Report: Rampant corruption is aggravating EU crisis

"Europe by and large fails the test," said Corbus de Swardt, managing editor of TI.

In Greece and Portugal, corruption is so deeply ingrained it poses a direct threat to democratic legitimacy and jeopardises economic recovery, it said.

Greece, Portugal, Italy and Spain have "serious deficits in public sector accountability, and deep rooted problems of inefficiency, malpractice and corruption, which are neither sufficiently controlled nor sanctioned," it added.

Costas Bakouris, chair of TI Greece, told EUobserver: "Corruption created all the elements of the financial problems in Greece ... [It] has imbued the mentality of the people and the institutions of the country."

He said the government has undue influence on the judiciary and the media; laws are riddled with loopholes; companies dodge tax on a vast scale; and the ruling elite treats the state like a cash-cow at the cost of the lower classes.

Evangelos Koumentakos, a Greek national and an active member of the Indignados movement who was present at the hearing, agreed with the analysis. "We are on the ground but there is only so much we can do," he said.

Meanwhile, TI's chief researcher on Portugal was even harsher.

Luis de Sousa, chief of TI Portugal, said government statements on anti-corruption measures are "bullshit."

"It is in fact easier to send to jail a retired person who has stolen a packet of rice than a banker who has stolen €3 billion ... Portugal is a country of black holes in its public accounts and budget slippages at all government levels," he added.

He accused the EU of "neglect" on Portugal, noting that even the so-called troika inspectors who govern its EU-International-Monetary-Fund bail-out, did not mention corruption in their official memos.

TI also slammed the EU institutions on their home turf in Brussels.

It pointed out that the European Commission and the EU Council preach transparency, but at the same time they are trying to push through a new regulation to make public access to internal EU documents even harder.

Meanwhile, in the European Parliament, MEPs are required to claim trips financed by lobbyists only if hotels costs surpass €300 a night or if they are flown business class.

"This is ridiculous," Dutch left-wing MEP, Dennis de Jong, said on the parliament hospitality rules.

"They [EU institutions] don't have [proper] standards in place," TI's De Swardt told EUobserver.

The European Commission plans to release its own report on corruption in the EU in late 2013.