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Why does bureaucratic corruption occur in the EU?

A principal-supervisor-agent model

Abstract

Why does bureaucratic corruption occur in the EU system? Several examples suggest that bureaucratic corruption exists and that the Commission’s anti-fraud agency, OLAF, is not a fully independent authority. We thus develop a novel interpretation of the principal-supervisor-agent model to cope with non-independent anti-fraud units. This model shows that corruption is likely to occur when the expected value to the client from bribing the agent is larger than the expected value to the principal of truth-telling by the supervisor. Overall, this analysis points to the risks of flawed incentives and the lack of institutional independence among principal, agent, supervisor and client. Our main policy recommendations as a result of these findings are that OLAF should be placed outside the Commission, and that whistleblowers should receive adequate protection.

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Notes

  1. For a critical examination of the usefulness of applying the principal-agent model to analyze the EU, see Kassim and Menon (2003) and Hodson (2009).

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Acknowledgements

An earlier version of this paper was presented at the Martin Paldam Workshop, Aarhus University, September 28–29, 2012. We thank the other participants and three reviewers of this journal for helpful comments.

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Correspondence to Gert Tinggaard Svendsen.

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Brandt, U.S., Svendsen, G.T. Why does bureaucratic corruption occur in the EU?. Public Choice 157, 585–599 (2013). https://doi.org/10.1007/s11127-013-0095-5

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Keywords

  • EU
  • Bureaucratic corruption
  • Principal-supervisor-agent
  • OLAF
  • Commission