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International watchdog says corruption in Europe could slow recovery

posted 6 Jun 2012, 09:59 by Mpelembe   [ updated 6 Jun 2012, 09:59 ]

Global watchdog Transparency International says creeping corruption in southern Europe threatens the struggle to overcome the economic crisis.

BRUSSELS, BELGIUM (JUNE 6, 2012) (REUTERS) - Political and business corruption in Europe could further weaken vulnerable economies struggling to overcome the euro crisis, an international watchdog said on Wednesday (June 6).

While it sees itself as one of the world's least corrupt regions, few countries in Europe regulate lobbying or give citizens easy access to public information, allowing a culture of graft to take hold and political and business elites to divert funds, Transparency International said in a report.

The report named Greece, Italy, Portugal and Spain - the euro zone's most financially troubled nations - as having deeply rooted problems in their public administrations, namely that officials are not accountable for their actions.

"Countries such as Ireland, Portugal, Greece will be selling off massive amounts of state assets in the next couple of years in order to pay their debts. If those processes continue and their existing transparency mechanisms that exist, those funds will neither be fully utilized, potentially and instead of making a contribution to a way out of the crisis might even exacerbate some of the existing problems," said Managing Director of Transparency International Cobus de Swardt.

Bloated budget deficits and debt are at the heart of the euro zone's 2-1/2-year-old crisis, and corruption means scarce public money is spent inefficiently and may be creamed off at a time when record unemployment is reducing government revenues.

"Many European countries need to take actions in order to deal with the crisis. If citizens neither have the trust or the legitimate participation measures, such as the kind of austerity packages that we've seen are likely to be met with a massive amount of resistance. So it's tactically a very poor way to go about when you have to engage in massive reform that we need broad public support," de Swardt said.

Although not technically illegal behaviour, politicians and business leaders use their influence to win contracts and sway policies, while parliaments often fail to enforce the anti-graft laws and rules that do exist, the report said.

Corruption costs the European Union around 120 billion euros ($150 billion) a year, according to the Strasbourg-based Council of Europe. Many analysts say the figure is probably higher.

Many countries in western and northern Europe do not have dedicated anti-corruption agencies while wealthy Sweden and Switzerland have no binding rules to regulate private donations to political parties, the report found.

Regulations in the Netherlands are seen as "wholly inadequate," the report said, while bans in place on corporate donations in Belgium and France are not effective because funding can be pushed into other "opaque channels".

Transparency International also said the influence of lobbyists was shrouded in secrecy and that the 3,000 lobbying groups in Brussels should be required to sign a single register, rather than a variety of voluntary registers.

In France, only 150 of the 5,000 organisations that met members of parliament during hearings at the Assembly between 2007 and 2010 are registered as interest groups.

In Britain, several members of parliament were convicted after it was revealed that they were exploiting their expenses.