Wednesday, 22 June 2011

A critical week for European ethics

This is a crucial week for European ethics, not least with an important meeting of the Buzek working group to look at a draft MEP code of conduct and the launch of the joint transparency register between the Parliament and the Commission. So it's very timely that, new draft lobbying legislation will also be launched this week in Austria, massively strengthening the law there as it relates to lobbying and conflicts of interest.

The fall-out from the cash-for-amendments scandal has been profound in Austria, the home country of Ernst Strasser MEP, one of those at the heart of the scandal, who subsequently resigned. The new draft law in Austria is dubbed 'Lex Strasser' by some, indicating at least part of its 'inspiration'.

Crucially, the new Austrian law will introduce a ban on all paid lobbying by public officials, including members of the Parliament, civil servants and ministers. This ban is directly linked to Strasser who, before being caught on tape accepting bribes, was involved in lobbying for industry clients.

In fact Strasser was brazen in his defence of his multiple financial interests, telling the undercover Sunday Times reporters: “Right now I have an excellent opportunity to get to know people, to build a network and use this for my company.” About being an MEP and a lobbyist at the same time, Strasser said: “Of course I am a lobbyist … This is a very good combination. I see it now after one year: there are many people that are competing and who need something. And when one is there as a Parliamentarian this can open doors.” Whilst an MEP, Strasser had a range of paid jobs which involved lobbying: he co-owned the consultancy firms CIN and CCE-Consulting, was employed by PR agency Hochegger and had lobbied for companies including Rail Holding and Group4Securior.

This one case shows just how vital it is that the Buzek working group which is developing a code of conduct for MEPs includes a full ban on MEP second jobs which involve lobbying or which provoke conflicts of interest. On Monday, ALTER-EU (the Alliance for Lobby Transparency and Ethics Regulation) and Transparency International held a joint press conference to put forward our common recommendations for such a code, including in the area of second jobs.

But in addition to the ban on lobby jobs, 'Lex Strasser' will be robust in other ways too. There will be a compulsory register for all lobbyists, which particularly focuses on regulating lobbying consultancies working on behalf of third parties. They must publicly state the number of clients and the total revenue earned from lobbying contracts. In a non-public part of the register, they will need to store the actual contracts signed between themselves and their clients.

Other companies must register as well, if they have their own lobbying division in-house and so must law firms and interest groups. It is compulsory for lobbyists to register and fines could be between 10 000 – 20 000 euros for non-compliance, a sum which will increase for repeat offences. In fact, unregistered consultancies that lobby would see their earnings confiscated by the state!

In the week that the European Parliament and Commission launch the new joint transparency register, much could be learnt from the Austrian proposals. New research by ALTER-EU reveals the extent of 'under-reporting' by industry lobby groups where lobbyists fail to declare their full expenditure on lobbying in an attempt to look smaller than they really are. A particularly ludicrous example is that of Fertilizers Europe which declared only 400 euros of annual lobbying expenditure from an annual budget of four million!*

Speaking about the new proposed legislation in Austria, academic and ethics expert Hubert Sickinger in an interview in der Standard said, “Anyone who does not play by the rules will be sanctioned.” And while the Lex Strasser law is not perfect, he concludes: “In continental Europe there have been mostly voluntary registers only. The Americans are stricter. But in the European context this will certainly be a law that we can be proud of”.

* Following the publication of ALTER-EU's report, Fertilizers Europe notified ALTER-EU that they had updated their entry in the register. They claimed the original entry declaring €400 expenditure on lobbying was a mistake due to a technical problem in the Commission's register.

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Friday, 17 June 2011

Will the European Parliament stay bottom of the league?

As the Buzek working group to develop a code of conduct for MEPs following the cash-for-amendments scandal Corporate Europe Observatory starts to wrap up its work, it could do worse than look at a recent academic study which shows that the European Parliament has one of the weakest regulatory regimes for lobbying in the world.

Based on the comments and questions from MEPs when ALTER-EU recently gave evidence to the Buzek working group, it seemed clear that there was not a consensus on how far the group should go with its recommendations. The group seems to be divided between those who consider that the recent Sunday Times' expose revealed a 'few bad apples' that some tighter guidance will tackle, or whether there needs to be an overhaul of rules and regulations to tackle corporate lobbying and conflicts of interest within the Parliament.

For those in doubt about which direction the Buzek working group should go, a recent academic study provides good food for thought. “Regulating lobbying: a global comparison” claims to be the first book of its kind to compare and contrast different lobbying systems around the world.

Having looked at the level of lobbying regulations in 70 jurisdictions including US states, Canadian provinces, European countries and others, it give the European Parliament the lowest score of all when it come to assessing how strongly it regulates lobbying. One of the areas it looks at is the issue of the 'revolving door' where former parliamentarians become lobbyists, and an area where Corporate Europe Observatory produced a new report last week. On this issue, the EP receives 'nil points' as there is no 'cooling-off period' before former MEPs can take up a lobbying role. By contrast, Lithuania, the US and Canada, amongst others, do have such a provision. Other issues considered include how much information registered lobbyists must declare and what penalties there are for non-compliance.

The study is salutary reading and shows just how far the Parliament (and indeed the European Commission which also scores poorly) has to go before its lobby regulations can be said to be robust – and in step with other parts of the world.

The book concludes by saying that the system of lobbying regulation took over 100 years to develop and that this occurred almost exclusively in the US. MEPs may be unwilling to accept that the US has anything to teach us here in Europe – but in the area of lobbying regulation, this would be narrow-minded. Either way, the Buzek working group has an ideal opportunity to show European citizens that we will not have to wait 100 years for adequate regulations to be introduced here.

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Friday, 3 June 2011

Back to business as usual for MEPs?

Concerns about excessive bureaucracy, or arbitrary limits being placed on gifts which MEPs can receive, or fears for the careers of MEPs at the end of their term in office, were just some of the disappointing responses when the ALTER-EU coalition gave evidence on the new proposed code of conduct for MEPs on Tuesday night.

As a result of the Sunday Times' cash-for-amendments expose earlier this year, a working group of 10 MEPs, chaired by European Parliamentary President Jerzy Buzek MEP has been working to develop a code of conduct for MEPs.

Unfortunately, there is little information publicly available about the work of this group: there is no public website hosting meeting agendas, minutes and drafts, for example. However, earlier this week, the working group did invite the ALTER-EU coalition and others with an interest in these issues to comment on a whole range of questions posed by MEPs about the code. ALTER-EU was represented by Paul de Clerck of Friends of the Earth Europe.

ALTER-EU's key recommendations to the group included:

- A ban on MEPs holding paid second jobs that require representation or lobbying
- A cooling-off period for former MEPs accepting lobbying jobs to stop 'the revolving doors' syndrome
- An ethics committee with external representation to police and enforce the code of conduct

Not surprisingly perhaps, there was a lot of commonality between ALTER-EU's position and that of other participants such as Transparency International and the International Press Association. The European Ombudsman who was also present and made a statement also agreed that it would be in the interests of the Parliament to have an independent mechanism to govern the code of conduct.

Indeed one of the remarkable things about the hearing was the degree of consensus amongst those giving evidence - and when we are talking about ALTER-EU and business lobbying associations, that's not something that can often be said!

For example, the European Public Affairs Consultancies' Association agreed that it was a good idea to have a cooling-off period for MEPs and that MEPs should not be lobbyists as a second job. Meanwhile the Society of European Affairs Professionals supported the need to have external involvement in the ethics committee.

But while there was a broad consensus amongst those giving evidence, there was little consensus evident amongst the MEPs present.

One MEP argued that the special nature of being an MEP precluded external intervention in their affairs and that setting a financial limit on gifts and hospitality would be arbitrary. Others were concerned to avoid excessive bureaucracy, or worried about the legal basis upon which to regulate former MEPs, once they have left office. And while we can all agree that MEPs might need more guidance on some of these issues, in and of itself, guidance will not be enough.

Our concern is that as the initial shock of the Sunday Times' scandal dwindles, these MEPs feel under less and less pressure to put in place solid rules which will avoid a repeat of such a scandal in the future. Meanwhile, Adrian Severin, one of the Members caught by the Sunday Times, continues to shamelessly operate 'business as usual' as an MEP.

The Buzek working group has set themselves a tight timetable to complete their work by late June. Based on the evidence from this hearing, coming up with a code of conduct upon which all members of the working group can agree - and which is truly robust - could be a very tall order.

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