Integrity risks and remedies in the EU institutions
When it comes to fighting fraud and corruption Transparency International (TI) is a well-known NGO. Each year, it publishes an International Corruption Perception Index, measuring the perceived levels of public sector corruption in almost 180 countries. It also issues many studies, including a report looking at the integrity risks in EU institutions. The first issue of this report was published in 2014 and TI is currently updating this study, focusing on the European Parliament and the European Commission. Carl Dolan, currently Deputy Director of the Open Society European Policy Institute, was, until May 2019, the Director of the TI’s EU Office in Brussels. He gives his perspectives of corruption and how it is perceived in the EU and some insights on the integrity risks that TI identified in relation to EU institutions and what has been done to address them.
By Carl Dolan, Open Society European Policy Institute
Integrity risks well under control?
Before the 2016 US presidential elections, many observers were confident that the institutional checks and balances in the U.S. system, together with the decades old norms and values that imbued them, would be more than enough to constrain a man like Donald Trump if he ever were to be elected . More than half-way through his mandate, this seems a rather optimistic picture as Mr Trump has trampled over conflicts of interest norms, undermined the independence of the judiciary and law enforcement, used executive powers in an unprecedented fashion to bypass the legislature, and even threatened to ignore subpoenas and to pardon himself of alleged crimes.
It couldn’t happen here of course — or could it? The European Parliament elections in May 2019 are predicted to return a wave of populist-nationalists whose disregard for traditional ethical norms is the equal of Mr Trump’s. Many of them, such as Le Pen’s National Rally, are already embroiled in illegal party financing scandals, and Transparency International’s research shows that Members of the European Parliament (MEPs) from outside the political mainstream tend to have greater risks of conflicts of interest through outside sources of income. So how robust are the checks and balances — the integrity system — of European Union institutions? How would the system fare under the sustained political stress-testing we have seen in the USA?
Fraud and corruption are a persistent threat to the integrity of public decision-making across the EU. The public sees this as a growing threat and does not believe that political institutions are sufficiently protected or able to tackle these risks. The special Eurobarometer 470 published in December 2017, revealed that over two thirds of Europeans think that corruption is widespread in their country (68%). Almost three quarters (72%) believe corruption is present in the local, regional, and national public institutions of their countries. 43% of Europeans think that the level of corruption in their country has increased over the past three years. Worryingly, only a minority of respondents believe that various measures to discourage, tackle and punish corruption are effective (only one-third think there is enough successful prosecution).
Own interests over public interests
The view of the public is not without reason. The last years have seen many scandals involving undue influence by wealthy corporations or political leaders that are seemingly more interested in their own fortunes than that of citizens. Examples include the ‘cash for amendments’ scandal, in which MEPs were recorded by journalists accepting promises of payments to submit amendments to legislative proposals, the ongoing Dieselgate scandal, where European carmakers established a pervasive system for accessing and influencing lawmakers, or the many revolving door cases, with EU politicians moving into lucrative private sector jobs. This includes former Commission President Barroso joining the investment bank Goldman Sachs or the way in which Jean-Claude Juncker’s Head of Cabinet Martin Selmayr has been appointed as the European Commission’s Secretary General, described by both the European Parliament and the European Ombudsman as a ’coup-like action which stretched and possibly even overstretched the limits of the law.’
Transparency and accountability shortcomings were clearly confirmed in the only EU anti-corruption report published by the European Commission in 2014. This analysis details the extent of corruption across EU Member States and points to high-risk areas such as political party financing, the allocation of government contracts, as well as parliamentarians’ conflicts of interest and political accountability. These conclusions echo the findings of a series of national studies carried out by Transparency International, which also identified corruption risks in the close links between politics and business, poor protection for whistleblowers, and barriers to accessing information on public bodies.
What the EU anti-corruption report failed to evaluate however, were the EU institutions themselves, something which was also clearly noted by the ECA in its review of the Commission’s anti-corruption report . Why was this the case? Perhaps there is a belief that the EU institutions are free from the corruption risks present at national level. However, can we be sure that this is indeed the reality? Past corruption scandals answer this question with a resounding no and these, together with other factors, have led to the integrity of the EU institutions being questioned. According to the standard Eurobarometer of Autumn 2018, the trust of citizens in the European Union has decreased significantly since 2008 and it is now almost as low as the trust in their own national governments.
TI’s European Union Integrity Study 2014: rules in place but practice rather different
To fill the missing chapter in the Commission’s anti-corruption report, the one that looks at the institutions themselves, Transparency International EU launched the European Union Integrity Study in 2014. This was the first ever comprehensive review of corruption and integrity risks in the EU institutions , with the goal of separating myth from reality and putting forward recommendations for reform. This study — which also covered the ECA — looked at how EU institutions promote integrity, how they deal with corruption risks and how their policies help the fight against it. It looked at both the rules in place and the practice in ten EU institutions and bodies.
Following nine months of research, the study came to some striking conclusions. It found that there is a good foundation in the EU system to support integrity and ethics; a foundation provided by the general policies and rules adopted to prevent fraud and corruption. There is a wide range of provisions already in place to protect EU institutions and those working for them from undue influence; to give the public a right of access to EU information; and to enable suspected maladministration, fraud and corruption to be investigated. Citizens and businesses also have the opportunity to submit complaints or request judicial review of EU decisions affecting them. All these channels are being actively used in practice and have proven to function well on the whole, albeit with some variation between institutions.
However, this foundation is often undermined by poor practice, lack of political leadership, failure to allocate sufficient staff and funding, and lack of clarity on to whom the rules apply. The result is that despite improvements to the overall framework, corruption risks persist at EU level. The most urgent of these include opacity in EU law-making and in EU lobbying, poorly managed conflicts of interest, weak protection for EU whistleblowers, and weak sanctions for corrupt companies.
The report noted, for example, that existing EU transparency rules were rendered meaningless in practice by complex decision-making procedures and opaque negotiations within and between EU institutions that fall outside the formal rules. In an attempt to speed up the pace of EU law-making, there had been a trend towards decision-making being increasingly done outside of the processes foreseen in the Treaties. The consequence of this is that critical parts of the legislative process did not receive proper scrutiny and important negotiations were shrouded in secrecy. Similarly, no mandatory rules on lobbying were applied at the EU level, and the public remained largely in the dark about how outside interests are influencing EU legislation. Since the publication of the report, it is necessary to highlight that both the Commission and Parliament have introduced or are in the process of introducing lobby transparency measures.
In addition, no evidence could be found that the financial information declared by European Commissioners and MEPs was being systematically verified by the institutions themselves, undermining the effectiveness of this essential safeguard against conflicts of interest and illicit enrichment. Meanwhile, committees monitoring compliance with ethics rules were usually made up of current or former members of the institutions, and therefore lack independence or real teeth. At the same time, the absence of provisions to protect internal whistleblowers at almost all institutions meant that there was little incentive for staff to come forward and report unethical and illegal activity, despite legal obligations to do so. This poor implementation of existing rules could also be seen in the reluctance of the European Commission to use all the powers it has to prevent corrupt companies from taking part in public EU contracting. In late 2013, only one company was prohibited from tendering for EU contracts on the basis of the Commission’s powers to debar (or ‘blacklist’) companies where there is evidence that they have engaged in fraud or corruption.
More generally, the study concluded that failure to make full and proper use of existing controls would not reassure a public that is sceptical of the commitment of politicians and bureaucrats to a more open and ethical style of government. Moving beyond the existing mechanisms, it recommended ways to address the identified shortcomings and drew attention to the need to take action. Only by implementing these changes will the institutions demonstrate that they are serious about tackling weaknesses and fulfilling the spirit as well as the letter of the law. After all, it is not simply about changing perceptions but also about bolstering institutional legitimacy, contributing to better governance across the region, and ensuring the highest possible standards of public service among EU officials.
Change to the better in EU institutions
Since the publication of the first report half a decade ago, much has changed in the EU institutions. This mandate saw new systems and new rules coming into place, and existing mechanisms were revised. Many of the recommendations set in the first set of studies have been adopted by the institutions in the last years. Examples of this are new or reformed Codes of Conduct for the European Commission and the Parliament, longer cooling-off periods for Commissioners, greater lobby transparency through the publication of meetings by the Commission, whistleblower protection guidelines in all EU institutions, reforms in the EU financial institutions such as the European Central Bank (ECB) and European Investment Bank (EIB), and some improvements to the transparency of ‘trilogue’ negotiations between the Commission, the Council and the Parliament.
Yet, many inadequacies in the integrity mechanisms of the EU institutions still exist. The upcoming European Parliament elections are an ideal opportunity to renew the political impetus to address these. Although the chance is there for the taking, we are faced with a challenge, as there is no up-to-date holistic assessment of the corruption risks in the different EU institutions and how to mitigate them. Which mechanisms are in place that effectively increase corruption resilience and the good governance of the EU? Are there weaknesses? If so, what are they? How can these be addressed? Which best practices can be adopted? These, and many other questions, need to be answered if we want to ensure that the EU is able to seize future opportunities for reform and improvement.
European Integrity Study 2.0
The difficulties and obstacles described above highlight the need for strong advocacy efforts by civil society, based on unbiased analysis and deliberation. It was thus with the overall objective of contributing to the maturing of the EU as a polity that is an effective champion of good governance, transparent democratic processes and accountable institutions, that TI EU decided to conduct an updated evaluation of the integrity risks currently threatening the EU institutions, the European Union Integrity Study 2.0 .
We will carry out a practical research assessment of the three main EU institutions — the European Parliament, Commission and Council — using an already widely tested integrity systems methodology. This study will be done in a review card format and is intended to be a practical tool to both assess the work done by the EU institutions in the last legislature, as well as guide future advocacy efforts to strengthen the different EU ethics and integrity systems. We will supplement the qualitative methodology employed in 2014 with quantitative data analysis. For purposes of research and analysis, data will be collected through desk research, especially review of audit reports, media monitoring, and analysis of databases and registries. This will be supplemented by interviews with policy-makers, EU officials and experts. Where necessary, we will file access to information requests.
The analysis for each of the three EU institutions will be published in a separate report. Each of the reports will focus on the areas identified as having the greatest integrity risks. The first report to be published will be on the integrity system of the European Parliament, projected to be released in mid-July of this year. This report will look into potential integrity issues in the areas of access to documents, internal rules and functioning of parliamentary bodies, trilogues, lobby transparency, allowances of Members of the European Parliament (MEPs), conflicts of interests, revolving doors, declarations of financial interests, outside incomes of MEPs, whistleblowing procedures, recruitment processes, as well as ethics trainings.
Ultimate goal: accountability towards EU citizens
Together, the analysis done by all three reports will help to provide us with new information, allowing us to refocus and guide our advocacy efforts in the coming years. The ultimate goal of the project will thus be to improve the EU’s accountability towards its citizens, a goal which TI shares with the European Court of Auditors, as well as improve the protection of EU institutions against fraud and corruption risks.
This article was first published on the 2/2019 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.
