Wednesday, 30 December 2009

Kallas and the unresolved revolving doors problem

While Commissioner Kallas certainly deserves praise, the paper titled "My results 2005-2009" posted on his website just before Christmas overstates his achievements on some key issues. The voluntary lobby transparency register simply suffers from too many shortcomings to be considered a success, as has been pointed out in numerous postings in this blog and by other observers. Kallas's paper also highlights the “comprehensive staff ethics initiative”, which was launched “to raise awareness of the ethical rules of the European civil service”. A more realistic assessment of Kallas' record on ethics issues is that he has focused too much on awareness-raising and failed to add teeth to the Commission’s approach towards conflicts of interest. The Commission's current ethics rules are sketchy and the implementation ineffective, for instance when it comes to Commission officials going through the revolving doors to private sector lobbying jobs.

In theory, Commission officials are required to request permission before going through the revolving door and the Commission can refuse or attach conditions before authorising the move. In practice, the Commission is far too easy-going with giving the go-ahead. Only last month, Brussels-based lobby consultancy Interel Cabinet Stewart proudly announced that Jean-Philippe Monod de Froideville had become their new associate director. Mr. de Froideville, a Dutchman, was a personal advisor and member of Cabinet of Competition Commissioner Kroes, between July 1st 2007 and December 31st 2008. Interel's press release states that Mr. de Froideville will focus on “competition and trade matters” and that he will work “horizontally across the client portfolio”. It seems that the Commission has failed to prevent some obvious conflicts of interest that could emerge from Mr. de Froideville's new job as a lobbyist on competition policy issues, the very same field for which he was so recently responsible in the Commission. Interel is temporarily absent from the Commission's lobby transparency register, but the consultancy's report submitted to the register earlier this year includes
Rio Tinto and numerous other corporate clients that could have a strong interest in influencing EU competition policy.

When CEO asked the Commission's DG Admin for clarification about its approval of
Mr. de Froideville's new job, the cryptic response was that "the decision has not been taken”. This could mean that the Commission has not at all intervened in the matter of Mr. de Froideville's job move or that the decision has not yet been taken. This last scenario would also be rather surprising, considering that Mr. de Froideville's new employer already on November 19th presented him as their new associate director.

In any case, there is a strong argument to be made for lobby consultancy work on competition policy issues to be entirely off-limits for a member of the Cabinet of the Competition Commissioner for a lengthy period of time. A 'cooling off' period of several years would be needed before conflicts of interest can be convincingly ruled out. Interel's press releases reveals a serious lack of awareness about potential conflicts of interests related to employing high-level Commission officials; yet another good reason for introducing a general cooling-off period of several years.

On the last page of his paper, Commissioner Kallas acknowledges that there are still “a number of important challenges that need to be addressed”, one of which is to “pursue comprehensive staff ethics”. Indeed, there's serious work to be done for Maros Sefcovic, the candidate to replace Commissioner Kallas on Administration matters.

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Monday, 14 December 2009

EU citizens suspect corruption in EU institutions, Wenig escapes sanctions

Remarkably under-reported: an opinion poll published by Eurobarometer last week revealed that a growing share of European citizens considers corruption to be a serious problem. No less than 83% of the respondents believe that “there is corruption in national institutions” (ranging from 35% in Denmark to 98% in Greece). “The close links between business and politics is the most common cause Europeans give for corruption, followed by insufficient action by governments to prevent corruption”, Eurobarometer reports. 42% of respondents agree that “there are too close links between business and politics”.

The survey reveals that the image of the EU institutions is very grim and has further deteriorated in the last two years. According to the poll, a shocking 76% of EU citizens agree “there is corruption within the institutions of the European Union”, up from 66% in 2007. Respondents in Greece, Slovenia, Sweden (all 85%) and Germany (84%) most often share these concerns, those in Poland and Romania least often (both ‘only’ 58%). Strangely, this seems to be the only question that was asked about the EU institutions, the rest of the survey only deals with opinions about corruption on the national level. This is a missed opportunity, but the figures are sufficiently extreme to merit a strong political response. The burning question is: what will Barroso’s new Commission team do to secure the highest possible standards in preventing corruption and conflicts of interests in the EU institutions?

Over the last few months Brussels Sunshine has reported numerous cases showing that the Commission does not exactly have its house in order yet when it comes to avoiding conflicts of interest: a Trade Commissioner who personally signs the decision to lift import tariffs for a giant corporation owned by a close friend, ex-Commissioners working as highly-paid lobbyists, a lobbyist for Microsoft and Pfizer being the Special Adviser of the EU’s Consumer Commissioner, just to mention a few examples.

The need for change was underlined very clearly when earlier this month, the European Voice reported the bizarre news that former Commission official Fritz-Harald Wenig was found guilty, but will not suffer any consequences for highly unethical behaviour. Mr. Wenig, who has meanwhile retired, had according to the Sunday Times, offered to leak commercially sensitive information about trade negotiations in return for financial rewards. The European Voice now reports that the EU’s Civil Service Tribunal “found that Wenig had failed to comply with the Commission code of conduct”, but at the same time overturned his suspension “due to procedural errors”. The reason: the suspension decision was “taken only by Commissioner Kallas, rather than by the full College of Commissioners.”

According to the judgement of the Tribunal, the College had given Kallas the mandate to deal with the Wenig case on 10 September, but – contrary to the EC’s internal rules – this decision was only published on the EC intranet and not in the appropriate print publication. That formal error made Wenig win the case! The Commission may have wanted to act firmly in this case but had to fall back upon improvisation.

After the Tribunal’s verdict, the Commission has to repay Wenig the €6,000 that was deducted from his salary during the six month suspension period. The fact that Wenig was found guilty of violating the Commission’s internal rules, but suffers no consequences, raises major questions about the Commission’s ability to handle the corruption cases that so many Europeans worry about.

The Barroso II Commission clearly has its work cut out for itself!

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Friday, 4 December 2009

Potočnik as Environment Commissioner – industry in the drivers seat?

One of the remarkable aspects of Barroso’s decisions on the portfolios of the new Commission team is that all 13 current Commissioners that continue in Barroso-II will get a new portfolio. The logic behind these transfers is not always exactly clear and in some cases Barroso’s choices are very worrying. Take the example of Janez Potočnik who after five years as Research Commissioner is now proposed as new Environment Commissioner.

An Environment Commissioner should be strongly determined to defend the need for ambitious environmental protection laws and policies that can move societies away from unsustainable over-consumption that causes massive damage not only in Europe, but across the world. Standing firm against industry lobby groups that seek to block, delay and water down such policies, is a crucial element of the job. And there, Potočnik’s record as Commissioner for Research does not necessarily bode well. Judging from his approach to the European Technology Platforms, Potočnik may not be the most well-equipped to handle the heavy industry lobbying pressures that he will face as Environment Commissioner.

The European Technology Platforms play a key role in shaping the allocation of EU research funding (FP7), which concerns very large sums of taxpayers’ money. During Potočnik’s tenure as Research Commissioner, many of these advisory bodies were heavily dominated by, if not almost exclusively composed of representatives of large corporations with a direct commercial interest in the area on which the advisory groups were to formulate proposals. Examples include the Technology Platforms on agrofuels, ‘clean coal’, security research and biotechnology.

In the example of the Technology Platform on agrofuels (EBFTP), lobbyists managed to shape the research priorities in a way that opened up for their companies getting hold of millions of euros of public money to promote potentially very harmful technologies such as genetically modified trees. Many of the companies that participated in the EBFTP have received EU funding for their research projects, including Bayer, Shell, Syngenta, Novozymes, SEKAB, Abengoa, Repsol and SweTree Technologies. The European Ombudsman is investigating a complaint by CEO into these matters.

Disturbingly, this industry capture was not an accident, but the result of a conscious strategy from Potočnik’s side. In a letter to CEO (June 2007), Commissioner Potočnik justified the dominance of industry in these platforms saying: “European Technology Platforms have been conceived as a means to help realise the Lisbon Strategy. The platforms can play a key role in better incorporating industry’s needs into EU research priorities by bringing together stakeholders, led by industry, to define a Strategic Research Agenda and to suggest possible directions for its implementation. This is the underlying rationale for the deliberate industrial focus of technology platforms, which was indeed, as you note correctly, reflected in BIOFRAC and is also manifest in the composition of the Biofuels Technology Platform.”

If Potočnik would display a similar pro-corporate bias as Environment Commissioner, this would seriously undermine the effectiveness and credibility of EU environmental policy.

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Will Barroso-II have a transparency Commissioner?

Media reactions to Commission President Barroso’s decisions on the division of portfolios over the 26 candidate Commissioners have concentrated on who got key portfolios, like Michel Barnier getting the internal market job, which includes the politically hot financial services dossier. What seems to have gone unnoticed so far, is the lack of clarity over who will take over political responsibility for the next phase of the European Transparency Initiative.

Commissioner Kallas, who launched the ETI in 2005, is moving to transport and his portfolio will be split over at least three of the incoming Commissioners. Over the last term, Commissioner Kallas made good progress in securing transparency around EU agriculture funds and beneficiaries of EU grants and contracts to external consultants. Less impressive, but certainly not unimportant, was the progress he made in promoting lobby disclosure as well as preventing conflicts of interests, for instance around the Commissioners' Special Advisers. The European Transparency Initiative, despite the shortcomings in its implementation, is perhaps the European Commission’s first-ever ambitious initiative to address the lack of transparency and ethics rules around EU lobbying. It is worrying that Barroso has left it unclear whether the ETI will be continued during the next five years and which Commissioner will be in charge.

In a letter sent to Barroso November 23rd, and posted on Kallas’ website, the Estonian Commissioner “hands his lobby regulation mandate back to President Barroso”. Kallas recommends Barroso to assign “clear political responsibility for driving this issue forward in the next Commission”. However, when Barroso later that week announced the division of portfolios, such clarity was entirely missing. It seems Barroso has divided Kallas’ portfolio over three incoming Commissioners:

  • Maroš Šefčovič: Vice-President of the Commission for Inter-Institutional Relations and Administration
  • Algirdas Šemeta: Taxation and Customs Union, Audit and Anti-Fraud
  • Janusz Lewandowski: Budget and Financial Programming
There’s also the scenario that Barroso would take charge of the ETI follow-up himself. President Barroso should urgently provide clarity over who will get political responsibility to drive this issue further. Whatever the constellation, Barroso needs to address this very important issue with the necessary vigor and determination. During the approval hearings of the incoming Commissioners in Parliament in mid-January, MEPs are more than likely to ask questions about the new Commission's approach to lobbying transparency and ethics. The ETI was an important starting point, but there are still plenty of improvements to be made, for example on the lobby register.

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Thursday, 3 December 2009

Searching in vain for the EP's Chamber of Secrets (Intergroups Register)

In the last few weeks, CEO has tried in vain to access the European Parliament's Register of Intergroups. After numerous phone-calls and fruitless email correspondence, we raised the white flag and wrote a complaint letter to the Parliament's Quaestors instead. Our failed search for the register reveals an unacceptable lack of transparency.

In 2006 Corporate Europe Observatory published a survey of official and informal intergroups operating in and around the European Parliament. The so-called intergroups contain MEP's from different political families in the Parliament and are centered on a specific issue or area of interest (like Tibet or anti-racism). Some Intergroups are used as lobbying tools by special interests, for example the secretive Sky and Space Intergroup, which is run by ASD, the Aerospace and Defence Industries Association of Europe. This activity is absent in ASD's file in the Commission's lobbying transparency register.


During the 2006 survey it proved pretty difficult to find information on the intergroups officially registered with the European Parliament. It took quite some determination to get access to the room hidden deep in the EP labyrinth where the registration forms for all formal intergroups were kept in old-fashioned binders. And when we were finally able to take a look at the files, it turned out that most intergroups had failed to submit the updated and complete declarations which the rules require.


With the approval process of intergroups for the new legislature now entering its final phase, we wanted to repeat our survey. Our goal was to examine if intergroups had registered properly, in particular if they had provided financial data as required in the rules on intergroups. But this was easier said than done. The internal rules of the Parliament regarding intergroups state that “the Quaestors shall keep a register of the declarations of financial interests submitted by the intergroup chairs. That register shall be open to the public for inspection.” However, contrary to what would be the common sense solution, the register is still not available online. So we had to get in touch with the Secretariat of the Parliament, who hopefully could point us in the right direction. After corresponding with several secretariat staff, we finally managed to talk to the person responsible for the register.


While we were hoping that we could go and browse the paper files (as we did in 2006), it turned out there were no files available at the moment. As the last legislature was now past, the files had been sent to the archives. But according to the head of the archives, they had never received any documents of that kind. Thus, he forwarded our request to yet another register, namely the Public Register of Documents. And there we finally lost the scent, when a friendly lady at this Register told us they didn't have the files, and we should try to get in touch with the Register of Intergroups itself.


This brought us back to where we were when we started our investigations. A Kafkaesque experience that makes us wonder why it is so hard to live up to basic transparency standards? If the intergroups are requested to submit their financial interests and the public are allowed to see these files, why is this information not available?

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Tuesday, 1 December 2009

Mandelson's links to oligarch raise concerns over Commissioners' conflicts of interests

Channel 4's documentary Dispatches yesterday revealed a document showing that former EU Trade Commissioner Peter Mandelson (2004-2008) personally signed the decision to lift import tariffs for Rusal, the aluminum giant owned by Lord Mandelson's close friend Oleg Deripaska.

Lord Mandelson's close links to Deripaska have attracted criticism before, but the document, dated December 20th 2005, appears to show a serious conflict of interest. German MEP Dr Ingeborg Graessle described Lord Mandelson's behaviour as "a completely improper doing" and argued that "it is a conflict of interest". "For me it is a conflict of interest, when you have a close friend who profits from your decision," Graessle told The Independent.

In response, Lord Mandelson's spokesperson argued that EU decision-making is "based on a college system where decisions are taken by 27 commissioners. The idea that one individual can influence the process is laughable". This comment ignores that the Trade Commissioner position is a hugely powerful one and that Mandelson did hold very substantial powers over trade policy decisions. The College of Commissioners often just rubber-stamps what is proposed by the Trade Commissioner.

The spokesperson also stated that EU commissioners are not subject to any code of conduct for these type of situations. This is correct and underlines the importance of tightening the code of conduct for Commissioners. Commission President Barroso has announced a review of the current code. The ALTER-EU coalition has written to Barroso with recommendations for such a review.

MEP Graessle told UK newspapers that she is going to "make Lord Mandelson's involvement with Mr Deripaska a centrepiece" in her efforts to promote a code of conduct that can prevent conflicts of interest.

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Monday, 30 November 2009

Champagne corks popping in Rue Belliard

Commission President Barroso surprised many with his early announcement on Friday afternoon of the portfolios for the 13 new candidate Commissioners and the 13 current Commissioners who will continue in Barroso-2.

Barroso gave Günther Oettinger (German Chancellor Angela Merkel's appointee) the job as energy Commissioner. This news is likely to have resulted in champagne corks popping in the Rue Belliard, the ugly four-lane motorway full of lobbyists' offices that cuts through the Brussels EU quarter.

No.s 60-62 Rue Belliard are the lobby offices of German coal and nuclear energy giant EnBW, a company he knows well from his time as prime minister of Baden-Württemberg. EnBW's offices are inside Baden-Württemberg's official offices in the Brussels EU quarter. Oettinger's many past favours to EnBW include lobbying heavily on the company's behalf to keep its nuclear power plants open, at a time when the German government had committed to a nuclear phase-out.

On Rue Belliard 65, opposite EnBW's offices, are the lobby headquarters of FORATOM, the European alliance of nuclear energy producers. Andris Piebalgs, Oettinger's predecessor as Energy Commissioner, was very pro-nuclear, but with Oettinger in the seat, FORATOM is likely to have an even closer ally in the Commission's Berlaymont headquarters.

What did Barroso have in mind when appointing Oettinger? Nuclear energy remains hugely controversial among European citizens. Is there any real chance that Oettinger can defend the European public interest in a radical shift towards genuinely sustainable energy? The European Parliament's approval hearings are in the second week of January. To be continued...

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Wednesday, 25 November 2009

Lobbying campaign by hedge funds not declared in Commission register

According to eFinancialCareers "it emerged yesterday that the Alternative Investment Management Association is paying Finsbury €1m to lobby against the EU’s Alternative Investment Fund Managers’ Directive."

The Alternative Investment Management Association (AIMA), the main lobby group for the hedge fund industry in Europe, vigorously opposes the very modest light-touch regulation of the proposed EU directive. AIMA's lobby campaign to further weaken the directive will now be boosted by lobby consultancy firm Finsbury, but none of this will be visible in the Commission's lobby disclosure register. Both AIMA and Finsbury make use of the voluntary nature of the register to simply opt out. The fightback by vested interests against the proposed investment fund directive is one of the biggest lobbying battles of the last years. The failure of the Commission's register to throw light on who's involved in this lobbying, on whose behalf and with what financial resources reflects at least two major shortcomings:
- lobby transparency must become mandatory
- consultancies lobbying for industry clients should be obliged to report more frequently than the current yearly update, so new clients appear in the register when the lobbying is happening, not years after

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Wednesday, 11 November 2009

Cross-party MEP initiative demands genuine lobby transparency

A new High Level Working Party of MEPs and Commission representatives starts talks tomorrow on a joint Commission-Parliament lobby disclosure register. Yesterday, more than 25 MEPs were represented (in person or by an assistant) at a seminar in the European Parliament on how to achieve real improvements in transparency around EU lobbying. The seminar is a follow-up to the pledge signed by more than 75 MEPs in the run-up to the European Parliament elections, committing to “to provide leadership in lobbying transparency and ethics”.

Danish Social Democrat MEP Dan Jørgensen, one of the three MEPs hosting the seminar, kicked of by emphasising that lobbying can play a positive role, but that privileged access and unequal resources means some are less heard than others in Brussels. A new framework is needed to ensure that lobbying becomes transparent and makes a positive contribution to decision-making.

MEPs Claude Turmes and Dan Jorgenson and moderator Leigh Phillips

MEPs Claude Turmes (Greens) and Dan Jørgenson (S&D)
and moderator Leigh Phillips

Green MEP Claude Turmes, also co-hosting, reminded those present that the Parliament already has a strong mandate to improve lobby transparency: in May 2008, the Parliament voted for a mandatory register, with names of lobbyists included as well as detailed financial disclosure. The same resolution also called for a regular review of the register, sanctions for non-compliance and a properly staffed and resourced administration to oversee implementation. Turmes stressed that one of the key priorities for the Parliament was to get lobbying law firms to sign up to the register.

Dutch Socialist Party MEP Dennis de Jong, who had presented the new initiative to the Dutch media earlier in the day, encouraged MEPs to embrace a code of conduct which included not meeting with unregistered lobbyists. He also underlined the importance of stricter rules for MEPs on gifts and hospitality provided by corporate lobbies. Advertising inside the Parliament by large corporations is another issue that De Jong wants to tackle with the new cross-party initiative.

MEP Dennis de Jong (GUE) and ALTER-EU's Jorgo Riss

On behalf of the ALTER-EU coalition, Jorgo Riss presented examples of numerous shortcomings in the Commission's register. Not only is that register voluntary (which means that anyone preferring to stay out can do so, as the boycott by lobbying law firms and thinktanks shows), it also requires very little information from those who choose to register. In the US, far stronger lobby disclosure rules mean that far more information is available about the lobbying done by European firms in Washington DC, than in Brussels, Riss explained.

During the debate, a number of people stressed that the European Parliament is in a strong position to make the register de facto mandatory. The Parliament’s system of permanent access passes for lobbyists could simply become dependant on registration and full compliance with transparency requirements. Lobby consultants' club SEAP, which opposes a mandatory register, has already started lobbying against this and is also calling for law firms to be allowed to stay out of the lobby transparency register.

The new cross-party initiative will organise a series of meetings in the coming months and provide input to the High Level working Party of MEPs and Commission representatives about the upcoming joint Commission-Parliament register.

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Monday, 9 November 2009

Commission's advisers on financial markets: bankers only?

ALTER-EU's new report, 'A captive Commission – the role of the financial industry in shaping EU regulation' which was launched last week, shows that most of the so-called 'expert groups' advising the EU Commission on financial market regulation are dominated by industry lobbyists. More than 80% of the non-governmental 'experts' in these advisory groups represent big banks and investment funds.

During the launch event, Poul Nyrup Rasmussen (president of the Party of European Socialists and former Danish Prime Minister) called this situation is “a disaster for democracy”. Dennis de Jong,United Left MEP and member of the parliamentary committee on the crisis, pointed out that, unlike big banks - “small cooperative banks and 'green banks', have no voice in Brussels and their views are ignored”. Their role in the Commission's expert groups is marginal. Sven Giegold, Green MEP, and a member of the Economic and Monetary Committee of the European Parliament, added that while in today's “autistic economics” it might be hard to find experts committed towards the public interest and without financial links to the industry, the Commission doesn't even try. There are independent experts out there, including academics that predicted the crisis and NGOs with elaborate proposals, but the Commission chooses not to invite them to join expert groups and to stick with the giant banks.

While MEPs from different political groups are deeply concerned about corporate capture of Commission advisory groups, the Commission seems to be in denial. When asked by the EUobserver to comment on the findings of the report, a Commission official stated that "if you want financial advice you don't ask a baker". Does the Commission really, even after the biggest crisis in 70 years, think that advice on how to regulate financial markets can be left to the big banks and investment funds themselves? The ALTER-EU report shows how the banking lobbyists invited by the Commission to join its advisory groups have used their privileged access to lobby for their own narrow commercial interests, contributing to the inadequate regulation that contributed to the financial collapse.

No less convincing was the Commission's second argument against the ALTER-EU critique: the report, a Commission official argued, is 'unfair' because it 'concentrates solely to the financial sector'.

This would imply that it is not a problem if a whole area of decision-making, like financial markets, is captured by special interests. This position hardly seems defensible. But the Commission's response also ignores the evidence provided by ALTER-EU previously which shows that the corporate capture of Commission 'expert groups' is a widespread problem. ALTER-EU's position is that corporate-dominated advisory bodies are unacceptable and that the Commission should dissolve them or radically change their composition.

Commissioner McCreevy, responsible for financial market regulation, earlier this year stated that listening too much to the lobbyists with the biggest budgets was one the reasons that the devastating and continuing crisis happened. Were these empty words or will the Commission now act to end the scandal of powerful advisory groups being controlled by big banking lobbyists?

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Tuesday, 20 October 2009

Three surprising new entries on the register

The number of entries in the Commission’s voluntary lobby transparency register has now passed 2,000 (753 of which are Brussels-based). The Commission celebrated this as a big success, but in fact the rate of participation is still below 1/3 of Brussels-based lobbies (estimated as 2,600 in an European Parliament report from 2000). Among the recent sign-ups are some big fish, but their reports beg a few questions.

The European Roundtable of Industrialists (ERT) joined the register earlier this month, much to the delight of Commissioner Kallas, who celebrated with a note on his website saying he was “pleased that [the ERT] has again confirmed its positive European spirit by joining the transparency register”. The ERT lists the names of three members of staff “engaging in direct advocacy of ERT positions” and reports lobbying expenditure of 300,000 - 350,000 euro in 2008, which “does not include expenses incurred by our Members and their companies for participation in ERT activities”. There are several major problems with the ERT’s registration: firstly, only 20 of the 48 member companies have joined the register; large firms like Nokia, E.ON, BT, Deutsche Telekom and Heineken have not. This means that a major part of the ERT’s lobbying expenses remains invisible. Secondly, the ERT lists three of its staff as lobbyists, but shouldn’t politically active CEOs like Peter Sutherland (BP), Jorma Ollila (Nokia) and Peter Brabeck-Letmathe (Nestle) also be listed?

Another surprising new entry is chemical industry lobby group CEFIC, which returned to the register in late September after two months suspension. The Commission suspended CEFIC as it had reported its lobby expenses as less than 50,000 euro per year, out of a budget of over 40 million euro. The Commission judged that this “appears to be underestimated”. CEFIC is now back on the register reporting a 4,000,000 euro lobby budget in 2009, a remarkably round figure. The figure may be 80 times more than its previous entry, but this still means that only 10% of CEFIC’s budget is being used on lobbying which seems to be a low estimate. CEFIC's entry says that the remainder of the budget goes on managing Horizontal Programmes, Sector Groups (a combined 30,2 million euro), and Research Funding (a total 13,5 million euro). Why these costs are not considered as lobbying remains unclear.

The third noteworthy addition to the register is lobbying consultancy firm Pleon, which reports its lobby turnover as “>= 1,000,000 euro”, using the privilege of the lobbying consultancies to opt to hide their lobby turnover. Whether this means just over a million or perhaps ten times more, one can only guess. With 50 staff in its Brussels office, 5 million euro is perhaps a good guess. But the Commission’s lobby register, in its current form, does not provide answers to such basic questions. Pleon's entry does at least mean its client list is now in the public domain. According to media reports, Pleon had seen an increase in “clients for whom proposed EU environment and consumer protection rules go too far”. Pleon lists 16 clients for 2008, 15 of which contribute below 10 % of Pleon’s lobby turnover. Among the clients is BAT, but as with all the other clients it is impossible to judge whether Pleon is undertaking a major lobby operation for the tobacco giant or perhaps just some advice. The list is for 2008 and as reporting is only once per year, the register does not show who Pleon has started lobbying for since then. Far more frequent reporting is needed, especially for lobby consultancies, if the register is to become a reliable information tool.

The Commission is expected to announce changes to the register before the end of this month. A crystal clear definition of what to report as lobbying expenditure, more frequent reporting and closing loopholes in financial disclosure are essential.

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Friday, 2 October 2009

Ex-Commissioners lobbying at 500 euro per hour

The Belgian daily newspaper De Standaard has this week published an interesting series of articles on EU lobbying. While one article covers the critical perspective of lobby watchdog groups like Corporate Europe Observatory, De Standaard also published a lengthy interview with Russell Patten, who leads the Brussels office of lobby consultancy giant Grayling Global. Patten argues that “lobbyists have nothing to hide” and that the negative image of lobbying is undeserved. On the question why Grayling has not joined the Commission’s lobby transparency register (launched 15 months ago), Patten explains that some of the firms' clients were sceptical about disclosure. He expects that Grayling will sign up “towards the end of the year”.

EUobserver last week reported about “ScienceMatters”, a campaign questioning the EU’s use of environmental risk assessments. This campaign is run by Grayling on behalf of chemicals companies Albemarle, Chemtura, and ICL-IP. According to EUobserver, these chemical companies have invested €100,000 in the campaign, which is also actively supported by pesticide and biotech lobby groups. “ScienceMatters” is a continuation of the ReachForLife initiative, also run by Grayling, which aimed to overturn a ban on deca-BDE, a toxic flame retardant produced by Albemarle, Chemtura and ICL-IP. Has it not occurred to Mr. Patten that it is this kind of scandalous activities that gives lobbying its negative image?

In the interview Mr. Patten makes some fascinating remarks about the salary of lobbyists in Brussels. “If you are really good, you can earn up to 350 euro per hour”, says Patten, adding that, “for ex-Commissioners or top civil servants this can be up to 500 euro per hour”. Patten estimates that about half of the Brussels-based lobbyists previously worked in the EU institutions, and that this percentage used to be even higher in the past.

Patten’s remarks leave me with a burning question: who are these former Commissioners that are now earning up to 500 euro per hour as lobbyists? Former trade Commissioner Leon Brittan and former industry Commissioner Martin Bangemann went through the revolving door and became lobbyists after the fall of the Santer Commission in 1999, but both are now over 70 years old. A more recent example of a Commissioner entering the lobbyist profession is Pavel Telička. The former EU Commissioner for health and consumer affairs co-founded lobby firm BXL Consulting almost instantly after leaving the Commission in 2004. With BXL Consulting, Telička provides lobbying services to corporate clients such as Microsoft, energy giant RWE and OKD Doprava, a Czech coal producer.

Which other ex-Commissioners may Mr. Patten be referring to? The Commission’s lobby transparency register does not throw any light on this important question: not only is registration voluntary, the register has no names of lobbyists in it...

Do you know more about such high earning former Commissioners and senior Commission officials? Contact us at ceo@corporateeurope.org.

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Tuesday, 29 September 2009

Is Pat Cox 'too special' to follow the rules?

After the Commission’s refusal last week to disclose the declaration of Pat Cox’s “professional activities”, Corporate Europe Observatory has now also received a more general reply from the Commission about the issue of Mr. Cox’s conflicts of interest. Remarkably, the Commission argues that the conflicts of interest rules of its Health and Consumers department (DG SANCO) do not apply in the case of Mr. Cox.

These rules stress that “it is essential that external experts are free from financial self interest when performing their duties as advisors; that they have no parallel loyalty to another organisation; that they are not burdened with competing personal or professional agendas or compromising personal or professional relationships” and that ‘someone who is known to work for an organisation with a ‘vested interest’ on a particular policy issue and is appointed advisor, should simply not be appointed”.

The Commission’s new letter says that:
“Special Advisers [...] is a very specific group of persons not covered as such in DG SANCO’s Guidelines. The Decision on Special Adviser covers the appointment of “a person who, by reason of his special qualifications and notwithstanding gain full employment in some other capacity is engaged to assist one of the institutions of the Communities” [...]. The situation of such Special Advisers is thus indeed “special”: while DG SANCO’s Guidelines cover all types of experts, the Decision on Special Advisers aims at making it possible for the Commission to have the benefit of the services of an exceptionally qualified person, in the case at hand a former President of the European Parliament, while allowing him/her to continue with other activities, subject of course to all of the obligations relating to the avoidance of conflicts of interest cited above. In the case of unpaid Special Advisers such as Mr COX, it would not only be unreasonable to prohibit all other activities, but would presumably also oblige the person in question to refuse the appointment there by depriving the Commission of the expertise of an exceptionally qualified and experienced adviser.”

Corporate Europe Observatory never argued that Mr. Cox should abstain from all other paid activities. We have merely pointed out that there is a major risk of conflicts of interest arising from Mr. Cox’s activities as a paid lobbyist for large firms with vested interests in EU consumer policies, including APCO, Microsoft, Michelin and Pfizer.

In our opinion, there is no justification for exempting Mr. Cox – or any Commission advisors for that matter – from DG SANCO’s Guidelines. We have therefore today written to the Commission’s Secretariat General to ask for further clarification.

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Thursday, 24 September 2009

MEP-Industry fora – vehicles for lobbying ?

Earlier this month, representatives from the automotive, financial services and digital economy industries were joined by MEPs and EU Commission president José Manuel Barroso at a “networking cocktail” to relaunch three “MEP-industry forums” in the new Parliament. These corporate-funded forums seldom declare who they are funded by and are frequently run by big Brussels-based lobby groups and consultancies. When interviewed by CEO TV, industry members deny that these forums are used for lobbying. Some MEPs, however, acknowledge that they are lobbying vehicles serving industry interests.

On Wednesday 2 September, the Forum for the Automobile and Society (FAS), the European Parliamentary Financial Services Forum (EPFSF) and the European Internet Foundation (EIF) were officially relaunched in the European Parliament with the support of Commission president José Manuel Barroso. “These forums represent important European economic interests”, he told CEO TV. “It is our duty to listen to the different economic sectors because it is these sectors which create jobs in Europe”, he added.

MEP-industry forums are groups that involve MEPs from different parties together with corporate lobbyists. In October 2006, Corporate Europe Observatory revealed that there was a fundamental lack of transparency concerning how the European Parliament’s official intergroups and also the unregistered cross-party groups of MEPs were financed. Among the many unregistered cross-party groups were at least a dozen MEP-industry forums, where secrecy was particularly widespread. Three years later, not much has improved.

In practice, these forums co-chaired by MEPs and industry members, often act as think tanks. They facilitate what could be called “broad sectoral interest representation” during conferences and “lunch debates” that they organise and where they invite business people to talk about an issue that is subject to regulation by MEPs, the Council or the Commission.

The Forum for the Automobile and Society, for instance, gathers big automobile manufacturing and supply companies like BMW, Volkswagen, Ford, Toyota, or Michelin. It describes itself “as a think tank for all those interested in automotive issues” and makes sure to “relat[e] discussion topics closely to current legislative issues”.

In a brochure distributed during the networking cocktail, the European Internet Foundation (EIF) describes its mission as: “to support Members of European Parliament in their efforts to shape policy and regulation responsive to the unique potential and character of the internet revolution.”

MEP-industry forums do not consider themselves to be intergroups, which are official entities regulated by the European Parliament since 1999. Therefore, these informal forums are not bound by any parliamentary ethics and transparency rules at all.

According to the Commission, all entities engaged in “activities carried out with the objective of influencing the policy formulation and decision-making processes of the European institutions” are expected to register in its voluntary register of interest representatives – but none of the MEP-industry forums appears to have done it so far.

The financial resources of these forums are quite significant. While the FAS told CEO TV that its annual budget is “less than 100,000 euros”, Corporate Europe Observatory estimates the yearly budget of the European Internet Foundation (EIF) – which is run by lobby consultancy giant Burson-Marsteller – to be well above 400,000 euros (1) while the budget of the European Parliamentary Financial Services Forum (EPFSF) is likely to exceed €440,000 in 2009 (2). The EPFSF secretariat is run by the European Banking Federation, “the united voice of banks established in Europe”, while the Fédération Internationale de l’Automobile (FIA) – a fake industry-controlled “consumers” or “users” organisation – runs the secretariat of the Forum for the Automobile and Society (FAS).

Malcolm Harbour, a UK Conservative MEP who made a career in the car industry before becoming a politician and who co-chairs the FAS, denies that the forum is a lobbying vehicle for the car industry at the heart of the European Parliament. He had already previously denied being a “lobbyist for the car industry” – an accusation made by some of his fellow MEPs.

German MEP Wolf Klinz (ALDE), who co-chairs the European Parliamentary Financial Services Forum (EPFSF) and sits on the European Parliament's Committee on Economic and Monetary Affairs, agrees that the EPFSF is a place where “broad lobbying” by financial services industry lobbyists takes place, but “only if this has not a negative connotation to it”. “In the [EPFSF] discussions, the interested parties of course defend their interests, there's no question about it”, he told CEO TV. “But we also defend our interests as legislators, so there is sometimes a clash”, he added.

Portuguese MEP Mario David, vice-president of the European People's Party, also agrees that MEP-industry forums are used for lobbying. According to him, the main difference with classical lobbying is that lobbying through those forums is “much more transparent”. “We still don't have in Europe that tradition of lobbying not being perceived as something that is evil. And it should not. If it is transparent, if it is correct, why not”, he added.

In May 2008, a large majority in the European Parliament voted for stronger transparency rules around MEP-industry forums, more precisely for listing “all existing, registered and non-registered Intergroups on Parliament's website, including full declaration of outside support for the activities of Intergroups as well as a statement of the Intergroup's broad aims”. It is to be hoped that the new Parliament will implement this decision to end the current secrecy around these lobby activities.

See also:
Notes
(1) 37 “business members” paying each a €10,000 annual fee + 46 “associate members” paying each 500-2,000 euros; see http://www.eifonline.org/en/articles/joinuspages/info-on-membership.cfm
(2) At least €440,000 with 55 “industry members” paying each a €8,000 annual fee for 2009; non members of the Forum may attend meetings on a pay-per-meeting basis for a €200 fee; see http://www.epfsf.org/finances.htm



CEO TV is an independent web TV channel that covers European political and economic affairs with a particular focus on the role of corporate lobbying in EU capital Brussels. CEO TV is a new project of Corporate Europe Observatory (CEO) and publishes video reports on an irregular basis.

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Tuesday, 22 September 2009

Commission refuses access to Pat Cox’s declaration of interests

The European Commission has rejected Corporate Europe Observatory’s request to see the “Declaration of activities of Pat Cox in view of applying to the function of Special Adviser to the Commission”, stating in its letter (21st September) that it was prevented from doing so because of “personal data protection”.

CEO had asked for this document because this is what the Commission uses to assess conflicts of interest in appointments. In the case of Pat Cox, who is a paid advisor for Microsoft, Pfizer, Michelin and lobbying consultancy APCO, the document is crucial in assessing whether there might be any conflict of interest in him taking up the post of special advisor to consumer affairs Commissioner Kuneva.

We can only guess about what is in the confidential document, but it is probably simply an extensive CV. It is hard to imagine how the information in this document can be defined as sensitive personal data. The EU’s data protection rules state that documents should be released when it is “necessary […] on important public interest grounds”. CEO believes this case is in the public interest and will write to Commission President Barroso’s office (the Secretariat General) to appeal the decision.

Mr Cox stresses that he is “not a lobbyist”, but given his record, it is not very convincing. In fact there is strong evidence of Mr. Cox acting as a lobbyist, if you compare his activities to the European Commission’s definition of lobbying.

For example, in July 2005, a year after Mr. Cox left the European Parliament, the EUobserver reported that “EICTA is the first major client of Mr Cox’s Washington DC-registered lobbying firm, European Integration Solutions (EIS).” EICTA (since renamed DigitalEurope) was one of the main industry groups lobbying for US-style software patents. Mr. Cox told EU Observer that the kind of lobbying he does is not “going around knocking on MEPs’ doors” but rather meeting with industry stakeholders to “help shape their telling of the story”. In fact, Cox’s role clearly went beyond advising. In the following months, Cox regularly made statements on behalf of EICTA and he co-wrote an op-ed in Le Monde, again on behalf of EICTA.

Cox is also a member of Microsoft’s European Advisory Council and has over the last few years regularly spoken and written to defend the interests of the software giant, eg. in an op-ed in BusinessWeek, entitled Europe’s Microsoft Case Goes Too Far (2 April 2007).

In February 2007, Pharma Marketletter reported that “Pat Cox, former President of the European Parliament and now a leading lobbyist, presented a report on ‘Financing Sustainable Health Care’ to the Vice President of the European Commission, Gunter Verheugen”. This was the start of what is an on-going campaign (Initiative for Sustainable Healthcare Financing in Europe), which includes consultations with Commission officials. The campaign is sponsored by pharma giant Pfizer; Mr. Cox is a member of Pfizer’s Europe Advisory Council. There are also other examples that Mr. Cox is actively promoting Pfizer’s lobby demands, such as allowing direct advertising to consumers for pharmaceutical products.

In July 2009, Portuguese newspapers reported that “the Ex-President of the EP will lobby for the Azores in the EU”. According to the press reports, “APCO Worldwide, led by Pat Cox, former president of the European Parliament, was chosen to provide lobbying services for the Azores with the EU institutions over the next 12 months.” When we called APCO to get clarification of what Mr. Cox’s role was in this and other APCO lobbying activities, the managing director of the Brussels office told us that the Azores contract had not been signed yet and that “Cox has no involvement in it”.

Since 2006, Mr. Cox is a member of APCO Worldwide’s International Advisory Council. According to the APCO website, “APCO’s International Advisory Council is a dynamic group of former senior members of government, the media, the diplomatic corps, academia, the business community and nonprofit organizations who work hand-in-hand with APCO’s professionals to counsel clients on a broad range of issues.” Today, 22 September 2009, a spokesperson at APCO Worldwide in the US told CEO that “Mr. Cox currently does not engage directly with APCO clients.” But she could not confirm that Cox had never done so since he became a member of the International Advisory Council. And if Mr. Cox advises APCO lobbyists working for clients on issues related to EU decision-making or in other ways improves APCO’s lobbying capacity, that would qualify as lobbying under the Commission’s definitions.

The European Commission defines lobbying as “activities carried out with the objective of influencing the policy formulation and decision-making processes of the European institutions”. Mr. Cox clearly is a lobbyist, but more importantly, does his lobbying lead to conflicts of interest when he acts as a Special Adviser to the EU’s consumer Commissioner? This may not be the case if he is lobbying for the Azores government, but it is more likely if he lobbies for Pfizer, Microsoft and other large corporations with a direct interest in influencing EU consumer policy and communication to consumers. These questions are even more pressing considering that Mr. Cox is candidate to become Ireland’s next Commissioner.

Transparency around Mr. Cox’s lobby activities is a matter of public interest.

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Tuesday, 15 September 2009

Unnamed French EU lobbying firm accused of fraud and bribery

Flemish daily De Tijd, quoting anonymous sources in the Belgian Central Anti-Corruption Agency and the Belgian Federal Court, writes today that an unnamed French lobbying firm active in Brussels has sold confidential information on upcoming tenders for EU contracts to a consortium of Belgian consultancies. This allowed the Belgian consultancies to prepare their offer in such a way that their competitors had no chance to win these contracts. The Belgian authorities started investigating this case after they had been alerted by the EU anti fraud agency OLAF and the French justice. The Belgian fraud investigators are reported to have found several suspect payments by the Belgian consultancies to the French lobby firm. The newspaper article suggests that the lobby firm may even have bribed EU officials to obtain the confidential information. The facts under investigation date back to the year 2006.

This story comes just a week after I spoke at a debate on EU lobbying transparency in the European Parliament, organised by the European Voice, where representatives of the lobbying sector claimed that contrary to Washington DC, lobbying in Brussels is characterised by high ethical standards and an absence of scandals, suggesting there was a need for rather less than more transparency obligations on Brussels lobbyists.

The problem with this type of reasoning has always been that the fact that we don’t know of any major lobbying scandal does not mean that there were no lobbying scandals. It only means that we (the general public) don’t know about such scandals. And the continued lack of transparency, in particular on the financial aspects of EU lobbying, does make it much easier for wrongdoers to hide their traces.

It will be interesting to find out more details about this case, but even at this stage it demonstrates that the for-profit lobbyists' favorite image of Brussels as some kind of village full of well-behaved gentleman-lobbyists, is in fact a misleading illusion. With the European Commission currently undertaking a review of the first year of its voluntary and flawed “Register of Interest Representatives”, and negotiations on a shared EP-Commission lobbying register to resume soon, there now seems to be a compelling new argument for strong transparency and ethics obligations for EU lobbyists – something that public interest groups have been calling for since long.

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Register fails to throw light on corporate-funded patient groups

Before the summer break Danish MEP Margrete Auken asked the Commission who the patients’ organisations that it consults with represented. The question was sparked by revelations from the Danish daily Information that some of the biggest pan-European patient organisations are almost entirely dependent on funding from pharmaceutical giants such as Pfizer, GlaxoSmithKline, Novartis and Merck. The Danish newspaper revealed that the International Alliance of Patients Organizations (IAPO) gets roughly 97% of its revenue from the industry, while the European Patient's Forum (EPF) receives 88% of its overall income from corporate sponsors. MEP Auken urged the Commission to ensure that the groups it consults with genuinely represent European patients, rather than big pharmaceutical corporations.

What does the Commission's voluntary lobby transparency register reveal about the lobbying and funding sources of EU-focused patients groups? Very little.


Just seven of the 27 patient groups surveyed by Corporate Europe Observatory have registered. This means almost 75% of patients groups are boycotting the Commission's register, including the International Alliance of Patients Organizations mentioned above. The European Patients’ Forum is registered, but like the other registered patient groups, it has not disclosed its corporate sponsors. The Commission currently does not require reporting on specific funders, only broad categories of public or private sources. The Commission's register was launched with the intention to secure visibility around who lobbies to influence EU decision-making, on whose behalf and with what funding. In its current form, the register simply does not answer these key questions, as the example of the patients’ groups shows. If the register is to become a truly representative and a reliable source of information for media, citizens and decision makers, it not only has to become (de facto) mandatory but the disclosure requirements must be significantly tightened. Lobby groups should be obliged to disclose their funders and sponsors. Otherwise, the Commission will continue to allow corporate-funded patient organisations to operate in the shadows, pretending to represent European patients.

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Thursday, 10 September 2009

Whatever happened to... Fritz-Harald Wenig

It's a year ago this week that the Sunday Times reported that a high-level official from the Commission’s trade department had offered to leak commercially sensitive information in return for financial rewards. Undercover reporters from the UK newspaper posing as lobbyists for a Chinese businessman offered the official – Fritz-Harald Wenig – a payment of € 100.000. Wenig was reported to have suggested putting the money in a frozen bank account which he would be able to access after he retired. According to the newspaper, Wenig disclosed information about a pending anti-dumping case concerning a Chinese candle-making firm as well as other cases.

The allegations led to Wenig being suspended and the case being investigated by Olaf, the EU’s anti-fraud agency. As the outcome of the Olaf inquiry is nowhere to be found in the public domain, Corporate Europe Observatory contacted the agency for clarification. Olaf told us it “finalised its investigation on 29 January 2009 and forwarded its findings to the European Commission as well as to the competent Belgian authorities.” But whether Olaf found Mr. Wenig guilty of any wrongdoing remains unclear. Referring to legal restrictions, Olaf informed us that it is “not entitled to provide more details”. When we contacted the European Commission’s Trade department, we were informed that Mr. Wenig retired in May 2009. But apart from that, more than seven months after Olaf finished its inquiry, it seems that the Commission has still not made up its mind about the case. According to a DG Trade spokesperson, the investigations are not yet closed and the matter remains confidential.

The allegations made against Mr. Wenig in the Sunday Times article raise serious questions about the political culture at the Commission’s trade department. It is therefore imperative that the Commission draws clear conclusions on the implications of the case and announces these publicly.

Two observations. When Mr. Wenig retired in May, his age was 61. Is that a normal age for retirement at the Commission? And why has there been a silence of over a year on a controversial case like this? Surely the Commission isn't intending to cover up this issue?

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Monday, 7 September 2009

Lobbying through the media

Industry lobbying to water down the proposed EU investment fund directive is intensifying week by week. Earlier this year Corporate Europe Observatory showed how the European Commission’s voluntary register in fact revealed very little about the tremendous levels of lobbying by the financial services industry.

Many major industry players have not even registered. For those who have, the information disclosed is generally very limited. Recent reports in the press suggest that the financial services industry is gearing up for another attack, again raising yet more questions about the need for a tighter definition of what should be included on the Commission's register - and when.

According to PR Week UK, the European Venture Capital Association (EVCA) is on the verge of hiring Brussels-based lobby consultancy FD Blueprint on "a pan-European media and PR brief" to help improve the image of the private equity industry in the run-up to the decisive European Parliament vote on the investment fund directive.

As the contract is for boosting EVCA's "media relations activity in the run-up to crucial EU legislation" it is doubtful whether this contract will ever show up in the Commission's register. This is an area where the Commission should act to close a major loophole.

The Commission asks for disclosure of “all activities carried out with the objective of influencing the policy formulation and decision-making processes of the European institutions”, but in practice consultancies tend to exclude media work, even when the goal is clearly to influence EU decision-making.

In the case of the EVCA contract, this is very clear. According to PR Week, "FD Blueprint will work on behalf of the entire European industry focusing on EU-level issues [...] The private equity industry has a number of audiences it has to address - the principal one being the politicians responsible for drafting the legislation in the European parliament."

If the Commission does the right thing and requires media work that is part of EU-focused lobbying campaigns to be disclosed, there's another very important change it should also make. Currently, consultancies are only expected to report once per year. In its current report in the register, Blueprint mentions clients and turnover from 2007. The frequency of reporting should clearly be increased, particularly for consultancies.

Without this change, information about lobby work done this autumn would only become visible in the register in 2011, long after the lobby battle around the investment fund directive is over.

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Thursday, 27 August 2009

Lobbyists receiving EU money must be transparent

A large number of think tanks which receive funding from the EU Commission are boycotting the Commission’s lobby transparency register, as Commissioner Kallas recently highlighted. “I find it surprising that think tanks that receive substantial amounts of Commission funding, including 17 of the top 20 recipients, have not followed our invitation to join,” Kallas commented. “In fact, some of those we support are the least co-operative. Perhaps a “reminder” is needed, so I fully support the idea of my colleague, commissioner Figel, to include an invitation to join the Register in the next call for proposals to access the “Europe for Citizens Programme”.”

Expecting recipients of Commission funding to join the lobby transparency register is hardly unreasonable – assuming that the think tanks will actually disclose their sources of funding (which is not currently required by the Commission). But why not go further than a mere “invitation to join”? And what about those other think tanks which do not receive funding from the Commission? Many of these are also refusing to join the register.

Still, the approach of Commisisoners Kallas and Figel might help overcome the transparency boycott of at least some think tanks. Perhaps the Commission could broaden this approach and also start putting pressure on other recipients of Commission payments. Concretely, the Commission should consider making lobby transparency a condition for consultancies that win Commission contracts.

An estimated €2 billion of work each year is contracted out by the Commission. This includes services such as media monitoring and press relations, constructing websites, organising press conferences and seminars, and running promotional campaigns. A significant number of contracts for communications work and media campaigns are run by ‘public affairs’ firms that also provide lobbying services for corporate clients – which means they should be on the register.

Among the Commission’s favorites are Ogilvy and Edelman, who have both joined the register. Edelman recently won a Commission contract worth 1,563 million euro (leading a consortium with three smaller companies). Edelman’s task is “to improve the provision of Public Information on the European Union in Ireland”, as part of efforts “to promote better public understanding of the EU on a longer-term basis.” Ogilvy last month landed a 760,000 euro contract to do a “communications and outreach campaign on biodiversity”

But other consultancies with similar Commission contracts have not joined the transparency register. Take the example of DLA Piper, whose Brussels-based office that combines legal advice and lobbying services (see also "Confidential: Law Firm Lobbyists at Work"). Last month DLA Piper won a bid for a 498,750 euro contract to set up a database for the Commission on “unfair commercial practices in the EU” that will detail how the EU's directive on this matter is being implemented. In March this year, DLA Piper announced it had won a Commission contract to “improve European e-commerce legislation”, producing a study with recommendations on issues like “data protection, service provider liability, electronic payments, consumer protection, digital copyright and child safety.” Is it too much to ask that DLA Piper ends its boycott of the lobby transparency register and discloses which (corporate) clients it is lobbying for?

Preventing conflicts of interest

In fact lobby transparency is particularly important for consultancy firms that carry out tasks for the European Commission. These public affairs firms inevitably gain privileged access to information, privileged access to insiders within the Commission and other potential benefits. With such privileged access, conflicts of interest can arise. This problem is most likely to occur when the firms carrying out this work for the Commission are also lobbying for corporate clients, who pay the firms to promote their messages and enhance their reputation in the corridors of power. Consultancies, including DLA Piper, may be tempted to abuse the role granted to them through these contracts to unduely advance the interests of their corporate clients.

This is not idle speculation. There are clear examples where public affairs consultancies appear to have taken advantage of their contracts with the Commission to promote the aims of other clients on their books. Weber Shandwick, which worked for the commission Directorate-General for Consumer Affairs for several years, organised a controversial Commission press event on ‘Fighting Obesity’ in November 2006. At the event Markos Kyprianou (then Commissioner for Consumer Affairs) praised several major food, drink and retail companies for their role in tackling obesity, including McDonalds, Unilever, Pepsi Cola, Coca Cola and Kraft. Their chief executives were invited to present their commitments to the press and journalists were also shown a video clip titled “Industry tackles obesity” which highlighted the beneficial role played by McDonalds, while featuring Pepsi Cola, Coca Cola, Kraft and Unilever products. At least two of the five multinationals praised were Weber Shandwick clients at the time (Coca-Cola and Unilever) – and two of the others (McDonalds and Kraft) have previously been represented. The press event was criticised by industry and NGOs and critical questions were raised by MEPs. But it is unlikely to be an isolated example. Weber Shandwick informed CEO that since December 2007 the company has withdrawn from doing contract work for the Commission.

The Weber Shandwick case shows that, beyond enforcing lobby transparency, the Commission should introduce safeguards against conflicts of interests and the abuse of the opportunities provided by outsourcing sensitive tasks. Such outsourcing has in fact been questioned in an EP resolution, calling on the Commission to reconsider its outsourcing “in the light of such high sums for consultant contracts and the negative experience of awarding contracts to external firms in the past”.

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Friday, 31 July 2009

Confidential: Law Firm Lobbyists at Work

As law firms continue to evade transparency on their lobbying activities by boycotting the European Commission’s register of interest representatives, Corporate Europe Observatory decided to shed some light on the extent of law firm lobbying in Brussels.

Law firms are not required to register their activities – the Commission’s register remains voluntary for all interest representatives – and in July, just four law firms had registered.

A quick survey by CEO shows that while 16 law firms in Brussels have lobbyists registered with the European Parliament, none of these firms appear on the Commission’s register. Of these 16, international firm DLA Piper seems to lead the field, with six members of staff registered as lobbyists at the European Parliament.

Ten individuals from five Brussels law firms are registered as members of the Society of European Affairs Professionals (SEAP), the body established to represent and lobby on behalf of public affairs professionals. DLA Piper is also a member of the European Public Affairs Consultancies Association (EPACA).

Indeed a number of the Brussels law firms appear keen to promote their lobbying activities to potential clients – while preferring not to sign up to the transparency register. As previously noted, 110 law firms are listed in the European Public Affairs Directory, with seven of these highlighting lobbying as one of the services they offer. A larger number of law firms advertise their lobbying services via their own websites.

International firm Freshfields Bruckhaus Deringer, for example, publishes an online brochure highlighting how they “offer clients strategic policy advice and help to shape EU legislation and administrative decisions.”

The brochure goes on: “A large part of our work relates to shaping draft EU legislative measures. We analyse the potential effect of draft legislation on our clients’ business activities and in co-operation with our clients define threats, opportunities and strategic goals. We then devise and implement detailed campaigns, encompassing both legal and public affairs advice.”

Indeed Freshfields’ lawyer Paul Bowden has even recorded a video message to potential energy clients encouraging them to lobby the EU over the third phase of the Emissions Trading Scheme (ETS).



US firm Covington and Burling describe themselves as “one of the leading law firms in Brussels” when it comes to public affairs, “helping to ensure that industry’s voice is heard in the EU legislative process and in administrative decision making”. They are also particularly proud to advertise the expertise of their European Policy Advisor, Wim van Velzen – a former MEP and vice president of the European People’s Party.

Another US firm, White and Case, are also keen to promote their lobbying skills, telling potential clients that “White & Case lawyers were involved in the preparations for Europe’s legislation on electronic waste before any draft texts were published”.

Other firms, such as WilmerHale, maintain a low public profile for their lobbying services. They do not appear to have any lobbyists registered with the European Parliament and none of their staff appear to be registered with SEAP.

Of course nobody is pretending that law firms are not involved in lobbying – what is in question is the need for transparency. Law firms claim that their clients’ confidentiality must be maintained.

Cleary there are good arguments for confidentiality when representing a client in court, but there is no reason why law firms should be exempt from the general rule that registered lobbyists must disclose the names of their clients and give an indication of the income generated from lobbying on behalf of these clients.

Given the extent of law firm lobbying in Brussels, the law firms’ boycot of the register is unacceptable. It is now more than a year since the register was launched – the Commission must act to remedy this flaw.

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Monday, 13 July 2009

The Commission's bad excuse for not delivering lobby transparency

As yet, it is not clear whether the Commission will announce changes to the lobby transparency register before the summer break or wait until September.

Officials from the Commission's Secretariat-General are in charge of drawing up conclusions from the review of the register's first year, incorporating stakeholder feedback. A central figure in this process is Jens Nymand Christensen, who told EurActiv that "contributions to the review reflect what we knew a year ago: some think we haven't gone far enough, and others think we've gone too far. We've tried to find the middle ground". Nymand Christensen's approach does not exactly bode well for the quality of the Commission's review.

While the input from stakeholder groups should clearly be considered, the Commission’s job is to make whatever changes necessary to ensure the transparency register fulfils its goals: securing visibility around who lobbies EU decision-makers, on whose behalf and with what financial means. Aiming for "the middle ground" between the positions of different lobby groups will not result in a quality outcome. Instead it leads to a lowest common denominator approach that effectively gives the anti-transparency lobbyists victory. A closer look at the contributions to the Commission's stakeholder consultation for the register review reveals why.

Comments have been sent in by eight groups, half of which are corporate lobbies, and the other half of which are public interest groups and coalitions. Transparency International, the Civil Society Contact Group, consumer lobby BEUC and ALTER-EU have called for mandatory registration, closing the loopholes in financial disclosure and adding the names of lobbyists to the register.

In stark contrast, EPACA and SEAP (on behalf of the for-profit lobby consultancies), the council of law firms as well as AmCham (US firms) all urge the Commission not to go beyond the current level of transparency. In its comments, EPACA warns that it "could produce a reversal in the trend of additional registrations, and some deregistration, if the Commission changed the ground rules on financial disclosure". This implicit threat of leaving the register is repeated at the end of EPACA’s text. In the light of the Commission's 'finding-the-middle-ground' approach, there is every reason to fear that EPACA's threats will make the Commission shy away from common sense improvements to the register.

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Tuesday, 23 June 2009

Only 24% of Brussels lobbies registered, but Commission claims success

On the first anniversary of the European Commission's lobby transparency register, less than one in four Brussels-based lobby groups and firms have signed up. At a press briefing yesterday, however, the Commission hailed the register as "a success" and argued that "the numbers do not point to an instant need to make registration compulsory."

For the ALTER-EU coalition, in contrast, such a large majority ignoring the register proves the failure of the Commission's voluntary approach.

ALTER-EU yesterday published an updated assessment of the register which shows that:
- the total number of registrations is now 1604, of which only 625 have offices in Brussels;
- less than 24% of Brussels-based lobby organisations and firms have registered so far (based on the European Parliament's estimate of 2,600 lobby groups with offices in Brussels in 2000);
- the European Public Affairs Directory lists 165 consultancies in Brussels. Just 25 of these are on the Commission's register, putting the compliance rate for this crucial category at a meagre 15%;
- Of the 330 companies listed in the European Public Affairs Directory, only 86 feature in the Commission's register, which means that just 26% of companies with Brussels-based lobby offices have registered.

On 4 June, ALTER-EU published a detailed report highlighting the flawed information contained in the register and putting forward concrete proposals for solving the shortcomings. The study also showed that:
- think-tanks and law firms are boycotting the register;
- unclear financial disclosure requirements allow lobby groups to disguise the size of their lobbying effort, making it impossible to determine who the biggest spenders really are and what policies they are trying to influence;
- the lack of clear guidelines means that the register is increasingly cluttered by associations that play no role in lobbying the EU (such as the German Erotic Trade Association, which estimates its lobbying costs at €10, and the Surfrider Foundation of Europe, with a lobby budget of zero).

Next month the Commission is expected to present its official review as well as possible changes to the register. In its press briefing yesterday, the Commission conveniently ignored that a large majority of EU lobbyists remain unregistered and that the data disclosed in the register is seriously unreliable. There seems little hope that these problems will be seriously addressed in the review.

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Monday, 22 June 2009

Some good news from the European Parliament elections

There was no shortage of bad news in the European Parliament elections results earlier this month. Take the turnout rate of 43%, the lowest since the start of European elections in 1979, signaling a growing sense of alienation and disempowerment among voters. No less shocking is the fact that so many MEPs were elected from xenophobic parties in Hungary, the Netherlands, Austria, Denmark, the UK and other EU countries.

As the dust settled, there was also some good news. No less than 73 of the newly elected MEPs have pledged "to provide leadership in lobbying transparency and ethics". These MEPs were among the 381 candidates that committed to the pledge formulated by the ALTER-EU coalition as part of the www.electioncampaign.eu initiative.

The MEPs, from diverse political backgrounds and countries, promised to promote the following objectives:
* Replacing the current flawed lobbying register with a mandatory EU lobbying register that includes a list of all individual lobbyists, the legislative dossiers lobbied on and detailed information on the money spent on lobbying per client.
* Ensuring that the Parliament takes all necessary steps to ban conflicts of interest, including barring MEPs from working as lobbyists while in office.
* Securing full transparency around Expert Groups and other groups advising the European Commission, and strong safeguards against privileged access and unbalanced composition of Expert Groups.

It is the first time that such a substantial number of MEPs have ever committed themselves to positive change on these important issues. This promises well for the coming five years.

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Thursday, 18 June 2009

DG Environment lets transparency boycotters off the hook

We have in this blog reported extensively about the boycott by Brussels-based think tanks of the transparency register. We have also congratulated Commissioner Kallas for taking on Friends of Europe as a particularly obvious example of a corporate-funded think tank that really must register. It is now unfortunately becoming clear that other parts of the Commission fail to back - and even undermine - Kallas´ efforts to increase the pressure on Friends of Europe. The Commission's DG Environment has decided to give Friends of Europe a very prominent role in its annual 'Green Week', which happens next week.

On its website Friends of Europe proudly announces a conference next Tuesday and Wednesday titled "Climate change: Keys to a concerted policy shift": "This European Policy Summit, co-organised by Friends of Europe, Unilever and Microsoft with the support of Dow, UNICA (the Brazilian sugarcane industry association) and the Alliance for Beverage Cartons & the Environment (ACE), is part of the official programme of the European Commission's Green Week. The event will take place in the European Commission's Charlemagne Building in Brussels on June 23 and 24, 2009." Among the speakers are high-level Commission officials like Jos Delbeke and Claus Sørensen, as well as representatives of the sponsoring corporations and industry lobby groups.

Hosting this official event inside the Commission's Charlemagne Building (next door to the Berlaymont headquarters) is clearly a scoop for Friends of Europe, but a major setback for Kallas and anyone else who cares about lobby transparency. Beyond transparency concerns, one can really wonder why DG Environment outsources the organising of Green Week events to a think tank that not only systematically allows debates to be sponsored by corporations and their lobby groups, but also gives these sponsors a prominent place in the debate panels (and most likely also in the shaping of the programs). For agrofuels lobby UNICA and the other corporate sponsors, who have all been involved in greenwash in the past, the debates next week are a dream-come-true image-building opportunity. But allowing these firms to buy a seat on the panels raises serious questions about due process and the credibility of the Green Week events. DG Environment has failed to safeguard its Green Week from greenwash.

Back to the lobby transparency issue: not only Friends of Europe is missing in the Commission's transparency register. Of the five corporate sponsors of the Policy Summit, Dow, Unilever and Microsoft are registered, but UNICA and the Alliance for Beverage Cartons & the Environment are not. Wouldn’t it be high time for Mr. Kallas to have a chat with Environment Commissioner Dimas about a coherent approach to make lobbyists join his voluntary register?

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Wednesday, 10 June 2009

BUSINESSEUROPE – a small fish in the lobbying pond?

--- by guest blogger Christine Pohl, Friends of the Earth Europe

Anyone following political debates in the Brussels bubble will agree that BUSINESSEUROPE must be one of the biggest industry lobby groups. Representing employers federations from 34 countries, it has 45 permanent staff at its smart Brussels headquarters. Their role is “to secure that the views of European employers regarding the impact of proposed EU legislation on enterprise are considered as legislation is decided” - in other words: to lobby. But according to its entry in the Commission's lobby transparency register, BUSINESSEUROPE is just a small fish in the Brussels pool. The group reports an amazingly low lobbying budget, claiming their costs “directly related to representing interests to EU institutions” in 2008 were just 550,000EUR - 600,000EUR.

Compare this to the lobby budgets of some other business lobby groups in the register. The German Chamber of Industry and Commerce for example estimates its lobby budget at 1,500,000EUR – almost three times more than BUSINESSEUROPE. The Italian Food Industry Federation reports its lobby expenditure to be >= 1,000,000EUR. This is very vague, but still indicates that it is at least twice as big as BUSINESSEUROPE. Others including the Italian Association of Financial Intermediaries and the Federation of European Accountants appear to outspend BUSINESSEUROPE. In fact, BUSINESSEUROPE is not even in the top-30 of the biggest industry lobby groups in the register. This seems so unlikely that there is good reason to think that BUSINESSEUROPE has calculated its lobbying expenditure in a far too limited way.

For a start, BUSINESSEUROPE should have included the salary and office costs for the 45 members of staff involved in its Brussels lobbying work. It should also have included the cost of lobby events such as the European Business Summit (EBS) and the glossy lobbying publications displayed on its website.

We were curious to find out how BUSINESSEUROPE explained their lobbying budget. So we wrote them a letter and asked. We didn't get a reply. We then decided to use the complaint mechanism for the Commission's register, hoping that this would shed some light on BUSINESSEUROPE's low budget lobby work. It took the Secretariat-General of the Commission a while to reply - and when it finally did, it was to inform us that “Having carried out the necessary verifications internally as well as in contact with BUSINESSEUROPE, we have no ground to establish a violation of the Commission's Code of Conduct.”

This reply did not really satisfy our curiosity, and we were slightly surprised to get so little explanation. Any serious complaint mechanism provides the reasoning and argumentation for a decision, from the European Ombudsman to the OECD. Even the complaint panel for the lobby association EPACA gives some kind of explanation for its decision. So we wrote to the Secretariat-General again – but to no avail. We did get a reply – but it merely explained that “the Commission's services had met representatives of Business Europe and asked them to clarify the issue at stake regarding the elements and the methodology used to assess the estimated amount spent on direct lobbying of the EU institutions."

Are we expected to believe BUSINESSEUROPE's registration any more now than we did before complaining? We can only conclude that the Commission does not take complaints about registrations seriously. How seriously are they taking their role of oversight body for the register then?

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