Denmark

Denmark Corruption Report

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Snapshot

Denmark_250x186.jpgDenmark is regarded as one of the world’s least corrupt countries, and bribery and other corrupt practices are not considered obstacles to business. The Danish Criminal Code (in Danish) forbids active and passive bribery and most other forms of corruption offenses contained in international anti-corruption conventions. It is also forbidden to bribe foreign public officials, and companies can be held criminally liable for acts of corruption committed by individuals working on their behalf. There is no distinction made between bribes and facilitation payments, and the propriety of gifts and hospitality depends on their intent and the benefit obtained. There is little formal regulation of conflict of interest and asset disclosure in the public sector. Despite a very low level of corruption, international monitoring institutions have criticized Denmark for its non-transparent rules on financing of political parties, and for insufficient enforcement of foreign bribery laws. Nonetheless, the government otherwise enforces anti-corruption policies and laws effectively.

Last updated: December 2017
GAN Integrity 

Judicial System

European_Commission.svg.pngThere is a low risk of corruption in Denmark’s judiciary. The judiciary is independent of the other branches of government and is extremely well-regarded and considered to be independent and fair (ICS 2017GCR 2017-2018). Companies have sufficient confidence in the efficiency of the legal framework to settle disputes, but express some reservations about the efficiency of the legal framework in challenging regulations (GCR 2017-2018). Bribes and irregular payments in return for favorable judgments are perceived as very uncommon (GCR 2015-2016). Over four in five companies and citizens perceive the independence of the courts to be good or very good (JS 2017). Judges express confidence that appointments and promotions in the judiciary are based on merit (ENCJ 2017). Only very few judges express concerns about facing inappropriate pressure in their work (ENCJ 2017).

Enforcing a contract takes 485 days, which is significantly faster than in other OECD high-income countries (DB 2018). Denmark has signed the New York Convention of 1958 and is party to the International Centre for the Settlement of Investment Disputes (ICSID). No major disputes over investment in Denmark have been reported in recent years (ICS 2017).

Police

The Danish police are not affected by corruption, and it enjoys a large degree of public trust (SGI 2016). The reliability of police services to protect companies from crime is considered very high (GCR 2017-2018), and the government has effective mechanisms to investigate and punish police abuse and corruption (HRR 2016). Public polls reveal that citizens do not pay bribes to police officers and that police services are considered to be among Denmark’s least corrupt institutions (SESC 2014).

Public Services

Companies are very unlikely to encounter corruption when obtaining public services in Denmark. Legal, regulatory and accounting systems are transparent and in accordance with international standards (ICS 2017). Bureaucratic procedures are streamlined and transparent (ICS 2017). New laws and regulations affecting the business sector only come into effect twice a year; on January 1st or July 1st (ICS 2017). Much of the Danish administration is decentralized and the interpretation of laws may vary from one municipality or region to another (SGI 2016). Although it is considered relatively burdensome to deal with government administrative requirements and companies report that inefficient government bureaucracy can be an obstacle to doing business (GCR 2017-2018), irregular payments and bribes almost never occur when obtaining public utilities, business permits, licenses and other related services (GCR 2015-2016; European Commission 2014). Starting a business takes less than half the time required in other OECD high-income countries (DB 2018). Businesses can start up their companies within a few hours through an easy plug’n’play registration system (Invest in Denmark, Oct. 2014). Dealing with construction permits takes significantly fewer steps and less than half the average time in other OECD high-income countries (DB 2018).

Allegations of mismanagement of fishing quotas over a period of twelve years by officials in the Fisheries Ministry have surfaced. It is alleged that a number of “quota kings” procured fishing licenses using fake papers which they then sold to fishermen (Eurotopics, Aug. 2017). As many as eight ministers may be involved; Fisheries Minister Esben Lunde Larsen was relieved of his portfolio and several fishing companies are under investigation by the National Police (Politico, Aug. 2017).

Land Administration

There is a low risk of corruption in Denmark’s land administration. Companies express confidence in that property rights are well-protected and respected in Denmark (GCR 2017-2018). Companies are not likely to encounter corruption while interacting with land services in Denmark (European Commission, Feb. 2014). Non-EU companies and individuals that have not been resident or present in Denmark for the preceding five years may only purchase real estate with the permission of the Danish Ministry of Justice (ICS 2017). Expropriation for public purposes with reasonable compensation following standards set by international law is allowed, but there have not been any significant expropriations recently, and there is no reason to believe major expropriations may take place in the near future (ICS 2017).

Registering property in Denmark takes less than a fifth of the average time required in OECD high-income countries (DB 2018).

Tax Administration

There is a moderate to low risk of corruption in Denmark’s tax administration. Companies report that bribes and irregular payments are exceedingly rare when making annual tax payments (GCR 2015-2016). Nevertheless, almost half of surveyed companies consider tax fraud to be the most widespread corrupt practice (European Commission, Feb. 2014). Tax rates and regulations are ranked by businesses to be among the most problematic factors to doing business in Denmark (GCR 2017-2018). The Danish Tax Assessment Act specifies that bribes and facilitation payments paid to foreign public officials and employees of state-controlled enterprises are not tax deductible. The Ministry of Taxation publishes corporate tax records to increase transparency and public scrutiny of corporate tax payments (ICS 2017). Companies spend less time on paying taxes compared to other OECD high-income countries (DB 2018).

A series of scandals involving mismanagement in Denmark’s tax agency (SKAT) have come to light in the past few years. The tax agency failed to act, despite numerous warnings, to stop a scheme costing the Danish state an estimated DKK 12.3 billion in which foreign companies applied for tax refunds for fictional shareholdings based on falsified documents (Business Insider, Aug. 2016). IT problems also caused SKAT to fail to collect an estimated DKK 92 billion from citizens and businesses; which is unlikely to be recovered (Politiken, Apr. 2017). SKAT is to be broken up into seven separate agencies in a bid to reform the plagued tax administration (The Local, Jun. 2017). Denmark became the first country to buy data related to the Panama Paper leaks in order to pursue an estimated 500 to 600 Danes suspected of tax evasion (The Guardian, Sept. 2016). In another case, Denmark’s largest bank, Danske Bank, has become embroiled in a corruption case involving a EUR 2.5 billion slush fund used by the Azerbaijani elite to influence high-ranking European politicians and offshore companies (OCCRP, Sept. 2017). Danske Bank is said to have broken Anti-Money Laundering regulations by ignoring several warning signs irregularities were occurring (OCCRP, Sept. 2017).

Customs Administration

Corruption risks are low in Denmark’s customs administration. Irregular payments and bribes are very rare during customs procedures (GETR 2016). The efficiency and time-predictability of import procedures are seen as satisfactory (GETR 2016). Polls reveal that the Danish customs administration is considered free from corruption and abuse of power, and that bribery almost never occurs during interactions with customs services (European Commission, Feb. 2014). The time and costs required to comply with border procedures in Denmark are practically negligible (DB 2018).

Public Procurement

There is a moderate to low risk of encountering corruption, mismanagement or irregularities in Denmark’s public procurement process. Few surveyed businesses believe that corruption prevents their company from winning a public tender (European Commission, Feb. 2014), or that procurement officials are likely to show favoritism when deciding on contracts (GCR 2017-2018). Around one in seven companies believes that corruption is widespread in tenders managed by national authorities and one in five companies believes corruption is widespread in tenders managed by local authorities (European Commission, Feb. 2014). Large-scale public procurement projects are subject to tender requirements in line with EU legislation (ICS 2017). Companies convicted of corruption are subject to fines and possibly prohibitions on exercising certain commercial activities, depending on the gravity of the offense (UNODC 2016). Exclusion from bidding on future tenders is also a possible sanction (GTDT 2017). Unfair competition from state-owned enterprises (SOEs) is not a concern (ICS 2017).

Nearly forty public officials working in IT departments were charged in connection to a bribery investigation for accepting gifts of electronic devices from IT vendor Atea A/S, which provides services to a number of public institutions in Denmark (HRR 2016). Atea A/S is being prosecuted by Danish authorities for bribery and embezzlement carried out by a number of employees (Reuters, Mar. 2017). The convicted Atea employees include former CEO Claus Hougesen, two former sales directors Carsten Ritzau and Per Juul Andersen and former vice president Peter Trans. Convicted government employees include former IT operations manager Rene Clausen and former IT director Michael Steen Hansen, both in the Zealand region and Michael Mølkær Jensen, former IT development director in the Zealand region and later on IT director at the national police. All seven defendants, as well as Atea, were convicted on 38 counts of bribery and embezzlement (Børsen, Oct. 2017). Sentences are expected to be handed down in February 2018 (Fyens.dk, Nov. 2017).

Legislation

The Danish Criminal Code (in Danish) prohibits active and passive bribery, trading in influenceembezzlement, fraud, breach of trust and money laundering. It also criminalizes bribery of foreign public officials, bribery between businesses, and corruption committed by individuals working on the company’s behalf. Penalties for bribery under the Criminal Code can include fines and up to six years’ imprisonment. The proceeds of the corrupt acts may also be confiscated. The government generally enforces anti-corruption laws effectively (HRR 2016). The Public Prosecutor has issued a memo instructing prosecutors to prosecute both the company and the individual for corrupt acts in case the employee is operating at a senior level (GTDT 2017). If a non-senior employee engages in bribery in the company’s interest, only the company should be prosecuted as a general rule (GTDT 2017). There is no distinction made between bribes and facilitation payments, and the propriety of gifts and hospitality depend on their intent and the benefit obtained (GTDT 2017). Following criticism by the OECD that the Criminal Code permits facilitation payments to foreign public officials in countries with ‘very special conditions’, Denmark’s Director of Public Prosecutions has instructed all prosecutors to regard facilitation payments as ‘undue’ and constituting criminal bribery (UNODC 2016). The Act on Measures to Prevent Money Laundering and Financing of Terrorism requires regulated financial institutions and other entities to report suspicious transactions to the Public Prosecutor for Serious Economic and International Crime (SØIK, in Danish). Denmark has no specific laws to protect whistleblowers; a 2015 report by a government-commissioned expert committee advised against introducing special legislation (BT, Apr. 2015). Businesses in the financial sector do face legal requirements to implement a whistleblowing program for their employees (WLG 2016). However, there is a duty to report wrongdoing in the public sector found in the Code of Conduct in the Public Sector (UNODC 2016). There are no specific laws that regulate conflicts of interests and asset disclosures for members of parliament; asset disclosures are voluntary (EUACR 2014). Denmark has among the laxest regulation of political finance in Europe (Open Democracy, Jun. 2016). The OECD has expressed concerns that Danish authorities have in several cases failed to thoroughly investigate allegations of foreign bribery (OECD 2015). The last proceedings involving foreign bribery date back to 2012 (GTDT 2017).

Denmark is a signatory to the OECD Anti-Bribery Convention, the United Nations Convention Against Corruption (UNCAC), the Council of Europe’s Civil and Criminal Law Conventions against Corruption and the Group of States Against Corruption (GRECO).

Civil Society

Denmark’s constitution guarantees freedom of expression, which is widely respected in practice. The media reflects a wide variety of political opinions and is frequently critical of the government (FotP 2016). Danish media plays a central role in uncovering scandals of political abuse, with cases of suspected fraud often starting in the media and subsequently picked up by relevant public authorities (NISA 2012). A controversial access to information law was entered into force in 2014, banning public access to documents between the ministries and their advisers (FotP 2016). Criticism has been voiced that this restricted access to information will prevent the media and civil society from discovering potential abuse of power in the state administration (FotP 2016). The Danish media environment is among the freest in the world (FotP 2017).

There is no uniform legislation that regulates civil society organizations (CSOs) in Denmark, but their independence is guaranteed by law and there are no examples of political interference (NISA 2012). Very few CSOs deal with corruption due to the limited role that corruption plays in the public debate. Nevertheless, the main government entities responsible for combating corruption collaborate actively with civil society and other relevant actors (SGI 2016).

Sources

2018-04-17T08:37:48+00:00 Region: Europe & Central Asia|

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