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25th May 2019

Corruption costs EU €71bn a year

  • Corruption has an economic as well as social and political cost, a European Parliament study says (Photo: Images_of_Money)

The lack of EU-wide action against organised crime and corruption costs the EU at least €71 billion each year, according to a study published by the European Parliament.

Corruption itself costs the EU economy up to €900 billion each year when lost tax revenues are taken into account, but also the social and political costs such as more unequal societies, high levels of organised crime or a weaker rule of law and the public mistrust it generates.

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The estimate goes well beyond the €120 billion figure usually put forward by the European Commission, which takes into account only the loss of tax revenue and investment.

The findings are part of a research project at the European Parliament on the "cost of non-Europe".

The study on organised crime and corruption was commissioned last September by the EP's civil liberties, justice and home affairs committee and recently published by the European parliamentary research service.

It is based on three reports carried out by the Rand Europe and CEPS think-tanks and and Oxford academic, Federico Varese.

"The lack of ratification, transposition, implementation and enforcement of international and EU norms poses one of the main barriers in the European fight against organised crime and corruption," the study says.

In its fight against organised crime and corruption, the EU is hampered by "the lack of a proper EU definition of organised crime, the absence of an EU directive approximating corruption in the public

sector, the lack of an EU-wide system of whistle-blower protection and the fact that there is no consolidated framework for police and judicial cooperation", the study says.

Whistle-blower protection

In their recommendations to EU policy makers, the authors of the study say that establishing an "effective and truly independent" European public prosecutor working with Europol and Eurojust, the EU's police and justice agencies, would save the EU budget €200 million annually. The figure is based on a predicted increase in prosecution and conviction rates.

The study also recommend to integrate the different EU monitoring mechanisms into "a broader rule of law monitoring framework". The move would save €70 million annually thanks to potential gains of GDP.

One sector particularly vulnerable to corruption is public procurement, with an annual cost estimated at €5.33 billion each year.

The study recommends the establishment of a "full EU-wide e-procurement system". It says that would reduce cost of corruption risk in public procurement by €920 million a year.

Other recommended measures are a better protection of whistle-blowers both in EU institutions and member states, as well as a better mutual recognition of freezing and confiscation orders and cooperation for the European arrest warrant.

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