European Union: Proposals Have Been Drawn Up For An EU-wide Approach To Tackling Corruption

Angelika Hellweger of financial crime specialists Rahman Ravelli considers the new measures and the factors that prompted them.

The European Commission has published a proposed directive to create a standard legal framework and system of penalties for corruption. The new measures follow several high-profile scandals at EU institutions over recent years, which have placed renewed scrutiny on these institutions' lack of transparency on the issue of lobbying, gift-giving and sponsored luxury holidays.

With corruption costing the European Union (EU) economy an estimated minimum of ?120 billion each year, the directive aims to align member states' definitions of corruption offences to include bribery in public and private sectors, embezzlement, trading in influence and illegal enrichment.

Member states would have the power to:

• Prosecute any EU national for such offences.
• Prosecute any other person when the alleged offence occurs in the EU.
• Bring a prosecution for the benefit of a person established in the bloc.

The Commission also wants to address the current wide variation in penalties imposed for corruption offences in EU states. The proposal states that standardising penalties will "facilitate cross-border police and judicial cooperation and increase deterrence".

The Commission proposes that individuals convicted of corruption should face a sentence of between four and six years, depending on the seriousness of the offence. Companies could face financial penalties of up to 5% of their global turnover for the past year. The global turnover figure would include the turnover of a company's subsidiaries or other linked entities. There would also be a requirement for EU member states to exclude companies found guilty of corruption offences from receiving public benefits and to ban them temporarily or permanently from bidding on public contracts.

Under the directive, each EU member state would have to establish a body for the purpose of preventing and fighting corruption. Such organisations would have to be independent of their governments, be equipped with enough "human, financial, technical and technological resources" and be given the necessary powers to carry out their objective.

EU countries would also be required to introduce measures to ensure that any immunity from investigation and prosecution granted to some officials (such as members of parliament) for the new offences could be lifted through "an objective, impartial, effective and transparent process preestablished by law".

Determination

The Commission has stated that the proposed directive will have to be negotiated and adopted by the European Parliament and the European Council before it can become standardised EU law. Commission vice president, Josep Borrell, said that the proposed measures are clear proof of the Commission's determination to increase efforts to tackle corruption both within and beyond the EU's borders.

Last year, a survey conducted on behalf of the Commission found that 68% of people in the EU and 62% of companies based in the EU considered corruption to be widespread in their country. Individuals within the European Commission, Parliament and Council have called for more action to be taken to tackle corruption, both at EU and national level.

It now appears that there is official recognition of the need to update the existing EU legal framework to reflect the size and nature of corruption in the bloc. The evolution of corruption has made it necessary for the EU to devise a more effective, comprehensive approach than that which is currently being taken.

Instruments

It is clear that current EU instruments relating to corruption - in particular, Council Framework Decision 2003/568/JHA and the 1997 Convention on the fight against corruption involving EU officials or officials of EU member states - are not adequate for the challenge that such illegal activity poses. The problem is added to by current enforcement difficulties, with reported problems relating to cooperation between enforcement agencies in different member states.

The legal bases for the proposed update to the EU approach to combating corruption are Articles 83(1), 83(2), and 82(1)(d) TFEU. Article 83(1) allows for the establishment of minimum rules on the definition of corruption through directives, while Article 83(2) allows for the establishment of minimum rules on criminal offences and sanctions in EU policy areas subject to harmonisation measures. Article 82(1)(d) provides for measures to facilitate cooperation between judicial authorities in criminal matters.

It now remains to be seen whether the proposals become an effective reality.