On 4th November, the European Commission released a study identifying several high-risk areas of corruption within the EU, particularly in finance, health, and defence/security sectors. These sectors are vulnerable due to their essential services. Corruption in these areas often involves bribery, fraud, embezzlement, favouritism, and conflicts of interest.
To combat corruption, the Commission introduced a new anti-corruption package with stricter rules. EU institutions and Member States now have an opportunity to address these issues before corruption becomes more deeply rooted.
The impact of corruption
Corruption harms economic growth, wastes resources, and deepens social inequality by abusing public power for private gain. It often involves collusion, lying, and intimidation. The European Commission identifies finance, healthcare, defence and security, public procurement, construction, infrastructure, and sports as high-risk sectors. This blog highlights the first three sectors due to recent significant societal and economic developments, and potential misuse of public funds and resources:
- Financial sector: The financial sector faces various corruption offenses, from small scams to terrorism financing. This evolving industry deals with money laundering, tax evasion, hidden assets, fraud, false reporting, and cybercrimes. Increasing digitalization and new financial technologies have introduced new risks, prompting a renewed focus on combating corruption.
- Health sector: The health sector is a corruption hotspot due to complex governance, large budgets, and critical services. The COVID-19 pandemic has highlighted these vulnerabilities. Patients' inability to assess medical decisions or bills allows providers, insurers, and pharmaceutical companies to exploit their positions.
- Defence and security sector: High secrecy makes this sector prone to corruption. It involves defence ministries, contractors, and suppliers. Increased defence spending and unclear procurement processes raise the risk of bribery, conflicts of interest, and fraud. The Ukraine war and NATO commitments further contribute to these risks.
EU’s Anti-Corruption Directive: What companies need to know
In May 2023, the European Commission introduced an anti-corruption package, including an Anti-Corruption Directive to be fully implemented by 2025. Member states have 18 months to adopt it into their national laws.
Companies can be held liable for corruption or fraud committed by natural persons in leadership roles, such as those with authority to represent, make decisions, or exercise control within the company. Liability can also arise from weak oversight, even if the crime occurs indirectly due to poor supervision.
To avoid penalties, companies must implement strong anti-corruption programs, ensure transparency, and conduct regular financial checks.
Now is an opportune moment for companies to assess and enhance their anti-corruption strategies. If you require assistance in strengthening your anti-corruption efforts, we are here to help.
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Author: Sofia Turunen
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Leea Uusi-Hautamaa
Leea Uusi-Hautamaa johtaa Deloitten Regulatory & Compliance -palveluita. Leea on ammatiltaan lakimies ja varatuomari. Hänellä on pitkä ja monipuolinen kokemus rikosoikeudellisista asioista, väärinkäytösten ja muun epäeettisen toiminnan selvittämisestä sekä yritysetiikan ja vaatimustenmukaisuuden kehittämisestä yksityisellä ja julkisella sektorilla. Briefly in English Leea is a lawyer and works as Head of Deloitte’s Regulatory & Compliance services. She has extensive experience in working for both listed global corporations and private owned companies as well as public sector in respect of criminal law related matters, corporate internal investigations, compliance and ethics matters.