The Best System Money Can Buy
Corruption in the European Union
Publication Year: 2007
As the European Union moved in the 1990s to a unified market and stronger common institutions, most observers assumed that the changes would reduce corruption. Aspects of the stronger EU promised to preclude-or at least reduce-malfeasance: regulatory harmonization, freer trade, and privatization of publicly owned enterprises. Market efficiencies would render corrupt practices more visible and less common.
In The Best System Money Can Buy, Carolyn M. Warner systematically and often entertainingly gives the lie to these assumptions and provides a framework for understanding the persistence of corruption in the Western states of the EU. In compelling case studies, she shows that under certain conditions, politicians and firms across Europe, chose to counter the increased competition they faced due to liberal markets and political reforms by resorting to corruption. More elections have made ever-larger funding demands on political parties; privatization has proved to be a theme park for economic crime and party profit; firms and politicians collude in many areas where EU harmonization has resulted in a net reduction in law-enforcement powers; and state-led "export promotion" efforts, especially in the armaments, infrastructure, and energy sectors, have virtually institutionalized bribery.
The assumptions that corruption and modernity are incompatible-or that Western Europe is somehow immune to corruption-simply do not hold, as Warner conveys through colorful analyses of scandals in which large corporations, politicians, and bureaucrats engage in criminal activity in order to facilitate mergers and block competition, and in which officials accept private payments for public services rendered. At the same time, the book shows the extent to which corruption is driven by the very economic and political reforms thought to decrease it.
Published by: Cornell University Press
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Title Page, Copyright
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Preface and Acknowledgments
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Work on this book began with a naive question about what happens when coun-tries with different patterns of corruption become members of an internationalfree trade organization. When Edith Cresson, a French commissioner in the Eu-ropean Union (EU), hired an old friend to be her adviser on a project, was sheimporting French hiring practices into the EU or merely behaving as any admin-...
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In 1991, on the very eve of the launch of the European Single Market, politiciansin Italy took bribes of more than $100 million to approve the breakup of a jointventure between a private and a state-owned firm. Also in 1991, the former trea-surer of the German Christian Democratic Party used the bribe he collected onone deal to pay his fine for tax evasion on another. In 1988, just two years after...
1CORRUPTION DYNAMICSIN THE EUROPEAN UNION
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Who ought we to distrust, if not those to whom is committed greatBy 1992, according to some estimates, if the dollar amount of corruption in Italyhad represented the gross income of a firm, that company would have been thetwelfth largest in the country, just behind Olivetti and ahead of Alitalia. Fraud andcorruption take a noticeable portion of the EU’s annual budget, and major party-...
2DOES COMPETITION IN THEEUROPEAN UNION CORRUPT?
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On the morning of February 20, 1992, in Orlando, Florida, police were called to a not entirely atypical south Florida scene: a wild, half-naked middle-aged man standing seventeen floors up on a balcony of the Hyatt Regency Grand Cy-press hotel, threatening to jump into the lushly planted atrium below. Within lit-tle less than an hour, a police officer had talked the man down and back into his...
3“CORRUPTION IS OUR FRIEND”
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Thou shouldst rather ask if it were possible any villany should be sorich; for when rich villains have need of poor ones, poor ones mayWhen asked to explain how, on his modest government salary, he could have pur-chased 123 plane tickets costing more than $34,000, a former French bureaucrat,Jean-Charles Marchiani, replied that the funds came from “the savings of his 90-...
4THE MYTH OF THE MARKET
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In the spring of 1991, when Loïk Le Floch-Prigent, CEO of the state-owned oilcompany Elf Aquitaine, wanted to divorce his wife, Fatima Belaïd, he spoke of itto the president of France, then François Mitterrand. Noting that Belaïd was headof Elf’s charitable foundation and that she had accompanied him on numerousbusiness trips, Le Floch-Prigent told Mitterrand that she posed a rumor risk to...
5DECENTRALIZATION,DEMOCRACY, AND GRAFT
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...—Former deputy mayor of Marbella, Spain, Isabel García MarcosDid the mayor of Lyon and minister of foreign commerce steal his daughter’s di-ary? Would the information therein implicate his son-in-law in a bribery andkickback scheme hatched not long after decentralization in France? Are illegalkickbacks from local public works projects actually income subject to alimony...
6THE CORRUPTION OF CAMPAIGNAND PARTY FINANCING
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The French like neither political parties nor taxes, and we are goingAn Italian CEO dying mysteriously in Mexico; a dead Taiwanese navy captainfound floating in a Taiwan harbor; the commander of the Belgian air force killinghimself with an overdose of whisky and tranquilizers; a German party treasurershot to death in his bed; a German judge dying in a car “accident” the day he was...
7THE PATHOLOGIES OF ANINTERNATIONAL ORGANIZATION
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When the World Bank thinks it is ﬁnancing an electric power station,—Paul Rosenstein-Rodin, Deputy Economics Director, World Bank, 1947As previous chapters have shown, the institutions of the EU have a limited rolein reducing corruption in member states. Compounding the EU’s feeble influ-ence within the states are the new opportunities for creative funding and outright...
8THE EUROPEAN UNION,THE INTERNATIONAL POLITICALECONOMY, AND CORRUPTION
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Ideally, we should see a virtuous circle of beneﬁts.... Real life, When gli Azzurri, Italy’s national soccer team, took to the field for the 2006 WorldCup, more than half the players and the team manager were from Italian teamsthat had rigged matches. To those observers who gave it any thought, it may haveseemed like situation normal: someone always tries to cheat in professional sports...
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Page Count: 272
Publication Year: 2007