Adina Dudau & Alvise Favotto, University of Glasgow
As the European Union negotiates its ambitious Anti-Corruption Directive, it is taking a major step toward aligning Member States under a common framework to combat corruption. The directive’s focus on harmonising definitions, expanding corporate criminal liability, and creating dedicated anti-corruption bodies signals a serious commitment to clean governance across the EU.
Yet, as researchers and policy practitioners working on integrity systems and corporate accountability, we believe this important legislation raises a further question: Can the EU credibly claim global leadership in anti-corruption if its Anti-Corruption Directive fails to address conduct by EU firms operating overseas?
The directive, tabled by the Commission in May 2023, is rightly focused on offences committed within the Union, such as the Novartis corruption case in Greece. But in an era where European firms are deeply embedded in international markets and often backed by public financing or diplomatic support extraterritorial trans-national risks cannot be ignored. The legal framework, as proposed, contains no binding provisions on how Member States should address corruption committed by EU companies operating overseas. This is a potentially important omission given the global footprint of many European firms and the corruption risks that can arise from operating in a jurisdiction with weaker governance or regulatory oversight.
Such risks are particularly acute in complex and high-stakes sectors such as security, infrastructure and healthcare, where large contracts, extended supply chains and close ties between business and government are common. While the Directive encourages Member States to identify and mitigate vulnerabilities in high-risk sectors, it does not include binding or sector-specific provisions. One such area is international defence procurement, a form of public contracting widely recognised as highly vulnerable to corruption. These areas are frequently exempted from transparency and competition rules on national security grounds. While such exemptions may be legally defensible under current EU law, they present significant loopholes that merit closer attention, especially as public investment in military and security capabilities increases across Europe.
One illustrative case is Leonardo S.p.A., Italy’s partially state-owned aerospace and defence firm. Leonardo has faced scrutiny in connection with allegations of bribery linked to defence contracts, most notably in India, Indonesia, and, more recently, Colombia. In several instances, legal proceedings have targeted intermediaries and foreign officials allegedly involved in these operations. At the same time, Leonardo has also taken visible steps to strengthen its internal compliance and integrity systems, including the establishment of ethics committees and the adoption of international anti-corruption standards. Yet these cases highlight the persistent risks associated with complex cross-border transactions in high-stakes sectors like defence procurement. Despite past controversies, Leonardo has continued to benefit from strong political support within Europe and sustained market confidence with its share price rising notably in recent years. This suggests that reputational risks abroad do not necessarily undermine firms’ domestic legitimacy or financial backing, raising broader questions about the effectiveness of existing accountability mechanisms.
Do strategic firms receive limited scrutiny due to their geopolitical or economic importance? And if so, how does that align with the EU’s external messaging on transparency, accountability, and good governance, particularly toward candidate countries, aid recipients, and trade partners?
To be clear, we are not suggesting that strategic industrial policy and anti-corruption goals are incompatible. But they do need to be mutually reinforcing. In this context, the absence of any clear guidance in the directive on how to address foreign bribery by EU-linked firms—and the lack of targeted safeguards for high-risk sectors like defence procurement—could be a missed opportunity.
From both a policy and normative standpoint, the EU could:
- Encourage Member States to extend corporate criminal liability to offences committed abroad, especially where companies are headquartered or incorporated in the EU.
- Review and tighten exemptions for defence procurement and ad-hoc emergencies, ensuring that national security and emergency exceptions do not become safe havens for opaque or preferential contracting.
- Tie public subsidies, export credit guarantees, and political endorsements to integrity benchmarks, ensuring that public support does not shield firms from accountability. BridgeGap report on causes and trends of corruption risk in Europe-41 proposes a pan-European disbarment system in this sense.
In a time of growing geopolitical competition and renewed investment in security and defence, this issue is not peripheral, but central to the EU’s credibility as a normative power. And with recent signals that the United States is scaling back enforcement of the Foreign Corrupt Practices Act (FCPA)—a pillar of transnational corporate accountability—the EU’s role in shaping the next phase of global anti-corruption leadership becomes even more consequential.
Corruption is not confined by borders. The tools to prevent it shouldn’t be either. As negotiations on the Anti-Corruption Directive continue, this may be the right moment to ask whether Europe’s internal standards are truly matched by its global ambitions—and what steps are needed to close that integrity gap.
Acknowledgements: The authors are grateful to Alina Mungiu Pippidi and to Todor Galev for comments on earlier versions of this blog post. Thanks are also due to BridgeGap Work Package 4 members involved in the research of integrity management systems in public, private and hybrid European organisations.
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