Understanding the regulatory landscape and risk of corruption is no easy task for organizations wanting to do business in Europe. Even in the European Union, where market rules are largely harmonized within the bloc, corruption levels as well as anti-corruption laws and their enforcement differ vastly from country to country.
What is the likelihood of being extorted for a bribe in Turkey? Are licence-issuing bodies considered trustworthy in Poland? What is the risk of illegal favoritism in the award of public contracts in Austria? Companies doing business in Europe must resolve such questions on a regular basis, and that requires having an overview of the European anti-corruption landscape.
Although most European countries have anti-corruption legislation, only a select few laws take a strict approach by banning all forms of bribes such as facilitation payments or private sector bribery. The UK Bribery Act tops the list of the most rigorous anti-corruption law in Europe, and France recently followed suit with the recent Sapin II law. The US FCPA remains an influential law, with multiple European prosecutors collaborating with US authorities to settle transnational corruption cases against European companies such as Rolls Royce and Vimpelcom.
Despite that, the overall enforcement of anti-corruption laws is lackluster across Europe, with only the UK, Germany, the Netherlands and Norway performing well. Despite the recent Sapin II law, France has been notoriously inactive in prosecuting transnational corruption. However, that seems to be changing with its recent settlement with HSBC - the multinational bank paid EUR 300 million to the French authorities for its role in laundering the proceeds of tax fraud.
Enforcement of anti-corruption laws in Eastern and Central Europe is generally poor, albeit, Estonia’s and the Czech Republic’s authorities have been relatively effective. However, all countries in the region suffer from a level of impunity among some officials. Enforcement in Southern Europe is highly varied, with Italian authorities actively pursuing transnational bribery cases, while Spain has been criticized by the OECD for failing to investigate and prosecute foreign bribery committed by Spanish companies.
At the end of the day, it is important to consider that anti-corruption legislation and its enforcement is only part of the story. Companies doing business in Europe must consider the full spectrum of corruption issues, including the integrity of public administrations, private sector corruption, public procurement, as well as sector-specific risks in the banking, real estate and natural resource industries.
