Corruption costs European Union 120b euros a year, says report

PUBLISHED : Monday, 03 February, 2014, 9:16pm
UPDATED : Tuesday, 04 February, 2014, 3:53am


Corruption affects all member countries of the EU and costs the bloc's economies around €120 billion euros (HK$1.2trillion) a year, an official European Union report published yesterday said.

European Commissioner Cecilia Malmstrom, who presided over the first official EU-wide study on corruption, said the estimated amount lost annually due to padded government contracts, covert political financing, bribes to secure health care and other corrupt practices would be enough to fund the EU's yearly operating budget.

All 28 EU member states suffer from some level of corruption, the report found.

"There are no corruption-free zones in Europe," Malmstrom told a news conference.

The study does not rank countries according to the prevalence of corrupt practices, but Malmstrom acknowledged some of the "younger democracies" in Eastern Europe face special challenges. The report includes a breakdown of each EU member's problems and success stories.

The report found corruption is generally more present at local and regional levels, and that in some EU countries it is especially frequent when it comes to obtaining heath care services, or in the construction of real estate projects in urban areas.

Inflated government contracts are a particular problem, Malmstrom said. Government-financed procurement of goods and services accounts for 20 percent of all spending in the EU, the commissioner said, and studies indicate that up to a quarter of the money expended may be siphoned off by corruption.

As for the private sector, four of 10 companies quizzed in one survey consider corruption an obstacle to doing business in the EU, Malmstrom said.

"A huge amount of money is lost here," she said. "If you don't condemn corruption because it's immoral and how it erodes democratic legitimacy, at least for economic reasons there is good case to do more."