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EU Corruption 'Out of Control'

Fundamental doubts about accountability and an unresponsive political elite have resulted in a loss of legitimacy that could ultimately be the architect of its own downfall

November 30

0:00
2017

London , United Kingdom of Great Britain & Northern Ireland - 30 Nov 2017 - Ghassan Matar

The promise of the European Union was peace, democracy and prosperity. This promise was also the basis of its relationships with countries around the globe. There was always a clear link between the trust that Europeans had in the common project and the Union delivering on these promises. When citizens began to feel that the promise of prosperity was no longer viable, they began to question those values and lost trust in the EU.

“The people support the ideal of the European Union. At the same time, they can’t stand the leadership of the EU, because it insults the Member-States, and it abuses its power. Everyone in Europe can see that. This is why the European leadership is not respected.”

Corruption in the European Union has featured high on the minds of the Europeans. The endemic and systematic corruption sweeping across the union has shaken the core foundation of an institution that itself has silently encroached on nation states, stripping away their power, flooding them with pointless and useless regulation culminating in corrupt and icompetent decisions that influence the livelyhood and wellbeing of EU. The result is that public support for the EU has been seriously undermined with 75 per cent of Europe’s population believing corruption is now centered on politics and corporations. 

EU corruption has historically taken a wide range of forms demonstrated so vividly with successive scandals in banking, tax avoidance, a host of malpractice and fraud cases to secretive TTIP negotiations that circumvents public interest needs. EU budget fraud, from farmers seeking payments for climatically impossible sugar cane cultivation to the channeling of funds for immigration projects to what some have labeled terrorist groups has also been prevalent throughout the union. Successive scandals have surfaced that have led to an impression among the public that there is an unwillingness or inability to take action against malpractice, fraud and corruption, which undermines public support for the EU.

A recent study found that corruption related to public procurement was estimated to cost nearly €5 billion per year. Procurement corruption includes deliberately removing companies from the bidding process so there is only one viable candidate and limiting the amount of time a company has to respond to a tender for a new contract. This kind of corruption has simply been discounted as a comparative advantage. Another study found that at least 50% of all procurement money was lost to corruption, a budget which exceeded 1.9 trillion euros in 2016.

In 2016, 37 Spanish businessmen and former politicians, including members of the ruling Popular Party (PP), went on trial on charges of fixing the government procurement system to steer construction contracts to their buddies. Frances Correa, the prime suspect, went by the nickname Don Vito, a character in the “Godfather” films.

Since 2010, over 10 corruption scandals have rocked the French republic from the Bettancourt affair right through to the Fillon affair, these included several sitting French presidents.

Mariano Rajoy will soon become the first sitting prime minister to appear as a witness in a Spanish court when he gives evidence in a massive corruption case involving the alleged illegal financing of his Popular Party (PP).

In April, Ignacio González, the PP’s president of the Madrid region until 2015, was arrested and detained as part of an investigation into a public water company accused of profiting from investments made in Latin America through the state-owned firm that has an annual budget of €1 billion.

This kind of corruption just one more reason Europeans are growing angry with the governing elites. It is also a disturbing indicator of rot at the heart of European governance: all across the European Union, competition for government contracts is falling. According to the Tenders Electronic Daily (TED) database, an archive of 4m purchases by European governments during the past decade, 17% of calls for tender received only one bid. By 2017 that figure had risen to 30%. The median number of offers per tender fell from five to three.

Other strategies abound. Associates can be alerted to upcoming contracts before the official announcement, or a tender can be issued at an inconvenient time: 50% of Slovenian contracts announced in the week of Christmas received only one bid. Rejecting offers because of typos and charging thousands of euros to download crucial documents work well, too.

In one egregious case in 2007, Slovakia’s construction ministry issued a €120m tender to provide legal and advertising services, co-financed by EU funds. To ensure that a favored company won, the ministry posted it only on a bulletin board in a corridor inside one of its own buildings.

In the Czech Republic, Babis who won the premiership on an anti-corruption ticket despite the conflicts of interest with a business empire that includes farms, chemical plants, two leading Czech newspapers, and a restaurant in the French city of Mougins, is also implicated in an ongoing corruption probe with the police saying one of his farms illegally received EU subsidies, an allegation he denies.

In 2013, Petr Necas, the previous prime minister resigned amid a massive corruption scandal in which his top aide was charged with bribery after allegedly promising three former politicians from Mr Necas's party lucrative jobs in state-run companies on condition they quit the parliament. Police also uncovered instances in which they say Ms Nagyova had abused her power, by asking the head of Czech military intelligence to tail the prime minister's wife Radka, 47, and two other people. When her home was raided by 400 police officers, they recovered several million euros in cash and dozens of kilos of gold.

Nine Romanian politicians were accused of accepting $50m in bribes for dishing out software contracts. Croatia’s former prime minister and other members of his party are on trial for allegedly taking donations in exchange for state contracts. Lia Olguța Vasilescu, a PSD vice president and the employment minister-designate, was indicted last year on four counts of bribery, three counts of using her authority or influence to obtain money or other goods, and money laundering. She was briefly jailed last spring.

Prime Minister Joseph Muscat as well as Muscat’s chief of staff have been accused of operating secret offshore entities in Panama and New Zealand in order, to take kickbacks from privatization deals.

Indeed, the worst offender on single-bid tenders is Croatia. In 2015 43% of government contracts went uncontested

In Brussels alone, there are now over 30,000 corporate lobbyists, shadowy agitators with an annual budget of €1.5 billion, which are responsible for influencing three quarters of legislation in the EU. These individuals lobby an elected body; namely the European parliament and an unelected body known as the EU commission, where all the decisions are made, with the former simply ratifying the decisions of the latter.

There is no doubt that the European Union has lost the trust of its people; I am one of those European citizens that has simply had enough of this club which has lost all touch with the people it is supposed to govern. This is evident by the hostility directed at the European Union culminating in Brexit, the rise of Anti-EU parties across the union and the breakdown in relations between anti-immigration countries such as Poland, Hungary, Slovakia, Austria and the Czech Republic and the negative publicity directed at the EU and its institutions.

It is no wonder then that institutional and governance reform is peddled as a priority for the current Commission under the banner of ‘a Union of democratic change’. Despite a long history of promoting good governance, rule of law and anti-corruption reforms to non-EU members, the EU institution is itself being accused of corruption on a massive scale, costing the European people between €120 billion and 1 trillion euros annually. Worse still, the institution is so corrupt and so riddled with fraud that the auditors have felt unable to sign off its accounts for the past 20 years.

Reforms undertaken by Member States while negotiating EU membership have stalled or in some cases reversed. Seven EU member states (Bulgaria, Croatia, Greece, Hungary, Italy, Romania and Slovakia) still score 51 or less in our CPI. Governance indicators paint a picture of stagnation or worse.

There are indications that citizens in countries with particular corruption problems are looking towards the EU to rein in its own corruption before trying to impose corruption measures in their own nation states.

One way that the EU addressed corruption of EU funds in nation states was by redrawing the types of programs for the ongoing funding period so that the role of regional authorities in selecting and supervising projects all but disappeared. The former regional programs were frequently a problem in the Czech Republic with sticky fingered local politicians often abusing them to fill their own, party, or friends’ pockets. However, that simply transferred the corruption to Brussels.

Widespread corruption in nation states is partly a symptom of the EU’s own corruption and stands no chance in being eliminated unless the EU reforms itself and stamps out its own malfeasance.

Since the EU was established, only a single Commissioner has ever been charged with corruption, and that was in 2003, when the previous French Prime Minister Edith Cresson was charged with corruption by French courts and counterfeiting and benefiting from contracts. The Commission launched a total of eight disciplinary procedures against EU officials in light of the allegations against Ms Cresson, seven of which are still open. The remaining file has been closed. Ms Cresson who was then education commissioner from 1995-1999, hired her dentist Rene Berthelot, who was allegedly paid huge sums of money for fictitious projects. These allegations were levelled at her in a report by the EU anti-fraud office and is the only known case of a commissioner being indicted for fraud and corruption.

The EU is hampered by a limited and contested competence in the field of anti-corruption, with no legal powers in the area of anti-bribery legislation or political party financing for example. There is talk of anti-corruption court and an empowered EU prosecutor’s office who will investigate and prosecute criminal cases such as corruption and fraud with EU budget funds or cross-border VAT fraud. However, this is being opposed by several countries including Malta, which currently holds the presidency of the EU Council who refuses to sign up to it. Daphne Galizia, a critic of government corruption Malta was assasinated after uncovering corruption at the highest levels of the Maltese Government.

Shadow justice minister Jason Azzopardi said the Maltese government’s decision was “no surprise at all,” given what he described as the government’s “vested interest not to fight corruption or money-laundering.”

Implementation and enforcement of anti-corruption laws is mostly the preserve of national governments. Worse, in February of this year, rather than doing more to fight corruption, the EU commission actually scrapped plans to publish a report on anti-corruption efforts throughout EU states; their excuse was that the 2014 report was sufficient.

Freedom of information requests has been denied by the European Commission, saying it would have a chilling effect on people talking to them about corruption.

“The massive effort to collect comparative information about the state of anti-corruption measures in 28 EU member states has been thrown in the bin by the European Commission, having abruptly decided not to publish them, and refusing to publish them following requests for access. Given the present-day challenges to European democracies, the Commission’s decision to shelve the publishing of these anti-corruption reports makes it ever more difficult for citizens and civil society to hold public officials to account and tackle corruption.”

The EU faces an “arc of instability”, the result of geo-political shifts and conflicts, fueled by high levels of corruption driven primarily by corruption at the inner core of the union; the European Commission.

The EU needs to quickly move beyond the necessary crisis-management measures and think strategically about how it can deal with the root causes of this endemic corruption by systematically engaging with the anti-corruption and pro-democracy movements in these regions.

Rather than simply focusing on requiring governments to be accountable for progress on anti-corruption commitments, and by ensuring its funds do not become another revenue stream that is captured by corrupt elements; it should self-reflect on how corrupt an institution it has become and engage in real and tangible changes that will propagate to nation states. If Brussels cannot lead by example, then any talk of accountability on the national level is nothing more than a public relations campaign aimed at deflecting culpability.

Political corruption on a grand scale, such as that being carried out across all EU institutions relies on sophisticated techniques to disguise both the source and ultimate destination of the funds. The scale of such illicit financial flows is enormous.

Despite a number of promising transparency reforms led by the Juncker Commission, EU decision-making remains opaque. One of the most important EU decision-making bodies, the Council of Ministers, has made few concessions to transparency, so far abstaining from initiatives to improve lobby transparency and blocking reform to access to documents regulations. The influence of money on politics is one of the key corruption risks in developed economies. This is true both at national and EU level. Addressing these and more fundamental accountability gaps in an effort to make the Union more responsive to direct citizen input will require wide-ranging changes, including to founding treaties.

To date one cannot find out what his government does in their name until a text reaches its final vote at the Minister level. Addressing these and more fundamental accountability gaps in an effort to make the Union more responsive to citizen input will require wide-ranging changes and a shift in culture.

“Europe’s problem is not so much with small bribes on the whole,” Carl Dolan of Transparency International in Brussels, told reporters. “It’s with the ties between the political class and industry. There has been a failure to regulate politicians’ conflicts of interest in dealing with business,” he said. The rewards for favoring companies, in allocating contracts or making changes to legislation are positions in the private sector when they have left office rather than a bribe.

Take the financial system. There is no doubt that the entire global financial system is riddled with systemic fraud – and that key players in the gatekeeper roles, both in finance and in government, including regulatory bodies, know it and choose to quietly sustain this reality.

As far as the European Parliament is concerned, there is work required in three main areas: Reforms are necessary when it comes to outside jobs, revolving doors and ethics oversight by the “advisory committee”. The situation where your assistants face a cooling-off period of up to two years, while MEPs can take any job the day they leave is not tenable. More than 45 MEPs currently have outside jobs with registered lobby organizations.

More transparency and accountability is also needed when it comes to budget lines directly accessible to MEPs, such as the 40 million euros a year General Expenditure Allowance and the staff allowance that has just forced three former French MEP ministers to step down.

Finally, MEPs need to contribute to more lobby transparency in Brussels by publishing their meetings similar to what the European Commission has been doing since December 2014.

Commenting on the current state of the European experiment, George Soros warned the European Union has plunged it into an existential crisis as a result of "dysfunctional" institutions and austerity mandates, and will require the bloc to reinvent itself to survive.

However, Soros’ tirade seems aimed at Hungary, where both sides are locked in a protracted war of words. However, should the EU take moral advice from Soros.

According to his own report, 226 MEPs from all sides of political spectrum, including former President of the European Parliament Martin Schulz, former Belgian PM Guy Verhofstadt, seven vice-presidents, and a number of committee heads, coordinators, and quaestors take money from Soros.

These people promote the ideas of Soros, such as bringing in more migrants, same-sex marriages, integration of Ukraine into the EU, and countering Russia. There are 751 members of the European Parliament. It means that the Soros friends have more than one third of seats.

The billionaire financier believes that the European Union should receive millions of immigrants from the Middle East and Northern Africa, provide each one with an annual 15,000 EUR in aid, and resettle these migrants in member-states where they do not wish to go and are not necessarily welcome.

The Visegrad group is trying to stand tall under the EU pressure on migrants’ policy. The European Commission of Migration and Home Affairs is pushing a new bill to make migrants quotas obligatory. At least 30 Soros supporters work for the commission.

The Soros list sheds light on the question of what makes the EU leadership implement policies, which run counter to the interests of Europeans. The answer is corruption. The politicians bribed by Soros dance to his tune.

“I am full of admiration for the courageous way the Hungarian people have resisted the deception and corruption of the mafia state the Orban regime has established,” Soros said.

The publication of Soros list provides a clue to understanding who rules the EU and who instigates anti-Russia sentiments in Europe. Actually, this is the case when EU member countries like Hungary happen to be in the same boat with Russia opposing the very same US-based forces, while protecting their sovereignty and independence. This is the time for Europeans to think about transforming the system to do away with outside pressure.

To summarise. The much-vaunted European democracy is a façade to hide the activities of power structure close to feudal system with local lord holding the reins. It can hardly be called the power of people or a democratic institution. It is not too late for the European Union institutions to be effective champions of the anti-corruption agenda and to be an example of good governance and transparency in the way they function. This would clearly contribute towards regaining citizens’ trust in the institutions and the EU as a whole. Fundamental doubts about accountability and an unresponsive political elite have resulted in a loss of legitimacy that could ultimately be the architect of its own downfall.

​The EU commission should be disbanded and replaced with an electable and accountable body that is transparent in every aspect. The Nation state should be restored and power should be removed from faraway bureaucrats detached from the diver realities of life around the continent. The EU should return to its original idea of European countries working together in a loose, free-trading group of independent countries.

​This blind and self-justifying drive to create a super state like the United States can never work. One has to only look at what happened to the United States; which is a real life and current example of what happens when power is centralised. We all love Europe, but we no longer love the European Union.

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