The 250 page investigation comes amid increasing voter disillusion with the EU sparked by the region's debt crisis. "Euro-sceptic" political parties such as Britain's UKIP and France's National Front, whose campaign messages are that the EU is a corrupt system that is taking over powers from individual governments, are expected to make big gains in the European elections in May.
Three-quarters of EU citizens think corruption is widespread in their own country, according to a Commission report from February, showing the distrust of the political establishment across the continent.
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"The EU institutions have done a lot to put their house in order in recent years but strong foundations are being undermined by complex rules, complacency, and a lack of follow up," Carl Dolan, director of the Transparency International EU office, said in a press release.
Transparency International's report shone the light on "blind spots" in the EU law making process. The so-called "trilogue" discussions that take place behind closed doors between the Parliament, European Commission and Council are "difficult or impossible to trace", the report said, but directly influence the final legislation.
Despite the presence of around 15,000 lobbyists in Brussels, the report said there are no rules requiring EU lawmakers to disclose their meetings with them when drafting legislation. The anti-corruption body also said European institutions need to make access to information more transparent.
The European Commission and Council did not respond to requests for comment.
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EU institutions have been hit with a series of scandals over the past few years. EU commissioner John Dalli, was forced to resign in 2012 after allegations he knew about a lobby attempt to influence tobacco legislation, while some members of European Parliament were allegedly paid to amend legislation in 2011.
Whistleblowers not protected
Transparency International's report is the first of its kind and covers 10 EU institutions including the Commission and the anti-fraud agency OLAF.
Bolstering ethics and conflict-of-interest checks, together with better monitoring EU institutions's accounts are among other recommendations made by organization.
The integrity report also claims that while EU staff are obliged to report misconduct, whistleblowers at many institutions are not protected.
"Without sufficient procedures in place to support and protect those reporting, the risks of corruption and wrongdoing within the EU administration are increased," the report said.
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Parliament under fire
The European Parliament came under heavy fire in the report for not co-operating with the research. The report claims that the Parliament would not allow researchers to interview key members of the institution.
"This lack of cooperation from the EP reveals serious concerns about the transparency of the institution and a worrying distrust of the role of civil society in contributing to the integrity of European parliamentarians and the administration supporting them," the report said.
The European Parliament was not available for comment.