'Breathtaking' Corruption in the EU

A recent article at the BBC discusses the findings of a report by EU Home Affairs commissioner Cecilia Malmstroem on corruption in the EU. According to the report, the cost of corruption in the EU amounts to €120 billion annually. We would submit that it is likely far more than that (in fact, even Ms. Malmstroem herself concurs with this assessment). This is of course what one gets when one installs vast, byzantine bureaucracies and issues a veritable flood of rules and regulations every year. More and more people are needed to administer this unwieldy nightmare of red tape, and naturally the quality of the hires declines over time due to the sheer numbers required.

Moreover, many small to medium sized businesses would probably not be able to survive if they didn't occasionally bribe officials. Big business considers bribes a perfectly normal cost of business anyway, especially when the business concerned involves milking tax cows. As you will see further below, the defense business – or better the war racket – is especially prone to corruption. Tax payers of course end up paying every cent. Another sector that is apparently subject to widespread corruption is health care – which should be no surprise, since health care provision is an almost fully socialistic enterprise in Europe. Bribes may well mean the difference between life and death in some instances. You will probably also not be overly surprised to learn that there was VAT fraud amounting to €5 billion in the bizarre and totally ineffective and useless 'carbon credits' market, which has turned into a boondoggle of amazing proportions. There's simply no other way of making a mint in that market we suppose. From the BBC:

 

“The extent of corruption in Europe is "breathtaking" and it costs the EU economy at least 120bn euros (£99bn) annually, the European Commission says. EU Home Affairs Commissioner Cecilia Malmstroem has presented a full report on the problem.

She said the true cost of corruption was "probably much higher" than 120bn. Three-quarters of Europeans surveyed for the Commission study said that corruption was widespread, and more than half said the level had increased.

"The extent of the problem in Europe is breathtaking, although Sweden is among the countries with the least problems," Ms Malmstroem wrote in Sweden's Goeteborgs-Posten daily. The cost to the EU economy is equivalent to the bloc's annual budget. For the report the Commission studied corruption in all 28 EU member states. The Commission says it is the first time it has done such a survey.

National governments, rather than EU institutions, are chiefly responsible for fighting corruption in the EU.

[…]

In some countries there was a relatively high number reporting personal experience of bribery. In Croatia, the Czech Republic, Lithuania, Bulgaria, Romania and Greece, between 6% and 29% of respondents said they had been asked for a bribe, or had been expected to pay one, in the past 12 months. There were also high levels of bribery in Poland (15%), Slovakia (14%) and Hungary (13%), where the most prevalent instances were in healthcare.

[..]

Last year Europol director Rob Wainwright said VAT fraud in the carbon credits market had cost the EU about 5bn euros.”

 

(emphasis added)

And that is merely what they actually know about. Remember, there are know unknowns and unknown unknowns here as well, and they probably dwarf what is actually known. One gets an inkling of how big the problem may really be when considering the case of Greece.

 


 

_72724992_eu_corruption_labels_624map(3)The EU corruption map according to the official report – via BBC.

 


 

Bribes Exceeding Greek Official's Memory Storage Capacity

Greece is of course a special case in terms of official corruption. If you ever wondered how the country could go bankrupt in such short order after joining the euro zone, wonder no longer. Here are a few excerpts from a recent article in the NYT about a lower level official in the defense ministry who received so many bribes that he cannot even remember them all anymore. The amounts involved are astonishing:

 

“When Antonis Kantas, a deputy in the Defense Ministry here, spoke up against the purchase of expensive German-made tanks in 2001, a representative of the tank's manufacturer stopped by his office to leave a satchel on his sofa. It contained 600,000 euros ($814,000).

Other arms manufacturers eager to make deals came by, too, some guiding him through the ins and outs of international banking and then paying him off with deposits to his overseas accounts.

At the time, Mr. Kantas, a wiry former military officer, did not actually have the authority to decide much of anything on his own. But corruption was so rampant inside the Greek equivalent of the Pentagon that even a man of his relatively modest rank, he testified recently, was able to amass nearly $19 million in just five years on the job.”

 

One certainly wonders what more powerful officials were able to skim off. Unfortunately, corruption is so widespread and reportedly involves the highest echelons of the bureaucracy and the body politic in Greece, so that one must expect that we will never find out. No wonder there is a lot of tax evasion in Greece: who wants to hand over his hard earned money to such a gang of thieves? It is like paying off the mafia.

Meanwhile, the companies paying the bribes are of course just as guilty, and many of them come from countries that are themselves ranked relatively low on the corruption scale – e.g. Germany and Sweden. It seems to be an 'opportunity makes thieves' type situation.

 

“Never before has an official opened such a wide window on the eye-popping system of payoffs at work inside a Greek government ministry. At various points, Mr. Kantas, who returned to testify again last week, told prosecutors he had taken so many bribes he could not possibly remember the details.

[…]

Mr. Kantas's testimony, if accurate, illustrates how arms makers from Germany, France, Sweden and Russia passed out bribes liberally, often through Greek representatives, to sell the government weaponry that it could ill afford and that experts say was in many cases overpriced and subpar.

The 600,000 euros, for instance, bought Mr. Kantas's silence on the tanks, which were deemed of little value in any wars Greece might fight, according to Constantinos P. Fraggos, an expert on the Greek military who has written several books on the subject. Greece went ahead and bought 170 of the tanks for about $2.3 billion.

Adding to the absurdity of the purchase (almost all of it on credit), the ministry bought virtually no ammunition for them, Mr. Fraggos said. It also bought fighter planes without electronic guidance systems and paid more than $4 billion for troubled, noisy submarines that are not yet finished and sit today virtually abandoned in a shipyard outside Athens. At the height of the crisis, when it was unclear whether Greece would be thrown out of the euro zone and long before the submarines were finished, the Greek Parliament approved a final $407 million payment for the German submarines.”

[…]

The Defense Ministry is hardly the only ministry suspected of being a hotbed of corruption. But the Defense Ministry makes a particularly rich target for investigators because Greece went on a huge spending spree after 1996 when it got into a low-level skirmish with Turkey over the Imia islets in the Aegean Sea.

One former director general of the Defense Ministry, Evangelos Vasilakos, calculated that Greece spent as much as $68 billion on weaponry over the next 10 years, much of it borrowed money. To win these deals, which involved the approval of military and Defense Ministry officials, as well as Parliament, arms dealers probably spent more than $2.7 billion on bribes, according to Tasos Telloglou, an investigative reporter for the Greek daily newspaper Kathimerini, who has written extensively on the subject.”

 

(emphasis added)

Buying $68 billion worth of largely useless weaponry is certainly quite a feat for a country of slightly over 11 million inhabitants. The Saudis may well be able to top that on a per capita basis, but they have a lot of oil money and haven't required a bailout from anyone. Greece was not able to actually afford these expensive toys. 

Even if the weapons were in perfect working order, this buying spree wouldn't make any sense. Is Greece really going to fight a war with Turkey, a NATO partner? The very idea is absurd. Since we can rule this possibility out, what on earth are the weapons good for?

We can hereby amend Randolph Bourne's famous saying: 'War is the health of the State – and its minions and suppliers'.

 


 

Greek tankSay hello to a white elephant in the Greek shrubbery.

(Image author unknown)

 


 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

5 Responses to “A Bog of Corruption”

  • No6:

    There will come a time of retribution.

  • I think that this corruption is eased not only by unlimited rulings, but over all by our financial sistems. Fractional reserve banking, fiat money and micromanaged insterest rates make it easy for big companies get the money to buy politicians that then favor their mates. All this began in 1971 and I thing we are now seeing, probably, a tipping point. In Spain corruption is rampant. And nothing happens. Almost no one goes to jail eventhough there is constant talking in the media about corruption.The three main political parties have been involved in some corruption case and even one of the two principal labor unions. Nothing happens and no one is made accountable. People here is really getting fed up. And our politicians are unable to see it. Somethig is going to happen eventually. And I think it is not going to be pretty.

  • Sounds a lot like our Congress and bureaucracy, where unskilled workers go in broke and come out unskilled and rich. Every member of Congress is an expert money manager, who commonly turn $2000 trades into $100K in a few months, ala Hillary Clinton. There is a fog of corruption that follows the Rodham’s around. Can the US afford another Chicago politician?

  • zerobs:

    Corruption is so widespread that huge swaths of academia and public intellectuals actually consider it the OPPOSITE of corruption. Government loans to companies like Solyndra are nothing short of corruption, but good luck convincing government apologists of that.

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • A Surprise Move in Gold
      Traders and Analysts Caught Wrong-Footed Over the past week gold and gold stocks have been on a tear. It is probably fair to say that most market participants were surprised by this development. Although sentiment on gold was not extremely bearish and several observers expected a bounce, to our knowledge no-one expected this:   Gold stocks (HUI Index) and gold, daily. As noted in the annotation above, a Wells Fargo gold analyst turned bearish at the worst possible moment...
  • May Away
      May Gone in June... Yes, now that June is here, it is indeed the end of May. Theresa May, to be precise, the henceforth former British Prime Minister. After delivering her unparalleled masterclass in “how to completely botch Brexit”, British cartoonists are giving her a well-deserved send-off, which we are documenting below. But first, in case you don't know anything about Ms. May's heroic “Brexit”-related efforts, here is an explanation of how she tried to finagle the best...
  • Elizabeth Warren’s Plan to Bamboozle American Voters
      A Plan for Everything! The run-up to the presidential primaries offers a funhouse reflection of American life.  Presidential hopefuls, hacks, and has-beens turn to focus groups to discover what they think the American electorate wants. Then they distill it down to hollow bumper stickers. After that, they pump their fists and reflect it back with mindless repetition.   A plea for clemency from Mr. 1/1024th crow. [PT]   Change We Can Believe In.  Feel the...
  • Fed Chair Powell’s Plan to Pickle the Economy
      A Loose Relationship The Dow Jones Industrial Average made another concerted run at the elusive 27,000 milestone over the last several weeks.  But, as of this writing, the index has stalled out short of this psychosomatic barrier.  By our estimation, this is for the best.   Since early 2018 the DJIA has gone nowhere, albeit in interesting ways... [PT]   While not always apparent, the stock market generally maintains a loose connection to the underlying...
  • Paul Tudor Jones Likes Gold
      Gold is Paul Tudor Jones' Favorite Trade Over the Coming 12-24 Months In a recent Bloomberg interview, legendary trader and hedge fund manager Paul Tudor Jones was asked what areas of the markets currently offer the best opportunities in his opinion. His reply: “As a macro trader I think the best trade is going to be gold”. The relevant excerpt from the interview can be viewed below (in case the embedded video doesn't work for you, here is a link to the video on...
  • The Italian Job - Precious Metals Supply and Demand
      Lira Comeback? The price of gold jumped 35 bucks last week, and that of silver 48 cents. The dollar is now down to 23 milligrams of gold. Keith is on the road this week, so we will just comment on one thing. If Italy is serious about moving back to the lira, that will make the euro less sound (to say nothing of the lira). That will drive people mostly to the dollar, but also to gold.   Italian deputy prime minister Matteo Salvini (as the leader of the Lega party he is...
  • Bitcoin: What is the Best Day of the Week to Buy?
      Shifting Patterns In the last issue of Seasonal Insights I have discussed Bitcoin’s seasonal pattern in the course of a year. In this issue I will show an analysis of the returns of bitcoin on individual days of the week.   Bitcoin, daily – since bottoming in early December, BTC has advanced quite a bit. It remains an excellent trading sardine. [PT]   It seems to me that Bitcoin is particularly interesting for this type of study: it exhibits spectacular price...
  • Feeling the Heat of a Civilization on the Downside
      An Epic Folly for the Ages Today we begin with a list.  A partial list.  And in no particular order... Angela Merkel. Donald Tusk. Mario Draghi. Donald Trump. Jerome Powell.  Shinzo Abe.  Haruhiko Kuroda.  Theresa May. Boris Johnson. Mark Carney. Xi Jinping.  Emmanuel Macron.  Vladimir Putin. Justin Trudeau. Juan Trump.  And many, many more...   Politicians and bureaucrats of the modern age of statism and central planning... fighting a rearguard action...
  • Silver Remains a Monetary Metal - Precious Metals Supply and Demand
      Silver Price Driven by Reservation Demand The price of gold went up a buck last week, but the price of silver dropped back 13 cents. And the gold-silver ratio marches further upwards. Keith spoke at a conference this week, about how to analyze the fundamentals of supply and demand in gold and silver. He talked about the basis of course.   Silver coins – silver prices are partly influenced by an industrial demand component, but the fact that they move most of the time with...
  • “We’re All Socialists Now”
      An Ominous Sign of Things to Come Despite being probably robbed of the Democratic Party’s nomination by the Clinton political machine, the success of the Bernie Sanders’ 2016 campaign with his advocacy of “democratic socialism” was an ominous sign of things to come and, in some sense, more telling of the political climate than Donald Trump’s improbable victory in November, 2016.   Bernie Sanders, yet another professional finger-wagger (he is actually famous for his...
  • How Do Stock Prices React to Rate Cuts by the Fed?
      The “Greatest Economy in History” Stumbles “This is the greatest economy in the history of our country”, Donald Trump opined just a few months ago. Alas, recently there is growing evidence of an economic slowdown.   The Morgan Stanley MSBCI business conditions gauge plummets to its lowest level since 2008, as recent economic data releases ominously persist in disappointing. [PT]   This has fueled speculation of imminent rate cuts by the Fed. You may...

Support Acting Man

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!