EU: Corruption costing bloc $162 billion annually

BRUSSELS - Corruption affects all member countries of the European Union and costs the bloc's economies around 120 billion euros ($162.19 billion) a year, an official EU report published yesterday said.

European Commissioner Cecilia Malmstrom, who presided over the first official EU-wide study on corruption, said the estimated amount lost annually due to padded government contracts, covert political financing, bribes to secure health care and other corrupt practices would be enough to fund the European Union's yearly operating budget.

All 28 EU member states suffer from some level of corruption, the report found.

"There are no corruption-free zones in Europe," Malmstrom told a news conference. "We are not doing enough. And this is true for all member states."

The study does not rank countries according to the prevalence of corrupt practices, but Malmstrom acknowledged some of the "younger democracies" in Eastern Europe face special challenges. The report includes a breakdown of each EU member nation's problems and success stories.

The report found corruption is generally more present at local and regional levels, and that in some EU countries it is especially frequent when it comes to obtaining heath care services, or in the construction and promotion of real estate projects in urban areas.

Inflated government contracts are a particular problem, Malmstrom said. Government-financed procurement of goods and services accounts for 20 percent of all spending in the European Union, the commissioner said, and studies indicate that up to a quarter of the money expended may be siphoned off by corruption.

As for the private sector, four of 10 companies quizzed in one survey consider corruption an obstacle to doing business in the EU, Malmstrom said.

"A huge amount of money is lost here," she said. "If you don't condemn corruption because it's immoral and how it erodes democratic legitimacy, at least for economic reasons there is good case to do more." The money Europeans pay in taxes is too often misspent to purchase goods and services that don't give citizens a proper return for their money, she said.

Carl Dolan, director of the European Union office of Transparency International, a non-governmental watchdog organization, said it was to the credit of the EU's executive arm, the European Commission, that it issued such a critical report in a year when voters will elect a new European Parliament.

"What the report shows is that there has been a consistent failure among politicians to regulate their conflicts of interests, particularly in their dealings with business and industry," Dolan said.