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.


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:
(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.


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.


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.


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.


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?


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.