The current state of corruption in Eastern Europe

Almost thirty years after the collapse of the Communist bloc, corruption continues to be a reality in some post-Soviet countries. Indeed, despite perpetual efforts to combat state capture, or the concentration of power in the hands of local oligarchies, sometimes allied with large multinationals, this evil remains very present.

In recent years, corruption scandals linked to these envelopes have been multiplying in several Eastern European countries that have joined the European Union. It’s not easy to pinpoint the causes of this endemic phenomenon: is it a sad legacy of the Communist era? Can we blame other EU countries for having “given in” to this type of dubious practice?

On January 29, 2020, the NGO Transparency International published its twenty-fifth annual report on the perception of corruption in the public sector, measured in 180 countries and territories¹⁾Transparency International, Corruption Perceptions Index 2019. A sad conclusion: the results of Transparency International’s Corruption Perceptions Index (CPI), the most widely used in the world, show that some former Communist bloc countries are fighting corruption, but to no avail, remaining associated with the most dubious practices.

Measuring the level of perceived corruption can be a very tricky business: on the one hand, the hidden nature of this offence makes it impossible to access objective data, and on the other, there is no universal definition of the concept. However, the CPI has become the benchmark for both private players, particularly investors, and public authorities. It uses a scale from zero (an extremely corrupt country) to one hundred (a corruption-free country) to try and assess levels of corruption, as perceived by public opinion.

According to the NGO, the IPC defines corruption as the misappropriation or abuse of public office for personal gain, through the bribery of public officials, particularly in the context of public procurement, or simply through the misappropriation of public funds.

A high score indicates the existence of a transparent administration, while a low score indicates the widespread use of bribes, the absence of sanctions in the event of corruption and, more generally, a mismatch between the administration’s performance and its responsiveness to the needs of the population, according to the Transparency International survey.

In 2019, the main theme of this study was political integrity, more specifically the financing of political parties and their election campaigns. Through their research, Transparency International’s experts have highlighted the close relationship between politics, money and corruption, particularly in low-scoring countries.

The study highlights a heterogeneous Europe in terms of corruption, where northern countries seem to be far less affected by corruption than central countries, which do better than the states of Eastern and Southern Europe. As in previous years, the data show that despite some progress, the majority of countries are still failing to combat corruption in the public sector.

The highest score was “won” by the Western Europe and European Union region (66), while Sub-Saharan Africa remains the region with the lowest score (32). In terms of countries, New Zealand and Denmark score highest (87), followed by Finland (86), Singapore (85), Sweden and Switzerland (85). More than two-thirds of countries score below 50 on the CPI, with an average score of just 43.

Countries with lower scores generally experience limited or non-existent separation of powers, flagrant abuse of state resources for private, often electoral, purposes, opaque financing of political parties and numerous conflicts of interest. This is complemented by strong political influence over the supervisory authorities, insufficient judicial independence and severe restrictions on press freedom. Despite their aspiration to join the European Union, this will remain impossible in this context of lack of political will and implementation of the necessary legal and regulatory frameworks. While Belarus (45) and Kyrgyzstan (30) have made considerable progress on the CPI, Uzbekistan remains one of the world’s most authoritarian regimes, despite slight improvements.

However, the European Union, designated the best performing region, with an average score of 66 out of 100, is not immune to corruption. More specifically, most of the post-communist states that are currently members of the EU have real difficulties in combating corruption: Bulgaria (43) Romania (44) and Hungary (44) are unable to effectively prosecute cases of high-level corruption.

For Romania, 2019 has been a fateful year. In January, the case of the illegal retrocession of land in the city of Constanta was finalized: the former mayor, Radu MAZARE, was sentenced to 9 years’ imprisonment for corruption, abuse of office and conflict of interest for having arbitrarily allocated vast areas of urban land, beaches and cliffs. Damages estimated by the National Anti-Corruption Prosecutor’s Office? 114 million euros to the detriment of the Romanian state²⁾https://adevarul.ro/locale/constanta/pronuntare-dosarul-retrocedarilor-radu-mazare-condamnat-9-ani-inchisoare-executare-1_5c5caf40df52022f7580bfc8/index.html. Sorin BLEJNAR, the former director of the National Tax Administration Agency, was sentenced to 5 years’ imprisonment for using his influence in public procurement procedures, in exchange for bribes equivalent to 3 million euros³⁾https://financialintelligence.ro/sorin-blejnar-condamnat-definitiv-la-5-ani-de-inchisoare-pentru-trafic-de-influenta. But, by far, it was the conviction of Liviu DRAGNEA⁴⁾https://www.bursa.ro/inalta-curte-a-motivat-decizia-de-condamnare-a-lui-liviu-dragnea-80841834 that caused the most controversy, dividing the Romanian people. This strong politician with a long history with the Romanian anti-corruption prosecutor’s office, who was tried for fraud in the referendum, was finally imprisoned for influence peddling and creating fictitious jobs.

However, it would be inaccurate to consider the lack of integrity of Romania’s political class as the sole cause of the perpetuation of corruption. Less recently, the Oracle and Veolia cases highlight the expansion of the phenomenon of corruption through the existence of a certain tolerance on the part of major groups towards the practices deployed by their Romanian subsidiaries. The General Manager of Oracle Romania is accused of having received bribes amounting to over 860,000 euros from various IT companies for granting them, at favorable prices, shares in contracts in which Oracle was the main contractor⁵⁾https://www.romania-insider.com/oracle-romania-ceo-corruption-investigation. Apa Nova , the Romanian subsidiary of the Veolia group responsible for water distribution in Bucharest, is suspected of having paid more than 12 million euros in bribes between 2008 and 2015 in exchange for favorable decisions by local authorities, according to the investigation launched since September 2015 by the Romanian anti-corruption prosecutor’s office.⁶⁾https://www.lefigaro.fr/flash-eco/2018/01/15/97002-20180115FILWWW00352-corruption-le-siege-de-veolia-en-roumanie-perquisitionne.php. In Bucharest, water prices jumped 125% between 2008 and 2015. Correspondingly, the company’s sales had risen from around 114 million euros that year to 152 million in 2012, and its net profit from 19 to 26 million. The damage suffered by the Romanian state would amount to at least 5.5 million euros for income tax and VAT, and 17.3 million euros for money laundering. Could it be that the Romanian subsidiary alone is behind this corruption scheme, when the main beneficiary of the fraudulent cost increases is the Veolia group? Hard to believe.

In Hungary, we should mention the repeated misappropriation of European funds for the benefit of Viktor ORBAN’s entourage: a tourist train from his home village, built by his very close friend thanks to 1.9 million euros from the European Union, and an adventure park also entrusted to people close to the Prime Minister, again financed by European aid to the tune of 3.5 million euros. 43.7 million euros paid by Brussels for an electrical renovation project involving the installation of new lighting in 34 towns⁷⁾https://www.francetvinfo.fr/elections/presidentielle/hongrie-les-pratiques-douteuses-du-clan-orban_2691690.html, a project carried out by his son-in-law’s company, to the detriment of residents, who find themselves in the dark. The NGO Transparency International notes that, in terms of corruption, Hungary has fallen from 20th to penultimate place in the European Union during Viktor Orban’s term of office.

Bulgaria, the most corrupt of the European Union member states, has seen its government recently hit by corruption scandals in 2019, including embezzlement of EU funds, manipulation of tenders in return for bribes, and the sale of luxury apartments at low prices. Members of the GERB party, founded by the current Prime Minister, Boïko BORISSOV, who is currently serving his third term, have been directly involved in the purchase of low-cost luxury apartments⁸⁾https://www.courrierdesbalkans.fr/Corruption-en-Bulgarie-l-Apartmentgate-le-scandale-qui-fait-trembler-le-pouvoir. This pattern exists in all the countries of Eastern Europe, which still operate today on the basis of dense networks created by all kinds of links between people: friendships, family ties, former clients from the days of centralized planning, but also links of mafia influence or corruption. All these links give a particular coherence to what has been built up in Eastern Europe, a kind of network economy in which the mafias all have their place. Added to this is an almost permanent desire for reform, notably with the aim of better controlling the justice system, and in particular the media, one of the most important vectors for the spread of these practices.

Problems of conflict of interest, abuse of state resources for electoral purposes, insufficient transparency regarding the financing of political parties and their campaigns, and lack of media independence are commonplace and should be priorities for both national governments and the EU. Following these results, and with a view to restoring and strengthening the integrity of political systems, the NGO has issued new recommendations, including the regulation and control of the transparency of political financing, better management of conflicts of interest, and the reinforcement of electoral integrity.

However, as Patricia MOREIRA⁹⁾Transparency International, Corruption Perceptions Index 2019, page 9, Transparency International’s Director General, also points out, it is by tackling the relationship between politics and money that corruption could be effectively combated.