Monday, 20 December 2010

Internal documents throw light on McCreevy and Kuneva industry jobs

2010 saw high-profile controversy around the large number of ex-Commissioners who went through the revolving door in to lobbying jobs in industry. The year is now drawing to an end and we're still waiting for the promised new Code of Conduct for Commissioners. The vice president of the European Commision, Maroš Šefčovič has repeatedly pledged that the draft rules will be presented before the end of the year, after which the European Parliament will discuss the proposal. On the grapevine we've heard that the new draft rules have actually already been finalised by the Commission and sent to some within the European Parliament, but there's nothing to be found on the Commission's website. So much for transparency!

Meanwhile, Friends of the Earth Europe last week published a number of internal Commission documents related to the approval of the new jobs of six ex-Commissioners. Among the most interesting of these documents, obtained under freedom of information rules, are those related to Irish ex-Commissioner Charlie McCreevy’s move to RyanAir and former Consumer Commissioner Meglena Kuneva's transfer to BNP Paribas. The Dutch newspaper De Volkskrant pointed out in September that McCreevy regularly dealt with RyanAir during his time as Commissioner. The airline refused to comply with EU rules to compensate delayed passengers and had challenged a decision by the Commission to block the takeover of Air Lingus.

“As a Commissioner McCreevy decided not to appeal a decision by the European Court of Justice about illegal state aid which was beneficial for Ryanair. The company can now continue to cash in millions of euros tax payers money for flights to regional airports. This is good for the share options which McCreevy now receives as part of his remuneration”.

The final conclusions of the Ad-hoc Ethical Committee (document 55), tasked with approving McCreevy’s move, do mention that McCreevy was involved in these decisions on competition matters and state aid cases, but saw no problem because “McCreevy was not directly in charge”. The Committee also argued that the decisions were not “related to the content of the Internal Market portfolio for which Mr. McCreevy was in charge”. But in that case, why would McCreevy be consulted on these matters? Also the non-executive character of McCreevy’s directorship at Ryanair is brought forward as an additional argument, although in fact this does not actually limit the range of activities he may undertake for the firm and is therefore irrelevant.

McCreevy’s Appointment Letter (document number 51) shows that he will be paid an additional fee for “specific advice to be provided to the Board and Management on European Commission and Government relations including up to two annual visits with Senior Management to Brussels for meetings with the European Commission”. It was therefore entirely clear to the Ad-hoc Ethical Committee that McCreevy’s job would involve lobbying the Commission. The Committee, however, only suggests instructing McCreevy to “abstain from providing advice where it would relate to a case involving Ryanair for which he, or his Cabinet […] has been consulted during his term of office, as this could create at least the perception of a conflict of interest”. The Commission followed the feeble advice of the Ethical Committee word by word. This means that McCreevy got the green light for lobbying the Commission on any issue other than the ones he was directly involved in during his time as Commissioner. Ryanair was given permission to hire an ex-Commissioner to boost its lobbying efforts by using his contacts to open doors and insider knowledge.

The documents relating to Kuneva's move to the mega-bank BNP Paribas reveal that the Ad-hoc Ethical Committee appeared to be more pre-occupied with rubberstamping ex-Commissioners moving into industry jobs than with seriously and objectively assessing any conflict of interest. The Ad-hoc Ethical Committee found that the job “could possibly present a link” with Kuneva's previous responsibilites within the Commission,“notably concerning studies related to bank tariffs in Europe”, but claimed “that such situation would not create a conflict of interest” (document 67). No arguments are presented to back this up, so it remains unclear how the Committee reached this counter-intuitive conclusion, which the Commission then endorsed. The Committe suggested to give the go-ahead with just one condition that Kuneva should inform the Commission if she joined one of the committees set up within the BNP Paribas board. If she joined “say a 'consumers committee' with the board, this might have to be further evaluated” (document 70). Remarkably, the Commission did not include this nor any other condition in its approval letter to Kuneva (document 73). Kuneva was left entirely free to advise and otherwise assist BNP Paribas with lobbying.

The ALTER-EU coalition has repeatedly called for these and other revolving door cases to be re-assessed. Earlier this month, ALTER-EU wrote to the Commission to ask why there was – and still is - no decision on ex-Commissioner Verheugen's involvement in the European Experience Company, the lobby consultancy he co-founded in April. The Commission's failure to act bodes ill for the new Code of Conduct.

It is high time the Commission acknowledged that the revolving door is an unacceptable tool for corporations to gain undue access and influence. Only when the Commission shows its cards and publishes the new Code of Conduct will we know if these scandals will finally be prevented.


Thursday, 18 November 2010

New ethics rules must be Verheugen-proof

On Thursday 18 November Barroso’s team of Commissioners will discuss a draft of the new Code of Conduct. Commissioner Sefcovic’s speech to MEPs ealier this month revealed some of the elements that are likely to be in the draft. An analysis by Corporate Europe Observatory (CEO) concluded that the speech marks an important departure from the previous habit of denying conflicts of interest, but that much more needs to be done to halt the revolving door.

One positive development announced by Sefcovic is online transparency around decisions made about requests for approval on new jobs and other activities by ex-Commissioners. This already exists in the UK and will – if done well – be a step forward. Similar transparency measures should be introduced as soon as possible for Commission staff moving into new jobs, something that is currently virtually covered in secrecy. But Sefcovic’s speech also left a lot unclear and was disappointing on some keys issues.

Verheugen case: 10 weeks later and still no decision

A crucial test for the new rules will be whether they clarify that cases such as the lobby consultancy firm set up by ex-Commissioner Verheugen are prohibited. The Commission (through its ad-hoc ethical committee) started an investigation in early September, but 10 weeks later there has been no indication of which way the recommendations will go or what the Commission as a whole will decide. Verheugen, who has already been given a green light for four other paid positions with large firms and lobby groups, claims that the rules do not apply to him because he is not an employee of his lobby consultancy firm. Yet he is the managing director and owns 50% of the shares in the firm. He also continues to receive a Commission pension. Scrutiny of ownership of shares, Commissioner Sefcovic mentioned, is one the likely additions to the new Code of Conduct.

The Verheugen case is crucially important because it will reveal whether the Commission prioritises protecting a former Vice-President or whether it intends to rebuild public trust. But in the future the rules should be crystal clear so a decision can be taken quickly and with determination. Not only direct lobbying, but also lobby advice should be covered by the new cooling-off period. Otherwise ex-Commissioners will continue to use the networks and insider information they have developed while in public office in ways that create conflicts of interest.


Monday, 4 October 2010

German company register shows Verheugen’s active role in European Experience Company and a clear conflict of interests

New documents, obtained from the German official company register reveal that former EU commissioner Günter Verheugen has a clearly defined active role in the European Experience Company as well as a clear financial interest.

It is now five weeks since the German weekly Wirtschaftswoche broke the news that the former commissioner was involved in European Experience Company lobby consultancy. The Commission has asked an Ad-hoc Ethical Committee to assess the risk of conflicts of interest from this, but the process appears to still be on-going. Verheugen, meanwhile, wrote an open letter to the Euractiv news portal which said in the headline: “I have no paid job at the European Experience Company, so Code of Conduct doesn’t apply”. In his letter, Verheugen elaborates:

“My investment in this company does not constitute an occupation. Consequently the Code of Conduct does not apply in this case. Therefore I did not need any permission and I have not asked the Commission for clearance.”
As argued in a previous blog posting, this interpretation of the Code of Conduct for Commissioners is not convincing and directly contradicts the wording in the EU Treaty referred to by the Code.

Verheugen’s attempts to get around the Code of Conduct appear creative, but the facts would seem to contradict him. The German register of companies (Handelsregister) shows that The European Experience Company was established 31st of March 2010, with a start capital of 25,000 euro. It appears there are only two shareholders in the company. According to the Bürgel Firmenprofile, 50% of the start capital came from Verheugen, the remainder from Petra Erler, his former head of cabinet at the Commission, and now business partner (12,500 euro each).

Verheugen, according to the company statutes, has the same title (Managing Director) and authority as Erler, including the right to represent the firm on his own and to sign contracts with external parties (click on picture to enlarge).

The German register of companies is clear (above): Petra Erler and Günter Verheugen are both 'Managing Directors' (Geschaeftsfuehrer). There is no distinction between 'executive' and 'non-executive' directors, contrary to what Günter Verheugen and the website of his company both claim since the scandal broke (right).

Verheugen will clearly be actively involved in the European Experience Company and will financially benefit from whatever profit the company makes, presumably taking 50 per cent. Verheugen is officially retired and is reported to enjoy a European Commission pension of around 10,000 euro per month.

In his open letter, Verheugen also stresses “that the European Experience Company explicitly excludes any lobbying activities”. As mentioned before, it is hard to judge what Verheugen means by this. How narrow or broad does is Verheugen’s definition of ‘lobbying’? A narrow definition would mean only direct, face-to-face lobbying of EU officials, but the Commission’s definition of lobbying is – rightly - far broader than that:
“activities carried out with the objective of influencing the policy formulation and decision-making processes of the European institutions” [including preparations for lobby activities].
The broad definition from the transparency register launched in 2008 was confirmed in October 2009. Since it was first registered in March 2010, the European Experience Company’s activities are officially described as “Consultancy and education for institutions and corporations about EU and other political matters” (our translation; see document above). Nowhere in the official documents is there anything that points to lobby activities being excluded.

The Commission’s decision on Verheugen’s involvement in the firm will show whether there is any real political will to prevent conflicts of interest. In the last 10 days, almost 4,000 people have written to the Commission to insist that Verheugen’s role should not be approved.

Download the documents filed by The European Experience Company at the German register of companies

Photo: (c) European Commission


Tuesday, 28 September 2010

McCreevy wants to cash in on financial de-regulation – will the Commission stop him?

Last month former European Commissioner Charles McCreevy joined the board of NBNK Investments PLC, a new investment vehicle which according to media reports aims to “buy banking assets that are being sold off by banks for regulatory reasons”. McCreevy's salary will be between 61,000 and 122,000 euro per year depending on “NBNK achieving a major acquisition. McCreevy is also reported to hold 20,000 shares.”

It is unclear whether McCreevy has informed the Commission about this new job, but it seems obvious that it violates the Code of Conduct for Commissioners as it is clearly related to the content of McCreevy's portfolio as a Commissioner.

McCreevy was the EU’s Commissioner for Internal Market and Services from 2004 to February 2010. During his term a vast liberalisation of the financial sector took place in the EU. All the EU regulatory bodies reported to him, the supreme regulator of the EU financial markets. He was widely criticised as one of the main architects of a deregulated, unprotected financial system that inevitably led to the current crisis. After the crisis erupted, McCreevy admitted that the Commission had paid too much attention to the 'selling' side and ‘to those with the biggest lobby budgets’.

Was that a sincere recognition of an error? After quitting public service, McCreevy seems to be joining those very same powerful, wealthy lobbyists. His partner in the new banking company is Lord Levene, former chair and current employee of the insurance giant Lloyd’s and current chairman of the lobby group International Financial Services, London (IFSL). IFSL lobbied DG Internal Market under McCreevy (submitting consultation contributions for example).

As a commissioner, McCreevy was very receptive to Lloyd’s invitations. He also gave his consent on continued state subsidies to the company. Lloyd’s has also heavily lobbied McCreevy on the legislative dossiers around solvency rules. According to the company, Lloyd’s had ‘regular direct communication and dialogue’ with the unit on pensions and insurance of McCreevy’s DG Internal Market. Through its participation in expert groups, Lloyd’s says it had exerted substantial influence on policies. These facts make the question of when exactly McCreevy’s new job was arranged crucial.

Right now, NBNK clearly aims to profit from the continuing financial crisis: its main mission is to buy branches of insurance companies and banks that have to be sold to meet the EU conditions for government bailouts. McCreevy bears serious responsibility for the financial crisis as the chief EU regulator up to February. The Dutch daily De Volkskrant last week commented that “as a director of the investment firm NBNK from the City of London, McCreevy will now indirectly profit” from the new banking rules developed in response to the financial crisis.

In the context of last week’s media and citizens’ outcry over Commissioners going through the revolving door into industry lobby jobs while still receiving generous EU payments, the European Commission should draw a line. Ex-Commissioners McCreevy and Verheugen should be stopped before cashing in on the policies they promoted, the insider knowledge they gained and the contacts they developed while in public office.

In case the Commission has not yet assessed the potential conflicts of interest with McCreevy’s involvement in NBNK it should open an investigation now.

McCreevy is among the 17 former Commissioners receiving hefty ‘farewell bonuses’ from the Commission. Any such payments for McCreevy seem entirely inappropriate considering his involvement in NBNK. McCreevy hopes to receive €32,000 per year from Ryanair (not to mention stock options) and the €61,000-122,000 from NBNK. Adding taxpayers’ money to such earnings is a slap in the face of all those suffering from the impacts of the financial crisis.

Corporate Europe Observatory last week (on the basis of EU freedom of information law) asked the European Commission to see the documents related to a possible approval of McCreevy's new job as a banker.

More info on NBNK:

- Sharecast

- London Stock Exchange

- NBNK Investments plc

- FT Adviser


Friday, 24 September 2010

Commission under fire over revolving doors scandals and ‘farewell bonuses’ – will it block Verheugen?

After brewing for months, the controversy around the number of former Commissioners going through the revolving door into lobbying and lobby advisory jobs has finally boiled over. In the last few days, the six Commissioners that have moved into private sector jobs with potential conflicts of interest have been exposed in the press across Europe. This was sparked by the Financial Times Deutschland revealing that a number of former Commissioners were still receiving extremely generous EU payments years after leaving the Commission. Recipients of this farewell bonus of an average 100,000 euro per year for three years include ex-Commissioners who have taken lobby advisory jobs, such as Joe Borg and Charlie McCreevy.

During press conferences yesterday and today the Commission spokesperson faced a barrage of questions on this and on the revelations that the former Enterprise Commissioner Günter Verheugen has set up his own lobby consultancy firm, the European Experience Company. The Commission confirmed that the Ad-Hoc Ethical Committee is looking into the case and that a decision will be made “in the coming days or weeks”.

Meanwhile, Verheugen has reacted for the first time publicly to the criticism in an interview with Euractiv (in German). In the interview Verheugen denies there is any problem whatsoever. He also defends the Commission’s procedures and the Ethics Committee which has so far allowed former commissioners to do whatever they want. He told Euractiv: “Of course the committee has so far allowed everything and this does not surprise me, because every former Commissioner knows what he can and what he cannot do.” But Verheugen’s defence of his role in the European Experience Company shows that he himself has a highly questionable interpretation of the Code of Conduct for Commissioners.

Verheugen denies that he should have notified the Commission about the company earlier. “I have reported absolutely nothing, and I should not have and will not do so,” Verheugen told Euractiv. He argues that the Code of Conduct doesn’t apply because he is not receiving a salary. “I hold an equity interest in the company that I need not report to the Commission,” he said. “I’m not getting paid for being manager of the GmbH.The rules say nothing about setting up business or about investments, only about paid employment. A cleaner arrangement than this is impossible.”

Verheugen’s interpretation of the Code of Conduct is questionable. According to the Code unpaid jobs must also be cleared. As a Managing Director, Verheugen will be directly involved in the activities of the lobby consultancy and as a shareholder, he will financially benefit from the company’s activities. When the Commission asked Verheugen to inform them about his jobs in April, it clearly asked not only about paid jobs but about his ‘planned activities’. It is normal practice for ex-Commissioners to notify the Commission of all the functions they take up, including unpaid positions on foundation boards and so on. The Code of Conduct (Paragraph 1.1.1. on “Outside activities”) refers to the EU Treaty (Article 213(2)), which stresses the duty of ex-Commissioners “to behave with integrity and discretion as regards the acceptance, after they have ceased to hold office, of certain appointments or benefits”. Verheugen’s role as a managing director, investor and shareholder in the European Experience Company clearly falls under “appointments and benefits”.

Verheugen also claims that European Experience Company does not engage in lobbying and argues that “this is about pure consulting and training activities.” When the interviewer asked whether the company’s offer to develop “the right strategy to succeed in dealing with European institutions” could give the impression that the company engages in lobbying advice, Verheugen categorically denied this. “One must have a lot of bad intentions to interpret this wrongly,” he said. Insiders in Brussels lobbying also find this unconvincing. The Dutch daily newspaper de Volkskrant today quotes a Brussels-based lobbyist who argues that “Verheugen opens his address book for anyone who wants to pay for this. If he makes the phone call, you can meet a civil servant or others involved. On your own you won’t manage this so fast. It’s about exploiting a network”. de Volkskrant also points out that the European Experience Company’s website has been changed following the criticism.

The Commission’s decision is expected within weeks. Several thousand people have already joined the online petition launched by the ALTER-EU coalition earlier this week, calling upon the commission to “block Mr Verheugen’s involvement in the lobby firm European Experience Company.”


Thursday, 2 September 2010

Ex-Commissioner Verheugen in revolving door scandal

The German weekly WirtschaftsWoche earlier this week revealed that former Enterprise Commissioner Günter Verheugen has set up his own EU lobby consultancy firm, the European Experience Company. Verheugen started the new firm in April 2010, just two months after he ended his term as Commissioner, but did not inform the Commission about this. According to WirtschaftsWoche the Commission is now investigating whether Verheugen has violated the Code of Conduct for Commissioners.

WirtschaftsWoche quotes MEP Inge Gräßle who comments that this will mean that “now, anyone with money can buy access to the institutions through Verheugen”. “The Commission must start considering how it can protect itself against ex-Commissioners,” Gräßle told WirtschaftsWoche. The issue has led to significant controversy covered in the German and Austrian press. In the German daily Handelsblatt, the co-director of the European Experience Company Petra Erler (who is also Verheugen’s former head of Cabinet) made a clumsy and unconvincing attempt to counter the criticism.

In a letter to Commission President José Manuel Barroso earlier this week, Friends of the Earth Europe (FoEE) stressed that Verheugen’s failure to notify the Commission about his lobby consultancy company is “a clear breach of the rules”. Internal Commission documents released to FoEE under freedom of information rules show that the Commission in April explicitly asked Verheugen to inform them about “various activities that you may consider within the year”. Verheugen responded by sending information about four new positions he was taking up, but did not mention the European Experience Company. After a rather superficial assessment procedure, the Commission on July 7th informed Verheugen that it had approved his move to the four jobs which were with the Royal Bank of Scotland (senior adviser and vice chairman of Global Banking and Markets in Europe, Middle East and Africa), global lobby consultancy Fleishman-Hillard (member of international advisory board), the Turkish Union of Chambers and Commodity Exchanges (adviser) as well as a German banking lobby group (adviser). Ironically, Verheugen’s responses to the Commission were all sent from a fax machine with the sender message “EUROPEAN EXPERIENCE COMPANY”. But nowhere in the correspondence does he mention his involvement in this new company.

In the German daily Handelsblatt, Erler made an unconvincing attempt to counter the criticism, which she described as “insinuations” and “a fairytale”. She also disputed whether Verheugen should have notified the Commission about the company, arguing that she informed the Commission on August 30th. But this would mean she only notified the Commission after the critical article in WirtschaftsWoche had appeared. Erler tried to argue that Verheugen would not need authorisation anyway, as he is not employed by the company: “for Mr Verheugen this is just an investment. He is a shareholder”, Erler told Handelsblatt. This raises the question why the website of the European Experience Company presents Günter Verheugen as managing director?

Friends of the Earth Europe in their letter to Barroso also asked for clarification about Petra Erler. According the EU’s Staff Regulations, high-level officials like Erler need to get permission before going through the revolving door, although like for Commissioners there is no clear cooling-off period.

Friends of the Earth, as well as Corporate Europe Observatory, LobbyControl and other watchdog groups have called upon the Commission to intervene and block Verheugen’s involvement in the lobbying firm, but it remains to be seen whether the Commission will make any serious assessment of the very obvious potential conflicts of interest. The way in which Verheugen’s other four positions were given the green light does not bode well. When the Commission in April requested clarification from Verheugen about these four jobs, he replied with a brief letter stating that these jobs “will not include lobbying of any kind”. When the Commission asked him for additional information in early June, Verheugen sent back atwo-page response in which he claims that FleishmanHillard chose him for his “professional life-time experience” (as opposed to his 10 years as one of the most powerful European Commissioners?). He repeats that all the jobs “explicitly exclude any type of any lobby”. At the same time, however, many of the activities which Verheugen stated that he would be doing for his new employers sound very much like giving lobbying advice. The description also includes speech-making and other public outreach for his new employers. Amazingly, the Commission’s Ad-hoc Ethical Committee endorsed Verheugen’s explanations without further questions or comments and concluded categorically that the four jobs “do not entail any risk of conflict of interests”. The Commission accepted this and informed Verheugen that he had been given green light. The Commission’s Ad-hoc Ethical Committee, led by former Commission official Michel Petite who himself went through the revolving door in 2008, clearly has a far too lax attitude to conflicts of interest.

The website of the European Experience Company states that it “will not engage in any kind of lobbying activity”, but this is contradicted by the services offered elsewhere on the website. The company is actually entirely focused on assisting lobbying efforts to influence EU institutions, ranging from lobbying advice to more active engagement. It assists “top leaders of public and private institutions and enterprises” with EU lobbying efforts, for instance via “Intensive management seminars for institutions and enterprises in cooperation with experts from European institutions”. It also offers “strategy recommendations in the area of EU-policy and other political matters” and “support for your public relation endeavours in European affairs (speeches, media events, publications)”. The European Commission – in the context of its transparency register - defines lobbying as “actions initiated with the aim of influencing European policy formulation or decision-making processes ”.

Verheugen is one of six Commissioners from the previous Barroso Commissionthat have moved into private sector jobs which might entail conflicts of interest (out of the 13 Commissioners that left in February). In WirtschaftsWoche MEP Inge Gräßle calls upon the Commission to tighten its Code of Conduct and introduce a cooling-off period for job moves that involve conflicts of interest. Commission President Barroso last September promised such a review, but 12 months later there is still no sign of this. Also a review of the EU’s Staff Regulations is said to be underway, but so far the Commission has rejected any need for stricter rules to prevent conflicts of interest. A common-sense solution advocated by the ALTER-EU coalition would be to introduce a three-year cooling-off period for ex-Commissioners wanting to move into private sector jobs that involve lobbying or lobbying advice.


Financial lobbyists ‘educating’ MEPs?

Both the MEPs and banking lobbyists that participate in the European Parliamentary Financial Services Forum (EPFSF) claim that the EPFSF is not a lobby group but a “forum for discussion”.

Commenting on the recent call from more than 70 MEPs to counter the dominance of big banks and investment firms in the debates around financial reform in Europe, Catherine Denis, Director of EPFSF, told Public Affairs News that the objective of the EPFSF “is to organise debates where all participants can express their different points of view, including representatives of consumer groups”. This is also the impression given in the EPFSF’s Governance Principles.

On 2 September 2010, the EPFSF organised a seminar for MEP assistants to “educate” them on derivatives markets and the impacts of the proposals on the review of the Markets in Financial Instruments Directive (MiFID). Derivatives (described by critics as “weapons of financial mass destruction”) are very controversial due to their role in the financial meltdown, but the financial industry is fighting tooth and nail against stricter regulation of derivatives. The European Parliament will decide on these matters in the coming months and the EPFSF event looks very much like an effort to lobby MEPs (via their assistants) on how to regulate the derivatives markets.

Corporate Europe Observatory (CEO) asked Catherine Denis if we could attend the seminar, wanting to see for ourselves whether or not the EPFSF is acting as a lobbying vehicle for the financial industry. The response was that this was not possible because “only speakers and MEP assistants will attend”. However, Catherine Denis argued, “we have included speakers who are representatives from end-users”.

In the list of speakers, however, the only end-users of financial services we can see are Lufthansa and the European Association of Corporate Treasurers which are against strict regulation of derivatives. They will speak along with derivatives managers and brokers at least two of which are members of ISDA, the controversial lobby coalition of the derivatives industry. Not one single consumer organisation or other critical voice is involved.

Denis also informed us that in their “regular lunch and breakfast events”, the EPFSF now reserves four seats in the room (but none on the panel) for ‘consumer’ groups ranging from BEUC to EuroInvestors (which includes the union of European shareholders). “We might not be able to fill all the gaps regarding the diversity of sources of expertise, but we are doing our best to foster conditions enabling an open dialogue”, Denis stated in her response to CEO.

It is unclear how often genuine consumer groups like BEUC, or FIN-USE have been invited by EPFSF, but we can surely say the EPFSF has a strange perception of words like ‘diversity’ and ‘open dialogue’.

There are signs that MEPs are getting more critical of the EPFSF than was the case in the past. This is a healthy development. Surely the EPFSF should not be considered a neutral forum for discussion. Funded and controlled by banks and investment firms, the EPFSF plays a pivotal role as a lobbying vehicle for financial industry players aiming to influence MEPs.


Tuesday, 29 June 2010

MEPs ring alarm bells over financial industry’s excessive lobbying power

Twenty two Members of the European Parliament from across the political spectrum launched a remarkable warning against the financial industry’s intensive lobbying efforts last week, warning that it “poses a danger to democracy”.

The MEPs, all actively involved in decision-making on financial market regulation, “can see every day the pressure exerted by the financial and banking industry”. They highlighted the weakness of a counter-lobby defending the public interest and warned that there was a dangerous imbalance between the power of the banking lobbyists compared to that of civil society. The parliamentarians (including Greens, Conservatives, Liberals, Social Democrats and United Left) also pointed to the “close proximity between political and financial elites”, which “contributes to a unilateral attention to the argumentations of the financial industry” both in the US and Europe.

The appeal has attracted widespread media attention, particularly in Germany, France and Austria, with headlines like “Cry for help against finance lobby”, “The EU a marionette of the banks?”, “Helpless against the financial lobby”... It is perhaps the first time since the start of the financial crisis that the problematic role of the banking lobbies has received critical media attention on this scale in Europe.

This attention is well deserved from Corporate Europe Observatory’s perspective. Our research over the last two years has shown the influence of the financial lobby in creating the flawed EU regulatory system for financial markets, and its manoeuvres to pull out the teeth from proposals designed to strengthen regulation. They set the agenda, while politicians and the public are often sidelined.

But while the MEPs’ statement speaks out powerfully against the massive pressure from financial industry lobbyists, the solution presented is rather limited. The MEPs “call on civil society to organize to create one (or more) non-governmental organization(s) capable of developing a counter-expertise on activities carried out on financial markets”. This is not a bad idea and the MEPs are right that there is a lack of civil society expertise and lobbying capacity in this field. But the problem of the excessive influence of finance lobbyists will not be solved just by setting up a “Greenpeace of finance”.

A comprehensive action plan for breaking the undue influence of the financial sector is what is needed. This should include ending the widespread secrecy around financial industry lobbying, rolling back the privileged access currently enjoyed by these lobbyists, closing the revolving door between Commission and banking lobbies, stricter conflicts of interest rules both at the Commission and Parliament, a broader democratisation of EU decision-making (away from the current centralised and technocratic processes) and a re-orientation of the banking sector to serve society’s needs, not the other way around.

One of the 22 MEPs, Sven Giegold, has highlighted one of the most crucial problems in several interviews in German media: the continued dominance of financial industry lobbyists in the European Commission’s advisory groups (the so-called expert groups). The Commission handpicks banking lobbyists to fill up the seats in these powerful groups advising on draft regulations for the financial sector and as a result plays a key role in boosting the power of financial lobbies. It is high time for the Commission to establish safeguards against regulatory capture by industry lobbyists, starting with its advisory groups on financial markets.

Similar problems exist in the European Parliament, where numerous MEPs are far too close to the financial industry and its demands. When Parliament voted on regulating hedge funds and private equity in April, more than half of the amendments on the directive were written by industry lobbies and passed on by MEPs close to the industry. Numerous MEPs are active members of the European Parliamentary Financial Services Forum (EPFSF), a lobbying vehicle of the banking industry.

These examples underline the need for a change in political culture and vision, away from the pre-crisis thinking that what is good for mega-banks is good for society at large. The financial crisis and the continued instability have shown that the banking sector should be regulated with a completely different set of criteria, based on what kind of banking and financial services contributes to the needs of society. Both Commission officials and MEPs must break off their close relationships with Goldman Sachs, Deutche Bank, BNP Paribas and the other financial giants who have enjoyed privileged access for far too long.

One German newspaper commentator correctly pointed out that regulating financial markets is not just a matter of more balanced expertise. Only the investment bankers themselves have detailed expertise on the complex financial products they have developed in the last decade, which means in effect that these speculative instruments could be labelled as “technologies with uncontrollable risks”. As the commentator rightly points out, such risky speculative instruments (eg. the very complicated derivatives that made the US real estate market implode in 2007-2008),, should be treated in the same way as other high-risk technologies, such as nuclear power which is banned in many countries. In the end the unequal battle with the banking lobbyists can only be won if their ‘expertise’ is made superfluous, through simplified and highly transparent financial markets in which high-risk speculative activities are banned.


Wednesday, 23 June 2010

High time for CIAA to come clean on its lobbying

CIAA's €1-billion campaign to promote the GDA labelling system was clearly a key element in its political strategy to combat other, stricter labelling options which it feared would damage sales of unhealthy food, such as the 'traffic light' system. The €1-billion figure was quoted as CIAA's own estimates in an European Voice article about EU food labelling regulation. The bottom line is CIAA would have never invested a single penny into a GDA scheme if the Commission in 2006 had not decided to review the food labelling regulation.

CIAA seems to be very nervous about being referred to as a lobby group. Last week, CIAA's head of communication Lisa McCooey called CEO's offices to angrily complain about our report on the food labelling lobby battle. During this phone call, she claimed that "CIAA is not a lobby organisation". This is a remarkable statement. From its own website it is obvious that CIAA is a lobby organisation; its newsletters provide ample details of CIAA's lobbying of Commission staff, Member States representatives and MEPs, not least on the issue of food labelling.

She also claimed "CIAA has never worked with Fleishman Hillard", the Brussels-based lobby consultancy. Just a few months ago, Fleishman Hillard organised a 'Bite Size Lunch Debate' on food labelling in the Brussels Renaissance Hotel on behalf of CIAA, including a high level speaker from DG SANCO. It is high time that CIAA comes out of the closet, and registers in the Commission's lobby transparency register, which it has boycotted for the last two years.

This comment has been sent to on 22 June following the publication of the article "Food industry wins battle on 'traffic light' labels".


Monday, 21 June 2010

Lobby register turns two - is there hope for transparency?

A few days from now it will be two years since the European Commission launched its voluntary lobby register. The critique of the shortcomings of the register will be well known to readers of this blog. Only a minority of Brussels-based lobbies are registered and the data of those who have joined are often unreliable (some over-estimate their lobby spending, most under-report). The register fails to show who is lobbying, on whose behalf, on which issues and with which budgets.
Take the example of the European Parliament's vote on food labeling last week, which was preceded by an avalanche of corporate lobbying. The biggest player in this lobbying offensive, food industry lobby umbrella CIAA, is nowhere to be found in the register, simply because they have chosen not to register. The voluntary register does nothing to throw light on the lobbying around this important matter.

But more interesting than listing yet more examples of the obvious failure of the voluntary register is perhaps the question whether there is any hope of progress. And yes, there is some light at the end of the tunnel. Commissioner Sefcovic and a delegation of four MEPs last month started talks about a new joint Commission-Parliament register. There seems to be consensus that this new transparency register will be directly connected with the Parliament's access pass system. The access passes are popular, if not indispensable, among Brussels-based lobbyists as they allow permanent entry to the Parliament's buildings. Linking the passes to registration could therefore drastically increase the share of Brussels lobbies that commit to lobby transparency.

It is however too early celebrate. The history of the Commission's register shows a pattern of giving in to lobbying pressure for exemptions and other loopholes. Corporate lobbyists' club SEAP is lobbying against transparency becoming a condition for Parliament access passes. SEAP claims transparency conditions would be unfair for those who are not registered. Lobby consultancies' coalition EPACA has been quiet for a very long time in the debate about the shape of the lobby transparency register, but may also be active behind the scenes.

But even in the best case scenario that Commission and MEPs stand firm on this point, the register suffers from other serious shortcomings that need to be solved if it is to be of any real value. The disclosure requirements are full of loopholes, especially when it comes to lobby expenditure information, and the Commission seems unwilling to go beyond the minor changes it announced in October 2009. The creation of the new joint register is expected to take another year.


Monday, 14 June 2010

‘Hard-core’ lobbying: “voting recommendations” sent to MEPs on food labelling regulation

Corporate Europe Observatory (CEO) has collected more than twenty e-mails from industry lobbyists with “voting recommendations” for MEPs ahead of the ENVI committee vote, in March 2010, on the ‘Sommer report’ about the new EU regulation on food labelling.

These are just a very small, non-representative fraction of the lobby messages that have bombarded MEPs during the €1-billion campaign by the food and drink industry to block ‘traffic-light’ labelling.

According to Kartika Liotard MEP, industry sent more than 100 e-mails for every one sent by civil society.

CEO is publishing these documents because we think they should be in the public domain, to allow EU citizens and journalists to understand who is influencing EU legislation on this issue.

Read the e-mails


Friday, 11 June 2010

MEP Carl Schlyter: “Industry lobbying has buried ‘traffic-light’ labelling”

MEP Carl Schlyter, member of the Committee on Environment, Public Health and Food Safety (ENVI) is shadow rapporteur on the food labelling dossier for the Greens. In this interview with Corporate Europe Observatory, he reflects on one of the biggest lobbying battles in Brussels in recent years on food labelling regulation. CEO has today launched a new report on this topic. Consumer groups demand ‘traffic-light’ labels for food packaging, which have a clear green symbol for healthy options and a red symbol for sugary, fatty and salty foods. The Confederation of Food and Drink Industries of the EU (CIAA) — on the other hand — wants the nutritional information on the packaging to be limited to single-coloured guideline daily amounts (GDAs) — which do not give an explicit, at-a-glance warning that a product is high in fat or sugar.

What was the role of industry lobbying on the food labelling dossier?
On numerous occasions during the meetings of the shadow rapporteurs of the ENVI committee, colleagues have flashed position papers from industry where they want us to consider special exemptions for gift-wrapping, for different manufacturers of different products. The arguments given to us by industry were constantly repeated both in internal negotiation meetings but also in the ENVI committee discussions. It really had a big impact on the decisions. For example, a special exemption for gift-wrapping was not an issue at all until we got a lobby letter from the food industry and suddenly it was an issue. Same thing with tax-free goods: manufacturers have been exempted from using the language of the place where goods are sold. These measures have been adopted by the ENVI committee under industry pressure.

Do you think all these measures will be confirmed in the June plenary?
Yes. When people want to change a position from the ENVI vote, they focus on the biggest issues. These are not examples of the biggest issues. The biggest issue is why MEPs are so much against any kind of warning labels from high fat, high salt, high sugar. For instance, a traffic-light system or any system warning consumers that a product has an unusually high level of sugar, salt or unhealthy ingredients was almost all voted down. And that was because of industry pressure, because in the earlier discussions MEPs were much more open-minded. But they have been exposed to so much industry pressure that it shifted focus.

In March, the so-called ‘traffic-light’ labelling system was rejected by the ENVI committee by 32 to 30 votes. Do you think it has a chance to pass in the plenary?
No, I think it would change to the worst direction, because the ENVI Committee is normally more progressive than the plenary. There are some MEPs who are not in the ENVI committee who have links with industry and industry tells them that this or that is bad, and they break the group’s lines to follow industry. So I’m not very optimistic.

How many e-mails do you receive daily on this issue?
I don’t know. But on average, every week I receive around 230 lobby e-mails, mainly from industry. As I am shadow rapporteur on the food labelling dossier, industry lobbyists have been always following me and trying to influence me.

What is exactly a shadow rapporteur and why are they targeted by lobbyists?
Every time a dossier is to be voted there is a rapporteur who writes the proposals — in this case it is Madame Sommer. This person has a huge influence on the dossier because he or she takes the Commission proposal and then he or she makes a lot of suggestions on what to change, and then all other parliamentarians react to the rapporteur’s changes to the Commission proposal. So it means the direction the rapporteur is taking has a huge impact on how people think about the dossier. And then each political group appoints one person who is following the issue for that group. And those are called ‘shadow rapporteurs’ and they are also very important because when the dossier is negotiated with the Council, after the vote in the European Parliament, shadow rapporteurs are the people involved in the negotiating process. And before the vote, if compromises are to be made, these are the people doing the compromises. So shadow rapporteurs are the ones mainly influencing the whole dossier. So they are the most important people to influence if you want to change parliament’s positions.

What is the ratio between industry lobbyists and public interest groups on the food labelling dossier?
In general it’s about 84% industry and 16% public interest. But on the food labelling issue I would say 90-95% industry and the rest is consumers. In the 90-95%, many of the exemptions and special rules in the food labelling dossier concern small or micro enterprises. However if you check the lobbyists and where they come from, it’s mainly large corporations. The most active interest groups on the lobbying front were associations of retailers, of producers of processed products such as cereals, chewing gums, ready-meals, and soft-drinks manufacturers of course. But some companies like Coca-Cola came with their in-house lobbyists. Most retail chains have their own labelling system already in place, and most have told us how excellent they are.

You’ve been shadow rapporteur 45 times during your last mandate. Is the lobbying on the food labelling dossier particularly intense?
It’s an important and big dossier and therefore there was a lot of lobbying. For instance I was shadow for REACH and then it was the same amount of lobbyists as for REACH, maybe even actually more on REACH. But this would qualify among the top-three of all the dossiers I’ve been responsible for.

What’s the problem with this lobbying?
The problem with lobbying is that it sets people’s mindsets to solve problem that are industry-related and not consumer-related, whereas the whole package is regarding food information to consumers. If you want to find an alternative position to industry’s position then you must yourself dig out the facts. So that means that in order to get a balanced picture you must put time and effort in it. I can say one thing about how I deal with lobbyists: every time I meet a lobbyist, I try to find somebody representing a different viewpoint, to counterbalance. But if I want to counterbalance industry’s interests I need to find these people myself. I need to turn to research institutions sometimes. One of my demands is that every time a lobbyists sends me a letter or contacts me to influence the legislative process, then he would have to send a copy to a public register where everybody could search and look for who influences decisions. Because then you could see the origins of proposals. We paid a researcher three months to study the chemical legislation REACH and F-gases — the legislation on other climate gases than carbon dioxide — and we asked her to check what was the origin of amendments tabled by different groups. On the F-gases dossier, between 96% and 100% of all amendments — when you can trace the origin of the amendments from the three biggest political groups — were all from lobbyists. On REACH, it was between 50% and 75%. So this shows the enormous impact of lobbying. This is a real democratic problem because there is such an imbalance in the power of influence. If we increase transparency, then we would have a better chance to deal with this democratic problem.

“A red light for consumer information – The food industry’s €1-billion campaign to block health warnings on food”, the new report by Corporate Europe Observatory is available here.


Tuesday, 13 April 2010

MEP amendments and democracy

The European Parliament’s press service has just published a remarkable online tribute to the practice of MEPs submitting amendments to proposed legislation. In “The Art of the Amendment”, this is praised as “a way for MEPs to bring into play the interests of voters, lobbyists, non-governmental organisations and other interest groups.” In the accompanying clip on EuroparlTV, David Earnshaw (presented as Visiting Professor at the College of Europe, while his role as Managing Director and Chairman of the Brussels office of lobby consultancy giant Burson-Marsteller is not mentioned) argues that “tabling of amendments to some extent demonstrates the democratic process”. “To some extent” indeed! While there’s obviously nothing wrong with proposing amendments, there’s good reason to be critical of the way this currently works at the European Parliament.

The EuroparlTV clip highlights the example of the directive on regulating hedge funds and private equity, where “no less than 1,600 amendments have been tabled”. This incredibly high number shows how the tabling of amendments has gotten out of hand. According to sources in the Parliament, more than half of the amendments for this directive were actually written by industry lobbies and just passed on by MEPs close to the industry. The case of the hedge fund directive also illustrates how under-represented NGOs and other non-commercial interest groups often are in the lobbying battles around the Parliament’s decision-making. While MEPs in the economic affairs committee face a massive lobbying pressure from the hedge fund industry, public interest groups are virtually absent.

The lesson to learn from this is that the habit of MEPs submitting amendments on behalf of interest groups is not in any way a guarantee for a democratic process.


Monday, 15 March 2010

Cashing in on secrecy?

Twenty months after the launch of the Commission's voluntary lobbying register, less than 40 percent of Brussels-based lobby consultancies have signed up, according to a new survey from the transparency alliance ALTER-EU.

Some of the consultancies that have chosen to boycott the register even appear to be using this as a selling point to attract new clients. One example is Cabinet DN, a lobby consultancy operating less than 200 metres from the European Parliament, just off Place de Luxembourg. Cabinet DN was set up in 2005 by two Danish former MEP assistants, Timme Bertolt Døssing and Jacob Lund Nielsen.

Cabinet DN is growing rapidly, perhaps as a result of the transparency boycott, and with 16 people now on the team. And, according to various interviews, Cabinet DN is not exactly lightweight when it comes to exerting influence. In an interview with a Danish journalist, Jacob Lund Nielsen even claimed to have written part of the text on liberalisation in EU member states’ postal sectors for the EU's Postal Directive in 2007, on behalf of a corporate client.

Among the lobby consultants that recently joined Cabinet DN are high profile names such as conservative ex-MEPs Christian Rovsing (Denmark) and Chris Heaton-Harris (UK) who left the European Parliament in June 2009. Cabinet DN has also headhunted several European Parliament staffers, including former head of media and spokesman for the UK Conservative Party, Peter Wilding. The team also boasts experienced journalist David Gow, who used to cover European affairs for UK newspaper the Guardian.

According to its website “cabinet DN works on the principle of complete client confidentiality both before, during, and after the completion of assignments”. The Commission's register obliges consultancy firms to list their clients and their relative weight in the firm's turnover. Only firms that are not on the register are therefore able to promise “client confidentiality”.

Confronted with this fact by Danish daily Politiken, Timme Bertolt Døssing maintained that “there is nothing secretive about what we're doing”. He went on to explain that as long as the register was voluntary, he saw no reason to sign up and expose Cabinet DN’s clients. And this is the problem of the current register in a nut shell; as long as it is voluntary, many lobbyists will simply take advantage of the right to remain silent. Not only is this detrimental to basic transparency standards, it also gives an unfair advantage to firms which choose to boycott and which can promise client confidentiality, compared to those firms that have signed up and are therefore obliged to disclose all clients.

The case of Cabinet DN underlines the urgency of moving towards a mandatory lobby register.


Thursday, 11 March 2010

Portugal hires lobby firm to help steer off speculative attacks

The Portuguese weekly Expresso reports that the Portuguese government is about to hire lobby consultancy firm Kreab & Gavin Anderson (KGA) to lobby on its behalf. Expresso writes that KGA will advice the government on the PR strategy for its Stability and Growth Pact, a new austerity program of welfare cuts and privatisations aimed to bring the country's deficits within EU limits.

The Portuguese government, according to Expresso, hopes KGA can help avoid attracting negative attention from financial markets, who may compare the state of the country's economy with that of Greece. If investment funds smell blood, this could unleash speculative attacks similar to what Greece has recently experienced. KGA's CEO Richard Constant refused to comment to Expresso about the contract. KGA is one of the top-5 largest lobby firms in Brussels, after a merger in 2008 between Kreab and Houston Consulting.

How ironic that the Portuguese government has turned for help to a consultancy that is specialised in helping large banks and investment firms influence EU decision-making. Lobbying by firms like KGA, whose current clients include JP Morgan, Morgan Stanley, Prudential, State Street and other banking giants, has been a major cause behind the weak regulations for financial markets which led to the financial meltdown and the resulting economic crisis.

Rather than filling the coffers of a lobby consultancy firm whose allegiance is with the financial giants whose speculative attacks it fears, the Portuguese government should join hands with other governments to promote strong progressive regulations that can help disarm the destructive capacity of financial markets.


Monday, 22 February 2010

Revolving doors: Ferrero-Waldner joins insurance giant Munich Re

The new European Commission (Barroso-II) took office on 10 February. Just seven dayslater insurance giant Munich Re announced that they had headhunted the out-going EU Commissioner for external relations Benita Ferrero-Waldner (2004-2010).

Ferrero-Waldner is to join the supervisory board of Munich Re, the world’s largest reinsurance firm. Rumours about Ferrero-Waldner's next career move have been circulating for a while in the Austrian press and Ferrero-Waldner had confirmed that she was considering a move to oil giant OMV (to lobby for the Nabucco pipeline project) as well as an un-named Spanish company.

What the press coverage failed to mention was the need for Ferrero Waldner to clear conflicts of interest checks as outlined in the Code of Conduct before taking up a new job. In the first year after leaving, ex-Commissioners need to notify the Commission and get permission for their planned job moves. This lack of concern may reflect the fact that the Commission has previously shown itself not to be very strict on these matters, approving revolving doors cases despite clear conflicts of interest. During the transition from the Prodi to the Barroso Commission in 2004, former EU Commissioner for health and consumer affairs Pavel Telicka was given permission to set up lobby firm BXL Consulting without any 'cooling off' period. BXL Consulting now lobbies for Microsoft, energy giant RWE and OKD Doprava, a Czech coal producer.

As EU Commissioner for external relations, Ferrero-Waldner was responsible for issues of direct interest to Munich Re, including decisions regarding the DESERTEC project in which Munich Re is involved. CEO has written to the Commission asking for clarification about how Ferrero-Waldner's job move (and possible conflicts of interest) was assessed.


Monday, 18 January 2010

Šefčovič announces lobby transparency follow-up, but level of ambition unclear

There was both good and bad news from the Parliament’s hearing with designate Commissioner Šefčovič today. On the positive side, Šefčovič confirmed that he will continue the European Transparency Initiative and that he will put pressure on law firms to join the lobby register. He also acknowledged that the Commission needs stronger rules for Commission staff going through the revolving door into industry lobbying. On the negative side, Šefčovič did not appear very ambitious in terms of pushing for genuine lobby transparency and the strong conflict of interest rules that the EU needs so badly.

The revolving doors problem needs to be addressed, Šefčovič admitted, adding that the rules that apply to Commissioners should be incorporated in the rules for Commission staff (Staff Regulation). But when asked for dates, Šefčovič did not go beyond a disappointing “at the latest in 2012.”

His assessment of the Commission’s current lobby register is unrealistically positive, but this perhaps reflects the briefing he has received from officials rather than his own analysis of the register as it currently stands. “We got the lobbyists under control”, Šefčovič claimed, arguing that there are “2300 companies” in the register and that “the voluntary and incentives-based approach works”. In reality, less than 1/3 of Brussels-based lobbies have joined the voluntary register. The information disclosed by the minority that did join is seriously unreliable.

As the Commissioner gets to grip with his brief, and starts to work closely with the European Parliament, the merits of a mandatory scheme may become more obvious and attractive. Šefčovič referred to the talks that will restart with MEPs in February in the socalled ‘high-level working party’ about the creation of a joint register, mentioning that the European Parliament’s lobbyists’ access pass system could be a helpful addition to the current register. The MEP members of the high-level working party are clearly in favour of a mandatory register.


Barroso takes risk in backing Jeleva

Friday 15 January late afternoon, Commission President Barroso replied to the letter that the President of the European Parliament, Jerzy Buzek had sent him a day before.
In his response Mr. Barroso backs Ms. Jeleva. Interestingly, Mr. Barroso puts his full trust in a short written statement by Ms. Jeleva, attached to Mr. Barroso’s letter to Mr. Buzek, in which she states that her “declaration of interest, signed on the 17 December 2009 and submitted to the Commission in accordance with the Code of conduct for commissioners, is fully accurate and complete.”
There is absolutely no indication that the Commission has double checked Ms. Jeleva’s statement. In fact Mr. Barroso admits that “the Commission, like the EP, relies on the statements of the individual concerned, lacking any specific procedure of control in the Union law in this respect.”
This confirms the serious issue we raised on this blog last Friday: the Commission is not scrutinising Commissioners’ declarations of interest, even in the case of Ms. Jeleva, about whom serious rumours have circulated in the media and in the Parliament since her designation as Commissioner in November 2009.
President Barroso takes quite a risk by not waging a serious investigation of the accuracy of Ms. Jeleva’s declaration of interest and of potential conflicts of interest that she may have. If the European Parliament’s legal service will detect irregularities, the reputational damage will now also extend to Mr. Barroso himself.


Friday, 15 January 2010

Barroso fails to screen Jeleva on potential conflicts of interest

During her hearing in Parliament on Tuesday 12 January, designate Commissioner Rumiana Jeleva came under fire over potential conflicts of interest resulting from undeclared business interests. She was also accused of irregularities in the declarations of financial interests that she filed as a member of the European Parliament (2007-2009). After the hearing there was a lot of doubt about her ability to handle the portfolio she has been assigned. At the time of writing, Ms. Jeleva’s chances of becoming European Commissioner for International Cooperation, Humanitarian Aid and Crisis Response look very slim indeed.

After the hearing, there has been a lot of confusion about the allegations of a conflict of interest and lack of transparency. European Parliament President Jerzy Buzek reportedly sent a letter to Commission President Barroso on Thursday 14 January, asking Mr. Barroso to confirm whether Ms Jeleva’s declaration of interest is in line with the Code of Conduct for Commissioners and whether he still considers her the right candidate for the post she was assigned to.

Concerns about Ms. Jeleva’s conflicts of interest were voiced at the time when her designation was first announced by Barroso in November, so she should have been thoroughly screened by the Commission a long time ago. The prolonged confusion over Ms Jeleva’s real or perceived irregularities and Commission President Barroso’s continued silence indicate that the Commission has failed to do serious, pro-active screening of conflicts of interest of the designate Commissioners. As a result, the reputation of the EU institutions has now been seriously damaged.

The way that the Commission deals with potential conflicts of interest of EU Commissioners is structurally flawed, as was pointed out by the Alliance for Lobbying Transparency and Ethics Regulation (ALTER-EU) in a letter on the revision of the Code of Conduct for Commissioners, sent to Commission President Barroso on 24 November 2009.

In this letter, ALTER-EU recommended

  • a more precise definition of what constitutes a conflict of interest;
  • better transparency on financial interests of Commissioners, and
  • independent oversight of potential conflicts of interest at the European Commission.

In its letter, ALTER-EU noted that, according to the 2005 Framework agreement on EP-Commission relations, “the President of the Commission shall be fully responsible for identifying a conflict of interest which renders a Member of the Commission unable to perform her duties”. Therefore, ALTER-EU asked Mr. Barroso to outline how he will guarantee the complete independence and absence of conflicts of interest of new Commissioners. Seven weeks later, ALTER-EU has still not received any answer from Mr. Barroso.


Öttinger under fire for ties with big energy

In yesterday's hearing, several MEPs grilled Energy Commissioner designate Günther Öttinger about his close ties with German energy companies.

Claude Turmes (Greens, LU) put the spotlight on Öttinger's close personal relationships with Wulf Bernotat and Jürgen Großman, the chief executives of energy giants E.ON and RWE. Would Öttinger stand up against Bernotat in WWF's legal complaint over a new RWE coal plant in Mannheim? How would he handle possible infringement procedures against Amprion? RWE created this “independent” network operator in order to comply with EU rules, but remains involved in Amprion as Großman is chair of its supervisory board. Could Öttinger give an assurance that EU energy policy will not be decided during the regular card nights he has with his big energy friends?

Marita Ulvskog (S&D, SE) took a similar line, worrying whether Öttinger would not be “partisan” and favour nuclear energy as well as major energy companies.

Obviously, Öttinger had prepared carefully for these questions. He stated that he had no shares in energy companies EWF, EnBW, E.ON, RWE or Vattenfall. He clarified that he had only played skat with RWE's Großman once – during a public benefit event. He assured MEPs that special and in particular economic interests wouldn't be at the centre of his work, but that he would keep close contact with all stakeholders. And he invited MEPs to check whether he kept this promise.

Remarkably, Öttinger praised the Commission for dealing more strictly with conflicts of interests and independence than any other organ he knew. But the controversy around Bulgarian designate Commissioner Jeleva indicates that the Commission fails to do serious, pro-active screening of conflicts of interest.

Despite Öttingers assurances, several other replies he made during the hearing should be reason for concern. He was cautious about splitting energy oligopolies through the so-called unbundling policy of separating production and supply from the transmission networks. This had been initiated by his predecessor and had encountered fierce opposition from German and French energy companies. And when describing his vision of a low-carbon economy, he voiced support for the contentious carbon capture and storage technology as a means to pave the way for the use of coal.

It remains to be seen whether Öttinger will manage to keep the distance from the energy giants that is needed to promote a green, safe and socially responsible energy future.


Wednesday, 13 January 2010

De Gucht on shaky ground on corporate lobbying

Caroline Lucas MEP (Greens, UK) challenged the Trade Commissioner designate Karel de Gucht on the issue of corporate influence over EU trade policy when he appeared before the European Parliament hearing yesterday (12 January 2010).

Lucas was happy with de Gucht's strong pledge for “independence” and for countering “third-party interests where these have undue influence” in his written answer to the Parliament's questions. But she was worried that he might follow in the footsteps of his predecessors. It was former trade Commissioner Mandelson who developed the EU's Global Europe trade strategy in close co-operation with corporate lobby groups like BusinessEurope. Thus Lucas wanted to know how de Gucht would resist the undue influence of particular interest groups in the revision of this strategy.

The question seems to have caught de Gucht on the wrong foot. He started his response with the following cryptic elaborations: “I think this is a matter of personal integrity before all, I mean, I have no problem that there is full transparency, who is meeting whom at the services level, there is also a register of lobbies, I mean it's a fact of life that there are a lot of lobbyists, it's because you are important that there are a lot of lobbies.” Then he pulled his act together and assured Lucas that he would meet “all stakeholders” on an “equal basis” to “be informed about what is really at stake in the negotiations”.

Interestingly enough, de Gucht did not do so while he was Belgian minister for foreign affairs and trade. At that time he established a permanent business council of 40 entrepreneurs and chief executives of multinationals active in Belgium to “garner structured advice”. Members included the then chief executive of ING bank Michel Tilmant, the chief executive of GDF Suez Energy International Dirk Beeuwsaert, Jean Stéphenne of consumer healthcare giant GlaxoSmithKline and Nestlé's chief executive Paul Bulcke. According to Lucas, de Gucht did not set up any similar body for public interest groups. So, she asked whether he would employ “a more balanced model of taking advice in developing trade policy”.

Again, the response was rather evasive: “I already mentioned earlier in the debate that the roles of a member state and the European Union and the Commission are quite different. The work of member states before all has to do with trade promotion and I established this business council to discuss with business how we could better promote their products in third countries.” But then de Gucht hastened to say that he “also consulted with civil society on a two times a year basis on the overall topics of foreign policy” and that he “always had an open door if they wanted to come to see me”. This would also be his approach as a trade commissioner.

Consultations with civil society on overall topics twice a year? Doors that are always open? That sounds familiar.

DG Trade already organises regular meetings on EU trade policy with civil society in the context of its Civil Society Dialogue. But while this initiative has been criticised by public interest groups as little more than a PR exercise, big business enjoys numerous other channels of influencing EU trade policy – from frequent and exclusive meetings with top officials in which sensitive information is shared to their institutionalised seats in the Commission's market access teams that tackle whatever regulation stands in the way of European exports to more than 30 countries.

DG Trade also praises itself for its open door policy towards civil society. However, not rejecting a meeting when a union or an NGO requests one is not enough to “reduce the risk of the policymakers just listening to one side of the argument”. And this is what the Commission's own standards for consultation require. Lets hope we do not have to wait for the next Commission until someone takes this seriously.