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.”

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