“Takes your breath away”

06 February 2014 by Adrienn Toth

No, this isn’t a blog about an electro pop love song by Berlin, or the accompanying video of Tom Cruise looking cool (for the 1980s) flying around in F-14A Tomcat, it’s about something much more disturbing – the levels of corruption in the European Union. (Actually, we will leave you to decide which is more disturbing).

Yesterday, the EU Home Affairs Commissioner Cecilia Malmstroem presented a full report on the problem and she wrote in the Swedish newspaper Goeteborgs-Posten that the "The extent of the problem in Europe is breathtaking”

Strong words indeed, but no surprise that Ms Malmstroem and her colleagues at the Commission had their collective breath taken away when you look at some of the stats included in the Commission’s report which was published yesterday.

The report studied levels of corruption in all 28 member states and concluded that corruption costs the EU economy €120bn annually.  Ms Malmstroem also remarked that the true cost is probably much higher. The sums of money are difficult to imagine, but one way of looking at it is that this roughly equivalent to the EU’s entire annual budget.  Another way of looking at is that it would have bought 3,157 Tomcats. Now that takes my breath away.

The report goes on to say that three quarters of those surveyed said that corruption was widespread and that a half said it was on the increase.

According to the survey results, Greece, Italy and Spain are among those countries in which corruption is reported to be widespread, and those in which corruption is felt to be low are Sweden and Germany.

The levels of bribery were also reported to be high in certain countries.

Whilst the focus of this report is corruption in public bodies, this clearly has implications for private businesses.  Against this backdrop, and taking into account the ever increasing attention that regulators are giving to, let’s just call it “inappropriate” behaviour in organisations, what can corporations and their legal advisors do to take control of the situation and to ensure that this behaviour is not happening in their businesses?

We are seeing an increase in the amount of pro-active “health checks” that are being carried out in which, not only are employees interviewed, but limited reviews and analysis of electronic correspondence is undertaken. Although this cannot ensure compliance with regulations or stop wrongdoing outright, it can uncover such activity before too much harm is done, or where such harm can be mitigated. It can also act as a deterrent to stop employees from partaking in unlawful behaviour if they know they are being monitored.

My colleague Daniel Kavan, who heads our consulting group has written an excellent article on this, recently published in the New Law Journal, which I recommend to you: http://www.newlawjournal.co.uk/nlj/content/e-disclosure-health-check