FEROLA - The Action of The European Union Against Corruption

LAURA FEROLA*
THE ACTION OF THE EUROPEAN UNION

AGAINST CORRUPTION
I. INTRODUCTION
Following the Treaty of Amsterdam, an increased integration in Justice and

Home Affairs is rendered more imperative by a wave of challenges which
hit the European Union and that can only be dealt with through a concerted
effort from Member States. Given the existing disparities, as well as the
fact that judicial authorities are competent only within their own internal
borders, it seems necessary therefore to implement an homogeneous system
able to counteract some particular offences. Among these, corruption has
became a phenomenon of extreme up-to-dateless, as the recent episodes,
which have been disclosed at European level, testify clearly.
This paper analyses the legal instruments adopted by the European Union
for fighting bribery: it is also focused on the influence exerted on National
legal orders and a special emphasis is given to the perspectives of co-
operation which are emerging in some selected fields strictly related with
corruption.
A. Economic crimes in Europe
Since the implementation of the most important policies, and mainly since
the settlement of its own resources system (1970), the European Communities
(EC) has been confronted with criminal offences against its budget, such
as fraud and corruption. This has become increasingly unacceptable, as the
* Laura Ferola is a lawyer of the Bar Association in Rome, Italy. After acquiring some
professional experience in international organisations (the European Parliament, the
UN), the author obtained a Master in Advanced European Studies at the College of
Europe in Bruges, Belgium. Her main field of action is European law. She has already
published some related essays and participated in international conferences as a speaker
on the Eurpean Union’s legislation.
The author thanks Prof. Giovanni Maria Flick and Prof. Hans G. Nilsson for high-
lighting the different aspects and peculiarities of the European legal orders.
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growth of these phenomena runs parallel with the development of the policies
and the completion of the internal market. In addition, the fact that the
European Union (EU) is a supranational organisation founded on the rule
of law, with its own institutions and a large staff of officials – moreover
strengthened by links between its Member States (MSs) and their common
membership of the EC – has made it necessary to implement effective
measures to protect its financial interests.
As competence over criminal matters is strictly reserved to national
authorities, the complex and highly different normative system existing within
the EU favours the phenomenon of forum shopping thus allowing cross-border
criminality to take advantage of the asymmetry offered by a so different legal
orders. From a parallel point of view, considering the extension of cross-
border crimes and extraterritorial jurisdiction, the increasing necessity for
rules relating to ne bis in idem is felt.
Different forms of misconduct may affect the decision making process.
In legal terms they may fall under various categories, e.g. abuse, fraud,
trafficking in influence, bribes, commission and corruption. As a result, there
is a sort of legislative lacuna within the EU, considering that not all these
kinds of practice are necessarily criminal offences in every MS. There are
examples that are not offences in one MS, but which are still regarded as
corruption in others, for example the provision of gifts where there is a
tacit expectation that the person providing them may receive favourable
treatment. Moreover, the forthcoming implementation of the single currency,
as well as the European Bank System, offer further fields of exploitation to
organised crime in terms of corruption and money laundering.1
There are evidently no precise figures on the extent of corruption in
Europe. Yet, it is considered2 that in most countries bribes amount to between
2–10% of the value of the orders. Internationally, it is calculated that around
50 billion are invested in bribes each year. In Italy, the estimated sum amounts
to thousands of billions every year, i.e. at least 1% of expenditure by the
State, Regions, Provinces and Councils are probably converted into bribes.
On average the additional cost arising from corruption exceeds market prices
by 30%. The figures have risen to 260% in individual cases. This situation
is reflected indirectly upon individuals: it is suspected that in some coun-
tries between 10–15% of the price consumers pay for a product goes into
corruption. In Germany, for example, the amount involved is estimated to
reach between 5 and 10 billion DM a year. The bribes resulted among other
things in increasing prices for public projects: it is estimated a general
increase in prices for enterprises of about 20 to 30%.
1. For the problem of economic crimes in relation to the single market, see G.M. Flick’s
more extensive analysis in ‘Lo spazio giudiziario Europeo: risultati raggiunti e
prospettive’, Conferenza presso la Scuola di Polizia Tributaria, Rome, 26 January
1999 (to be published).
2. Data from ‘Report on combating corruption in Europe’, The European Parliament,
Committee on Civil Liberties and Internal Affairs, Economic and political corruption
in Europe, Rapporteur: H. Salisch, 1 December 1995, Doc. A4-0314/95.
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THE ACTION OF THE EUROPEAN UNION AGAINST CORRUPTION
As has been clearly pointed out in an EC report,3 the phenomenon of casual

corruption, – i.e. its more widespread form – continues to occur sponta-
neously and without the underlying structure needed to take it beyond
individual cases. It is characterised by petty bribery and involves opportunistic
individuals or small groups. In such situations, corruption is the exception
rather than the rule. Meanwhile recently a form of structural or systematic
corruption is emerging in which corruption practices regularly occur in
quite specific industries or economic sectors, such as construction or the
arms trade. It is organised, not necessarily institutionalised, but recurrent.
It originates with high-level civil servants that recognise and exploit the illegal
opportunities in government departments and agencies. This practice is a
direct violation of the rule of law, but unlike systematic corruption, if the
offenders are removed the corruption is eliminated. Ultimately one must
also consider systemic corruption when the contagion spreads to the polit-
ical system due to the fact that it is pervasive, institutionalised, maybe
accepted, but not necessarily approved, built into the economic and polit-
ical institutions. It occurs when malfeasance has become an integral part of
the process. The following table4 may illustrate clearly the above-mentioned
typologies.
Type of Main actors Mode

corruption
Casual Petty officials, interested Small-scale embezzlement,

officials, opportunistic misappropriation; favouritism and
individuals discrimination
Systematic Public officials, Bribery and kickbacks, collusion to
politicians, defraud the public, large-scale
representatives or embezzlement and misappropriation
donor and recipient through public tender and disposal of
countries, bureaucratic public property, economic privileges
elites, businessmen accorded to special interests, large
and middlemen political donations and briberies
Systemic Bureaucratic elites, Large-scale embezzlement, ‘ghost worker’
politicians, on government payroll, embezzling
businessmen, government funds through false
white-collar procurement – payments for non-existent
workers goods; large-scale disbursement of public
property to special and privileged interests
under the pretext of ‘national interests’;
favouritism and discrimination exercised in
favour of ruling parties in exchange for
political contributions
3. Communication de la Commission au Counseil et au Parlement Européenne sur une

politique anticorruption de l’Union [COM (97) 0192], Bruxelles, 21 May 1997.
4. Source: ‘Political will in fighting corruption’, by S.J. Kpundeh in ‘Corruption: integrity
improvement initiatives in developing countries’ UNDP – OECD Development Centre,
UN, New York, NY 1998.
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On the ground of the above-mentioned elements, a study of corruption in

the EU would prove very interesting.
B. Corruption in the European Union and in the Member States: same

crime, different rules. The necessity of a common approach
1. DEFINING THE PROBLEM
Corruption is generally defined by the doctrine as the behaviour of persons,

with public or private responsibilities, who fail to fulfil their duties because
a financial or other illicit advantage has been granted or offered to them,
either directly or indirectly. Unlike other conventional economic crimes,
corruption is based on the principle of reciprocity: a mutual relation of advan-
tage is established between the two actors (the givers and the takers of bribes)
in terms of benefits. Both are offenders, neither is the victim and conse-
quently both have a vested interest in ensuring that no one else finds out
about the bribe, thus uncovering corruption usually calls for special inves-
tigative efforts.
2. THE EXTENT AND CONSEQUENCES OF CORRUPTION
The risk to which corruption gives rise, ranging from the international dis-
tortion of competition through the purchase of over-priced goods and services
to the undermining of democratic structures and their practical functioning,
are growing not only at the national but also at the European level.
Since the EU is based on the principle of a free market, corruption can
be considered as an element that distorts and is totally incompatible with
free competition,5 because individual businesses may use bribes in the course
of their commercial activities to gain a competitive advantage over com-
petitors who do not use such practices.
It may also adversely affect external policies in respect of a number of
States receiving assistance and thus be at variance with the transparent and
open conduct of international trade. In addition, corruption affects sound
decision-making and the functioning of the democratic system, thus under-
mining citizens’ confidence in the integrity of the democratic rule of law.
Due to increased economic interdependence at the European and interna-
tional levels, the phenomenon of corruption goes beyond national borders
and affects not only the financial resources of the EU, but also the interests
of individuals.
According to recent inquiries, a large number of corruption cases are also
5. For a deeper analysis of the influence that corruption may exercise on competition and
the free market, see the ‘Report on the Communication from the Commission to the
Council and the European Parliament on a Union policy against corruption [COM (97)
0192]’, The European Parliament, Committee on Civil Liberties and Internal Affairs,
Rapporteur: Mr. R. Bontempi, 24 July 1998, Doc. A4-0285-98.
126
closely linked with organised crime.6 The fundamental characteristic of such

a relationship is the reconciliation of conflicting interests. Corruption makes
it possible for organised crime to obtain in advance information on investi-
gations planned by prosecution services. Frequently detected links have
emerged between it and corruption which is used as a mean of penetrating
government or the legal system, thus increasing its chances to exploit and
penetrate political/administrative systems for illegal economic purposes.7
In principle, the majority of MSs appears to be not exempted from cor-
ruption, as it may be noticed from the following table.
Country 1998 CPI score Standard deviation Surveys used
Denmark 10.0 0.7 09

Finland 09.6 0.5 09
Sweden 09.5 0.5 09
Netherlands 09.0 0.7 09
Luxembourg 08.7 0.9 07
United Kingdom 08.7 0.5 10
Ireland 08.2 1.4 10
Germany 07.9 0.4 10
Austria 07.5 0.8 09
France 06.7 0.6 09
Portugal 06.5 1.0 10
Spain 06.1 1.3 10
Belgium 05.4 1.4 09
Greece 04.9 1.7 09
Italy 04.6 0.8 10
Survey: The Transparency International 1998 Corruption Perceptions Index. 8
6. Corruption was explicitly taken into consideration by the Action Plan to combat
organised crime adopted by the Justice and Home Affairs Council on 28 April 1997 and
by the European Council of Amsterdam on 17 June 1997 (O.J. C 251 of 15/08/97,
p. 1). For further details, see D, infra.
7. Strengthening measures to bar corruption and fraud is one of the main goals at the
European level: see Council Resolution of 18 December 1997 laying down the priori-
ties for co-operation in the field of JHA for the period from 1 January 1996 to the date
of entry into force of the ToA (O.J. C 11/1 of 15 January 1998).
8. How to read the Chart: Standard Deviation indicates differences in the values of the
sources for the 1998 index: the greater the variance, the greater the differences of
perceptions of a country among the sources. The members of surveys used had to be
at least 4 for a country to be included in the CPI.
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Notwithstanding the TI Index is not founded on a real rational basis, 9 the

so-determined world-wide trend constitutes an important source of infor-
mation which has acquired, during the years, considerable consideration
within institutional bodies.
3. THE ORIGINS OF EU ACTION: DIFFERENT NATIONAL LEGISLATIVE

PROVISIONS FOR FIGHTING CORRUPTION
While economic integration has gathered pace, a disparate and patchy

anti-corruption legal system exists in the EU as a whole. At the same time,
corruption appears to be increasingly a world-wide issue, thus requiring
comprehensive and wide ranging measures to prevent and counteract it by
using a comprehensive and integrated flexible strategy. It becomes evident
that tackling it with methods designed only for a national context cannot
constitute a consistent anti-corruption policy, especially in the financial
interests of the EU as such, particularly considering the many areas of activ-
ities at risk from this crime (structural funds, transition regime, enlargement,
etc.). In addition, the EU’s budget seems to be targeted mainly by so-called
multinational corruption, i.e. when the offence is committed partly on the
territory of different States and produces effects elsewhere, giving rise to
problems varying from conflicts of jurisdiction to extradition, transfer of
proceedings or the enforcement of sentences.10
At the moment, the most relevant issue is the legal vacuum stemming
from the absence of a legally binding definition of corruption, which differs
to a great extent in national criminal codes. Although each of the MSs
has anti-corruption measures of their own, they diverge markedly in their
9. The index is not an assessment of the corruption level in any country, rather it is an
attempt to assess the level at which corruption is perceived by people working for
multinational firms and institutions as impacting on commercial and social life. These
perceptions may not always be a fair reflection on the state of affairs (variance may be
due to a change in the awareness rather than real corruption and cultural settings may
differ considerably between time), also they do not necessarily express the real level
of corruption, yet they are reality. Indeed, indicative questions (concerning improper
practices, level of corruption, estimated losses caused by corruption, likeliness to
demand special and illegal payments in high and low levels of government, degree of
misuse of public power for private benefits) are asked to executives in top and middle
management and banks, embassies, chambers of commerce, employees of multinational
firms and public institutions.
10. In the absence of international or Community rules determining jurisdiction, the various
national jurisdictions consider themselves to be competent to deal with offences com-
mitted on their own territory, those committed partly on a foreign territory, and those
which, although committed exclusively abroad, produce effects within the national
borders. On the other hand, co-operation involving international requests for judicial
assistance has been hindered. Protection against cross-border crimes is defective to the
same extent, while most of the offences (notably fraud and corruption) against the
European Union’s budget are carried out at a multinational level (especially in the
European transit and tourism sector). For further details, see: ‘Report on criminal
proceedings relating to protection of the Union’s financial interests’, The European
Parliament, Committee on Budgetary Control, Rapporteur: Mrs. D. Theato, 3 March
1998, Doc. A4-0082/98.
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definition of all the constituent elements, legal impact, range and practical
application. In addition to these substantial differences in law, one also finds
a relevant asymmetry in the practice of prosecution. The most remarkable
differences between MSs in defining corruption are the following:11
a. The officials responsible
The principal weakness in the fight against trans-national corruption is the

fact that criminal law in the MSs has often failed to address the issue of
corruption involving foreign officials and officials employed by international
organisations.12 In fact for the purposes of applying internal criminal law,
the definition of ‘public officer’ or official, is only applicable to national
officials in many MSs and moreover if the term is not more narrowly defined,
it is often interpreted restrictively. Thus, criminal law in most MSs does not
include penalising conduct aimed at corrupting officials of other MSs, even
when it takes place within their own territory or at the instigation of one of
their own nationals. In spite of this, criminal conduct can in certain
circumstances be prosecuted by using charges other than corruption (such
as fraud or breach of trust), the chances being that corruption itself would
go unpunished. Moreover, only in few MSs do judges and magistrates issue
particularly severe penalties in cases of bribery.
b. The prosecution of legal persons
In some MSs if a bribe is paid on behalf of a company, then the company

itself may be criminally liable. In other States, on the contrary businesses
are not liable: only the natural person involved is considered guilty for the
offence committed, even if it was for the benefit of the company.
c. Immunities
In certain Countries, elected officials, Ministers or Members of Parliament

are not regarded as public officials and are not subject to the same laws
normally provided to punish corruption among public officials.
11. For further details regarding the national criminal provisions for combating corruption
in the Member States, see ‘Measures to prevent corruption in the Member States of the
European Union’, Juridical Affairs Series, Working paper of the European Parliament,
JURI 101 EN, Luxembourg, 03-1998.
12. Only the US provides for an explicit outlawing of foreign official corruption with the
1977 Foreign Corrupt Practices Act. As a result of this, US enterprises have often
claimed that they were disadvantaged with respect to those coming from countries where
the corruption of foreign officials is not prohibited. This can be considered another
reason why the US has pushed at international level (notably at UN, OECD, WTO) for
the adoption of Conventions against this crime. In the UK, the Prevention of Corruption
act outlaws corruption ‘by any member, officer or servant of a public body’.
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d. Trading in influence
According to some national rules, paying a bribe to a person who has influ-
ence over an official is not necessarily an offence. The bribe must be paid
to the official who makes the actual decision before any criminal offence is
committed.
e. Aim of bribing
Officials must act in breach of their official duties in order to be punished

in some legal systems. Thus in some systems, no crime is committed when
an official accepts a bribe and awards a contract to a company which should
have got the contract in any event.
f. Sanctions
The corruption of domestic civil servants carries with it the threat of

imprisonment in all MSs, but for a widely varying duration (from 6 months
to 10 years) depending on the MS and the gravity of the crime.
g. The private sector
Only a few MSs provide for special criminal offences in order to deal with
corruption in the private sector, namely when a person in a private economic
entity is bribed to act in a way which is in breach of his/her duties. Some
MSs have already outlawed private corruption to some degree, whereas in
others civil or administrative measures are the only remedies available.
h. The political sector
Similar disparities also exist in the area of financing political parties, where
there are differences in approach (public support, private assistance or hybrid
systems) and in the transparency of financial conduct of political parties.
i. Fiscal facilities
A number of MSs specifically permit tax deductions for the bribery of foreign
officials if the bribers are recognised as conducting customary business
practised in the territory in question. Within the EU, several instruments
have been recently adopted to counteract corruption in order to arrive at a
homogenous and effective system. As will be explained in more detail,13 it
is important to underline that the approximation of criminal laws among MSs
13. See D, Infra.
130
is pursued on the grounds of intergovernmental co-operation, namely each

State retains its prerogatives in being able to ratify and implement the relative
treaties.14
C. Measures undertaken at the international level: In particular, the

OECD and the Council of Europe
On account of the fact that bribes can involve payments on the national
territory to domestic officials as well as to foreign officials, officers of the
EC or international organisations, the question of corruption is currently
under discussion in a significant number of international forums, including
the OECD, WTO, CoE, OAS, UN. The EU has an interest in formulating a
coherent strategy on corruption both within and outside its borders while
fully respecting international legal rules on jurisdiction in order to safeguard
its interests effectively.
As regards Europe as such, some important initiatives have been taken
since the mid 90s, in particular within the framework of the Organisation for
Economic Co-operation and Development (OECD) and the Council of
Europe (CoE). Both institutions include all the EU MSs amongst their
Members and can be considered as precursors in the fight against corrup-
tion. In subiecta materia their instruments can be placed alongside the EU’s
provisions, without coinciding totally. For instance, as regards the OECD
rules in comparison with EU provisions, the Convention15 concerned (the
14. As regards the technique of legislative integration, it must borne in mind that in the
criminal field there are different degrees of normative approximation. As has been
stressed by a Council Working Group on JHA (internal working document – not
available); the first step, after co-operation, is assimilation (this concept, established
by the ECJ in Case 68/88 Commission vs. Greece, ECR 1989, p. 2985, was later codified
in Article 209 A TEU, i.e. MSs have to protect EU interests through the same measures
they would implement to protect their own interests). Harmonisation is the following
level, which involves the enactment of laws on the grounds of the same values i.e. on
the grounds of a legislation of reference. Eventually unification provides for a uniform
system, where laws are identical in every aspect. Given that the European Union has
no competence in criminal affairs, due to the fact that this is considered strictly to be
the prerogative of national sovereignty, co-operation seems to be the only possible
road to European integration at this stage.
15. OECD Convention in combating bribery of officials in international business transac-
tions, adopted by the Negotiating Conference on 21 November 1997, OECD Working
Papers, Vol. VI, No. 24, Paris, 1998. It consists of only 17 articles, but what was unusual
was its entry in force in that it required 5 of the 10 countries with the largest export
shares, representing at least 60% of export in the aggregate, to ratify the Convention
for it to become effective. The national legislation to implement it can be broader, but
not narrower. The Convention will not result in uniformity, but should – if properly
implemented – establish a minimum standard of conduct. 34 countries (29 OECD
Members plus Argentina, Chile, Brazil, Bulgaria and Slovenia) signed it and it came
in force in 11 countries on 15 February 1999, which ratified it. The threat to a good
result lies in the fact that some of the signatory States themselves are fiscal paradises
and problems of international juridical co-operation still exist. For further details, see
‘OECD Commentaries on the Convention on Combating Bribery of officials in inter-
national business transactions’, adopted by the Negotiating Conference on 21 November
1997 (http://www.oecd.org/daf/cmis/bribery/20nov2e.htm).
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only legally binding instrument which entered in force – 15 February 1999

– until now), provides for a more extended ambit. Indeed, it covers the illegal
conduct of public officials of any State or public international organisation.
On the other hand, it presents a more limited field of application, because
it only covers active corruption and the particular aim of obtaining an undue
advantage in international business.
Before entering into further details, it must be mentioned that the OECD
adopted a series of recommendations between 1994 and 1997 to combat
the bribing of foreign public officials in business transactions. It fights cor-
ruption in a framework correlated with the essential economic aims of an
organisation, to counteract briberies paid during international transactions.
The first milestone in the OECD effort against international bribery was
the 1994 Recommendation on bribery in international transactions16 calling
on member countries to take effective measures to deter, prevent and combat
the bribery of foreign public officials in connection with international
business transactions. With respect to matters involving taxes, the 1996
Recommendation17 addressed those countries that do not disallow the
deductibility of bribes to foreign public officials and asked them to re-
examine such treatment with the intention of denying such forms of
deduction. The other 1996 Recommendation provides a systematic inser-
tion of anti-corruption clauses in contracts with bilateral aids. In 1997, the
revised Recommendation on Combating Bribery in international business
transactions18 was endorsed. As the doctrine pointed out,19 this rule has
adopted a ‘double track’ system. On the one hand, it requests MS to make
an autonomous commitment towards an efficacious fight against corrup-
tion. On the other hand, it obliged parties to co-operate for the implemen-
tation of an International Convention in conformity with the common
elements agreed to by the MSs. Indeed, the above-mentioned 1997
Convention requires countries to outlaw the bribery of foreign officials in
the same way that countries prohibit the bribery of their domestic officials.
To this end, the Convention invites Parties to make it a criminal offence
under their national laws for any person who intentionally offers, promises
or gives any undue pecuniary or other advantage, directly or through inter-
mediaries, to foreign public officials in order to obtain or retain business or
to obtain any other advantage (Article 1). It applies only to the bribery of
foreign public officials (i.e. of any person ‘… holding a legislative,
administrative or judicial office of a foreign country’ or exercising a public
16. Recommendation of the Council on Bribery in international transactions, Doc. C (94)75

final, 27 May 1994.
17. Recommendation of the OECD on tax deductibility for bribes to foreign Public Officials
Doc. C (96) 27 final, 11 September 1996.
18. Doc. DCD/DAC (96) 11 final. See also ‘Update the implementation of the OECD
Recommendation on the tax deductibility of bribes to foreign public officials’, Report
by the Committee on fiscal Affairs (CFA) to the OECD Council at Ministerial level,
28/04/98 (http://www.oecd.org/daf/cmis/bribery/tax98HTM).
19. L. Salazar ‘Recenti sviluppi internazionali nella lotta alla corruzione (e conseguenti
obblighi di recepimento da parte italiana)’, in Cassazione Penale No. 5, 1998,
p. 393.
132
function ‘as well as any official or agent of a public international organisa-

tion’ – including ‘parastatals’, i.e. State-owned enterprises/semi-state bodies
– but not to foreign commercial bribery, and it focuses on the so-called
‘supply’ side of bribery only (namely the person who promises or gives the
bribe, in contrast to the offence committed by the official who receives the
bribe). Notably excluded from the Convention’s definition of an offence are
payments to political parties, party officials and candidates for political
office. The Convention requires that each party shall take such measures as
may be necessary to establish its jurisdiction over the bribery of a foreign
public official when the offence is committed wholly or in part on its
territory (Art. 1.2). As a result, the domestic legislation of implementation
enacted by Parties to the Convention should cover any (national or foreign)
person acting within a country’s territory in furtherance of an improper
payment. In addition, each country is to apply its law extra-territorially in
accordance with the principles of its own jurisprudence (Art. 4.2). The OECD
Convention demands Party States to institute ‘effective, proportionate and
dissuasive criminal penalties’ (Art. 3.1), comparable to those applicable
domestically. The Convention lays down that for the natural persons, criminal
penalties shall include ‘deprivation of liberty’ (Art. 3.1), while those Parties
whose domestic law does not subject legal persons to criminal responsibility
should ensure "effective, proportionate and dissuasive non-criminal sanc-
tions, including monetary sanctions" (Art. 3.2). Furthermore, countries are
committed to co-operate in the investigation and enforcement of trans-
national anti-bribery laws. Article 10 deems the bribery of foreign public
officials an extraditable offence under the laws of the Parties and extradi-
tion treaties between them. In situations where Parties have not concluded
extradition treaties, the Convention will serve as a self-executing extradition
treaty among those parties for all the offences falling within the scope of
the Convention itself. Investigations and prosecutions should then take place
under national law, following the entering in force of the Convention.
Intending to facilitate enforcement, the Convention requires States parties to
provide each other with ‘prompt and effective legal assistance’ (Art. 9.1).
A relevant provision regards bank secrecy, which is not recognised under
the Convention as a legitimate basis for refusing assistance (Art. 9.3).
Moreover, where a party requests legal assistance upon discovering the exis-
tence of dual criminality, the requirement will automatically be met for
offences within the scope of the Convention (Art. 9.2).20
The Council of Europe meanwhile has established a Multidisciplinary
20. Regarding the broader geographical extension of the OECD Convention, an interesting
source of comparative studies are the Acts of the Congress ‘International corruption
1998. Meeting the new guidelines’, 8–9 October 1998, College of Europe, Bruges. In
particular, see the reports of L. Low-J. Davis-K. King ‘The international anti-corrup-
tion standards of the OECD and the OAS: a comparison with the US Foreign Corrupt
Practices Act’, as well as T. Dickinson ‘Report on behalf of the American Bar
Association, Section of International Law and Practice’.
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Group against Corruption (GMC)21 following two recent conferences of the

European Ministers of Justice. The Group has elaborated an ambitious Action
Plan against corruption,22 which was adopted by the Committee of Ministers
in 1996. It covers a wide range of initiatives to be taken varying from
insurance that those in charge of the prevention, investigation and prosecu-
tion of corruption offences should enjoy ‘… the independence and autonomy
appropriate to their functions …’ to be free from improper influence, to
protect persons who help the authorities in combating corruption and to
provide appropriate measures to prevent legal persons being used to shield
corruption offences. Other noteworthy issues are the rendering illegal of
the proceeds of corruption, the provision of codes of conduct, the inclusion
of civil law remedies and media freedom.
In 1997, the Committee of Ministers adopted furthermore a Resolution
containing twenty guiding principles for the fight against corruption, 23 which
substantially reaffirmed the same aims of the Action Plan. What must be
underlined here is the provision (principle 20.3), that the GMC should submit
a draft text proposing the establishment of an appropriate mechanism, under
the auspices of the CoE, for monitoring the observance of these principles
and the implementation of the international legal instruments to be adopted.
In the meantime, in 1998, through a partial agreement, a special body called
GRECO24 was created which is responsible for monitoring both the
application of the Twenty guiding principles as well as the implementation
of the Criminal Law Convention on Corruption, which was signed by 21
countries on 27/01/99,25 once it will enter into force. The latter will cover a
wide range of cases of corruption, i.e. active and passive, of domestic and
foreign public officials (Arts. 1–3), members of the public assemblies
(Arts. 4–6), bribery in the private sector (Arts. 7–8), bribery of officials of
international organisations, members of international parliamentary assem-
blies, judges and officials of international courts, (Arts. 9–11), trading in
influence (Arts. 12–13), laundering of proceeds from corruption offences,
accounts, offences and participatory acts (Arts. 14–15). Also worth noting
is the set of rules which deal with international judicial co-operation
(Arts. 25–31). What can be particularly interesting as a result is the special
provision regarding the protection of collaborators of justice and witnesses
(Art. 22): the settlement can be considered a clear expression of the
21. XIX Conference of the European Ministers of Justice on judicial co-operation (Malta
1994) and XXI Conference on relations between corruption and organised crime (Prague,
1997). For a deeper analysis of the Council of Europe’s action against corruption, see
H.G. Nilsson ‘Substantive criminal law: corruption and money laundering’, in
Corruption & Democracy, Institute for constitutional and legislative policy, D.V. Trang
ed., Budapest 1994, p. 89.
22. Programme of Action against corruption, adopted by the Committee of Ministers,
Strasbourg 1996.
23. Resolution (97)24 on the twenty guiding principles for the fight against corruption,
adopted by the Committee of Ministers on 6 November 1997 at the 101st session.
24. Group d’Etats contre la corruption (Resolution 98/7). The GRECO Agreement came
into force for 14 MSs on 1 May 1999.
25. Criminal Law Convention on Corruption, Provisional Edition, December 1998, GMC
(98) 41.
134
extension and weight of the phenomenon in civil society. As has been rightly
pointed out in a recent opinion of the CoE,26 a weakness of the draft
Convention is that, according to its Articles 37 et seq., ‘… it permits an
unusual number of reservations, excluding only bribery involving domestic
public officials …’ with furthermore the negative aspect that ‘… the
reservations are renewable at infinitum …’
At present, attention must be paid to the draft Civil Law Convention,
adopted by the GMC in February 1999.27 For the first time, at least at a
European level, effective remedies for a person who have suffered damage
from acts of corruption is taken into consideration. According to the project,
States shall provide the right to initiate an action in order to obtain full
compensation for the damage suffered (Art. 3). It also explicitly provides
the right to claim for compensation from the State, when the ‘… suffered
damage is a result of an act of corruption by its public official in the exercise
of their functions …’ (Art. 5). The ratio legis is that State, being directly
involved and considered the first responsible in refunding damages, should
not continue to encourage, even in an indirect way, such kinds of practice.
Finally, the CoE also pays particular attention to the dangers deriving from
links between corruption and organised crime, which have been explicitly
pointed out in a series of recently adopted instruments.28
It is noteworthy that the EU has adopted two Common Positions29 in
relation to OECD and CoE work. These will firstly ensure compatibility with
the work carried out within the EU, and therefore avoid unnecessary
duplication, incompatibility or jeopardy. Secondly, these initiatives will also
co-ordinate the position of the MSs within negotiations conducted or being
conducted in these international contexts, in order to increase the scope of
their initiatives.
D. The Treaty of Maastricht
In a political space that is neither wholly federal nor inter-governmental,

there have been persisting concerns about effective enforcement of European
26. Opinion No. 207/1998: ‘Draft criminal law convention on corruption’, Parliamentary
Assembly of the CoE, Strasbourg 1998.
27. Draft Civil Law Convention on Corruption, adopted by the GMC following a 2nd
reading at its 16th plenary meeting on Strasbourg, 26 February 1999, GMC (96) 35
rev. 3.
28. CoE’s fight against corruption and organised crime, Programme of action against
corruption, adopted by the Committee of the Ministers of the CoE, Strasbourg 1996
(http://www.coe.fr/corrupt/eactionO.htm), and also ‘CoE’s fight against corruption and
organised crime’, 21 Conference of European Ministers of Justice, 10–11 June 1997,
Prague. Links between corruption and organised crime-Progress report of the GMC for
the attention of the 21 Conference (http://www.coe.fr/corrupt/e97-32.htm#6).
29. Common Position of 6 October 1997 defined by the Council on the basis of Article
K.3 of the Treaty on European Union on negotiations in the Council of Europe and the
OECD relating to corruption (OJ L 279/7 of 13 October 1997). Second Joint Position
of 13 November 1997 defined by the Council on the basis of Article K.3 of the Treaty
on European Union on negotiations held in the Council of Europe and the OECD on
the fight against corruption (OJ L 320/1 of 21 November 1997).
135
LAURA FEROLA
law at the national level, due to the apparent inadequacy of the latter. As
has been already explained (see B, supra), the great variations in criminal
law throughout Europe has given economic operators an opportunity to
exploit these differences, by making able use of national legal peculiarities
(so-called forum shopping).
Although this danger is undoubtedly present in all areas concerning penal
law, crimes against the European budget attack an essential interest of the
EU, which is supranational in nature. Notwithstanding the fact that the EU
has no competence in the criminal field, the principle of subsidiarity (con-
tained in Art. 3B TEC) has called for European action, even though the fight
against corruption does not fall within its exclusive competence. This regards
the fact that the objective of implementing a budget should involve acting
according to the principles of ‘sound financial management’ explicitly
stipulated in the Treaty (Art. 205 TEC).30 As is pointed out in the literature,31
the possibility to issue rules in the framework of the Ist Pillar, thus gener-
ating actual supranational community law is not so improbable.
Notwithstanding the fact that corruption is not explicitly listed in Article
K.1 TEU as a ‘matter of common interest’, an entire programme against
this crime has been recently developed. The European legislator, starting
from a rather abstract reference to community financial interests, has intro-
duced further instruments, specifically aimed at counteracting it.
Technically speaking, the issue of combating corruption through criminal
law has remained part of the so-called IIIrd Pillar of the TEU legal frame-
work, being rightly considered as a matter falling within the JHA field.
Contrary to the Ist Pillar, the legal nature of the IIIrd is not one of amend-
30. According to this provision, MSs shall ‘co-operate with the Commission to ensure that
the (EC) appropriations are used in accordance with the principle of sound financial
[management]’. As a consequence, a more specific approach based upon this principle
should be considered within the framework of the1st Pillar, the legitimate aim here is
the safeguarding of both the legal security and equality of economic operators through
the unification of penal protection for the EU budget. Still remaining on the subject of
the 1st Pillar, there has been some exploitation of the possibilities involved. On the
grounds of Article 235 TEC (which allows the Council to take the appropriate measures
when the Treaty has not provided the necessary power to do so i.e. implied powers),
an ‘horizontal’ Regulation (Council Regulation 2988/95 on the protection of the EC’
financial interests, OJ L 312/1 of 23 December 1995), seeking to reduce control
disparities between sectors of the budget, has been adopted. It sets up a common legal
framework in all areas covered by Communities’ policies, but confines itself to
administrative measures and sanctions in order to allow the ‘competent authorities of
the MS’ to stipulate the law under which the potentially culpable behaviour of economic
actors are to be assessed. Another remarkable example of a legally binding instrument
laid down in an area closely related to criminal matters on the basis of the 1st Pillar is
the Directive on money laundering (Council Directive of 10 June 1991 on prevention
of the use of the financial system for the purpose of money laundering, OJ L 166/77
of 28 June 1991).
31. See M. Delmas-Marty, ‘The EU and the Penal Law’ in European Law Journal, Vol. 4,
March 1998, p. 87. In effect, according to its author, Article 205 TEC has provided the
basis for a proposed supranational penal code to be directly applicable to all the MSs
(‘Corpus Juris portant dispositions pénales pour la protection des intérêts financiers
de l’Union Européenne’, sous la direction de M. Delmas-Marty, Direction Général du
Contrôle Financier, Ed. Economica, Paris 1997).
136
ments to the TEC, hence its provisions are not part of EC law: the princi-
ples concerned are not applicable in this case, like for instance the primacy
of Community law over national provisions. Another factor to be kept in
mind is that the legally binding instruments of the EC as laid down in
Article 189 TEC (namely regulations, directives and decisions) cannot be
used to enforce a policy in the framework of Title VI. Consequently, the
provisions of Title VI do not fall basically within the jurisdiction of the
European Court of Justice (ECJ).32 As far as the instruments are concerned,
Article K.3 TEU provides for joint positions, joint actions and conventions:
the European acts have been criticised33 for their unclear range when con-
sidered from a legal point of view (doubts have arisen not so much as regards
conventions, but concerning the first two instruments). Ultimately, the
weakness of the system stems from the fact that the Council has to act
unanimously to adopt the acts, as settled by Article K.4 TEU expressis verbis,
and has no power to initiate any measure (the competence for initiatives for
countervailing actions rests with each MS and, for some selected areas, with
the Commission ex Article K.3.2 TEU), although the Commission will be
given full right of initiative in the Treaty of Amsterdam (ToA).
1. THE CONVENTION ON THE PROTECTION OF THE EUROPEAN

COMMUNITIES’ FINANCIAL INTERESTS: THE ANNEXED PROTOCOLS
The so-called ‘PIF’ Convention34 was the first instrument adopted with the
specific aim to effectively punish forms of fraudulent conduct (which affect
European revenue and expenditure and are often committed by organised
criminal networks) through national criminal law.
The Convention was integrated later through Protocols. The purpose of
the first one (or the so-called anti-corruption Protocol)35 is to combat
corruption ‘that damages or is likely to damage European financial interests’
by public officials or members of the European institutions (i.e. the
32. The MSs have considered the recognition of an a priori ECJ competence as being
unacceptable and as an excessive control over their sovereignty (it must be always
remembered that JHA action is ruled on an intergovernmental level). This is why Article
K.3.2 TEU, in attempting to make up the lack of judicial control, provides for the
possibility that Conventions ‘… may stipulate that the Court of Justice shall have
jurisdiction to interpret their provisions and to rule on any dispute … in accordance
with such arrangements as they may lay down’. The result is, however, a lack of judicial
control. The TEU has been also accused for its lack of democratic control by the EP
(Art. K.6 TEU states that it shall be ‘regularly’ informed and ‘consulted’, taking into
consideration its views). As will be explained in the following pages (see G, infra) the
ToA has partially made up for it.
33. See, among others, J. Monar, ‘Justice and home affairs’, Journal of Common Market
Law Studies, Vol. 36, Sept. 98, p. 131.
34. Convention drawn up on the basis of Article K.3 of the Treaty of the European Union,
on the protection of the European Communities’ financial interests (OJ C 316/49 of 27
November 1995).
35. Protocol drawn up on the basis of Article K.3 of the Treaty of the European Union to
the Convention on the protection of the European Communities’ financial interests (OJ
C 313/2 of 23 October 1996).
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LAURA FEROLA
Commission, the European Parliament, the Court of Auditors or the Court

of Justice) as well as those of the MSs in particular, as it is pointed out in
its Preamble. In order to establish a uniform legal system, the first Protocol
contains an exhaustive set of provisions settling all the essential elements
of the criminal entity in question.36
The Protocol opens with an introductory provision (Art. 1.a) defining the
term ‘official’ generically, in such a way as to ensure the broadest and most
homogenous application of the related provisions. The following point (b)
of the same article refers to the definition of an ‘European official’ (the
category comprises not only permanent employees stricto sensu, i.e. those
within the meaning of the Staff Regulations of the EC, but also seconded
persons carrying out corresponding functions). ‘National official’ (Art. 1.c)
is to be understood, for the purposes of the application of criminal law, by
reference to the definition of ‘public officer’ in the national law of the MS
in which the person in question performs that function.37 Through these initial
rules, the European legislator aims to fill up the unacceptable legal vacuum
deriving from the absence of criminal incrimination against foreign official’s
in almost all the MSs (see B, supra).
The Protocol enumerates the fundamental elements of corruption in its
Articles 2 and 3. The material components of passive corruption (Art. 2
refers, in other words, to the case when the official is corrupted) committed
by an official include his requesting, accepting or receiving, directly or
through a third party, for himself or for somebody else. The provision also
foresees the case of his accepting offers, promises or advantages of any
kind whatsoever38 to act, or refrain from acting, in accordance with his
functions or in exercise thereof in breach of his duties in a way which
damages or is likely to damage the EC’s financial interests. It is essential
that this is carried out in a deliberate way, i.e. with the deliberate desire to
obtain undue advantages from the official acting in breach of his duties.
Active corruption (Art. 3) refers to the person who induces corruption:
here also the aim is to ensure that the public administration functions
properly and, at the same time, to protect officials from possible manoeu-
vres targeting them. The prohibited behaviour substantially corresponds to
the official misconduct analysed above. It is defined as the deliberate action
of whosoever who promises or gives, directly or through an intermediary,
an advantage of any kind whatsoever to an official for himself or for a third
party for him to act or refrain from acting in accordance with his duty or in
36. For a precise and official interpretation of the Protocol, it refers to the Explanatory
Report to the Protocol to the Convention on the protection of the European
Communities’ financial interests (OJ C 11/5 of 15 January 1998).
37. Rightly so, the definitions in the criminal law of the official’s own State is given priority.
This implies that in a case where a national official of the prosecuting MS is involved,
the relevant national definition is applicable. By consequence, when an official of
another MS is involved, the definition of the law in the MS should normally be applied
by the prosecuting MS.
38. The concept of the pursued advantages is itself quite wide: it may comprise not only
material objects (money, goods, etc.), but also anything which may be of an indirect
or intangible interest for the official (e.g. settlement of the corrupted person’s debt).
138
the exercise of his functions in the breach of his official duty in a way that
damages, or is likely to damage, the EC’s financial interests.
In order also to allow a broad application of the anti-corruption provi-
sions, Article 4 of the Protocol contains the principle of assimilation.39 This
wording means that each MS would ensure that measures in its criminal
law relating to the corruption of officials, occupying similar positions within
their own institutions, equally apply to all officials with responsibilities for
EC funds. In this way, the Convention would implicitly cover all the possible
cases of corruption40 among public officials.
Article 5 requires the MSs to ensure that corruptive offences are punish-
able by ‘effective, proportionate and dissuasive’ criminal sanctions. This is
solemn formula present in all the international instruments. Notwithstanding
the fact that the usage of the term ‘dissuasive’ is often criticised in the
literature as being too abstract and ambiguous, it must be borne in mind
that multilateral agreements cannot influence domestic legislation too deeply
thus allowing them to fix the sanctions themselves, according to the prin-
ciple of sovereignty. States have the competence (and the responsibility)
not only to penalise, but also to prevent through the prospect of an effec-
tive and severe application of penalties (i.e. fair degree of summons).
MSs have discretion in determining the nature and severity of penalties:
according to the formula contained in Article 5, criminal sanctions can
involve deprivation of liberty only in those cases that can give rise to
extradition due to their extreme gravity. In the less serious case, despite the
silence of the European legislator, it seems possible for a MS to impose fines
as an alternative, or in addition to imprisonment. However, it must be noted
that it is essential, particularly in the context of free competition, to create
a common understanding within the EU on undesirable behaviour by imple-
menting a really standard definition and uniform rules on types of penalties
to avoid the risk of unequal penalties in the MSs. In each MS such unde-
sirable conduct should be accompanied by the same risk – which creates
approximately the same level of protection for the potential victims. It is
unacceptable, then, that action against the offences should differ from one
MS to another (for example by the fact that in some MSs prosecution
depends on a complaint being lodged by the victim). This is a fundamental
reason why the concept of an effective European legal space should be con-
cretely established.
The Protocol requires the MSs to establish their jurisdiction in a number
of circumstances listed in Article 6. These comprise the cases in which the
offence is committed wholly or in part on their own territory (principle of
territoriality), when the offender is a national or an official of the State
39. It is important to underline that the principle de quo was established by the ECJ in its
famous sentence on the Greek maize case (op. cit. note 14 supra). Nevertheless, it
must be noted that the same Article 2, at its para. 2, foresees a possible derogation in
those MSs where the criminal liability of government ministers is governed by special
legislation applicable in specific national situations.
40. Nevertheless, it must be noted that the same Article 2, at its para. 2, foresees a possible
derogation in those MSs where the criminal liability of government ministers is governed
by special legislation applicable in specific national situations.
139
LAURA FEROLA
concerned (principle of active personality) or when the offence is committed

by or against a European or national official, a Government Minister, an
elected Member of Parliament or a Member of the highest Court (principle
of passive personality).
The European Court of Justice should have jurisdiction to rule on disputes
between MS on the interpretation or application of the Convention if no
solution is found in six months within the Council (Art. 8).
It is important to underline that the PIF Convention, together with its
Protocol, has been followed by a specific Protocol regarding the competen-
cies of the ECJ.41 Pursuant to its Article 1, States may declare, at the time
of signing the PIF Convention and its Protocols, that they accept the
jurisdiction of the Court of Justice in Luxembourg. Any Court of that State
may request it, therefore, to give preliminary rulings on a question raised in
a case pending before it and concerning the interpretation of the instruments
de quibus (Art. 2). The laborious procedure established in the first Protocol
ex Article 8 is thus eliminated.
Most recently a Protocol42 was adopted specifically to pursue another
category of actors who often damage or threaten the financial interests of
the EC. Indeed, the prosecution of legal persons has appeared necessary in
cases of fraud, money laundering, active and passive corruption.
According to Article 3, MSs shall set out the appropriate measures in
order to hold legal persons liable for the above-mentioned infringements
when these crimes are committed particularly for their benefit. It clearly
underlines that a natural person could have acted/can act individually or as
part of an enterprise. In the last case, he/she must occupy a leading position:
in other words only a person who has power of representation or authority
to take decisions or to supervise on behalf of the legal person concerned may
be considered responsible.
Since the ratio puniendi is directed at the enterprise, Article 4 urges MSs
to ensure ‘… that a legal person held liable […] is punishable by effective,
proportionate and dissuasive sanctions …’. The norm can be interpreted as
an achievement by the European legislator since criminal responsibility of
legal persons is not provided for in the majority of MSs. Indeed, the rule
establishes that sanctions ‘… shall include criminal or non-criminal fines,
being able to include other punishable provisions like the exclusion from the
entitlement to public benefits or aid, temporary or permanent disqualifica-
tion from the practice of commercial activities, placing under judicial
supervision or a judicial winding-up order …’. In addition, having regard
to not prejudicing the rights of bona-fide third parties, MSs shall also con-
fiscate or remove the instruments and proceeds of fraud, active and passive
41. Protocol drawn up on the basis of Article K.3 of the Treaty on the European Union on
the interpretation, by way of preliminary rulings, by the Court of Justice of the European
Communities on the Convention on the protection of the European Communities’ finan-
cial interests (OJ C 151/2 of 20 May 1997).
42. Second Protocol drawn up on the basis of Article K.3 of the Treaty on the European
Union, to the Convention on the protection of the European Communities’ financial
interests (OJ C 221/12 of 19 July 1997).
140
corruption or money laundering, in accordance with their national laws

(Article 5).
As corollaries to the provisions regarding co-operation established in the
first Protocol, Article 8 also provides for adequate protection of personal
data and investigation secrecy, in order to encourage and facilitate the
effective exchange of information not only between MSs, but also with the
Commission (Arts. 8–11). It is noteworthy that the appropriate provisions
have to be drawn up regarding the competence of the ECJ (Art. 13).
2. THE CONVENTION ON THE FIGHT AGAINST CORRUPTION

INVOLVING OFFICIALS OF THE EUROPEAN COMMUNITIES OR
OFFICIALS OF MEMBER STATES OF THE EUROPEAN UNION:
COMPLETING THE FRAMEWORK
The contents of the Convention signed in 199743 substantially duplicate that

of the first Protocol, except for one fundamental point: its action is not
restricted to the protection of the financial interests of the European
Communities stricto sensu, but entails a wider field of action. More pre-
cisely, as it is set out in the Preamble, the Convention is extended to any
act of passive or active corruption involving an EU or national official in
general.
The Convention was drawn up on the same legal basis as the Protocol
(Art. K.3 TEU), with the objective of improving judicial co-operation. Its
contents reproduce the provisions extracted from a joint reading of the PIF
Convention and its first Protocol. In its first six articles, the Convention
reiterates the Protocol’s definition of national and European officials, passive
and active corruption with one relevant ‘omission’: the wording ‘or is likely
to damage [the] EC financial interests’ has been left out. This clearly indi-
cates that the European legislator seeks to establish common rules for dealing
with corruption, independent of the impact it may have on the EC budget.
Moreover, Article 11 sets out that ‘… no provision in [the] Convention
shall prevent a MS from adopting internal legal provisions which go beyond
the obligations deriving from [the] Convention [itself] …’. In this way
nothing can prevent an MS from penalising corruption that consists in
receiving an advantage after the official has performed the breach of his
official duties (and not only when illegal remuneration is obtained before
the breach).44
43. Convention drawn up on the basis of Article K.3 (c) of the Treaty on the European
Union on the fight against corruption involving officials of the European Union or
officials of Member States of the European Union (OJ L 195/1 of 25 June 1997) (from
here on: the Anti-corruption Convention).
44. These provisions must be interpreted in such a way that MSs have an obligation to
introduce criminal liability only when an advantage is received before an act has been
performed. Article 11 may be intended as an expression of an ‘upwards’ harmonisa-
tion (namely the European laws cannot be lower than existing levels of citizen security
thereby imposing a ‘downwards harmonisation’ on those countries with more advanced
provisions). It must be noted that a similar provision is not provided for by the first
Protocol.
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LAURA FEROLA
The rules on assimilation, penalties and jurisdiction are reproduced almost

faithfully.
The provisions found in the Anti-corruption Convention concerning the
criminal liability of the heads of business, extradition, co-operation, ne bis
in idem rules and provisions of national laws can also be extracted from a
joint reading of the PIF Convention and its Protocol; they are analysed in
more detail below.
As far as the criminal liability of head of business is concerned, Article
6 aims to ensure that persons exercising legal or effective power are not
automatically exempt from criminal responsibility when corruption is
committed by somebody acting under their authority on behalf of the
enterprise. The head incurs liability on the basis of his/her personal actions
(i.e. culpa in vigilando for failing to fulfil a duty of supervision or control):
it seems that their responsibility could also include negligence or incompe-
tence.45
Judicial co-operation is largely covered in the Anti-corruption Convention.
Pursuant to Article 9, when officials are involved in passive or active
corruption (defined above) which concerns at least two MSs, then the States
would have to co-operate effectively in the investigation, in judicial pro-
ceedings and in enforcing the imposed penalty, for instance by means
‘… of mutual legal assistance, extradition, transfer of proceedings or enforce-
ment of judgements rendered passed in another MS …’. By mandating for
co-operation in control of conduct, regardless of whether the diverse legal
natures and other traditions of MSs have led them to regulate such conduct
within their administrative, civil and/or criminal law systems, the Convention
builds up and extends existing forms of co-operation in the administrative
and civil spheres, even if the behaviour in question is not the object of
criminal sanctions.46 These fields are as equally important as the penal one.
For example, in the administrative sphere, authorities may be in such a
position as to be able to co-operate more speedily than judicial authorities
and moreover instruments already exist to promote co-operation in customs
and tax matters which are strictly related with economic crimes. Co-opera-
tion in the civil field is also of primary relevance where authorities should
45. According to the Explanatory Report on the Convention, within the meaning of Article
6 nothing prevents a MS from providing these for objective criminal liability by virtue
of the action of others, without being necessary to prove fault, negligence or failure to
exercise supervision on their part [see ‘Explanatory Report on the Convention on the
fight against corruption involving officials of the European Communities or Officials
of MSs of the EU’ (http://www.europa.eu.int/eur-lex/en/lif/dat/en_498Y 1215_01.html)].
46. Through this provision, the Convention differs from the earlier Protocol in the area of
co-operation. A joint reading of the Protocol and the PIF Convention establishes that,
when the corruption of officials concerns at least two MSs and constitutes a criminal
offence, then those States would have a duty to co-operate effectively in relation to
investigation, prosecution and punishment. This could be achieved by way of mutual
assistance, extradition, transfer of proceedings, enforcement of sentences passed in
another MS and/or other means of co-operation. This has the effect of limiting co-
operation to criminal proceedings. It reflects the opinion, expressed by the GMC of
the CoE, that a comprehensive anti-corruption strategy should not be confined to the
criminal sphere alone.
142
co-operate in attempting to recover advantages illegally obtained, in pro-

viding actions for damages, or penalising breaches of contract that may
involve more than one MS.
Provisions on extradition and prosecution (Art. 8) supplement rules on
extradition that are already in force between MSs arising out of existing
agreements on this matter. However, it is specified that those MSs who do
not extradite their own nationals should take the necessary measures to
establish its jurisdiction over the corruptive offences.
Article 10 establishes the ne bis in idem principle,47 according to which
a person who has been judged in one MS already, cannot be prosecuted in
another State for the same facts.
When disputes between MSs do not reach a solution in a period of six
months, the dispute falls within the province of the European Court of Justice
(Art. 12). This is the first time that its competence is established directly in
a Convention, instead of being referred to in a separate Protocol (as is the
case for the PIF Convention and the Europol Convention).
The Convention would have to be ratified by all the MSs and apply within
ninety days thereafter for its entry into force (Art. 13). Until then, the MSs
may decide to apply the Convention either bilaterally, or by means of a
declaration.48 It would be open to accession by any MS that becomes a
member of the EU (Art. 14) and no reservations are admitted (Art. 15).
E. Corruption in the private sector
There are areas where corruption directly harms the interests of the citizens
of the EU. As the Commission sets out in detail in its communication on an
anti-corruption policy,49 the prevention of this crime in the private sector is
of increasing importance for the EU because it throws up a number of
problems in addition to the usual negative aspects of corruption. Further
hampering the financial interests of the EU, it also undermines the decision-
making process, and has a detrimental effect on policy toward third
countries thus preventing transparency and openness in international trade.
Above all, when individual businesses use bribes in the course of their
commercial activities to gain a competitive advantage over competitors who
do not employ such practices, it falsifies and distorts free competition. Since
47. The principle is based on the Convention on the application of the ne bis in idem rule,
signed in Brussels on 25 May 1987, which was already used in the context of European
Political co-operation (see the similar provisions contained in the Schengen Agreement).
This is particularly important in cases of cross-border crime, which are liable to be
prosecuted in more than one MS when it is not possible to centralise the prosecution
in a single country.
48. This process has been referred to as one of ‘rolling ratification’. In that sense S. White,
‘Protection of the financial interest of the European Communities: the fight against fraud
and corruption’, European monographs, Kluwer Law International, The Hague-London-
Boston, 1998.
49. Communication de la Commission au Conseil et au Parlement Européenne sur ue
politique anticorruption de l’Union, op. cit. note 3 supra.
143
LAURA FEROLA
the latter is a cornerstone of the economic activities of the EU, it appeared

necessary to bar corruption in the private sector not only by removing any
encouragement to active corruption; but also by trying persons and legal
entities who continue this conduct within the EU. It emerged that this
‘negative inducement’ should be accompanied by the threat of effective,
proportionate and deterrent penalties in all MSs in order to provide adequate
support for motivation to engage in fair competition.50
A Joint Action on corruption in the private sector has been adopted
therefore very recently.51 It is based on the Action Plan to combat organised
crime, adopted by the JHA Council on 28 April 1997 and by the European
Council in Amsterdam on 17 June 1997;52 more precisely it intends to
implement Recommendation No. 6 of Chapter II of the Action Plan
(Prevention of organised crime).53 The Council’s choice of this legal instru-
ment must be considered positive by virtue of the fact that a Joint Action –
in contrast to a Convention – is much less cumbersome, thereby permitting
a speedier transposition and implementation of the provisions contained in
it.
Article 1 contains a definition of the actors that may be comprised by
the Joint Action, in other words any employee or other person having any
capacity to act on behalf of a natural or legal person and operating in the
private sector. The article also establishes that the ‘breach of duty’ which
can be obtained through corruption shall be understood in accordance with
national laws and covers those violations of professional regulations or
instructions which apply within the enterprise.
By consequence, according to Article 2, active corruption comprises the
action of a person who, in exercising his business activities requests or
receives, directly or through an intermediary, obtains an undue advantage
of any nature performed in breach of his duties.
More particularly, Article 3 outlaws active corruption, i.e. the action of
whosoever who tries to obtain an undue advantage from a person in the
course of his business activities. Essentially, the Joint Action obliges States
to offer effective judicial co-operation on the basis of the two precisely
defined forms of conduct in the context of (private) commercial activities.
50. See ‘Report on a draft joint action on making corruption in the private sector a criminal
offence’, Committee on Civil Liberties and Internal Affairs, The European Parliament,
Rapporteur: R. Bontempi, Doc. A4-0348/97, 5 November 1997.
51. Joint Action of 22 December 98 adopted by the Council on the basis of Article K.3
TEU on corruption in the private sector (OJ L 358/2 of 31 December 1998).
52. Op. cit. note 6 supra.
53. Recommendation 6 says: ‘A comprehensive policy against corruption should be
developed, taking into account the work already carried out also in other international
fora, in order to enhance the transparency in public administration, at the level of both
the MSs and the Communities (see political guideline No. 13). This policy should
primarily focus on elements of prevention, addressing such issues as the impact of
defective legislation, public-private relationships, transparency of financial manage-
ment, rules on participation in public procurement, and criteria for appointments to
positions of public responsibility, etc. It should also cover the area of sanctions, be
they of a penal, administrative or civil character, as well as the impact of the Union’s
policy relations with third countries’.
144
It also covers the liability of a legal person (Art. 5), when a natural person
acts in benefiting a legal enterprise directly. Similarly to the provisions
established by the Second Protocol, in that case, a person who has power of
representation, authority to take decisions or to exercise supervision control
within the legal person must perform the active corruption.
Yet, it would be appropriate to extend the offence not only to the imme-
diate perpetrator, but also to those who incite the perpetrator to commit the
offence or who aid and abet it in any other way, given that legal persons
often have a complex structure. In addition, reference to immediate damage
should have been made, in order to make explicit the disruptive nature of
the undesirable conduct and to limit the scope of the new offence by
referring to immediate and tangible damage.
The conduct shall be punishable by effective, proportionate and dissua-
sive penalties involving, at least in serious cases that can give rise to
extradition, deprivation of liberty (Art. 4).
As regards the extremely complex area of penalties for legal persons
(Art. 6), the provisions are similar to those already provided in the Second
Protocol, namely that ‘sanctions shall include criminal fines or, as an
alternative, exclusion from entitlement to public benefit aids, disqualifica-
tion from the practice of commercial activities or placement under judicial
supervision.’ According to Article 8, MSs should submit appropriate
proposals for implementing it in their own competent legislative bodies
within two years after its entry in force. On the basis of a correct interpre-
tation of the rule, if, for whatever reason, a MS is unable to do so, it should
at least take measures to ensure smooth co-operation with other MSs (even
if the conditions of double criminality are not fulfilled).54 It is very impor-
tant that the MSs fulfil the obligations contained in the Joint Action, the
Council is to assess the implementation of it after three years after its entry
in force.
Finally, what must be underlined is that the jurisdiction of the ECJ is not
covered by the Joint Action. However, it should be given competence for
this Joint Action at least to the extent that it will have jurisdiction, pursuant
to the Amsterdam Treaty, for implementing measures which are agreed after
its entry in force.
F. Prevention measures
Creating the ideal conditions to prevent corruption from spreading as well

increasing the probability of its discovery and punishment is also an
important objective.
Actually, the action of the EU is focused not only on outlawing and
punishing corruption, but also on preventing it by means of transparency,
54. See ‘Report on a draft Joint Action on making corruption in the private sector a criminal
offence’, op. cit. note 50 supra.
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LAURA FEROLA
simplification and debureaucratisation in all important administrative

decisions.55
As the Commission has stressed,56 the introduction of transparency by
simplifying the law and implementing effective control mechanisms for all
significant decision-making processes can, as a general principle of democ-
racy, make a substantial contribution to preventing corruption. Transparent
procedures have a particular inhibiting or deterrent effect on those who are
offered bribes as well as strengthening the resolve of those who intend to
resist. An efficient prevention policy should be supported by a legal system
that guarantees the transparency and enforceability of decisions on the basis
of the personal responsibility of those who take the effective decisions, and
not just on an increase in formal control. Indeed, where decision-making
processes do not benefit from transparency, corruption is extremely diffused.
This is mainly so in the case of procurement in the arms trade and high
technology (the first due to the secret procedures involved, the second to its
complexity and the difficulty to compare products and decide which is really
the most advantageous).
The European Union’s action is oriented towards the following areas:
1. TAX DEDUCTIBILITY
In calculating taxable business profits in some MSs, it is normally permis-

sible to deduct from the business receipts those expenses that are associ-
ated with earning in income. This is a widely accepted principle of taxation,
but not all current expenses are universally deducible. For example, some
countries specifically disallow tax deductions for certain categories of expen-
ditures, such as payments that are illegal under the laws of that country or
entertainment expense.
Only a few national tax codes provide for the outright disallowance
of corrupt payments made to foreign officials. Apart from such a total
disallowance, the main grounds for not allowing tax deduction in some
countries include the nature of the payments themselves (gifts and enter-
tainment may not be tax deducible, irrespective of whether their acceptance
is corrupt or not); the difficulties lie in substantiating such payments, or their
illegality (whether in the country of the payer, or in that of the recipient).57
A number of States specifically permit tax deductions for the bribery of
foreign officials if the briberies are recognised as being customary practice
in the territory in question. In such circumstances, the giving of the tax
allowance may be conditional upon the disclosure of to the tax authorities
of the identity of the recipient.
55. In order to have a broader idea of the European priorities in this field, see ‘Report on
the Communication from the Commission to the Council and the European Parliament
on a Union Policy against corruption’, op. cit. note 7 supra.
56. Communication de la Commission au Conseil et au Parlement Européenne sur une
Politique anticorruption de l’Union Européenne, op. cit. note 3 supra.
57. See ‘Measures to prevent corruption in the MSs’, op. cit. note 11 supra.
146
Taxation policy is classically regarded as being morally neutral. This view

is not justified where allowances are granted for what is a criminal activity
in the state in which the bribe is accepted. This can be seen as endorsing
criminal acts committed in other jurisdictions. Moreover, tax allowances,
which may induce bribery, have implications for competition, and may distort
the single market and international trade. This also affects the economic
and social development of the countries. The practice may engender scep-
ticism in candidate and third countries as to the real aims of the Union when
EU enterprises are seen to be receiving allowances for bribing officials of
these countries in the pursuit of business.58
2. PUBLIC CONTRACTS AND BLACKLISTS
The Public Procurement Directives59 aim at assuring transparency and

equality of access for public procurement. The existing directives on public
contracts under the heading ‘Criteria for qualitative selection’ lay down that
any enterprise/supplier may be excluded from participation in the contract
when somebody has been convicted of an offence concerning his
professional conduct by a judgement which has the force of res judicata or
when somebody has been guilty of grave professional misconduct proven by
any means which the contracting authorities can justify. Of course, these
provisions also cover corruption.
The Commission Green Paper entitled ‘Public Procurement in the EU:
exploring the way forward’, of November 1996 recognises that fair, trans-
parent and non-discriminatory award procedures, together with the possi-
bility for suppliers to have recourse to national courts to assert their rights,
limit the risks of corruption. Even though the fight against corruption may
not be the primary objective, any improvement in the existing situation
regarding public procurement could usefully contribute to that fight. One
particularly relevant idea put forward in the Green Paper is that of a state-
ment of personal accountability by the responsible official that the Union’s
public procurement rules have been followed.
In any particular sector such as agriculture, the Structural Funds or the
transit regime, specific measures may contribute to combating corruption,
especially in those areas where Community policies involve large-scale
expenditure with a potential for corruption or other forms of abuse.
58. The two major EU trading partners have differing grounds for disallowing tax deduc-
tions for the bribery of foreign officials. The USA does not allow deductions for
briberies paid to foreign officials if the payments constitute criminal offences under its
Foreign Corrupt Practices Act of 1977. In Japan, however, bribes are disallowed for
other reasons. All 15 MSs have adopted the OECD recommendation on tax deductibility
setting out that ‘countries which do not disallow the deductibility of bribes to foreign
officials re-examine such treatment with the intention of denying this deductibility’. It
would appear therefore that all the MSs are in principle in favour of disallowing such
tax deductibility. Some MSs are, however, concerned that they will be at a competi-
tive disadvantage if other major trading nations continue to allow it.
59. Directives EEC 93/36, EEC 93/37, EEC 92/50.
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LAURA FEROLA
The Blacklist provides a means to identify an undertaking that has been

convicted of committing some infringement. In this regard, it may also be
envisaged to identify companies that represent a substantial risk of non-
reliability as regards corruption. This method can be used to prevent such
undertakings from competing for or being awarded further contracts/sub-
ventions or it may be used merely to alert people to possible risks in dealing
with such an undertaking. The directives on public contracts contains a sort
of blacklisting under the heading ‘Criteria for qualitative selection’, which
lays down that an enterprise may be excluded from participation in a contract
in the case of certain infringements. These provisions cover corruption. They
apply equally to contracts awarded by the Commission through its services.60
One Council Regulation61 provides for measures against blacklisted
operators, such as exclusion from entitlements under the Guarantee Section.
This regulation deals with irregularities in respect of Community provisions.
It does not, however, cover every form of corruption committed in connec-
tion with EAGGF (European Agricultural and Guidance Fund). Furthermore,
nothing prevents a particular company, which has been previously excluded
under this regulation because of corruptive practices, from applying for a
contract that is funded by another part of the community budget.
3. EXTERNAL RELATIONS
The Commission has included the fight against corruption in its external
co-operation and assistance policies. Funding is provided for a range of
projects which relate to the fight against corruption directly (regional
seminars) or indirectly (improving the judicial structure and administrative
transparency). The Lome IV Convention, as revised by the agreement signed
in Mauritius on 4 November 1995, now includes good governance as one
of the necessary prerequisites, requiring aid channelled through government
to be used effectively. According to a recent opinion of the Economic and
Social Committee,62 good governance must be defined as ‘the transparent
and accountable management of economic and social resources for the
management of society’ (point 4.1) and should therefore become a major
criterion in determining the amounts of development aid to be agreed upon.
On these grounds, the Council recommended withholding the signing of the
60. As the Commission has stressed in its Communication [COM (97) 192 def., see note
3 supra] establishing some form of comprehensive blacklisting system applicable to
areas where Community finances are at risk could be considered. This would include
the area of external assistance and would vary from sector to sector (in some cases it
may be appropriate for a blacklisted enterprise to be automatically excluded from certain
benefits, alternatively, a register of legal and natural persons who have been black-
listed could be established so that national and Commission services could be alerted
of the dangers of dealing with those particular operators).
61. Council Regulation 1469/95, op. cit. note 30 supra.
62. Opinion of the Economic and Social Committee on ‘Development aid, good governance
and the role of the socio-economic interest groups’ (OJ C 287/44 of 22 September
1997).
148
second amendment of the Lome Convention if indicative programmes were

not properly implemented, either through deliberate governmental misman-
agement or corruption.63
In addition, the capability of those applicant States to ensure fair imple-
mentation of the acquis communautaire,64 sub specie of internal adminis-
trative control able to protect European financial interests at both levels:
for the future implementation of the Criminal Convention and under new
Article 209A ToA, is also taken into consideration. Though Agenda 2000
does not raise this specific problem, the EP65 has recently addressed the
Commission, requesting that the attribution of pre-accession funds be linked
to the establishing of an external and effective control system. Particular
attention has also been paid to the ramifications of organised crime.66 The
corruption that accompanies it presents such difficulties that it constitutes a
high priority in the ‘accession partnerships’ due to the lack of efficacy of
the institutions (police, justice, borders administration) within the majority
of these countries. A recent Joint Action67 was therefore adopted in order to
implement a system for monitoring, by means of an experts’ group, the
situation in the candidate countries on the enactment, application and
effective implementation of the acquis of the Union in the field of JHA.
One of the highest priorities remaining is to make cross-border corrup-
tion a criminal offence. Several European firms sell their products by using
bribery as a mean of obtaining business because they are not considered
responsible in the country where they come from. This is a crucial point, as
it not only distorts competition it also impedes the development of these
countries.
G. The Treaty of Amsterdam
The IIIrd pillar of the TEU was criticised because of its intergovernmental
basis, the inadequacy of some of its instruments and in terms of democratic
and judicial control. Thus, during the 1996/97 Intergovernmental Conference
63. Cf. Title 5. ‘The fight against corruption’, Opinion of the Economic and Social
Committee, ibid.
64. Technical assistance for containing corruption in the public sector in Eastern Europe
has been provided to a limited degree under the PHARE programme (e.g. the joint
CoE/EU OCTOPUS program on corruption and organised crime in Central and Eastern
Europe). In this framework the joint SIGMA project with the OECD is also relevant
as it addresses the problem of public procurement.
65. See ‘Le contrôle et la protection des finances de l’Union en vue de l’élargissement’,
Fiche Thématique n. 16, Task-force Elargissement, Parlement Européenne, Luxembourg
19 March 1998, PE 167.330 FR.
66. ‘La coopération dans les domaines de la justice et des affaires intérieures dans le
processus d’élargissement’, Fiche thématique n. 25, Task-force Elargissement,
Parlement Européenne, Luxembourg 17 June 1998, PE 167.690 FR.
67. Joint action of 29 June 1998 adopted by the Council on the basis of Article K.3 of the
TEU establishing a system for collective evaluation of the enactment, application and
effective implementation by the applicant countries of the acquis of the European Union
in the field of JHA (OJ L 191/8 of 7 July 1998).
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LAURA FEROLA
the need became evident for progress in decision-making process through

the introduction of new objectives and instruments and likewise through
the improvement of judicial and democratic control. According to Article 35
ToA, the Court of Justice in Luxembourg has the power to issue prelimi-
nary rulings on the validity and interpretation of conventions, framework
decisions and decisions.68 It also provides that the EP shall be consulted
before their adoption (Art. 39 ToA), and shall deliver its opinion within a
time limit of three months.
Corruption more specifically is explicitly included among matters of
common interest: the ToA thereby sets out a precise legal basis to counteract
this crime, considering that the areas listed in Article 29 ToA seem to be
set aside for strict interpretation.
To conclude, it must be noted that the ToA introduces the approximation
of national laws (Art. 29 ToA, fifth indent) as a means of combating crime.
This concept may be defined as ‘soft harmonisation’, i.e. setting minimum
standards in some targeted fields in order to adequately counterbalance the
protection of European interests with national sovereignty. At this stage,
the prospect of a homogenisation of domestic criminal systems is still not
foreseeable. Notwithstanding the good will of the MSs, in terms of maximal
co-operation, these matters continue to be considered as being solely issues
of national sovereignty. Since the political climate still does not allow a
communitarization of the topic, only the progressive implementation of a
certain degree of compatibility among national legal instruments can be
assumed. This may not exclude the possibility of an effective uniformity of
criminal rules in toto: the project of a Corpus Juris is a first step in this
direction.
H. Perspectives. Consequences and prevention of corruption
Dealing with corruption is far from being simply a matter of law enforce-
ment, considering that it wastes resources by distorting public policy against
the interests of the majority and away from its proper goals.
Indeed, investigations on corruptive facts have opened a network of praxis,
unusual procedures and illicit relationships: it may be easily considered an
authentic criminal emergency which does not simply affect merely the
financial interests of public institutions.
The globalisation of corruption imposes an approximation of repressive
and co-operative juridical systems, since a limited approach based on a
national dimension appears insufficient.
As a result of this study, it has emerged that corruption is a ‘phenom-
enon in continuous evolution and adaptability’. Despite the committed
judicial action, it is still present at medium-high levels. There is a sort of
orruption Darwinism: through difficulties species get stronger and those
who resist selection still survive. Consequently, it must be stressed that in
68. Only common positions are still not embodied within the competence of the ECJ and
the EP: it is therefore quite evident that their character is more political than legal.
150
principle the implementation of efficient anti-corruptive action should deal

with the present multiple forms of corruption, which negatively affects not
only the public sector, but also the private relations, at national and inter-
national level.
The following emerging factors should be taken in account:
1. the harm caused by corruption may heavily undermine institutional and

political stability, as was demonstrated by the events which involved
some Italian political representatives. Most recently (March 1999) the
European Commission was obliged to resign, as it was collectively
reproached by a Parliamentary Committee of independent experts69 for
corruption, fraud and nepotism linked to negligence and errors in co-
ordination, causing the first government crisis in the history of the EC
and raising unprecedented juridical issues;70
2. besides the well-known distress to the good governance and impartiality
of individual public bodies, corruption has negative influence on national
economic integrity. The corrupter obtains an undue advantage that is
detrimental to those who are more honest or capable in the allocation of
resources (franchises, public contracts, authorisations et similia) thus
altering competition. Forms of widespread corruption not only increase
public expenses but also hampered the right selection of the best supplies
and products;
3. public officials must be attentive, fair and impartial in the performance
of their duties and, in particular, in the relations with the public. The
preferred treatment deriving from corruption may be seen as a violation
of the fundamental right to equal dealing. In terms of human rights,
specifically economic, social and cultural rights, corruption has been
defined as ‘l’envers des droits de l’homme’71 since these are sacrosanct
and cannot be touched by corruption. This concept is clearly underlined
69. For further details, see: ‘First Report on allegations regarding fraud, mismanagement
and nepotism in the European Communities’, Committee of Independent Experts, 15
March 1999 (http://www.europarl.eu.int/experts).
70. According to Article 158 TEC, Members of the Commission are appointed by the
Governments of the MSs. In order to partially obviate the representative deficit, the
ToA foresees (new Art. 214 TEC) that Members will be appointed by national
governments and later the EP will approve the nominations made by the President in
accordance with the Council. Being in a transitional period the ToA will enter into force
on next 1 May 1999 and the EP will be re-elected at the same time, most probably the
new Commission will be invested by the resigning EP and later the Commission and
will reconfirmed again by the new EP after the 1999 June elections.
71. The wording belongs to M. Delmas-Marty, but is quoted by L. Salazar in ‘Les projets
législatifs de l’Union Européenne sur la lutte contre la corruption’ (in Corruption de
fonctionnaires et fraude européenne, Actes du colloque de Bruxelles, 21 et 22 novembre
1996, Centre d’études pour l’application du droit communautaire en matière pénale et
financière, Bruxelles, 1998), who underlines as well that ‘… à la corruption ne manque
pas de se référer aussi le preambule de la Déclaration des droits de l’homme et du
citoyen de 1789 qui récite “… considérant que l’ignorance, l’oubli ou le mépris des
droits de l’homme sont les seules causes dews malheurs publics et de la corruption
des gouvernments” …’.
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LAURA FEROLA
in a recent Communication of the Commission72 outlining its policy on

human rights in the EU partnership with African, Caribbean and Pacific
(ACP) States. The Communication reviews briefly, among the other
things, also how the Commission sees the application of the various
concepts (human rights, the rule of law, democratic principles and good
governance). It affirms the universality, indivisibility and inter-depen-
dence of these principles and, although there can be no single model for
priority measures to be taken for each individual country, it argues for
certain types of essential action which may be considered on the way to
strengthening human rights. According to a specific chapter proposing a
number of concrete actions to promote these objectives, preventive and
repressive measures to combat fraud and corruption are included among
the legislative, institutional and administrative reforms that should be
adopted by ACP countries;
4. another remarkable factor linked to corruption is that it is not carried
out for itself sic et simpliciter, but generally is a phase of further illicit
activities. It therefore nourishes a system which may be defined as
‘double illegality’, which includes corruption itself together with the
illicit aims and activity for which it is accomplished. It generates the
risk to commit further crimes (like false company communications, black
funds, fiscal corruption, etc.) which are needed to cover up and allow
corruption in order to obtain commissions, public contracts, etc.;
5. on last analysis, the cost of corruption tends to be laid at the door of
society: corruption forms a sort of ‘improper taxation’ and burdens
citizens. On the other hand, black money tends to be transferred abroad,
thus removing important financial resources from the public national
economy;
6. corruption tends to self-nourish: when the cost of transaction is so high
as to form an imbalance between the real value and the artificial cost of
performance, recourse to corruption is boosted for those enterprises which
want to continue to be competitive. When the phenomenon is so extended,
those who do not use corruption risk to be excessively penalised and will
be obliged to leave the market;
7. corruption is a crime with a very high ‘obscure number’ of cases (i.e.
the difference between committed and denounced crimes) which are not
discovered and, by consequence, not punished due to the fact that the
illicit exchange is based on the connivance and convergence of interests
between the two actors, the buyer and the seller, of the corruptive act.
In consideration to all these factors, a tripartite attack – involving the

government, the private sector and the civil society – should be set up. In
addition, solutions should present a multilevel approach, involving concrete
preventive as well as punitive measures that address issues of accountability,
72. Communication of the Commission to the Council and the Parliament. Democratisation,
the rule of law, respect for human rights and good governance: the challenges of the
partnership between the EU and the ACP States [COM (98) 146, Brussels 24 February
1998).
152
transparency and inequity at various levels of social and economic systems,

which not only focus on the protection of financial interests.
Tackling corruption must be founded on a logic of specific repression, but
also on a set of extensive interventions, including confiscation, stolen of
proceed goods, etc.. Measures should be added likewise to the already tested
scheme used to tackling money laundering, which is – among other things
– also related to corruption itself as an accessory consequence when it is
used as a means to hide stolen profits.73
Therefore, a more incisive action strategy should be developed in the
following areas:
1. investigative collaboration should be improved. Given the particular

structure of the crime and consequently the relevant difficulties to acquire
proofs, the solidarity of criminal groups needs to be broken thus
desegregating their internal links: it should be ensured that individuals
who report instances of corruption (committed by the firms for which
they work) to authorities are adequately protected from victimisation.74
Indeed, witnesses and collaborators constitute an important information-
source which is of relevant importance to uncover and prosecute these
offences, considering the consensual nature of most of corruption
offences.
On the other hand, it would also be opportune to strengthen inves-
tigative techniques, for instance setting up ‘agents provocateur’ for
discovering corruption practices;75
2. investigations in banks, society and commerce are an important field of
action for tackling corruption and therefore call for effective judicial co-
operation, inasmuch as the issue of international rogatory requests con-
stitutes a real problem for acting against corruption because of length of
proceedings which may cause the offender to escape justice by pre-
scription.
Actions should therefore be developed in two different ways, namely
by binding MSs as regards the internal procedures of requests’ accom-
plishment, providing rigorous terms for answering and by establishing
international operative measures.
At the European level it must be noted that a Joint Action on good
73. Cf. G.M. Flick, ‘L’azione di contrasto alla corruzione nell’attuale contesto inter-
nazionale ed europeo’, Relazione tenuta presso la Scuola Interforze di Polizia, Rome,
23 February 1999 (to be published).
74. For instance, Mr. Paul Van Buitenen, the European official who denounced the
Commission’s financial irregularities is still suspended (since 1998) for having violated
the duty of discretion.
75. See G.M. Flick, ‘L’azione di contrasto alla corruzione nell’attuale sistema inter-
nazionale ed europeo’, op. cit. note 73 supra. It is necessary to point out that the ‘agent
provocateur’ (i.e. the public official who conducts mainly illegal transactions with
suspect of criminal offences) is already established in the Italian juridical system in
relation with specific crimes, e.g. in matters of the fictitious purchase of drugs by
policemen (Art. 84 bis, L.162/90, Art. 97 T.U. 309/90) and money laundering (Art. 12,
d.l. 306/92).
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LAURA FEROLA
practice in mutual assistance in criminal matters76 has been recently

adopted, followed by another Joint Action establishing a European
judicial network77 (whose Art. 2 specifically states the aim to counteract
corruption, among the other crimes). Above all, the EU should act in
order to simplify international requests. Very often bureaucratic proce-
dures are too complex, especially in those countries that are so-called
fiscal paradises. For this reason the bank secrecy should be abolished or
considerably limited in order to verify easily the huge capital flows
generated by corruption which pass into the accounting of companies,
banks, etc.78
In addition, given that improvement in judicial co-operation in criminal
matters is pursued by the ToA on the basis of approximation, the
principle of double criminality (i.e. the necessity that in both the
requested and the requesting States the behaviour is a criminal offence)
should be definitively abandoned. Likewise, as it has been already
achieved in the opposite field of free movement of goods through the
well-known ECJ judgement Cassis de Dijon, ‘… it would be useful to
introduce the principle of mutual recognition of the validity of the rules
of proofs, judicial systems and the laws of a MS as a first condition of
confidence …’.79
As regards the public sector, considering that corruption is a ‘serial’
crime, concrete controls should be established on the final product, not
only on the process of public procedures. This is because the corrupter
is interested in hiding the criminal agreement and therefore the proce-
dure is correct from the formal perspective;
3. a similar situation to tax deductibility arises from export credit insurance
schemes. Bribing foreign officials in order to secure overseas contracts
for their exports has become a widespread practice in industrial coun-
tries, particularly in certain sectors such as exports of military equipment
and public works. Normally these contracts are guaranteed by govern-
ment owned or supported export credit insurance. The value of the bribes,
which in general are presented as commissions, consultations, interme-
diaries, would normally be treated as part of the costs supply and included
in the total contract value covered by guarantee. This practice constitutes
an indirect encouragement to bribe;80
76. Joint Action of 29 June 1998 adopted by the Council, on the basis of Article K.3 TEU,
on good practice in mutual assistance in criminal matters (OJ L 191/1 of 7 July 1998).
77. Joint action of 29 June 1998 adopted by the Council on the basis of Article K.3 TEU,
on the creation of a European judicial network (OJ L 191/4 of 7 July 1998).
78. The idea of abolishing the bank secrecy is often taken into consideration at an
international level. The proposal has also been launched in the European context, see
Discours de Mme. Elisabeth Guigou, Garde des Sceaux, Ministre de la Justice, au
Colloque d’Avignon sur l’espace judiciare européen, le 16 octobre 1998.
79. Council of the EU, internal document – not available, op. cit. note 14 supra.
80. See ‘Export credit insurance and the fight against international corruption’,
Memorandum submitted to the EU-Institutions by Transparency International-Brussels,
26 February 1999.
154
4. as regards the EU in particular, it must be stressed that there are no

specific provisions for corruption committed inside the EU institution
themselves by Europeans officials. In addition, there is the problem of
the reporting of suspected offences by European Union officials who
could be prohibited as contrary to the interests of the Community.81 In
effect the Commission policy in cases of corruption within its own ranks
is still unclear and inconsistent and there is a tendency to cover up such
cases wherever possible. Two major problems can be identified: the
shortcomings in the detection of and inquiries into irregularities involved
in corruption and the absence of an efficient and consistent criminal pros-
ecution system operating throughout the Union. Although every European
summit meeting concludes with a resounding declaration that a resolute
anticorruption policy is being pursued, the EU is in reality nowhere near
the pursuit of what the Court of Auditors describes as a "zero-tolerance"
policy as regards corruption and similar offences such as favouritism,
patronage or conflict of interests.82
The Unit for the Coordination of Fraud Prevention (UCLAF, estab-
lished in 1989) is the existing European body for combating financial
irregularities (fraud in particular), but its capacity for action is still
established to a limited extent (lack of ability to act in the face of
increasing challenges like the implementation of the EURO, the next
enlargement, possibility to undertake investigation only inside the
Commission but not inside the other EU institutions when EU officials
are involved, etc.). Moreover, UCLAF is currently a Task Force under
the authority of the Secretariat-General of the Commission and does not,
therefore, have the necessary independence to carry out investigations on
EU officials conduct easily. These are the reasons why the establish-
ment for a renewed Office de lutte anti-fraude (OLAF) is currently under
consideration, which in addition to taking on UCLAF’s former powers
and responsibilities, shall be made explicitly responsible for combating
international corruption and fraud in all the EU’s institutions which will
take part to that decision.
Following the recent crisis involving executive power, the problem
of institutional competencies should be carefully reconsidered. Members
of the Commission are appointed by the MSs and shall operate in the
exclusive interest of the EU. The nature of the office is quite ambiguous:
81. Article 19 of the Staff Regulation seems to prohibit direct communication to the national
investigative authorities on items of information related to a suspected case of corrup-
tion by making the communication of any such information subjected to authorisation
by the appointing authority which may take the European Communities’ interests in
account. And yet, national laws generally oblige public officers under penalty of criminal
sanctions, to report to the judicial authorities any offence which comes to their knowl-
edge. So, while the MSs are governed by the principle of transparency, the EU runs a
discreditable system which offers opportunities to cover up criminal liability.
82. For an analysis of faults in EU Institutions, see ‘Report on the independence, role and
status of the Unit for the Co-ordination of Fraud Prevention (UCLAF)’, The European
Parliament, Committee on Budgetary Control, Rap.: H. Bösch, Doc. A4-0297/98,
22 September 1998.
155
LAURA FEROLA
commissioners have extended powers and are placed de facto in a sort

of limbo between the EU and the MS which they came from. This has
lead to the consolidation of personal feuds, while the President seems to
simply preside over the Commission, without having the necessary
powers to really direct it (the President, for instance, does not have the
power to dismiss a Commissioner). It appears decidedly necessary, as it
has been done with the ToA, to reinforce the authority of the President,
by endowing him with higher responsibility in front of the Council and
the Parliament. On the other hand, competitions and reciprocal relations
between institutions should be better defined than in the ToA, which tried
to fill up the so-called democratic deficit.
The EU does not advocate full harmonisation of national anticorruption laws,

but names certain key areas in which it would like to see a joint approach
at Union level, thus calling for a multilateral consensus (to be built up by
European institutions, the MSs and the private sector) on this issue in order
to facilitate a uniform application and effective enforcement of all the legal
instruments to fight corruption it adopted.
It is impossible to predict at this stage what the result of European or
national anticorruption action will be. It is difficult to be optimistic in the
light of recent events. This brought to mind the words of the Soviet poet
Grigoreviè Ehrenburg (1891–1967) ‘progress and revolutions have guaran-
teed the right to equality, but not the right to intelligence and honesty’. As
regards the first affirmation I still have some doubts, for the second I hope
it will be so in the future.
156

FEROLA - The Action of The European Union Against Corruption

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LAURA FEROLA*

THE ACTION OF THE EUROPEAN UNION

Following the Treaty of Amsterdam, an increased integration in Justice and

A. Economic crimes in Europe

As has been clearly pointed out in an EC report,3 the phenomenon of casual

Type of Main actors Mode

Casual Petty officials, interested Small-scale embezzlement,

3. Communication de la Commission au Counseil et au Parlement Européenne sur une

On the ground of the above-mentioned elements, a study of corruption in

B. Corruption in the European Union and in the Member States: same

1. DEFINING THE PROBLEM

Corruption is generally defined by the doctrine as the behaviour of persons,

2. THE EXTENT AND CONSEQUENCES OF CORRUPTION

closely linked with organised crime.6 The fundamental characteristic of such

Country 1998 CPI score Standard deviation Surveys used

Denmark 10.0 0.7 09

Survey: The Transparency International 1998 Corruption Perceptions Index. 8

Notwithstanding the TI Index is not founded on a real rational basis, 9 the

3. THE ORIGINS OF EU ACTION: DIFFERENT NATIONAL LEGISLATIVE

While economic integration has gathered pace, a disparate and patchy

a. The officials responsible

The principal weakness in the fight against trans-national corruption is the

b. The prosecution of legal persons

In some MSs if a bribe is paid on behalf of a company, then the company

In certain Countries, elected officials, Ministers or Members of Parliament

Officials must act in breach of their official duties in order to be punished

The corruption of domestic civil servants carries with it the threat of

g. The private sector

h. The political sector

13. See D, Infra.

is pursued on the grounds of intergovernmental co-operation, namely each

C. Measures undertaken at the international level: In particular, the

only legally binding instrument which entered in force – 15 February 1999

16. Recommendation of the Council on Bribery in international transactions, Doc. C (94)75

function ‘as well as any official or agent of a public international organisa-

Group against Corruption (GMC)21 following two recent conferences of the

D. The Treaty of Maastricht

In a political space that is neither wholly federal nor inter-governmental,

1. THE CONVENTION ON THE PROTECTION OF THE EUROPEAN

Commission, the European Parliament, the Court of Auditors or the Court

concerned (principle of active personality) or when the offence is committed

corruption or money laundering, in accordance with their national laws

2. THE CONVENTION ON THE FIGHT AGAINST CORRUPTION

The contents of the Convention signed in 199743 substantially duplicate that

The rules on assimilation, penalties and jurisdiction are reproduced almost

co-operate in attempting to recover advantages illegally obtained, in pro-

E. Corruption in the private sector

the latter is a cornerstone of the economic activities of the EU, it appeared

Creating the ideal conditions to prevent corruption from spreading as well

simplification and debureaucratisation in all important administrative

In calculating taxable business profits in some MSs, it is normally permis-

Taxation policy is classically regarded as being morally neutral. This view

2. PUBLIC CONTRACTS AND BLACKLISTS

The Public Procurement Directives59 aim at assuring transparency and

The Blacklist provides a means to identify an undertaking that has been

second amendment of the Lome Convention if indicative programmes were

G. The Treaty of Amsterdam

the need became evident for progress in decision-making process through

H. Perspectives. Consequences and prevention of corruption