BUSINESS CORRUPTION IN THE EU

There is no globally accepted definition of corruption. Transparency International defines corruption as ‘the abuse of entrusted power for personal gain’. Corruption can be distinguished between 'true corrupt intent' and 'necessary corruption'. True corrupt intent implies bribery or an action to obtain an illicit benefit, whereas necessary corruption occurs to get things done (i.e., to obtain a legally entitled service); facilitation payments fall under this category of corruption. The main forms of corruption are bribery, embezzlement, fraud and extorsion. Corruption is traditionally defined as the practice of public officials abusing their position, but this definition does not account for corrupt practices occurring within the private sector when a private-sector employee abuses their position.

Business corruption is prevalent in half of the EU Member States (Bulgaria, Croatia, Czech Republic, Greece, Hungary, Italy, Latvia, Lithuania, Poland, Portugal, Romania, Slovakia, Slovenia, Spain).

1. Bulgaria: Corruption is an obstacle to doing business in Bulgaria. A lack of autonomy and transparency in the judicial system has weakened corruption investigations and property rights, encouraged public official impunity, and contributed to an uncertain investment environment. Kickbacks and bribes plague Bulgaria's public procurement sector, eradicating fair market competition and resulting in fewer opportunities for foreign investors. Companies face demands for facilitation payments and bribery when registering businesses or accessing public utilities. The Criminal Code prohibits various types of corruption, including extortion, trading in influence, facilitation payments and bribery of foreign officials. Bulgaria's complex legal framework and weak enforcement hamper the country's ability to effectively combat corruption.
2. Croatia:  Corruption is still believed to be rife in certain areas of the government and in certain sectors of the economy. Small and medium-sized enterprises (SMEs) perceive that the majority of civil servants expect to be bribed when meeting with companies, but in most cases SMEs do not report occurrences of bribery. Croatia's ineffective legal system and a lack of transparency within both private and public sectors have presented significant challenges to investors. The extensive backlog of cases has made dispute resolution via the courts an undesirable option for companies. Due to the lengthy timeframes involved in obtaining court judgements, companies often try to resolve disputes without seeking judicial remedies. Transparency in developing legislation and regulations is often hampered by an inefficient public administration and a lack of intra-governmental coordination.
3. Czech Republic: Corruption can be an obstacle for doing business in the Czech Republic; patronage and nepotism are considered especially problematic in the country. The Criminal Code criminalises attempted corruption, extortion, active and passive bribery, bribery of foreign officials and money laundering . Criminal liability for legal entities covers domestic and foreign corporate entities registered in the Czech Republic. The Czech Republic has rejected the exception in the OECD Convention for facilitation payments. Although the majority of Czech citizens do not encounter petty coruption in their daily lives, they complain that bribes or gifts are occasionally needed to speed up public administration processes.
4. Greece: Corruption severely affects Greece's business environment and has completely distorted market competitiveness. A common form of corruption in Greece is known as 'fakelaki', meaning small envelopes and signifying bribes stacked in envelopes and passed on to officials or other recipients to obtain some form of benefit. Greece’s Penal Code criminalises several forms of bribery, including passive and active bribery, abuse of office and money laundering , yet ineffective implementation of existing laws has exacerbated corruption in both the higher and lower echelons of government. The tax administration and public procurement are identified as the sectors most affected by corruption. Bribery and facilitation payments are widespread despite existing provisions that criminalise these acts.
5. Hungary: Corruption in Hungary is not systemic, but certain areas of the public administration are particularly vulnerable to corrupt practices which present risks for doing business in the country. Petty corruption is not widespread, but companies report that unofficial payments are sometimes necessary to resolve certain administrative tasks. Public procurement is vulnerable to irregularities at the local level because of strong informal relations between businesses and political actors. Hungary's Criminal Code forbids bribery in the public and private sectors, as well as most other forms of corruption offences contained in international anti-corruption conventions. Criminal sanctions can be imposed on companies for acts of corruption committed by individuals working on their behalf, also if the individual carrying out the act is not prosecuted or convicted. There is no distinction between bribes and facilitation payments, and gifts and hospitality may be considered illegal depending on intent and the benefit obtained. Anti-corruption enforcement gaps exist, especially in relation to foreign bribery cases.
6. Italy: Corruption is a major problem in Italy, as shown by recent corruption cases. The integrity of public officials is marred by their relationships with organised crime and businesses. Public procurement, particularly infrastructure, presents a very high risk of corruption as it involves large resources and exposes companies to organised crime. Extortion, active and passive bribery, bribing a foreign public official, fraud and money laundering are criminalised under the Criminal Code of the Italian Republic. The anti-corruption Law (Law 190/2012) broadens the scope and punishment of corruption offences. Italy is a signatory to the OECD Convention and has rejected the exception for facilitation payments, meaning that facilitation payments are prohibited.
7. Latvia: Corruption is a problem for businesses operating in Latvia, and demands for bribes and other irregular payments are pervasive. Close ties between public officials and business, the influence of private interests involved in illegal political party funding and the unethical behavior of companies are considered competitive disadvantages for Latvia. Latvia's Criminal Law  criminalises several forms of corruption, including active and passive bribery, gifts, conflicts of interest and influence peddling. The government has recently strengthened the independence of the country’s anti-corruption commission, established a comprehensive e-government system and centralised procurement processes, but procurement is the sector most affected by corruption in Latvia. Giving gifts to expedite or obtain administrative services is reportedly widespread.
8. Lithuania: Corruption is not a major impediment to business in Lithuania, but small and medium enterprises (SMEs) can be vulnerable to bribery and extortion, largely due to the pervasiveness of red tape and inefficient government bureaucracy. The country’s shadow economy undermines fair competition and fuels corruption. The Criminal Code criminalises corruption in the public and private sectors, covering abuse of office, money laundering, active and passive bribery and the bribery of international civil servants and foreign government officials, but anti-corruption laws are not effectively enforced. High-level corruption is considered a problem as officials act with impunity. Companies indicate that facilitation payments and bribes are sometimes requested when in contact with some public officials or to obtain favourable judicial decisions. Gifts are regulated under Lithuanian law.
9. Poland: Corruption is a problem for businesses operating in Poland, although its levels have decreased in recent years. Political corruption constitutes a challenge to fair business as politicians use their positions to gain benefits; practices of nepotism and cronyism are widespread. Poland's Criminal Code offences include active and passive bribery, bribery of foreign officials, extortion and money laundering. However, the government does not prosecute these offences effectively, and officials engage in corruption with impunity. Sectors most prone to corruption are public services and public procurement. Despite facilitation payments and gifts being criminalised, these practices are widespread.
10. Portugal: Foreign companies operating in Portugal may encounter some instances of corruption, but they do not identify corruption as an obstacle to their operations. Corruption and abuse of power is most prevalent at the municipal level, particularly in the areas of urban planning and public procurement. The Portuguese Criminal Code makes it illegal to give or accept a bribe, while Law no. 20/2008 establishes the terms of liability for corruption offences in international trade and private activities. Individuals and companies are criminally liable for corruption offences, including for bribery of foreign public officials in international commerce. Facilitation payments are prohibited, and gifts and hospitality may be considered illegal depending on the intent. Recurring corruption scandals involving high-level politicians, local administrators and businesses abusing public funds have revealed that safeguards to counter corruption and abuse of power have been somewhat inefficient in Portugal.
11. Romania: Corruption is a serious problem in Romania and is a problematic factor for doing business. Foreign investors complain of complicated procedures, arbitrary application of rules and occasional requests for bribes when resolving administrative tasks related to business operations. The Romanian Criminal Code and other supporting laws make it illegal for an individual to give or accept a bribe, including bribery of foreign officials, and a company can be held criminally liable for corruption offences committed by individuals acting on its behalf. Romanian law does not distinguish between bribes and facilitation payments, and gifts and hospitality may be considered illegal depending on their intent and the benefit obtained. Petty corruption largely goes unpunished.
12. Slovakia: Corruption is a problem for businesses operating in Slovakia. Companies cite the lack of transparency and inefficient government bureaucracy as the largest impediments to business. The Slovak Penal Code, the Criminal Procedure Code and the Specialised Criminal Act provide for the criminalisation of most forms of corruption, including active and passive bribery, bribery of foreign officials and extortion. However, insufficient law enforcement negatively affects foreign companies in Slovakia. Companies report the possibility of facilitation payments and bribes in the customs, public utilities, public procurement and judicial sectors. Facilitation payments and gifts are illegal under Slovak law.
13. Slovenia: Corruption is an obstacle for businesses operating in Slovenia. The overlap between business and politics has a particularly damaging effect on public procurement. Slovenia's Criminal Code establishes a strong legal framework to mitigate corruption, criminalising extortion, passive and active bribery and money laundering, among other offences. However, enforcement is limited. Many public officials have engaged in corruption with impunity, and corruption scandals culminated in political instability and the eventual fall of the government in 2013. Even though facilitation payments, gifts and hospitality (with the intent of gaining an advantage) are criminalised, businesses perceive bribery as an established way of doing business in Slovenia.
14. Spain: Bribery is not reported to be widespread in business dealings in Spain, yet companies cite corruption as an impediment to business. Many corruption scandals have been uncovered in recent years, revealing corruption risks and mismanagement in local-level public procurement in urban planning and construction. The Criminal Code makes it illegal for individuals to offer and accept bribes, and corporate entities can be held criminally liable for corruption offences committed by their representatives. Facilitation payments are prohibited, and gifts and hospitality may be considered illegal depending on the intent and benefit obtained. Spain's fight against corruption has intensified in recent years. New anti-corruption units have been created, new transparency-enhancing legislation has been passed and efforts have been made to improve public control and governance systems. As a result, corruption investigations, arrests and prosecutions have increased significantly.