Public Choice

, Volume 157, Issue 3–4, pp 585–599 | Cite as

Why does bureaucratic corruption occur in the EU?

A principal-supervisor-agent model


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.


EU Bureaucratic corruption Principal-supervisor-agent OLAF Commission 



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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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Department of Environmental and Business EconomicsUniversity of Southern DenmarkEsbjergDenmark
  2. 2.Department of Political Science and GovernmentAarhus UniversityAarhusDenmark

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