
additional costs arising from corruption exceed
market prices by 30 per cent, rising to 260 per cent
in individual cases. But Italy should not be singled
out in this respect. In Germany the cost of corrup-
tion has been estimated at between DM5 and 10bn
each year.
1993 has been described as 'the year when cor-
ruption never left the headlines'.2 Indeed many
corruption cases involving public procurement
contracts have come to light in several Member
States of late. For example, in 1994 in Belgium
officials of the Flemish Socialist Party were
accused of taking bribes from an Italian firm. The
Defence Minister was forced to resign over the
allegations. He was later found guilty of fraud and
abuse of public office, together with seven asso-
ciates.3
There were many other instances of cor-
ruption scandals in France, Italy, Ireland and the
United Kingdom.
Some scandals directly involved EC funds. One
such case in the 'Tourism Promotion Unit' (run
by the directorate General XXIII of the European
Commission) involved EC officials. Suspicions
were raised as early as 1990 about the way the unit
awarded contracts and fees. In 1995 an internal
enquiry was relaunched by the Commission.
Eventually, after some delay, the immunities of
certain EC officials in the unit were lifted and the
Belgian police were called. Finally, in January 1996
an official and his wife were arrested in Belgium,
Page 168
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