Corruption in business is endemic across the European Community, costing the EU economy almost £100 billion a year in lost tax revenues and foreign investment; and the problem is getting worse.
That was the headline news following release of a study from the European Commission which says corruption is having a devastating impact on business activity, with a third of companies that would have tendered for public sector contracts having been prevented from doing so because of corruption. The EU accuses national governments of not having done enough to address conflicts of interest between politicians and business.
The Anti Corruption Report says the worst affected industry sectors are construction, energy, transport, defence and healthcare. A public opinion survey showed that on average 74% of EU citizens think corruption is widespread in their country; this falls to 64% for the UK, where only 1% had direct experience of corruption, ie had been offered a bribe. In Greece 99% think corruption is a widespread problem.
Any UK complacency should be swept away by considering last October’s survey from the Chartered Institute of Building which found that almost half of the respondents thought corruption was common in the UK construction industry and 35% have been offered a bribe or incentive; 20% said the problems had got worse in the previous five years.
The EU report concedes that member states have done a lot on the anti-corruption front in recent years, but not enough. The UK has introduced the Bribery Act 2010, billed as the toughest anticorruption legislation in the world, which came into force in July 2011.
The first person to fall foul of it was a railway clerk, which wasn’t quite the prosecution anticorruption campaigners had been hoping for. The Serious Fraud Office said last year that it was considering eight prosecutions, and since then two people have been arrested as part of investigation into alleged bribery involving Rolls-Royce.
By its nature corruption is hard to detect, but a new trend of self confession could be sparked with the introduction of Deferred Prosecution Agreements (DPAs) in England and Wales from 24 February. Guidance has just been published on the circumstances in which DPAs could be made available.
Essentially this will be when fines could put a company out of business, creating unemployment and losses to shareholders. Instead, companies are being encouraged to self report wrongdoing like corruption and fraud in the hope of negotiating a plea bargain, as is common in the United States.
We can perhaps expect more instances of bribery and corruption to come to light as a result of the DPAs, but it is difficult to argue with the EU’s conclusion that not enough is being done to detect it by the UK’s enforcement agencies – they are unlikely to be able to ‘cop a plea’ on that accusation.
Nick Barrett
Editor