# EUR-Lex - 52011DC0308 - EN

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# 52011DC0308

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE Fighting Corruption in the EU /* COM/2011/0308 final */**

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COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE

Fighting
Corruption in the EU

TABLE OF CONTENTS

1........... Introduction.................................................................................................................... 3

2........... Stronger monitoring of anti-corruption efforts................................................................... 5

2.1........ Current monitoring and evaluation mechanisms................................................................ 5

2.2........ The EU Anti-Corruption Report...................................................................................... 6

3........... Better implementation of existing anti-corruption
instruments............................................ 8

3.1........ Framework Decision 2003/568/JHA on combating corruption
in the private sector.......... 8

3.2........ Other international anti-corruption instruments................................................................. 9

3.3........ Cooperation between the EU and the existing
international anti-corruption instruments.... 10

4........... Stronger focus on corruption in EU internal policies....................................................... 10

4.1........ Law enforcement, judicial and police cooperation within
the EU..................................... 10

4.1.1..... Judicial and police cooperation...................................................................................... 11

4.1.2..... Financial investigations and asset recovery..................................................................... 11

4.1.3..... Protection of whistleblowers......................................................................................... 12

4.1.4..... Training of law enforcement officials.............................................................................. 12

4.2........ Public procurement....................................................................................................... 12

4.3........ Cohesion policy to support administrative capacity
building............................................ 13

4.4........ Accounting standards and statutory audit for EU
companies........................................... 13

4.5........ Preventing and fighting political corruption..................................................................... 14

4.6........ Improving statistics....................................................................................................... 14

4.7........ Integrity in sport............................................................................................................ 14

4.8........ Protecting EU public money against corruption.............................................................. 15

5........... Stronger focus on corruption in EU external policies...................................................... 15

5.1........ Candidate countries, potential candidates and
neighbourhood countries.......................... 15

5.2........ Cooperation and development policies.......................................................................... 16

5.3........ Trade policy................................................................................................................. 17

6........... Conclusion................................................................................................................... 17

1.
Introduction

Four out of five EU citizens regard
corruption[1] as a serious problem in
their Member State[2]. Despite the fact that
the European Union over the last decades has contributed significantly to
opening up Europe and making it more transparent, it is evident that a lot
remains to be done. It is not acceptable that an estimated 120 billion Euros
per year, or one percent of the EU GDP[3], is lost to
corruption. This is certainly not a new problem to the EU, and we will not be
able to totally eradicate corruption from our societies, but it is telling that
the average score of the EU27 in Transparency International's Corruption
Perception Index has improved only modestly over the last ten years[4].

Although the nature and extent of
corruption vary, it harms all EU Member States and the EU as a whole.
It inflicts financial damage by lowering investment levels, hampering the
fair operation of the internal market and reducing public finances. It causes
social harm as organised crime groups use corruption to commit other serious
crimes, such as trafficking in drugs and human beings. Moreover, if not
addressed, corruption can undermine trust in democratic institutions and weaken
the accountability of political leadership.

Over the last decade, some efforts have been made at
international, EU and national level to reduce corruption[5].
At EU level, the anti-corruption legal framework has developed by the adoption
of legislation on corruption in the private sector[6]
and the accession of the EU to the United Nations Convention against Corruption
(UNCAC)[7]. The Treaty on the
Functioning of the European Union recognises that corruption is a serious
crime with a cross-border dimension which Member States are not fully equipped
to tackle on their own[8]. Anti-corruption measures
have, to some extent, been integrated within a range of EU policies[9].

However, the implementation of the anti-corruption legal
framework remains uneven among EU Member States and unsatisfactory overall.
The EU anti-corruption legislation is not transposed in all Member States[10].
Some countries have not ratified the most important international
anti-corruption instruments. More importantly, even where anti-corruption
institutions and legislation are in place its enforcement is often insufficient
in practice[11].

This reflects a lack of firm political
commitment on the part of leaders and decision-makers to combat corruption in all its forms - political
corruption, corrupt activities committed by and with organised crime groups,
private-to-private corruption and so-called petty corruption. There is thus an
evident need to stimulate political will to fight corruption, and improve the
coherence of anti-corruption policies and actions taken by Member States.

That is why the Commission will set up a new
mechanism, the EU Anti-Corruption Report, to monitor and assess
Member States' efforts against corruption, and consequently encourage more
political engagement. Supported by an expert group and a network of research
correspondents, and the necessary EU budget, the Report will be managed by the
Commission and published every two years, starting in 2013. It will give a fair
reflection of the achievements, vulnerabilities and commitments of all Member
States. It will identify trends and weaknesses that need to be addressed, as
well as stimulate peer learning and exchange of best practices. Alongside this
mechanism, the EU should participate in the Council of Europe Group of States
against Corruption (GRECO)[12].

The EU should also put stronger focus on
corruption in all relevant EU policies – internal as well as external. The
Commission will therefore, in particular, propose modernised EU rules on
confiscation of criminal assets in 2011, a strategy to improve criminal
financial investigations in Member States in 2012, and adopt in 2011 an Action
Plan for how to improve crime statistics. The Commission will also work with EU
agencies such as Europol, Eurojust and CEPOL, as well as with OLAF to step up judicial
and police cooperation and improve training of law enforcement officials. It
will continue to prepare modernised EU rules on procurement and on accounting
standards and statutory audit for EU companies. Also, the Commission will adopt
a strategy to combat fraud affecting the financial interests of the EU in 2011.
In parallel, the Commission will put a stronger focus on anti-corruption issues
within the EU enlargement process and - together with the High Representative -
in our neighbourhood policy, as well as make greater use of conditionality in
cooperation and development policies. Business sector initiatives and private-public
dialogue at EU level on how to prevent corruption should be further developed.

This Communication presents the objectives
of the EU Anti-Corruption Report and how it will operate in practice, and
explains how the EU should place greater emphasis on corruption in internal and
external policies. It will be complemented by a Commission Anti-Fraud Strategy.
While the former focuses on the enforcement of anti-corruption policies by the
Member States, the latter will mainly cover measures under the responsibility
of the Commission for the protection of EU financial interests.

2.
Stronger monitoring of anti-corruption efforts
2.1.
Current monitoring and evaluation mechanisms

To date there is no mechanism in place monitoring
the existence, and assessing the effectiveness, of anti-corruption policies at
EU and Member State level in a coherent cross-cutting manner[13].
At international level, the main existing monitoring and evaluation mechanisms
are the Council of Europe Group of States against Corruption (GRECO), the OECD
Working Group on Bribery, and the review mechanism of the UN Convention against
Corruption (UNCAC). Those mechanisms provide an impetus for states parties to
implement and enforce anti-corruption standards. However, they each have
several features limiting their potential to address effectively the problems
associated with corruption at EU level.

The most inclusive existing instrument
relevant for the EU is GRECO, in as much as all Member States are
participating. Through GRECO, the Council of Europe contributes to
ensuring minimum standards in a pan-European legal area. However, given the limited
visibility of the intergovernmental GRECO evaluation process and its follow-up
mechanism, it has, so far, not generated the necessary political will in the
Member States to tackle corruption effectively. Furthermore, GRECO monitors compliance
with a spectrum of anti-corruption standards established by the Council of
Europe[14] and accordingly focuses
less on specific areas of the EU legislation, such as public procurement. The
GRECO system, moreover, does not allow for comparative analysis and hence the
identification of corruption trends in the EU, nor does it actively stimulate the
exchange of best practices and peer learning.

The OECD's Convention on Combating
Bribery of Foreign Officials in International Business Transactions (Anti-Bribery
Convention)[15] focuses on the specific issue
of bribery of foreign public officials in international business transactions,
and cannot be extended to other areas of importance for the fight against
corruption in the EU. The seventh annual Progress Report prepared by
Transparency International[16] indicated that
enforcement of the Anti-Bribery Convention has been uneven: active enforcement occurred
in only four EU Member States and little or no enforcement in 12 EU Member
States. In spite of a thorough evaluation system in the form of the OECD Working
Group on Bribery, political commitment to effective implementation of the OECD Anti-Bribery
Convention has remained insufficient.

The UN Convention against Corruption
(UNCAC) entered into force in December 2005, and the EU joined in September
2008[17]. The Conference of States
Parties to UNCAC adopted the terms of reference of the Mechanism for the Review
of Implementation of UNCAC in November 2009. The EU supports the involvement of
civil society and transparency in the findings of the evaluations under the
Mechanism. However, several features are likely to limit the potential of the UNCAC
review mechanism to address problems associated with corruption at EU level: it
is an intergovernmental instrument, the cross-review system is likely to leave
out policy areas of particular relevance to the EU, it includes states parties
which may have lower anti-corruption standards than the EU, the review cycles
will be of relatively long duration, and recommendations to states parties
which are not implemented might be followed up only a limited number of times.

2.2.
The EU Anti-Corruption Report

Given the limitations of the existing
international monitoring and evaluation mechanisms explained above, a
specific EU monitoring and assessment mechanism, the EU Anti-Corruption Report, should be established to prompt stronger political will in the
Member States and enforcement of the existing legal and institutional tools. That
mechanism should be combined with EU participation in GRECO[18].
The EU Anti-Corruption Report will be issued by the Commission every two
years, starting in 2013.

The establishment of the EU Anti-Corruption
Report is the Commission's response to the call from Member States, in the
Stockholm Programme[19], to 'develop indicators,
on the basis of existing systems and common criteria, to measure anti-corruption
efforts within the Union', and from the European Parliament to monitor anti-corruption
efforts in the Member States on a regular basis[20].

The establishment of the EU Anti-Corruption
Report starts from the principle that although there is no 'one-size-fits-all' solution
to fighting corruption, corruption is a concern for all EU Member States. Through
periodical assessment and publication of objective fact-based reports, the Report
will create an additional impetus for Member States to tackle corruption
effectively, notably by implementing and enforcing internationally agreed
anti-corruption standards. The mechanism, applicable equally to all Member
States, will provide a clearer overview of the existence and effectiveness of
anti-corruption efforts in the EU, help identify specific causes of corruption,
and thus provide grounds for sound preparation of future EU policy actions.
It will moreover act as a 'crisis alert' to mitigate the potential risks of
deeply-rooted problems which could evolve into a crisis.

When preparing the EU Anti-Corruption
Report the Commission will cooperate with existing monitoring and evaluation mechanisms
to avoid additional administrative burdens for Member States and duplication of
efforts. It will draw on the minimum standards against corruption
established by existing international instruments such as the Council of
Europe's Criminal Law Convention on Corruption[21], Civil Law
Convention on Corruption[22], Twenty guiding
principles for the fight against corruption[23], the UNCAC[24]
and the OECD Anti-Bribery Convention[25].

Given that almost all forms of corruption
may have cross-border implications, the Report will not be limited to an
exhaustive list of priority areas. Each EU Anti-Corruption Report will however
focus on a number of cross-cutting issues of particular relevance at EU
level, as well as selected issues specific to each Member State. These will
be assessed against a number of indicators, based on the already
existing standards in the respective fields and some newly developed in the
process of preparing the Report. New indicators will be developed where relevant
standards are not yet laid down in an existing instrument or where higher
standards are required at EU level. In the selection of existing and the development
of new indicators, the Commission will consult competent anti-corruption
authorities in the Member States. Indicators may include: perceptions of
corruption, respondents’ behaviour linked to corrupt activities, and criminal
justice statistics, including on seizures and confiscations of the proceeds of
corruption-related crime. The EU Anti-Corruption Report will include a
quantitative assessment of those indicators and a qualitative analysis of
corruption trends and results.

The Anti-Corruption Report will comprise:

·
A thematic section, highlighting specific aspects of the fight against corruption in
the EU based on research and including thematic case studies, examples of best
practices and recommendations.

·
Country analyses,
including tailor-made recommendations directed to individual Member States,
based on the results of existing monitoring mechanisms and reviews of available
evidence from relevant sources. This section may be accompanied by
recommendations for appropriate action at EU level.

·
Trends at EU level, including the results of a Eurobarometer survey on corruption
conducted every two years, measuring perception of corruption in various areas
among EU citizens, as well as other relevant sources of information on the experiences
with corruption at EU level.

In drawing up the Report, the Commission
will rely on a variety of sources of information, including existing monitoring
mechanisms (GRECO, OECD, UNCAC), independent experts, research findings,
Commission services and the European Anti-Fraud Office (OLAF), Member States, EU
agencies such as Europol and Eurojust, the European Anti-Corruption Network,
Eurobarometer surveys and civil society[26].

The EU Anti-Corruption Report will be
managed by the Commission assisted by:

·
An expert group advising on: (1)
establishing indicators, (2) assessing Member States' performance, (3)
identifying best practices, (4) identifying EU trends, (5) making
recommendations, and (6) proposing new EU measures where appropriate. The group
will be set up by the Commission, following an open call procedure. The
selected experts may come from a wide range of backgrounds (law enforcement,
prevention of corruption, civil society, research etc.), must enjoy undisputed
anti-corruption expertise, a high reputation for integrity and commit to act in
their personal professional capacity.

·
A network of local research correspondents
set up by the Commission and consisting of representatives of civil society and
academia, who will collect relevant information in each Member State to feed
and complement the work of the expert group.

Directly linked to the EU Anti-Corruption
Report, the development of an experience sharing programme may be
considered to help Member States, local NGOs and other stakeholders to identify
shortcomings in anti-corruption policies and best practices, raise awareness or
provide training.

The Commission will bear all expenses associated
with the EU Anti-Corruption Report, including those of the independent expert
group, the network of research correspondents and, if set up, the experience
sharing programme.

EU participation in GRECO, although not fully responding to the EU's needs for periodic
reporting on anti-corruption efforts across the EU, would create synergies
between the two mechanisms[27]. GRECO could, in
particular, provide input to the EU monitoring mechanism in the form of
comparative analyses of the existing GRECO evaluation and compliance reports on
the EU Member States, and indication of key outstanding recommendations requiring
additional follow-up.

In the light of the above, the
Commission is setting up an EU anti-corruption reporting mechanism to
periodically assess the Member States' efforts in fighting corruption and will
request the authorisation of the Council to negotiate EU participation in GRECO
with the Council of Europe. The Commission will consider in the medium and long
term, based on the findings of the EU Anti-Corruption Report, the need for additional
EU policy initiatives, including the approximation of criminal law in the field
of corruption.

3.
Better implementation of existing anti-corruption
instruments

A number of anti-corruption legal
instruments are already in place at EU, European and international level. This
includes the EU Convention on the fight against corruption involving officials
of the European Communities or officials of the EU Member States which entered
into force on 28 September 2005[28]. With the exception of
that Convention, the existing instruments have, however, not yet been ratified
and transposed into the law of all EU Member States. To address corruption
effectively, Member States should, as a minimum, take steps to complete the
process of ratification and transposition.

3.1.
Framework Decision 2003/568/JHA on combating corruption
in the private sector

Framework Decision 2003/568/JHA on
combating corruption in the private sector[29], adopted in
July 2003, aims to criminalise both active and passive bribery, establishing
more detailed rules on the liability of legal persons and deterrent sanctions.
The first implementation report[30] issued in 2007 showed
that many Member States had done little to apply it. Shortcomings were found in
the criminalisation of all elements of active and passive bribery and the
provisions on the liability of legal persons. The second implementation report
accompanying this Communication shows that several Member States have still not
transposed the most detailed provisions on criminalisation of all elements of
active and passive bribery[31]. Moreover, the liability
of legal persons continues to be regulated in an uneven manner at national
level.

The Commission urges the Member States
to fully transpose all provisions of Framework Decision 2003/568/JHA without
delay and to ensure that it is effectively
implemented. Depending on progress, the Commission will consider proposing a
Directive replacing the Framework Decision.

In this context, the Commission welcomes
the adoption by certain Member States of stricter rules to prevent private
sector corruption and reinforced corporate liability for corruption offences. The
Commission intends to support the public-private dialogue and the exchange
of best practices in this area. Private undertakings are encouraged to develop
and implement clear common standard rules for their respective fields on
accounting, internal audit, codes of conduct and protection of whistleblowers.

3.2.
Other international anti-corruption instruments

Several EU Member States have ratified all
or most of the existing international anti-corruption instruments. However, three
EU Member States[32] have not ratified the Council
of Europe's Criminal Law Convention on Corruption[33],
twelve have not ratified its additional Protocol[34]
and seven have not ratified[35] the Civil Law
Convention on Corruption[36]. Three Member States
have not yet ratified the UNCAC[37]. Five EU
Member States[38] have not ratified the OECD
Anti-Bribery Convention.

The Commission urges Member States that
have not ratified those instruments to do so without delay, taking into account where appropriate the exclusive external
competence of the Union, and to fully implement them. The Commission requests
the Member States to notify the Commission without delay of the steps they have
taken with a view to ratifying these instruments and any reasons for
non-ratification. In this context, ratification and effective enforcement of
the OECD Anti-Bribery Convention by all EU Member States is of particular
importance. The Commission will analyse possible difficulties encountered
by non-OECD EU Member States in the ratification process, as well as
deficiencies in implementation and enforcement.

3.3.
Cooperation between the EU and the existing
international anti-corruption instruments

The Stockholm Programme calls for increased
coordination between Member States in the framework of UNCAC, GRECO and OECD
work. To that end, the Commission will act, in particular, in the following
areas.

As regards UNCAC, the Convention
contains a legal obligation to carry out self-assessments. In the case of the EU,
that process is complex as it involves cooperation between all EU institutions,
as well as with Member States in the matters falling under shared competence.
The Commission has however initiated the process[39]
and is analysing the impact of the changes brought by the Lisbon Treaty on the
scope of the obligations of the EU within UNCAC. Once that analysis is completed,
the modalities of participation in the review mechanism, including the
appointment of experts, will be determined.

The Commission will enhance cooperation
with the OECD, possibly through the conclusion of a Memorandum of
Understanding. The findings of the OECD's Working Group on Bribery will be used
as input for the EU Anti-Corruption Report.

The Commission has analysed the possible
modalities for the EU's participation in GRECO and will initiate, within
the limits of EU competence, the necessary procedures in this regard[40].
Member States should support the EU's application to participate in GRECO within
the Committee of Ministers of the Council of Europe.

The Commission also supports the anti-corruption
efforts made within the context of the G-20 and will contribute to the
implementation of the G-20 anti-corruption action plan endorsed at the Seoul
Summit in November 2010[41].

4.
Stronger focus on corruption in EU internal policies

In addition to stronger monitoring and
implementation of existing legal instruments, anti-corruption considerations
should, as part of a comprehensive approach, be integrated into all
relevant EU policies – internal as well as external. A stronger focus should be
put on corruption, in particular, in the following policy areas.

4.1.
Law enforcement, judicial and police cooperation
within the EU

Member States should take all necessary
steps to ensure the effective detection, prosecution and a stable track record
of dissuasive penalties and recovery of criminally acquired assets in
corruption cases. In this context, judicial and
police cooperation between EU Member States, financial investigations, training
of law enforcement personnel, and the protection of whistleblowers is of particular
importance.

4.1.1.
Judicial and police cooperation

Under its 2010-2014 strategy, Europol is
committed to providing increased support for law enforcement operations and
function as the EU criminal information hub and EU centre for law enforcement
expertise. The Commission urges Europol to step up its efforts to combat
corruption as a facilitator for organised crime activity. This should
include the production of regular threat assessments.

Since 2004, Eurojust has been
involved in a slightly increasing number of corruption cases. Although in 2010
these cases represented only 2% of its total workload, the growing number of
Member States involved attests to an increasing need for judicial cooperation
in corruption cases with a cross-border dimension. The Commission urges
Eurojust to strengthen its efforts to facilitate the exchange of information among
Member States' authorities on corruption cases with cross-border implications.

Finally, since 2008 the EU contact-point
network against corruption (EACN)[42] has brought together
Member States' anti-corruption authorities, as well as the Commission, OLAF, Europol
and Eurojust. The EACN is managed by the Austrian-led network European Partners
against Corruption (EPAC). The Commission will work with the EACN towards more
concrete deliverables, stronger focus on operational issues of
relevance for corruption investigators, and a clearer delimitation of
the respective roles of EPAC and the EACN. The Commission considers
preparing a proposal to modify the Council Decision establishing the EACN.

4.1.2.
Financial investigations and asset recovery

Four implementation reports issued
by the Commission[43] have pointed to delays
in the efforts by many Member States to adopt measures regarding confiscation
of the proceeds of crime. In 2011 the Commission will propose a revised EU
legal framework on confiscation and asset recovery to ensure that courts in
Member States are able to effectively confiscate criminal and criminally
tainted assets and to fully recover the corresponding values, including in
cases involving corruption.

The third
Anti-Money Laundering Directive[44]
lists corruption as one of the predicate
offences for money laundering. Evaluations conducted by the OECD's Working
Group on Bribery suggest that very few foreign bribery cases are detected
through the national anti-money laundering systems. The Commission stresses the
need for further cooperation between the Financial Intelligence Units[45],
specialized anti-corruption agencies and law
enforcement bodies in Member States. Member States should ensure that financial
investigations are pursued effectively and consistently in corruption cases and
that any potential link with organized crime and money laundering is always
considered. The Commission will adopt a strategy in 2012 to strengthen
the quality of financial investigations in Member States and the
development of financial intelligence to be shared between authorities within
Member States, as well as between Member States and EU agencies and at
international level.

4.1.3.
Protection of whistleblowers

Effective protection of whistleblowers
against retaliation is a key element of anti-corruption policies. The relevant
legal framework in the EU is uneven, creating difficulties in handling cases
with a cross-border dimension. The Commission will
carry out an assessment of the protection of persons reporting financial crimes
that will also cover protection of whistleblowers, and
related data protection issues, as a basis for further action at EU level.

4.1.4.
Training of law enforcement officials

The Commission will support the development
of targeted training programmes on corruption for law enforcement
agencies through the European Police College (CEPOL). Those programmes should
cover specific aspects of handling corruption cases with cross-border implications,
for example, the gathering and exchanging of evidence, the link with financial
investigations, and the link with investigations of organised crime offences.

4.2.
Public procurement

Public expenditure on works, goods and
services accounts for roughly 19% of EU GDP (2009). Almost a fifth of this
expenditure falls within the scope of the EU Directives on public procurement
(i.e. approx. €420 billion, or 3.6% of EU GDP).

The current EU legal framework on public
procurement[46] does not include
specific provisions on prevention and sanctioning of conflicts of interest, and
comprises only few specific rules on sanctioning favouritism and corruption.

In January 2011, the Commission launched
a consultation[47] on the
modernisation of EU public procurement policy. It raises the question whether
a common definition of conflict of interest and possible safeguards against
such situations are needed at EU level, including the publication of concluded
contracts to enhance transparency, the extension of exclusion grounds and 'self-cleaning'
measures. In the preparation of a modernised EU public procurement legislation,
the Commission will carefully consider these issues. In this context, the
Commission will also consider proposing legislation on concessions to
create better conditions for the fair and competitive award of these contracts,
thus reducing the risks of corruption.

4.3.
Cohesion policy to support administrative
capacity building

The EU's cohesion policy supports the
strengthening of institutional capacity in Member States to make public
services and administrations more efficient. Administrative capacity and good
governance are included as main priorities in the 2007-2013 Community Strategic
Guidelines for cohesion. A total of 3.5 billion Euros have been allocated under
those guidelines to strengthen institutional capacity at national, regional and
local level of which 2 billion Euros stem from the European Social Fund. The
2007-2013 European Social Fund regulation introduced a specific priority for
strengthening administrative capacity in less developed regions and Member
States. Such support for institutional capacity will have a positive impact on
preventing corruption, by making public services and administrations more
efficient and transparent. Some Member States have included measures to fight
corrcuption in their operation programmes. The Commission intends to
continue support for the strengthening of institutional capacity and make it
available to all Member States and regions[48].

4.4.
Accounting standards and statutory audit for EU
companies

The use of International Financial
Reporting Standards for consolidated financial statements of companies listed
on the EU's stock markets became mandatory in 2005[49].
The procedures on statutory audit were harmonised[50],
introducing a requirement for external quality assurance, provisions on public
supervision, duties and independence of statutory auditors and the application
of international standards. These measures increased the credibility, quality
and transparency of financial reporting, reducing the risks of corruption.

The Commission conducted
public consultations in 2010 on the audit policy lessons from the financial crisis[51].
The results of the consultation will assist the Commission in deciding on
future measures aimed at ensuring consolidated checks and control
systems within EU companies to reduce the risk of corrupt practices. These
may cover matters such as: clarifications of the role of auditors, governance
and the independence of audit firms, supervision of auditors, creation of a
single market for the provision of audit services, and the simplification of
rules for SMEs.

4.5.
Preventing and fighting political corruption

As political scandals have repeatedly shown,
complex connections are sometimes developed between political actors, private
undertakings, media, trade associations and foundations[52].
These connections are driven by mutual benefits in influencing key political
and economic decisions, putting democratic institutions and procedures at risk
and rendering the detection of corrupt practices more difficult. Under the
impetus of the GRECO monitoring process, some progress has been seen in the
legal and institutional setting for the financing of political parties in
several Member States. Unfortunately, the enforcement of transparency and
supervision rules is still unsatisfactory in some Member States. The
Commission calls upon the Member States, the national Parliaments and the
European Parliament to ensure more transparency and allow effective
supervision of the financing of political parties and other interest groups.
The Commission is also committed to respecting its
obligations to defend the general interest of the Union, in conformity with the
obligations laid down by the Treaties, in its own Code of conduct and in other
relevant rules.

The media have a key role in increasing
transparency and accountability of political figures and are often a
resourceful tool for fighting political corruption. The Commission urges
Member States to take all necessary measures to ensure effective implementation
of the existing legal framework guaranteeing the independence and freedom of the
media, including on media funding. The Commission will support, through its
existing programmes, training of media to strengthen knowledge in specific
areas relevant for the detection of corruption (e.g. money laundering,
political party financing, banking, stock exchange markets). The Commission
also supports in other ways action limiting political corruption, including
through funding of civil society initiatives[53].

4.6.
Improving statistics

Currently there is no uniform statistical
system across the EU to measure the nature and extent of corruption or the
effectiveness of anti-corruption measures. As a follow-up to the EU Action Plan
to develop a comprehensive and coherent EU strategy to measure crime and
criminal justice[54], a new Action Plan
(2011-2015) is under preparation. The Commission will set up a sub-group of
experts in statistics, as a first step in work aimed at establishing a
uniform EU statistics system on corruption.

4.7.
Integrity in sport

Corruption in sport is an increasingly visible
problem with cross-border dimensions, mainly related to opacity of transfers
and match-fixing. The Commission will analyse possible solutions to addres
match-fixing more effectively[55] by first launching a
study on how corruption in sport is being covered in national legislation. This
may offer grounds for further policy actions in this area, such as possibly
establishing minimum rules concerning the definition of criminal offences in
this field.

4.8.
Protecting EU public money against corruption

More than a
decade ago, corruption charges led to the entire resignation of the Commission and
the setting up of the European Anti-Fraud Office (OLAF). One of the core
tasks of OLAF is to conduct administrative investigations for the purpose of
fighting fraud, corruption and any other illegal activity affecting the
financial interests of the EU[56].

In 2011, several
initiatives will be taken to step up the fight against fraud and corruption
affecting EU public money. The Communication on the protection of EU
financial interests by criminal law and administrative investigations[57]
sets out how the Commission intends to safeguard taxpayers' money at EU level
against illegal activities, including against threats posed by corruption
inside and outside the EU institutions. The Communication points to
opportunities for the improvement of the criminal law framework, of procedural
tools for investigators and prosecutors, as well as possible institutional
developments such as the setting up of a European Public Prosecutor's Office.

The Commission also intends to adopt a new anti-fraud strategy reinforcing
the Union's financial policies with a view to better protect the EU's financial
interests. The strategy will identify priorities and specific areas of activity
in order to enhance the current Commission anti-fraud framework, with a focus
on prevention.

Complementing those
initiatives, the Commission's proposal for amending the legal framework of
OLAF[58] aims at
increasing the efficiency and speed of OLAF investigations, at strengthening
procedural guarantees, as well as at reinforcing OLAF's cooperation with Member
States and at improving its governance.

5.
Stronger focus on corruption in EU external policies
5.1.
Candidate countries, potential candidates and
neighbourhood countries

The process of enlargement of the EU has
been a key vehicle for major anti-corruption reforms in the candidate countries
and potential candidates. The most recent accessions had a considerable impact
on the actual weight of anti-corruption policies within the EU. They also
showed that at the time of accession it was still very difficult to demonstrate
a track record of implementation and the irreversibility of anti-corruption
reforms. Moreover, following accession, efforts to fight corruption still
had to be monitored.

The 2005 negotiating frameworks for Croatia
and Turkey introduced a specific chapter[59] covering a
range of rule of law issues, including judicial reform and the fight against
corruption. The renewed consensus on enlargement[60],
has further strengthened the focus on the rule of law.

Aware of the fact that, without a
strong political will, investing EU funds in institution building alone
cannot guarantee the success of anti-corruption policies, the Commission
intensified in 2010 its dialogue on rule of law with the
candidate countries and potential candidates. The reinforced dialogue builds on
the experience gained during the visa liberalisation process. The roadmaps
containing benchmarks to which countries had to conform in order to obtain visa
liberalisation proved to be an efficient tool to motivate and prioritise
reform. The aim of the dialogue on rule of law is to strengthen such
benchmarking at earlier stages of the pre-accession process. The Commission
Opinions on Albania's and Montenegro's applications for EU membership already
set recommendations that should be met before the opening of negotiations. The
dialogue will be accompanied by yearly expert missions to be carried out
with participation of experts from EU Member States, which will in this way be
associated to the process more closely.

Based on these tools, the Commission
will continue to give high priority to the monitoring of anti-corruption
policies and will enforce thorough scrutiny from the early stages of accession
preparations with the aim of securing guarantees
for the sustainability of reforms. The Commission will also promote close coordination of the
international donors to avoid any overlapping and to better channel the
resources invested.

Under the umbrella of the European Neighbourhood
Policy, the High Representative and the Commission will promote
reinforcing the capacity to fight corruption in the neighbourhood countries as
a key aspect of the support given[61]. This is especially
important given the recent events in North Africa, where uprisings against the
regimes were also prompted by the urge to eradicate a culture of corruption in
their countries.

5.2.
Cooperation and development policies

The support for strengthening good
governance and democratisation granted by the EU as part of cooperation and
development policy also covers anti-corruption policies[62].
The Commission follows in this context a partnership-based
approach, engaging dialogue with partner countries’ governments and civil
society, EU Member States and other donors. While recognising that without
political will inside the country, outside support is unlikely to deliver
results, the Commission considers that incentive-based approaches may prove their
benefits[63]. The Commission intends to strengthen dialogue with partner countries
on anti-fraud and anti-corruption issues and its support to capacity building,
leading towards the adoption of national strategies to fight corruption in all
its forms. During the programming period as well as throughout the implementation
process particular attention will be paid to such strategies and their
effective implementation.

In line with that objective, the Commission
will promote greater use of the conditionality principle in the field of
development to encourage compliance with minimum international anti-corruption standards
as set out in UNCAC and other international and regional conventions these
countries are party to. In the same vein, the Commission will promote a stronger
use of the provisions covering anti-corruption matters already existing in the
legal bases for cooperation with partner countries, undertaking specific consultations in response to instances of
serious corruption cases, and applying sanctions if appropriate measures are
not put in place.

Finally, the Commission has established, and will continue to support, global frameworks aiming at setting
transparent systems for extracting and trading natural resources and raw
materials, such as the Forest Law Enforcement Governance and Trade[64] and the Extractive Industries Transparency Initiative.

5.3.
Trade policy

EU trade policy contributes to encouraging
third countries to respect, inter alia, human rights and good governance through
bilateral trade relations and through tools such as the Generalised System of
Preferences. The Commission recently proposed a reshape
of the Generalized System of Preferences,[65] reinforcing
the incentives for the respect of good governance standards through the
adherence and implementation of key international conventions such as the
UNCAC.

The Commission will continue to promote the
inclusion of specific provisions in Free Trade Agreements on transparency in
international government procurement, and in the content of World Trade
Organization the extension to other WTO Parties of the Agreement on Government
Procurement which contains provisions on enhanced transparency in international
procurement, limiting the risk of corruption.

6.
Conclusion

Corruption
continues to be a cause of concern in the EU, as it is globally. Although the
nature and extent of corruption vary, it exists in all Member States, causing
serious economic, social, and democratic harm.

International
instruments, and EU anti-corruption legislation, are already in place, but implementation
remains insufficient. The Commission calls on EU Member States to ensure
that all relevant legal instruments are fully transposed
into their legislation and, crucially, effectively followed up and enforced
through the detection and prosecution of corruption offences, backed up by
criminal law provisions and a systematic track record of deterrent penalties
and asset recovery.

To achieve
this, firmer political commitment by all decision-makers in the EU is needed. The
existing international monitoring and evaluation mechanisms have, so far, not
produced the necessary momentum. Action at EU level is therefore needed to strengthen
the political will, in all EU Member States, to vigorously tackle corruption.

To that end, the Commission will set up the EU Anti-Corruption Report to periodically
assess Member States' efforts, starting in 2013. In parallel, the EU should
negotiate its participation in the Council of Europe Group of State against
Corruption (GRECO).

The EU
should also continue, as part of a comprehensive approach, to address
corruption through all relevant EU policies – internal as well as external.
Greater focus should be put on corruption in the areas of judicial and police
cooperation, modernised EU rules on confiscation of criminal assets, a revised EU
public procurement legislation, better EU crime statistics, an enhanced
anti-fraud policy to protect EU financial interests, the EU enlargement
process, and greater use of conditionality in EU cooperation and development
policies. At the same time, private-public dialogue at EU level on how
to prevent corruption within the business sector should be further developed
with the support of the Commission.

These initiatives will not, realistically,
eradicate corruption, within or outside the EU. Taken together, they will
however help to reduce the problem, to the benefit of all.

[1]               This Communication uses the broad definition of
corruption adopted by the Global Programme against Corruption run by the United
Nations: 'abuse of power for private gain', which therefore covers
corruption in both public and private sectors.

[2]               78 %, according to the 2009 Eurobarometer on
corruption. This survey is conducted every two years. According to research by
Transparency International, 5% of the EU citizens pay a bribe annually, see http://www.transparency.org/policy_research/surveys_indices/gcb. One study suggests that corruption may add as much
as 20-25% to the total cost public procurement contracts, http://www.nispa.org/files/conferences/2008/papers/200804200047500.Medina_exclusion.pdf.

[3]               The total economic costs of
corruption cannot easily be calculated. The cited figure is based on
estimates by specialised institutions and bodies,
such as the International Chamber of Commerce,
Transparency International, UN Global Compact, World Economic Forum, Clean
Business is Good Business, 2009, which suggest that corruption amounts to 5% of GDP at world level. .

[4]               From 6.23 in 2000 to 6.30 in 2010, out of the maximum
10. In the 2010 Index, although nine Member States were ranked amongst the 20
least corrupt countries in the world, eight Member States were ranked below 5.
The main findings and tendencies of the Index for the EU have been confirmed by
the World Bank's worldwide governance indicators, i.e. a clear differences
among individual Member States, with nine EU Member States ranked as best
anti-corruption performers and ten as worst performers. See also http://info.worldbank.org/governance/wgi/worldmap.asp

[5]               The Commission called for such efforts in 2003, COM(2003)
317 final.

[6]               Council Framework Decision 2003/568/JHA on combating
corruption in the private sector (OJ L 192, 31.7.2003, p. 54).

[7]               Council Decision
2008/801/EC (OJ L 287, 29.10.2008, p. 1).

[8]               Article 83(1) of the Treaty on the Functioning of the
European Union lists corruption among those crimes for which directives
providing minimum rules on definition of criminal offences and sanctions may be
established, since corruption often has implications across, and beyond,
internal EU borders. Bribery across borders, but also other forms of
corruption, such as corruption in the judiciary, may affect competition and investment
flows.

[9]               See sections 4 and 5.

[10]         The Commission does not have the power to bring legal
proceedings against Member States for failure to transpose measures adopted
under the Third Pillar of the Treaty, prior to the entry into force of the
TFEU. Such proceedings will be possible from 1 December 2014, pursuant to
Article 10 of Protocol No 36 on Transitional Provisions of the Treaty of
Lisbon.

[11]             See section 3.

[12]             See section 2.2 and the Report from Commission to the
Council on the modalities of EU participation in GRECO, COM(2011) 307.

[13]             A specific monitoring mechanism applicable to two
Member States, the Cooperation and Verification Mechanism (CVM) for Romania and
Bulgaria, has existed since 2006 (Commission Decisions 2006/928/EC and
2006/929/EC of 13 December 2006 (OJ L 354, 14.12.2006, pp. 56, 58). The CVM
surfaced as an ad-hoc solution for the outstanding shortcomings found on the
eve of EU accession. In this context, the Commission carries out verifications
against a number of pre-defined benchmarks in the area of justice reforms and
anti-corruption, as well as, in the case of Bulgaria, the fight against
organised crime.

[14]             Criminal Law Convention on Corruption (STE 173, adopted
on 27 January 1999) and its additional Protocol (ETS 191, adopted on 15 May
2003); Civil Law Convention on Corruption (STE 174, adopted on 4 November 1999)
and the Twenty Guiding Principles against Corruption (Council of Europe's
Committee of Ministers' Resolution (97) 24).

[15]             http://www.oecd.org/document/12/0,3343,en_2649_34859_35692940_1_1_1_1,00.html
.

[16]             http://www.transparency.org/global_priorities/international_conventions

[17]             Council Decision 2008/801/EC
(OJ L 287, 25.9.2008, p. 1).

[18]             See Report from Commission to the Council on the
modalities of EU participation in GRECO, COM(2011) 307.

[19]             Council document 17024/09, adopted by the European
Council on 10/11 December 2009. (OJ C 115, p. 1). See also the Resolution of the
Council 6902/05, adopted on 14.4.2005, which called upon the Commission to also
consider the development of a mutual evaluation and monitoring mechanism.

[20]             Written Declaration No 2/2010 on the Union's efforts in
combating corruption, adopted by the European Parliament on 18 May 2010.

[21]             SET 173, of 27.1.1999.

[22]             SET 174, 4.11.1999.

[23]             Council of Europe Committee of Ministers' Resolution
(97) 24.

[24]             UN General Assembly Resolution 58/4 of 31 October 2003.

[25]             Adopted by the Negotiating Conference on 21 November
1997.

[26]             Assessments carried out by civil society of relevance
will be considered. This may include the on-going Transparency International
study on the National Integrity Systems in the EU.

[27]             See the Report from Commission to the Council on the
modalities of EU participation in GRECO, COM(2011) 307.

[28]             OJ C 195, 25.06.1997, p. 2-11.

[29]             OJ L 192, 31.7.2003, p. 54.

[30]             COM(2007) 328 final.

[31]             COM(2011) 309 final. The Report found that only 9
Member States (i.e. Belgium, Bulgaria, Czech Republic, France, Ireland, Cyprus,
Portugal, Finland and UK) have correctly transposed all elements of the offence
as laid down in Article 2 of the Framework Decision.

[32]             Austria, Germany, Italy.

[33]             SET 173, 27.1.1999.

[34]             Austria, the Czech Republic, Estonia, Finland, Germany,
Hungary, Italy, Lithuania, Malta, Poland, Portugal, Spain.

[35]             Denmark, Germany, Ireland, Italy, Luxembourg, Portugal
and the United Kingdom.

[36]             SET 174, 4.11.1999.

[37]             The Czech Republic, Germany, Ireland.

[38]             Cyprus, Latvia, Lithuania, Malta, Romania. These Member
States are not members of the OECD. Bulgaria is the only Member State non-member
of the OECD which has adopted this Convention.

[39]             OLAF has started with a systematic analysis of the
corruption cases in order to identify the threats and vulnerabilities the EU
budget is exposed to.

[40]             See the Report from Commission to the Council on the
modalities of EU participation in GRECO, COM(2011) 307.

[41]             Annex III of the G-20 Seoul
Summit Leaders’ Declaration, 11-12 November 2010.

[42]             Council Decision 2008/852/JHA,
(OJ L 301, 12.11.2008, p. 38).

[43]             Report from the Commission to the European Parliament
and to the Council based on Article 8 of the Council Decision 2007/845/JHA of 6
December 2007 concerning cooperation between Asset Recovery Offices of the
Member States in the field of tracing and identification of proceeds from, or
other property related to crime (COM(2011) 176 final); Report from the
Commission to the European Parliament and the Council based on Article 22 of
the Council Framework Decision 2006/783/JHA of 6 October 2006 on the
application of the principle of mutual recognition to confiscation orders
(COM(2010) 428); Report from the Commission pursuant to
Article 6 of the Council Framework Decision 2005/212/JHA of 24 February 2005 on
confiscation of crime related proceeds, instrumentalities and property
(COM(2007) 805 final); Report from the Commission based on Article 14 of the
Council Framework Decision 2003/577/JHA of 22 July 2003 on the execution in the
European Union of orders freezing property or evidence (COM(2008) 885 final).

[44]             Directive 2005/60/EC (OJ L 309, 25.11.2005, p. 15).

[45]             According to Article 21(2)(b) of Directive
2005/60/EC of the European Parliament and of the Council of 26 October 2005 on
the prevention of the use of the financial system for the purpose of money
laundering and terrorist financing, the "FIU shall be
established as a central national unit. It shall be responsible for receiving
(and to the extent permitted, requesting), analyzing and disseminating to the
competent authorities, disclosures of information which concern potential money
laundering, potential terrorist financing or are required by national
legislation or regulation. It shall be provided with adequate resources in
order to fulfill its tasks".

[46]             Directive 2004/18/EC on the coordination of procedures for the award of
public works contracts, public supply contracts and public service contracts (OJ L 134, 30.4.2004, p. 114) and Directive 2004/17/EC coordinating the procurement procedures of
entities operating in the water, energy, transport and postal services sectors (OJ L 134, 30.4.2004, p. 1).

[47]             Green Paper on the modernisation of EU public
procurement policy. Towards a more efficient European Public Procurement
Market, COM(2011) 15 final.

[48]             Conclusions of the fifth report on economic, social
and territorial cohesion: the future of cohesion policy, COM(2010) 642 final.

[49]             Regulation (EC) No 1606/2002 of the European Parliament
and of the Council of 19 July 2002 (OJ L 243, 11.9.2002, p. 1).

[50]             Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts,
amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council
Directive 84/253/EEC (OJ L
157, 9.6.2006, p. 87).

[51]             Green Paper on Audit Policy: Lessons from the Crisis,
COM(2010) 561 final.

[52]             Allegations of links between politicians and
influential businesses or media owners have been made repeatedly in recent
years, notably regarding financing of electoral campaigns.

[53]             This support is ensured through the specific programme
on 'Prevention and Fight against Crime'.

[54]             COM(2006) 437 final.

[55]             COM(2011) 12 final

[56]             OLAF reports annually on its activities, see http://ec.europa.eu/anti_fraud/reports/olaf_en.html.

[57]             Communication on the protection of the financial
interests of the European Union by criminal law and by administrative
investigations: An integrated policy to safeguard the taxpayers' money, COM(2011)
293 final.

[58]             COM(2011) 135 final.

[59]             Chapter 23.

[60]             Renewed consensus on enlargement endorsed on 14 and 15
December 2006.

[61]             Joint Communication to the
European Parliament, the Council, the European Economic and Social Committee
and the Committee of the Regions - A new response to a changing Neighbourhood,
COM(2011) 303.

[62]             Communication on Governance and Development, COM(2003)
615 final, and Communication on Governance in the
European consensus on development: towards an harmonised approach within the
European Union, COM (2006) 421 final.

[63]             E.g. the governance initiative for African, Caribbean and Pacific countries which took the form of
an 'incentive tranche' of 2.7 billion Euros to encourage political will to
reform.

[64]             Communication on the Forest Law
Enforcement, Governance and Trade Action Plan, COM(2003)
251 final.

[65]             COM(2011) 241 final.