EU corruption costs €120bn a year

Brussels - Corruption across the European Union's 28 countries costs about €120bn ($162bn) per year - a "breathtaking" sum equal to the EU's entire annual budget, EU Home Affairs Commissioner Cecilia Malmstroem said Monday.

Malmstroem said the actual figure could be even higher, despite the estimate amounting to a little less than one percent of the bloc's total economic output.

"The extent of the problem in the EU is breathtaking," Malmstroem wrote in an op-ed piece in Swedish newspaper Goeteborgs-Posten.

"Corruption undermines faith in democratic institutions, drains the legal economy of resources and is a breeding ground for organised crime."

Presenting the European Commission report, the bloc's first, Malmstroem emphasised the figure was "an estimation" and said the actual amount is "probably... much higher."

She called on member states to do more to stamp out the problem, saying: "The price of not acting is simply too high."

The report does not rank the countries as to the seriousness of the problem nor suggest legal remedies, with Malmstroem saying that could follow after talks with member states.

But "one thing is very clear - there is no 'corruption-free' zone in Europe," she said.

While Malmstroem refused to point the finger at any particular country, the EU has had longstanding concerns about corruption in Bulgaria and Romania, especially over their use of EU funds, and both were put under a special monitoring mechanism when they joined the bloc in 2007.

The report said that "fighting corruption has long been a priority for Bulgaria" but despite best efforts, the problem "remains widespread".

A poll found 84 percent of Bulgarians agreed corruption is prevalent while last year there were large demonstrations against the government's ties with wealthy oligarchs.

Among possible steps, the Commission "suggests that Bulgaria should shield anti-corruption institutions from political influence and appoint their management in a transparent, merit-based procedure", it said.

In addition, the Commission "is suggesting that a code of ethics is adopted for members of the National Assembly".

"In Romania, both petty and political corruption remains a significant problem," the report said, adding that efforts to address the issue have been inconsistent.

The Commission suggested Romania should ensure truly independent corruption investigations and develop "comprehensive codes of conduct for elected officials".

A poll showed "a full 93% of Romanians agree that corruption is widespread," it said.

Among the other member states, the report named Denmark and Finland as top performers, while in France it said that "corruption-related risks in the public procurement sector and in international business transactions have not been addressed."

Germany, the bloc's largest economy, "is amongst the best countries of the EU. However, more can be done," it said, suggesting it "would benefit from the introduction of strict penalties for corruption of elected officials."

Picking up on an issue attracting a lot of domestic attention, it also suggested Germany should develop a policy to deal with the "revolving door" phenomenon, where officials leave office to work for companies they may have recently helped.

In her Swedish op-ed, Malmstroem said Sweden "is among the countries with the least problems".

She said research showed that one in 12 EU citizens had experienced corruption in the past year, while four out of 10 companies regard it as "an obstacle for doing business within the EU".

The report reviews how existing laws and policies work and suggests what further effort could be made.

Malmstroem singled out public procurement, notably tenders for construction projects, as a major cause of concern.

Graft watchdog Transparency International welcomed the report, saying it marks "an important step in the EU's collective effort to scale up its anti-corruption efforts".

"It is a stark warning against complacency about corruption in any EU country," it added.

The report did not cover corruption in the EU's own institutions, with the bloc's finances reviewed by the separate Court of Auditors.