Sunday

24th Mar 2019

Report: Bribe money for contracts not prosecuted enough in EU

  • 'The growing momentum behind anti-bribery enforcement is making it harder to get away with the use of graft to win business' (Photo: europarl.europa.eu)

Obtaining lucrative contracts in Europe by companies or individuals still involves, in some cases, bribing foreign public officials.

The prosecution and investigation into such illicit acts has improved somewhat when compared to previous years, according to a report released on Thursday (6 September) by the Berlin-based NGO, Transparency International (TI).

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But some member states, like Estonia, Greece, the Czech Republic, Ireland and Poland, have shown no discernible improvement at all.

None of the five member states have yet to investigate or prosecute any case involving the bribery of foreign public officials in efforts by companies to secure contracts or avoid local regulations.

"The lack of enforcement and the lack of cases and the lack of investigations has been stagnating. It's never been better. It's always been equally bad in terms of no enforcement of these kinds of conventions that prevent foreign bribery," said Jana Mittermaier, director of Transparency International Brussels’ office.

TI looked at laws dealing with corruption, money laundering, tax evasion, fraud, or violations of accounting and disclosure requirements. The report did not look at cases involving domestic companies and their respective public officials.

Signatory governments of a 1997 anti-bribery convention by the Paris-based economic club, the OECD, are required to outlaw the practice.

Mittermaier said the Greek government, for example, has not enforced the convention due to a lack of financial resources for the prosecution and investigation that "often require very specialised expertise."

"These foreign bribery cases don't only happen outside the European Union, they also happen inside the European Union," said Mittermaier. She raised as an example of some EU companies vying for the contractual rights to mine gold in Romania.

In Europe, only Denmark, Germany, Italy, Norway, Switzerland, and United Kingdom are actively enforcing the convention with 10 or more cases under investigation.

While Italy may be investigating cases, a statue of limitations introduced by the government of former leader Silvio Berlusconi in 2005 means many of them are simply dismissed.

The Germans, meanwhile, currently have 43 active cases under investigation. Last year, the Munich prosecutor's office charged a former board member of Siemens AG with breach of trust over attempts to win a project in Argentina by paying off officials.

Siemens AG had allegedly paid some €21.4 million to government officials to secure contract rights to produce digital identity cards in the 1990s.

A Siemens AG spokesperson in Munich told this website that the company had been granted the contract in 1998 but was later cancelled in 2001 by the Argentinian government. He said Siemens took Argentina to court and won a €172 million plus interest settlement. Argentina is appealing.

He was not aware of the charge brought against the former Siemen border member cited in the TI report but noted that the company is complying with Argentian authorities who are currently investigating allegations of bribery for the contract.

He also noted that the company introduced rules in 2006 and 2007 that would ensure bribery would not happen.

"The company installed complete compliance systems to make sure that no bribery happens and that only clean business is only good business for Siemens," he said.

The Munich prosecutor, also in the same year, charged two former executives of Ferrostaal AG for allegedly bribing Greek and Portuguese officials to secure the sale of submarines between 2000 and 2007.

Other pending investigations in Germany involve Philips Electronics and Tognum AG which is jointly owned by Rolls-Royce PLC and Daimler AG.

For its part, the European Commission claims corruption costs the EU as whole some €120 billion in lost revenue annually. Commission reports cite the value of 20 to 25 percent of the public contracts is lost to corruption.

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