From bribery, to undue influence and collusion, from fraud to money laundering, corruption in the private sector undermines the vitality of markets, the livelihoods of people and damages society as a whole. From ecological disasters to economic instability and human rights violations, private sector corruption has drastic consequences on our world. It erodes public confidence in institutions and deprives citizens of the benefits of economic growth.
The recent financial crisis is among the most glaring examples of a persistent integrity gap in private sector institutions. Corrupt and unethical behaviour in the financial industry includes not only episodes of fraud, misselling of financial products, market manipulation, conflicts of interest, insider trading and money laundering, but also behaviour that ignores the wider responsibility of banks towards depositors, tax payers and society at large. The most recent scandals demonstrate that regulatory and judicial efforts have not delivered the much-needed systemic and cultural changes required to restore trust.
In the European Union, corporate integrity standards have not yet reached a level that prevents corruption and undue influence, and the EU governance framework for corporate activities does not properly address demand and supply-side corruption.
However, the EU can help combat corruption in the private sector through stricter anti-corruption standards in trade policies, through more transparent and corrupt-free public procurement practices and through more substantial initiatives to promote best practice on corporate compliance or anti-bribery systems or, where necessary, changes to company law.
The EU can also better promote reporting of company anti-bribery programmes, company structures and their financial contribution to the countries where they operate (so called country-by-country reporting). This helps promote integrity standards by allowing citizens to hold them to account for their impact on the ground.