WRITTEN QUESTION E-1716/00

by Olivier Dupuis (TDI) to the Commission

(29 May 2000)

Subject: Bribes and Union policy on distortion of competition rules and the fight against corruption

In its reply of 8 November 1999 to written question P-1844/99(1), with reference to its communication of 21 May 1997 on Community anti-corruption policy, the Commission stated that it intended to raise the question of tax deductibility for bribes with the Member States in the appropriate fora, with a view to reaching consensus to abolish such provisions in the framework of a joint concerted move.

In its reply in April (joint reply to oral question No 59, H-0257/00(2), and question E-2012/99)(3), the Commission stated that it was in possession of information showing that those Member States that still allowed firms to deduct from their profits commissions paid to foreign public officials had either already amended their legislation or were about to do so in order to reflect the principles set out in the OECD recommendation of April 1996 and the Commission communication of 21 May 1997.

Will the Commission provide specific details of the Member States concerned and the exact dates on which the legislation of each was changed or is due to be changed?

The Commission also states that it has no immediate plans to propose harmonisation of the conditions governing deductibility of commissions paid to private firms or persons. Quite apart from the obvious distortion of competition rules the payment of such commissions represents, is the Commission aware of the fact that a significant proportion of the monies supposedly paid to private persons or firms in order to gain a foothold in the markets of third countries actually ends up with intermediaries and the managers of firms in the Member State of origin?

In view of this, does the Commission agree that it has a duty to take, as a matter of urgency, all measures necessary to ensure that the practice of deducting from profits commissions paid to persons and firms, both public and private, is brought to an end as soon as possible?

(1) OJ C 219 E, 1.8.2000, p. 32.

(2) Debates of the European Parliament (April 2000).

(3) OJ C 219 E, 1.8.2000, p. 67.

Answer given by Mr Bolkestein on behalf of the Commission

(12 July 2000)

Further to its answers to the questions cited by the Honourable Member, the Commission would point out, on the basis of the information submitted by the Member States to the Organisation for Economic Cooperation and Development (OECD), that, Luxembourg apart, all those that still allowed firms to deduct from their profits commissions paid to foreign public officials have now amended their legislation to end this possibility and so apply the principles set out in the OECD recommendation of April 1996 and the Commission communication of 21 May 1997 on a Union policy against corruption(1).

Luxembourg's government has, from the information it has provided to the OECD, already presented a bill to the national parliament aimed at ending the deductibility of such commissions. It expects the bill to be adopted before the end of the year.

Corruption in the private sector is the subject of a Joint Action adopted by the Council on 22 December 1998 on the basis of Article 31 (formerly K.3) of the Treaty on European Union(2). Article 8 of the Joint Action requires each Member State, within two years of its entry into force on 31 December 1998, to submit appropriate proposals in the sphere of criminal law for consideration and possible adoption by the competent authorities. The Council must assess the fulfilment by Member States of their obligations under the Joint Action within three years of its entry into force. Only when the results of this Joint Action are known will it be possible to determine whether tax measures are needed to supplement criminal law measures.

(1) COM(97) 192 final.

(2) OJ L 358, 31.12.1998.