“Corruption is the abuse of power for private gain”.1 European Commission has outlined fight against corruption as a key political priority due to corruption having socio-economic effects on, for instance, governance, business, and security. Thus, corruption poses a serious threat to the European Union (EU) and its citizens.2
What is corruption and bribery? – Legal framework
Bribery may be the most known form of corruption, however majority of corruption taken place in Finland occurs in other forms, such as, favouritism, conflicts of interest, and unethical preparation of decisions secretly or between insiders.3 In EU level, favouritism is considered by businesses to be the most widespread corruptive practice in their country.4
Table 1. Businesses’ attitudes towards corruption in the EU – Percentage of how widespread corruption forms are considered by businesses in their country. Source: European Commission. Flash Eurobarometer 507. Businesses’ attitudes towards corruption in the EU. July 2022.
Ministry of Justice states that corruption takes different forms and varies case by case, making it a complex phenomenon. Legislation varies in different countries, for instance, there is no separate legislation in Finland for corruption and its prevention, instead, many acts together govern anti-corruption measures, criminalizing corruption’s different forms. However, not all forms of corruption are punishable by law.5
Across the EU, 49% of companies believe individuals and businesses engaged in corrupt activities are likely to be caught or reported to the authorities and 52% think that such individuals and businesses would face charges and go to court. In Finland, the figure is slightly higher, as 57% think that charges would be filed, and the individual/business would need to go to court.6
Olivier De Schutter states in his study for the Transparency International EU and Global Witness that the lack of a unified legislative framework in the EU, including law enforcement, results in the EU trailing behind other jurisdictions such as the United States in the fight against corruption. This has resulted in situations where European companies have been held liable for corruption under the United States Foreign Corrupt Practices Act (FCPA) of 1977 due to the lack of adequate anti-corruption legislation in Europe.
It is essential for EU to improve its anti-corruption legislation to ensure it is not lagging.7 To better fight against corruption, the European Commission has identified specific anti-corruption efforts. These efforts include mainstreaming anti-corruption provisions in EU law and providing support on implementing anti-corruption measures on a national level.8
How to measure corruption and bribery?
The Corruption Perception Index (CPI) report is published yearly by Transparency International, and it measures the level of perceived corruption in the public sector according to experts and businesspeople. In the 2021 report there were 180 countries included and the joint front runners were Denmark, Finland, and New Zealand (CPI 88; 100 is very clean, 0 is highly corrupt). CPI reports have been published since 1995.9
Global Corruption Barometer (GCB) published by Transparency International collects data on people’s views and experiences over corruption and bribery. Survey has been published for EU region with over 40 000 participants in 27 countries.10
What is the level of perceived corruption in Europe and in Finland?
Perceived corruption in the EU area is on the rise with EU average of 32% (Finland 16% - lowest of the 27 countries).11 Olivier De Schutter states in his study that, at European level more than 4 out of 10 companies consider corruption as an issue for doing business. The smaller the company, the often corruption and nepotism appeared a problem.12
Table 2. Percentage of companies in Europe who consider corruption as an issue for doing business
According to the national anti-corruption strategy, anti-corruption in Finland should focus more on corruption forms such as favouring friends and acquaintances, mutual unethical assistance as well as dual roles and conflicts of interest.13 A study by Ollus and Muttilainen regarding Indicators for measuring structural corruption in Finland also states that street-level corruption, i.e. activity to fulfil fundamental needs of people14, is rare in Finland, but corrupt and unethical behavior takes place, for instance, in decision making between insiders.15
Results in Global Corruption Barometer (GCB) from 2021 support these statements. Based on the GCB results in Finland, 99% of people did not pay bribes when using public services, but 25% used personal connections when using the same services.16 The EU averages for not paying bribes is 93% and using personal connections is 33%.17
How do different positions or institutions show in the GCB: Members of the Parliament, Business executives, Bankers, President’s / Prime ministers’ office and National Government officials are the top 5 institutions in EU with highest perception of corruption.18
Table 3. Perceived corruption in EU – Top 5
In Finland, the top 5 institutions differ from the EU - Business executives, Members of the Parliament, Bankers, Local Government Representatives and Non-Governmental Organisation (NGO).19
Table 4. Perceived corruption in Finland – Top 5
Is it only PEPs that have a higher risk for corruption and bribery?
According to the Financial Action Task Force (FATF) definition, Politically Exposed Persons (PEPs) are individuals who have a prominent position in a public function. Due to such a position and the possibility to influence, PEPs have a higher risk for corruption and bribery.20 Based on the Finland Country Report published by FATF in 2019, Finland is rated largely compliant over the PEP requirements set by FATF and due to the minor deficiencies over the requirement, it was not assessed on the Follow-up Report published 2021.21 The AML Act in Finland stipulates that a PEP needs to hold a position in the public sector. Finnish Government has decided on a decree to clarify the roles in the public sector that are applicable for PEP status.22
When assessing the perceived corruption in the EU area and Finland for the top 5 institutions, 3 out of 5 in EU and only 1 out of 5 in Finland fall under the definition of a PEP.
Table 5. Perceived corruption Top 5 institutions under PEP definition in EU and in Finland
How can BearingPoint help your organization?
Bribery and corruption are a global problem. Therefore, the anti-bribery and corruption measures must be relevant, sustainable and continuous – not only a tick-the-box exercise done once.
How is your organization prepared to identify and stop bribery and corruption? Has your company assessed potential risks, outlined key controls and ensured that a risk mitigation plan is up to date? Is your company’s risk assessment taking these into consideration?
BearingPoint can support your organization’s risk awareness by offering expertise ranging from creating robust risk-based processes to data-driven targeted and dynamic risk assessments.
Contact us for more information:
Henrika Pelkonen
Senior business Consultant, BearingPoint Finland
Timo Törrönen
Business Advisor, BearingPoint Finland
References
1 Ministry of Justice, Anti-Corruption.fi. What is corruption? Corruption | Anti-corruption.fi (korruptiontorjunta.fi).
2 European Commission. Corruption. Corruption (europa.eu).
3 Ministry of Justice, Anti-Corruption.fi. Corruption in Finland. Corruption in Finland | Anti-corruption.fi (korruptiontorjunta.fi).
4 European Commission. Flash Eurobarometer 507. Businesses’ attitudes towards corruption in the EU. July 2022. Businesses Attitudes towards Corruption_fl_507_summary_en.pdf.
5 Ministry of Justice, Anti-Corruption.fi. National legislation. National legislation and combating of corruption | Anti-corruption.fi (korruptiontorjunta.fi).
6 European Commission. Flash Eurobarometer 507. Businesses’ attitudes towards corruption in the EU. July 2022. Businesses Attitudes towards Corruption_fl_507_summary_en.pdf.
7 The Prevention of corruption as part of mandatory due diligence in EU legislation, 2021. Olivier De Schutter at the request of Transparency International EU and Global Witness. Web_The_Prevention_of_Corruption_Due_Diligence_EU-Legislation.pdf (transparency.eu).
8 European Commission. Corruption. Corruption (europa.eu).
9 Transparency International, Corruption Perceptions Index 2021. 2021 Corruption Perceptions Index - Explore the… - Transparency.org.
10 Transparency International, Global Corruption Barometer 2021 EU. Global Corruption Barometer - European Union - Transparency.org.
11 Transparency International, Global Corruption Barometer 2021 EU. Global Corruption Barometer - European Union - Transparency.org.
12 The Prevention of corruption as part of mandatory due diligence in EU legislation, 2021. Olivier De Schutter at the request of Transparency International EU and Global Witness. Web_The_Prevention_of_Corruption_Due_Diligence_EU-Legislation.pdf (transparency.eu).
13 Ministry of Justice. Korruption vastaisen yhteistyöverkoston luonnos korruption vastaiseksi strategiaksi, 2017. Korruption vastaisen yhteistyöverkoston luonnos korruption vastaiseksi strategiaksi (valtioneuvosto.fi).
14 Ministry of Justice, Anti-Corruption.fi. Corruption in Finland. Corruption in Finland | Anti-corruption.fi (korruptiontorjunta.fi).
15 Ollus, Natalia & Muttilainen, Vesa. Indicators for measuring structural corruption in Finland, 2021. Indicators for measuring structural corruption in Finland (tietokayttoon.fi).
16 Public service = public schools, public clinics or hospitals, identity documents, social security benefits, police
17 Global Corruption Barometer, European Union 2021. Citizen’s views and experiences of corruption. Transparency International. TI_GCB_EU_2021_web_2021-06-14-151758.pdf (transparencycdn.org).
18 Transparency International, Global Corruption Barometer 2021 EU. Global Corruption Barometer - European Union - Transparency.org.
19 Transparency International, Global Corruption Barometer 2021 Finland. Results - European Union - GCB - Transparency.org.
20 FATF Guidance - Politically Exposed Persons. FATF GUIDANCE (fatf-gafi.org).
21 FATF AML/CTF follow-up report Finland 2021. Follow-Up-Report-Finland-2021.pdf (fatf-gafi.org).
22 Valtioneuvoston asetus rahanpesun ja terrorismin rahoittamisen estämisestä annetussa laissa tarkoitetuista merkittävistä julkisista tehtävistä. Valtioneuvoston asetus rahanpesun ja terrorismin… 610/2019 - Ajantasainen lainsäädäntö - FINLEX ®.