European Semester progress reporting over the anti-corruption measures in Bulgaria, Italy, Romania and Spain

26/06/2020 - The European Semester (ES) provides political assessment of the key pressing issues and respective recommendations towards each Member State in order for achieving better coordination in economic policies across the European Union. In its 2020 reporting, corruption, and with growing recognition - state capture, are recognised as key issues, which affect the economy of the Member States. Responding to the needs for development of new tools and methodologies for assessment and monitoring state capture, SceMaps initiative, supported by the EC’s Internal Security Fund, aims at helping EU authorities to build evolving and risk-responsive instruments to tackle corruption and state capture threats. The initiative pilots a novel methodology in Bulgaria, Italy, Romania and Spain. The current note highlights the European Semester 2020 findings and respective policy recommendations regarding these phenomena in the four contries. In 2020 ES reporting, the issue of corruption is particularly stressed for Bulgaria and Romania, and to a limited extend for Spain and Italy. The first two countries still under the Cooperation and Verification Mechanism lag behind the rest of the EU in having effective judicial system and capacity to fight corruption and sustain rule of law. This is evident in both numerous cases of corruption scandals, revealed by the media, and in special Eurobarometer surveys. Spain and Italy’s reports conversely, are less focused on corruption as key challenge, although it is highlighted due to the high levels of perceived corruption in the Eurobarometer studies.

Spain The 2020 European Semester report highlighted that in Spain the perception of corruption has decreased substantially since 2013 (from 97% down to 88% in 2019), yet remains significantly higher than the EU average (66%) and around half of the companies surveyed by the Eurobarometer perceived corruption as a serious problem to their business in the country. In terms of policies, in 2019, the Spanish Parliament adopted a new ethical code and Parliamentary Office towards overseeing conflicts of interests. While Spain has no anti-corruption strategy, the National Strategy against Serious and Organised Crime, adopted in 2019, has foreseen new opportunities to the state authorities towards fighting corruption and organised crime. The strategy has allocated greater resources towards the Special Prosecutor’s Office of Spain and inter-agency cooperation was boosted. While corruption was not highlighted as a significant issue in Spain, the country has experienced a number of high corruption scandals since the publication of the ES report. The largest scandal in 2020 was for the alleged kickback between the King Juan Carlos by Saudi Arabia's late King Abdullah in 2008, where through offshore accounts was transferred nearly US 100 million to the ex-Spanish king.

Italy The 2020 European Semester report has highlighted that Italy has achieved limited progress in increasing civil justice and fighting corruption. Italy’s anti-corruption framework has experienced improvements but needs to be completed. It has strengthened the protections of whistle-blowers, giving the National Anti-corruption Authority a stronger role, and passing an anti-corruption law in January 2019. Despite this an issue that remains is of the absence of regulation sanctions in situations of conflict of interest for elected public officials, while embezzlement in the private sector remains only partly criminalised, and provisions against lobbying do not apply to members of government and parliament. Moreover, the low efficiency of criminal justice in appeals continues preventing prosecuting corruption effectively. A reform of the criminal procedure and appeal system is still pending. The COVID-19 pandemic, spreading after the publication of the ES reports, has exposed the Italian society to corruption, abuse of power and growth of organised crime. Following the start of the pandemic, Sicily’s coronavirus coordinator and 9 other healthcare officials have been arrested for taking bribes from equipment and services contracts. Another major corruption case, revealed in 2020, was the rigging of public tenders, worth around EUR 150 million, some of which coming from EU funds. The operation ‘Waterfront’ led to the arrest of 63 mafia suspects and public officials. The suspects were charged with abuse of public funds, bribery, corruption and abuse of office, as well as for their role in a scheme aimed to hand over control of the region’s state tender contracts to the syndicate.

Bulgaria The 2020 European Semester report acknowledged that that Bulgaria has taken steps towards fighting corruption, but it still remains one of the primary structural challenges in the coutry. A consolidation of the legal and institutional framework has been occurring in the recent years. Problematic areas continue to be ensuing effective criminal investigations, rebalancing the workload among courts, and streamlining local prosecution service offices. The country has progressed towards strengthening the anti-money laundering framework through the adoption of legislation to complete the transposition of the Fourth Anti-Money Laundering Directive and has taken steps to transpose the Fifth. However, Bulgaria’s capacity to fight money laundering remains low due to the limited use of financial intelligence and effective investigation’s supervision. Furthermore, measures to mitigate risks in relation to the ‘citizenship by investment’ scheme have not yet been undertaken. Such schemes have raised concerns about certain inherent risks, also linked to money laundering. It is recognised that high corruption cases remain a major issue, as there are ongoing trials, but the country has limited track record of effective convictions in high corruption cases. Since the beginning of 2020, several anti-corruption cases have been in development. The most significant one was the arrest of the Minister of Environment and Water of Bulgaria. He was charged with deliberate mismanagement and possible corruption which has led to a water crisis in the city of Pernik. Another corruption scandal in the same ministry, was related to the arrest of the deputy-minister, who is under investigation for crimes involving hazardous waste imports from Italy.

Romania The 2020 European Semester report highlighted that corruption continues to be a major problem for the business environment in Romania. 88% of businesses participating in the Eurobarometer survey in 2019 express that corruption is problem for the company, while 97% of companies perceived corruption to be widespread in Romania. The report underlined that currently, the Romanian government supports actions towards preventing and sanctioning corruption, but the country has to restore its track of progress in the fight against corruption, after it experienced backsliding done in the past years through legislative amendments and continued pressure on judicial institutions. The report also highlighted the existing concerns of negative impacts on the justice system. Legal modifications and political pressure in 2017 and 2018 have attributed to the affected efficiency and independence of the justice system in its capacity to investigate and sanction high-level corruption. On the positive side, Romania continues to make efforts to improve the enforcement of court decisions. Romania also makes progress in the implementation of its anti-corruption strategy although renewed political commitment would be necessary for its completion.

Policy recommendations The European Commission (EC) recently published recommendations to follow for 2020 and 2021 aiming at improving transparency and efficiency in the public procurement framework as one of the economic spheres, largely vulnerable to corruption and state capture in most of the Member States. In this regard, Spain needs to strengthen the public procurement framework to support recovery in an efficient manner as well as improve coordination between different levels of government. Italy, Bulgaria, and Romania are invited to improve the effectiveness of public administration in order to minimise burden to companies and as anti-corruption measure, while Romania needs particularly to improve the predictability of decision-making, including through an adequate involvement of social partners. Italy is called for improving the efficiency of the judicial system, while Bulgaria has to ensure adequate risk assessment, mitigation, effective supervision and enforcement of the anti-money laundering framework, despite the latest intensification of its efforts in this direction.