Will the EU act decisively and raise its anti-corruption standards?

Recent years have been punctuated by a series of seismic scandals in the EU – from the Azerbaijani Laundromat, the Uber Files, to Qatargate – that show corruption remains a serious problem across the bloc.

Time and again, significant cases of misuse of both state and EU funds have come to light. In fact, it’s been estimated that the EU loses up to EUR 990 billion to corruption every year. Domestically, political corruption has undermined the rule of law and, in the most extreme cases, has even led to state capture.

Currently, member states are not tackling these issues coherently. Not only are their rules not comprehensive and strong enough to effectively prevent and criminalise corruption, but there's also inconsistency between member states when it comes to which corruption offences are criminalised and how they are enforced.

The EU has not been pulling its weight on the international stage when it comes to fighting cross-border corruption. EU companies that bribe officials in foreign markets rarely face punishment, and authorities are doing far too little to stop foreign corrupt officials and their cronies from brazenly laundering and investing their stolen assets in the EU.

It’s no surprise that people in the EU are concerned about corruption. According to our 2021 Global Corruption Barometer survey, almost half of EU residents think their government was doing a bad job at tackling corruption. What’s more, a mere 21 per cent of those surveyed believed that corrupt officials face appropriate penalties.

Thankfully, steps are being taken to fix this.

Last year, the European Commission proposed a dedicated directive on combatting corruption, seeking to harmonise anti-corruption legislation across all 27 EU member states and make it mandatory to criminalise offenses outlined in the United Nations Convention against Corruption (UNCAC) within EU law. It was a promising first step towards closing gaps in legal frameworks, increasing criminal sanctions, and expanding the tools and measures available to enforcement agencies in the investigation and prosecution of such crimes.

Further headway was recently made in February when the European Parliament adopted its own position. This goes even further than what the Commission initially set out last year and introduces several elements that we advocated for – including those that establish the rights of victims of corruption and civil society organisations who represent them in court.

The Parliament will enter into negotiations with the Council on the final version of the Directive later this year. It is critical that EU decision-makers take this opportunity to agree on strong measures that enable member states to more effectively counter corruption.

In recent years, we've witnessed a string of incidents where individuals in the public sector have leveraged their authority to influence legislative decisions or secure lucrative contracts for companies in exchange for personal benefits.

Fortunately, the Parliament’s position provides for strong sanctions against perpetrators of corruption in the public sector, including recognising it as an aggravating circumstance when high-level officials are involved and subjecting this to higher punishment.

It’s important that these measures remain in the final version of the legislation, and every effort is made to ensure that corrupt public officials and their accomplices and enablers are uniformly held to account across all member states.

We also encourage EU legislators to include additional measures towards ending impunity and explicitly define grand corruption. Countries need to take much more action to tackle the most serious transnational corruption schemes involving officials, namely those involving high-level officials, and that result in gross misappropriation of public property or human rights violations.

When it comes to the most serious corruption offenses, perpetrators around the world often escape accountability because their home jurisdictions are unable or unwilling to act. The EU should not turn a blind eye to this – the role of transnational networks in grand corruption schemes highlights the need for coordinated international action. Jurisdictions with stronger rule of law should step up their efforts.

This is not a new topic. There has been a long-standing demand in the EU to do more on grand corruption. In 2017, just days after the Azerbaijani Laundromat scandal broke, it was revealed that European politicians allegedly received bribes from Azerbaijan. These bribes were in exchange for lobbying efforts to soften criticism of the country's human rights abuses, leading the European Parliament to call on the EU to implement reforms towards addressing impunity for grand corruption.

The negotiations between the Council and Parliament will be an ideal moment to ensure that grand corruption is clearly defined in EU legislation and all member states play a part in criminal enforcement against grand corruption and remediation of its harms. It would be a shame to miss this opportunity.

In 2020, Airbus settled out of court for US$4 billion with anti-corruption agencies in France, the UK, and the US because of bribery offences. Non-trial resolutions, where some form of negotiated settlement is reached with companies or individuals instead of a trial to resolve white collar crime cases, are becoming the norm globally in foreign bribery cases. While over 80 per cent of global foreign bribery cases are resolved through these means, countries often have no formal framework in place to ensure transparency and equitable outcomes.

We have concerns about whether non-trial resolutions used on this scale offer effective deterrence, but prosecutors are clearly committed to using these mechanisms. We therefore welcome that the Parliament calls for an effective and transparent framework for their use when pursuing accountability against legal persons in foreign bribery cases.

Initially, the Commission proposed that companies should face criminal liability for their failure to prevent corruption committed by a “leading person”, usually meaning a high-level executive, within a company. We highlighted a concern last year: there is an obvious risk in only targeting those in a "leading position", as it will create ambiguity when member states implement the final legislation. For example, in the Airbus case, the company used intermediaries that they referred to as "business partners" to pay their bribes. Such roles would not be covered by the term "leading persons".

The Parliament’s position is now in line with our stance, extending the standard to acts committed by any associated person.

That’s not all. The Commission first proposed that companies should be liable if they fail to implement supervision or control processes to prevent corruption committed by individuals associated with them. Importantly, the Parliament is in line with our calls, going one step further and adding a requirement for such processes to be effective. This addition is significant and should clearly remain in the final legislation because it will prevent companies from using weak or insufficient supervision as a defence.

It’s essential that victims of corruption are not overlooked in the final legislation. Ultimately, enforcement against corruption is incomplete if the victims of criminality have not been offered adequate remedies.

The sad reality, however, is that individual victims often lack the capacity and resources to initiate cases against corrupt actors or file claims for the loss they have suffered, including in the framework of criminal proceedings.

This is where non-state representatives of victims, such as non-governmental organisations (NGOs), can play a pivotal role in achieving remedies on their behalf. This occurred in 2021 when Congolese citizens, as well as anti-corruption and human rights organisations, filed a civil action against Semlex, a Belgian passport manufacturer accused of money laundering and corruption in the Democratic Republic of Congo.when Congolese citizens, as well as anti-corruption and human rights organisations, filed a civil action against Semlex, a Belgian passport manufacturer accused of money laundering and corruption in the Democratic Republic of Congo.

Currently, laws on remedies for domestic and foreign corruption victims vary across the EU. We therefore welcome the Parliament’s position, in which justice for victims is a central part of anti-corruption enforcement strategies at the national level and their fundamental rights are protected. This includes proactive identification, and notification, of their victim status and providing effective remedies to address their situation.

Another crucial proposal from the Parliament is that where victims are not able to represent themselves NGOs can do so, and such groups are recognised and have protected rights by member states. Arrangements should also be made for providing resources to these groups to carry out this important function.

Encouraging member states to create a supportive atmosphere for civil society to actively participate in anti-corruption initiatives showcases a commitment that must be backed up with adequate resources, especially at a time when civic space is increasingly under threat in the region and civil society continues to have a crucial role in exposing corruption.

According to our 2021 Global Corruption Barometer, people across the EU are concerned about the cosy relationship between business and politics – and over half of people think that their government is run by a few with private interests.

It’s no wonder they feel this way, when investigations like the Uber Files show the influence large corporations wield through undisclosed and privileged access to decision-makers across the EU.

Currently, many EU member states do not appropriately define lobbying or interest representation and have no transparency requirements in place. In a welcome step, the Parliament’s proposal includes regulating special interest representation and the revolving doors of personnel moving between roles as lobbyists or public sector employees, and an obligation for member states to establish a public legislative footprint. This would be following in the footsteps of four EU member states that already have an established public legislative footprint.

Despite this positive step, opaque political finance remains a concern throughout the EU. This opacity enables undue influence of vested or foreign interests on political systems and threatens the integrity of elections. Take one example – last year our Czech chapter identified 91 cases where legal entities with foreign ownership structures donated to political parties and movements that secured at least 3 per cent of the vote in parliamentary elections since 2017. Currently, in Czechia, corporate donations are allowed but foreign donations are not. Shockingly, seven countries in the EU still don’t have any clear obligation to publish the identity of donors at all.

It's crucial that measures to regulate and enhance transparency around the financing of political parties, candidates and third parties, alongside the financial disclosures of public officials, remain in the final legislation. The provision that competent authorities will have a mandate to monitor transparency rules and enforce sanctions is also a critical element that should remain. Further, upholding the transparency of political finance will be more effective through the Parliament’s proposed amendments, as it provides for reporting, audits and criminal liability for any breaches of transparency obligations.

Both the Commission and Parliament have shown a strong commitment to more effectively prevent and criminalise corrupt behaviour across the EU. A new way forward is sorely needed to raise standards in the fight against corruption and harmonise rules across the bloc.

This is a vital opportunity to demonstrate to the public a genuine ambition to tackle such crimes. Undue influence over decision-making, the poor enforcement of integrity safeguards, and threats to the rule of law and democracy are not delivering progress for people.

We will continue advocating for the Parliament and Council to seize this moment and take decisive action when they negotiate the final version of the Directive, and that they ensure all major gaps in member state legislative frameworks are addressed and harmonised across the board.