How Europe could take anti-corruption enforcement to the next level

At the time of writing, the European Parliament is due to start negotiations on the final form of its new directive on combating corruption.

Proposed by the European Commission in May 2023, the Directive will bolster Europe’s powers to combat corruption and, ultimately, lead to increased enforcement action on the continent.

The European Parliament’s own estimates indicate that corruption costs the European economy over €120 billion per year, an issue which recently made headlines through the Qatargate scandal.

In this context, the European Commission set out a modernised legislative framework to:

• Step up corruption prevention by raising awareness;
• Extend corruption offences to misappropriation, trading in influence and abuse of functions;
• Introduce minimum criminal penalties and sanctions for these offences;
• Extend the statute of limitations to prosecute corruption in the courts;
• Ensure that law enforcement and prosecutors have appropriate anti-corruption resources.

The new Directive forms part of this package of ambitious measures and, if adopted, European Union (“EU”) member states would have 18 months to transpose it into national law.

a) Adjustments to jurisdictional policies

Previously, firms accused of bribery and related crimes may have tried to have their cases heard in jurisdictions with the most lenient enforcement measures, a practice known as “forum shopping”.

To help prevent this particular type of retail therapy from becoming popular on the continent, the Directive will be imposing standardised enforcement measures for European member states, meaning trial and punishment should be more aligned, irrespective of where your case is heard.

Private-sector firms with a presence in several different European states may need to update their jurisdiction-specific policies to reflect any resulting uplift in the local legal framework.  However, procedures will still need to be proportionate to the inherent risks each jurisdiction holds.

b) Open communication with specialised enforcement bodies

The current version of the Directive requires member states to establish specialised anti-corruption bodies, with the “independence, resources and powers” required to counter corruption effectively.

This move could be in response to Transparency International’s latest Corruption Perceptions Index, which found increasing levels of corruption in Europe and attributed these developments to weak public-sector accountability, undermining the rule of law.

To prepare for this change, firms will need to maintain an open, collaborative dialogue with any new enforcement bodies in Europe, and ensure they are aligned with any changes in expectations.

c) Global alignment on best practice

Although by no means perfect, the UK Bribery Act, the US Foreign Corrupt Practices Act and the French Sapin II are perhaps seen as some of the world’s most mature examples of anti-bribery legislation.

Once the Directive is passed, legislators at the member-state level may therefore look to these examples of good practice when they transpose the new measures into local law.

If member states do seek to implement legislation at this level, it could have sweeping implications for the private sector, with organisations forced to comply with a UK/US-model of corruption legislation in states where this did not previously apply directly.

If the Directive delivers on all the enhancements described above, Europe could soon be seen as the latest global superpower to lay down the law in the name of anti-corruption.

This level-setting by the EU could put pressure on the UK to publish its own Anti-Corruption Strategy, in order to maintain its position as a global leader in anti-bribery regulation and enforcement.

These developments in Europe could also lead other regions, or supranational bodies, to reconsider and uplift their anti-corruption legal frameworks (all of which would be a fitting way to commemorate the 20th anniversary of the United Nations Convention against Corruption).

Before these ramifications of the new Directive start to be felt on the world stage, the key considerations above will at least help firms stay ahead of the near-term developments in Europe.

For more information, please contact Simon Stiggear and Michael Pollitt.