Edited by Edoardo Ongaro, Andrew Massey, Marc Holzer and Ellen Wayenberg
Chapter 17: Fiscal Decentralization and Corruption in the European Union: The Italian Case of Community Frauds
Maria Laura Seguiti INTRODUCTION This chapter examines the conceptual and empirical basis of the relationship between decentralization and corruption. The type of decentralization being studied is the one which involves the EU supranational power and the Member Status (MS), particularly in the financial area. The phenomenon of corruption under consideration comprehends both private and public actions and behaviors and is limited to irregularities and frauds committed at the expense of the EU budget.1 The literature is divided. Decentralization can be an effective antidote to corruption because it improves the provision of public services through competition among sub-governments and increases the accountability of public authority to citizens. On the other hand, decentralization creates new layers of public authorities, each having powers susceptible to abuse where corruption is powerful and governance is weak. This difference of views is relevant in the light of the EU government vis-à-vis the MS since the EU has decentralized a great part of the financial management of its budget expenditures (mainly agriculture and structural funds) to the MS and their local governments. The annual reports of the European Commission to the European Parliament and to the Council on the protection of the financial interests of the EU for the years 2004–06, show that Italy is at the top of the ranking as for the amount and number of frauds and irregularities against the EU budget (Table 17.1). These data seem to be consistent with the reports on corruption in Italy by other international organizations, such...
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