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:
- London Stock Exchange
- NBNK Investments plc
- FT Adviser