Monday, 10 November 2008

Glass half empty?

Four months after the launch of the register, two of largest Brussels-based lobby consultancies have now entered some details.

Burson-Marsteller, one of the top-five biggest 'public affairs' firms in Brussels, indicates it had a total turnover on lobbying of 6,963,000 euro in 2007.

The other big fish is KREAB, which recently acquired Houston Consulting Europe (registered separately); their combined Brussels team consists of more than 40 lobby consultants, probably only a little smaller than Burson-Marsteller. We can only guess at exactly how many, as the Commission regrettably decided not to include names in its register.

If KREAB and Burson-Marsteller are indeed of a comparable size, then why are their turnover figures from lobbying so different?

KREAB does not disclose a precise figure (>= 1000000 euro in 2007 plus 750000 - 800000 euros for Houston Consulting), but if we put it at 1.8 million euro, then that is just 25% of Burson-Marsteller's turnover. It could be that KREAB's consultants work for a lower fee than their competitors, but an average annual turnover of 45,000 euros per consultant seems very low for a profit-seeking company...

The real reason for the difference lies in a different interpretation of what "lobbying" involves, resulting in different calculations. At a conference in Brussels last week Catherine Stewart from Interel, another large lobby consultancy firm, said that in her view only 20% of the fee should be counted as lobbying! The problem is that the Commission has failed to provide clear guidelines and definitions, which enables consultancies to use whatever interpretation of the figures they choose. And the result is, of course, a register where figures cannot be compared, causing confusion rather than clarifying who lobbies for who, on which issues and with what budget.

Unlike KREAB, Burson-Marsteller chose to disclose a precise figure for its lobbying turnover, but at the same time all 65 clients listed have been put in the category "turnover below 10 %". All this tells us is that none of these clients paid Burson-Marsteller more than 696,300 euro for lobbying on their behalf. Clearly this is not a meaningful form of financial disclosure.

Burson-Marsteller's clients include pharma giants such as Pfizer and Novartis, Microsoft, the Republican Party of Armenia, controversial mining firm Gabriel Resources, among others. These clients may have paid Burson-Marsteller a few hundred euros or perhaps close to 700,000 euro in 2007. The conclusion is clear: the Commission, when designing its register, has allowed the lobby consultancy firms to escape meaningful financial disclosure.

The burning question, however, is whether all the clients are included in the registrations. Jose Lalloum, of lobby consultancy federation EPACA, has indicated that his members would not disclose clients to whom they have promised confidentiality. At last week's conference, several lobby consultants mentioned that they have asked each and every client for permission to add their name to the register. Promising secrecy to corporate clients may seem logical for lobbyists-for-hire but it is entirely unacceptable from a democratic point of view.

The Commission's spokesperson last week acknowledged that the register remains "half empty". In fact however, the situation is far worse than that. The register contains no names of lobbyists and only a tiny minority of lobby consultancies, law firms, corporations and thinktanks have registered. Those lobby consultancy firms which have joined the register disclose flimsy and misleading financial data about their lobbying turnover and what their clients pay them. The disclosed clients' lists might be seriously incomplete. At this stage, the register can best be described as a distorting mirror which may or may not be reflecting lobbying activities. The image is so confused, it is hard to tell.

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