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The Best System Money Can Buy

Corruption in the European Union

Carolyn M. Warner

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

Cover

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pp. 1-2

Title Page, Copyright

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pp. 3-8

Contents

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pp. 9-10

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Preface and Acknowledgments

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pp. ix-xiii

Work on this book began with a naive question about what happens when countries with different patterns of corruption become members of an international free trade organization.When Edith Cresson, a French commissioner in the European Union (EU), hired an old friend to be her adviser on a project, was she importing French hiring practices into the EU or merely behaving as any administrator would, given the structure of the EU? When Greece’s deputy finance ...

Abbreviations

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pp. xv-xvi

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INTRODUCTION

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pp. 1-13

In 1991, on the very eve of the launch of the European Single Market, politicians in Italy took bribes of more than $100 million to approve the breakup of a joint venture between a private and a state-owned firm. Also in 1991, the former treasurer of the German Christian Democratic Party used the bribe he collected on one deal to pay his fine for tax evasion on another. In 1988, just two years after...

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1 CORRUPTION DYNAMICS IN THE EUROPEAN UNION

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pp. 14-29

By 1992, according to some estimates, if the dollar amount of corruption in Italy had represented the gross income of a firm, that company would have been the twelfth largest in the country, just behind Olivetti and ahead of Alitalia. Fraud and corruption take a noticeable portion of the EU’s annual budget, and major partyfinancing scandals within the states have led many to conclude that corruption has become the norm, not the exception, in Europe’s democracies.1 ...

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2 DOES COMPETITION IN THE EUROPEAN UNION CORRUPT?

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pp. 30-53

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 Cypress hotel, threatening to jump into the lushly planted atrium below.Within little less than an hour, a police officer had talked the man down and back into his hotel room, where a twenty-two-year-old woman from Escorts-in-a-Flash was ...

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3 “CORRUPTION IS OUR FRIEND”

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pp. 54-84

When asked to explain how, on his modest government salary, he could have purchased 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- year-old mother-in-law.”1 That excuse failed to convince the French police, who instead suspected Marchiani of being directly involved in the sale of arms to Angolan president Eduardo Dos Santos at a time when the French government had ...

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4 THE MYTH OF THE MARKET

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pp. 85-106

In the spring of 1991, when Loïk Le Floch-Prigent, CEO of the state-owned oil company Elf Aquitaine, wanted to divorce his wife, Fatima Belaïd, he spoke of it to the president of France, then François Mitterrand.Noting that Belaïd was head of Elf ’s charitable foundation and that she had accompanied him on numerous business trips, Le Floch-Prigent told Mitterrand that she posed a rumor risk to Elf.Mitterrand replied, “Sort it out yourself. ...

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5 DECENTRALIZATION, DEMOCRACY, AND GRAFT

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pp. 107-134

Did the mayor of Lyon and minister of foreign commerce steal his daughter’s diary? Would the information therein implicate his son-in-law in a bribery and kickback scheme hatched not long after decentralization in France? ...

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6 THE CORRUPTION OF CAMPAIGN AND PARTY FINANCING

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pp. 135-158

An Italian CEO dying mysteriously in Mexico; a dead Taiwanese navy captain found floating in a Taiwan harbor; the commander of the Belgian air force killing himself with an overdose of whisky and tranquilizers; a German party treasurer shot to death in his bed; a German judge dying in a car “accident” the day he was to file papers in a corruption case; a Spanish court clerk jumping off a rooftop and plunging to his death to avoid revealing who was paying him to remove case ...

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7 THE PATHOLOGIES OF AN INTERNATIONAL ORGANIZATION

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pp. 159-174

As previous chapters have shown, the institutions of the EU have a limited role in reducing corruption in member states. Compounding the EU’s feeble influence within the states are the new opportunities for creative funding and outright graft that the EU provides. ...

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8 THE EUROPEAN UNION,THE INTERNATIONAL POLITICAL ECONOMY, AND CORRUPTION

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pp. 175-190

When gli Azzurri, Italy’s national soccer team, took to the field for the 2006 World Cup, more than half the players and the team manager were from Italian teams that had rigged matches. To those observers who gave it any thought, it may have seemed like situation normal: someone always tries to cheat in professional sports (and, che sorpresa, it happened in Italy). ...

Appendix 1

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pp. 191-194

Appendix 2

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pp. 195-196

Appendix 3

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pp. 197-198

Notes

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pp. 199-246

Index

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pp. 247-256


E-ISBN-13: 9780801459405
Print-ISBN-13: 9780801445552

Page Count: 272
Publication Year: 2007

Edition: 1