In Euro-Zone, Corruption and Crisis Go Together

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The Madrid stock exchange on May 17, in the midst of a losing streak. / REUTERS
In a broad survey of 25 countries, Transparency International reports that widespread corruption in Europe could make it harder for the continent to resolve the Euro-zone economic crisis.

The report talks about a culture of graft that has taken hold across the Euro-zone, especially as many countries seek to privatize and sell public assets. This further weakens vulnerable economies as public money is either skimmed off or spent inefficiently. Euro-zone countries may view themselves as not particularly corrupt, yet few regulate lobbying or provide transparency and easy access to public information.

Finn Heinrich, research director at Transparency International, was quoted by Reuters as saying that the countries in the deepest trouble are those with “weak anti-corruption safeguards.”  This means that “public officials probably know they can get away with cutting corners.”

While some behavior may not be technically illegal, the report said, politicians and business leaders use their power to land business contracts and shape policies. Ruling bodies fail to enforce anti-graft measures already on the books, even in Northern European countries that are often seen as being relatively corruption-free.

The countries with the tallest economic woes – Greece, Italy, Portugal and Spain – are also shortest on public accountability.  And, upcoming privatization deals are ripe for schemes that could enrich corrupt officials at the expense of cash-strapped countries.

“The links between corruption and the ongoing financial and fiscal crisis in these countries can no longer be ignored,” the report said.  Estimates by other organizations have pegged the cost of corruption in European Union countries at $150 billion a year – a number that many analysts think may even be too low.

Sweep to Corruption in Europe could slow recovery

Intrigue deepens in Rome over the bourgeoning scandals involving the Vatican Bank and Italy’s state-controlled aerospace giant, Finmeccanica.

The Associated Press reports that Italian prosecutors said they have raided the home of Ettore Gotti Tedeschi, the recently ousted president of the Vatican bank, as part of the Finmeccanica investigation.  Prosecutor Francesco Greco,  however,  declined to give details about the reasons for the search, but said it had nothing to do with Tedeschi’s role at the Vatican bank, adding that Tedeschi was not under investigation as part of the Finmeccanica probe.

Tedeschi is a well-connected Italian financier and head of the Italian branch of Spain’s Banco Santander.

He was ousted from his Vatican position last month over charges that he failed to do his job. A Vatican spokesman confirmed last Saturday, however, that Tedeschi had received a severance payment from the bank.  Tedeschi has said he does not want to respond to the charges against him, arguing that it might upset the Pope.  He has been accused if with failing to show up to meetings of the Vatican bank board, failing to keep the board informed and failing to show how documents in his possession were disseminated.

For months, Italian prosecutors have been investigating allegations that Finmeccanica officials created a $2.7 million slush fund to funnel money to political parties. Both the company’s ex-chairman and his wife, are under investigation for creating false invoices to evade taxes and pay off politicians.  Both Pier Francesco Guarguaglini and his wife Marina Grossi, also a Finmeccanica official,  have denied the charges.

Sweep to Home of ex-Vatican bank chief searched in widening Finmeccanica corruption probe

Elmo is getting kicked out of Pakistan.

And it’s all due to corruption.   Saying it had received credible allegations of fraud and corruption, the United States has cancelled funding for Pakistan’s version of Sesame Street.  US State Department spokesman Mark Toner said the US Agency for International Development terminated the contract with Pakistan’s Rafi Peer Theater Workshop to produce the show after investigating charges of corruption it had received on an anti-fraud hotline.

USAID had budgeted $20 million for the show, which premiered late last year and is known as Sim Sim Hamara in Pakistan. Reuters reports that about $6.7 million of this has already been spent. “We  take misuse and misspending of U.S. taxpayer dollars very seriously,” said Toner.

Sesame Workshop, the nonprofit that produces the show, said it was “surprised and dismayed” by the allegation.  The workshop sends children’s programs to more than 150 countries. Sim Sim Hamara was aired weekly in Urdu and other regional languages on Pakistan television and produced radio episodes, puppet shows and mobile screenings throughout the country.  The workshop said that “it is our hope that the achievements of Sim Sim Hamara and the gains we have made in the lives of children in Pakistan will carry on.”

A spokesperson for the Pakistan Children’s Television rejected the U.S. charges as a “lie,” and said the organization would try to find other sources of funding to keep the program running.

The Muppets have run into trouble in foreign lands before.   USAID support for a Palestinian version was cancelled by Congress after Palestine tried to gain admission to the United Nations.

Sweep to Pakistan’s Sesame Street hits dead-end amid fraud charges

 

Leslie Wayne

Leslie Wayne

Leslie Wayne, former senior editor at 100Reporters, is an award-winning business reporter, formerly at The New York Times. Ms. Wayne joined The Times in 1981 and has covered Wall Street, banking industry regulatory reform, municipal finance scandals and, most recently, the aerospace and military industries. Ms. Wayne has an M.B.A. in finance from Columbia Business School and was also a Knight-Bagehot Fellow in Business and Economic Journalism.

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