Wednesday, 16 February 2011

Commission wrong to approve Verheugen’s lobby consultancy - new ethics rules must be Verheugen-proof

The European Commission’s decision earlier this month to approve ex-Commissioner Günter Verheugen’s setting up of his own lobby consultancy firm went against the advice of the Commission’s own ethics committee. Internal documents reveal a complete lack of stringency in the approvals procedure. This underlines the urgent need to tighten the Commission’s ethics rules well beyond what is proposed in the new draft Code of Conduct for Commissioners.

In early February, journalists tipped off by the Commission reported that ex-Commissioner Verheugen had been given the go-ahead to continue his involvement in the European Experience Company, a Potsdam-based lobby consultancy firm that Verheugen and his partner and former head of cabinet, Petra Erler, founded when they left the Commission last spring. Media reported that Verheugen was asked not to lobby officials from his former Commission department (DG Enterprise) and not to work for some 400 companies that had directly benefited from decisions made by his former department. Both conditions were imposed for 26 months, ending in May 2012.

Some media referred to these as ‘strict conditions’, but this is hardly justified. The exact text, now available as the result of a freedom of information request from Friends of the Earth Europe, says that Verheugen’s lobby firm should “not provide its services to any company or person who has been the addressee or who has benefited from individual decisions, grants or contracts prepared or handled by the Commission’s Directorate General “Enterprise and Industry” during Mr Verheugen’s time as Enterprise Commissioner.

Paul de Clerck (Friends of the Earth Europe), speaking on behalf of the ALTER-EU coalition during a debate on conflicts of interest in Brussels, pointed out that this means that Verheugen is allowed to lobby any other Commission department, including DG Environment, DG Internal Market and many others which are all of interest for potential clients. As Enterprise Commissioner, Verheugen was involved in decisions on numerous issues that went beyond his own department, which means the restrictions are far too narrow. And only companies that have directly “benefited from individual decisions, grants or contracts” are off-limit as clients.

Not only are these restrictions narrow, they are virtually impossible to monitor, let alone enforce. The sad conclusion must be that the Commission has de facto given the green light to one of its most powerful former Commissioners to move straight into lobbying consultancy after his departure from the Commission, assisting wealthy firms to influence EU decision-making. It has shied away from blocking Verheugen from cashing in on the insider knowledge and the network that he developed while in the Commission.

The Commission in fact had every reason to block Verheugen’s involvement in the European Experience Company. Internal documents on the approval procedure reveal that the Ad-hoc Ethical Committee had advised against approving Verheugen’s consultancy.

The Ethical Committee had concluded: “it is inevitable that such a wide activity could at some point directly intersect with the scope of the Commissioner’s former activity, in a manner which could not be dealt with by abstaining on a case-by-case basis. […] As presently so indiscriminately described, the considered activity cannot be viewed as in conformity with article 245(2)” (of the EU Treaty).

The Commission overruled this. It first went back to Verheugen, requesting more information about his role in the company, which Verheugen refused to give. Throughout this controversy, Verheugen has claimed that the Code of Conduct does not apply to him because he is not employed by the company, but co-owns it, arguing it is therefore not an ‘occupation’ (the term used in the Code of Conduct for Commissioners). The Commission at least ignored this flawed argument.

Given Verheugen’s failure to provide any further clarification, the only logical conclusion would have been for the Commission to reject Verheugen’s involvement in the European Experience Company, as the Commission had previously done in the case of McCreevy’s planned job with investment firm NBNK.

It took Verheugen three weeks to even respond to the Commission’s request for more information. There was then a time gap of almost two months until the Commission made its decision on the case, on January 31st. The internal documents do not show what happened during these 7-8 weeks, whether perhaps the Commission tried to convince Verheugen to voluntarily pull out of the company, as it had done with McCreevy and NBNK (where the Ethical Committee had also given negative advice). Perhaps Verheugen simply refused to cooperate. The current Code of Conduct does not provide the Commission with any form of sanction it could use to force Verheugen to comply (except for the ultimate option of court case).

This unsatisfactory outcome of the Verheugen case underlines the need for the Code of Conduct for Commissioners to be urgently overhauled. In a recent report, the ALTER-EU coalition has called for “a general ban on lobbying and lobby advice for at least three years” and “a genuinely independent ethical committee that actively investigates potential conflicts of interest regarding ex-Commissioners’ new employers, with effective sanctions to enforce its decisions”.

Meanwhile the European Parliament has started assessing the draft Code of Conduct. When Commission President Barroso met the heads of the political groups in the European Parliament last week, several of the MEPs insisted on far stricter rules and demanded that the Parliament should be involved. Rebecca Harms of the Greens, for instance, said that “a mere cosmetic revision, which is decided on by the commissioners themselves, simply will not fly. For this reason, we want to ensure the full involvement of the European Parliament in the revision”.

In December MEPs were expecting a full decision-making role on the new Code of Conduct, via a report that would be voted on in the Budget Control Committee and in plenary. Even the name of the rapporteur had been discussed. It appears that the Commission preferred a more limited role for the Parliament, only involving the Conference of Presidents. After they met last week, the process has been broadened to include a discussion in the Conference of Committee Chairs; a plenary vote might follow.

During the debate hosted by ALTER-EU and the European Journalism Centre earlier this month, prominent MEPs voiced strong criticisms of the current Code and the Commission’s proposed revisions. MEP Lothar Bisky (United Left), a member of the Conference of Presidents, demanded a three-year cooling-off period. Irish Social Democrat MEP Nessa Childers called for transparency around the new jobs of former Commissioners and for effective sanctions to be introduced, such as withholding part of the ex-Commissioners’ pension. German Christian-Democrat MEP Inge Grässle argued that the Code should be replaced by a proper regulation, which would allow for enforcement by a prosecutor. Let’s hope that the Commission will listen to the solutions proposed by these and other MEPs.

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