Wednesday, 25 July 2012

Better control of EU revolving door needed

The revolving door has been in the headlines again in recent weeks with the speedy departure of a top official from the EU's medicines agency to a prominent law firm. Such moves, known as going through the revolving door, can allow the private sector to 'capture' or unduly influence the work of the public sector and it is vital that all public authorities including the EU agencies and the European Commission take this threat seriously. This example and other recent revolving door cases again raise questions as to how well the EU institutions implement the current rules, and whether the Commission will seize the initiative to tighten up on the loopholes which undermine them.

Vincenzo Salvatore was the Head of Legal Service at the European Medicines Agency until June 2012 when he announced that he would be moving to the law firm Sidley Austin to work in their European life sciences regulatory practice. Sidley Austin said that Professor Salvatore would be providing “clients with strategic legal counseling on the EU’s legal process regulating all aspects of the pharmaceutical industry...”, a role for which his time at EMA would undoubtedly have been useful preparation.

Such a senior official as Salvatore is likely to have been aware of the revolving door rules in place at the agency and the need for “officials intending to engage in an occupational activity … [to] inform their institution thereof”. After all, Salvatore was Head of Legal Service when the former director of that agency, Thomas Lönngren, himself went through the revolving door. In that case, EMA only belatedly applied restrictions on Dr Lönngren's new consultancy work.

Professor Salvatore was quoted in the Financial Times on 5 July 2012 as saying: “There is nothing to stop people working in their field of expertise”. Sidley Austin has told Corporate Europe Observatory: "Sidley and Professor Salvatore have followed every procedure required regarding his departure from the EMA. Since we are awaiting the results as the EMA works through its process, it is not appropriate to comment further at this time."

Yet EMA appears to have been caught on the hop by this move. Guido Rasi, the new Executive Director of the European Medicines Agency, told the Financial Times: "I have not approved any post-EMA activities for Vincenzo Salvatore. Before he left the Agency ... he indicated he was intending to work as an independent lawyer and as consultant for some law firms, but without providing any specific details." Rasi went on to say that he has set up a review which will probe possible conflicts of interest arising from this case.

[At the original time of writing, the review had yet to report. Now (6 August 2012) this review has reported back and EMA has imposed several conditions upon Salvatore. You can read all the latest details on this case here.]

Loopholes

An interesting element of the Salvatore case is that he was a contract agent (rather than a permanent official) at EMA and it is clear that there are loopholes in the revolving door rules for contract agents.

Contract agents are only covered by the EU's revolving door rules if they are considered to have had access to “sensitive information” during their time at the EU institution. Of course, as Head of EMA's Legal Service it is hard to see how Professor Salvatore would not have had access to sensitive information during his time at EMA, and so would not be exempt, but this loophole is regularly applied to other EU officials.

Take the case of Darren Ennis. When he left the European External Action Service (EEAS) in summer 2011 for a new job as director at MHP Communications in Brussels, he had, according to the EEAS: “not had access to sensitive information during his time with the European External Action Service and was consequently not deemed subject to the obligation of requesting authorisation to take up an offer from another employer in accordance with Article 16 of the Staff Regulations".

Ennis had only been working for the newly-formed EEAS for a month when he resigned, and so arguably, may not have come into contact with “sensitive information” during this time. However, this is not the whole story.

According to his biography on the MHP website, Ennis was appointed as Catherine Ashton's media and strategic communications advisor not long after her own appointment in December 2009 as EU High Representative of Foreign Affairs and Security. In this role, the website says he had “a key role in developing her narrative for EU foreign policy and helping deliver her political messages to world leaders and media around the globe”. It seems hard to imagine that “sensitive information” was not involved in this work. Yet, Ennis's move to MHP was unregulated and unscrutinised for possible conflicts of interest.

This goes too for the move by Harald Boerekamp from DG ECHO (which handles humanitarian aid and civil protection matters) to Interel European Affairs, one of Brussels largest lobby firms, in May 2012. According to DG ECHO, Boerekamp did not need authorisation to join Interel as he had not had access to sensitive information, even though he had worked at that DG for nearly two years; and had previously been with the Commission’s secretariat general for another year.

Overall, CEO considers that the definition of “sensitive information” needs clarifying and that the revolving door rules should be applied to all contract agents with a policy-making role or any significant working history at an EU institution. CEO also wants to see a cooling-off period of two years for all EU staff entering lobby or lobby advisory jobs, to avoid the risk of conflicts of interest.

Incoming officials

There are other weaknesses in the revolving door rules and the way in which they are implemented. Just as important as the outgoing revolving door – perhaps even more so - is the incoming revolving door, when staff join an EU institution from a job which might provoke a risk of a conflict of interests. The rules governing the incoming revolving door require staff to declare any possible conflicts of interest that they might have related to their present functions as an official.

Marcus Lippold worked for ExxonMobil from 1992 until he joined the Commission to work in a series of oil and energy-related jobs. Originally he was a senior energy economist at DG-TREN (transport and energy), working on oil and coal-related legislation, including European oil upstream and downstream sectors and related refinery products and product markets. In 2009, he led a study assessing the competitive aspects of the oil product markets in the EU 27. His current role is as international relations officer working at DG Energy.

You might assume that an official with a history of working for the oil industry would be scrutinised by the Commission for conflicts of interest if he was undertaking work related to the energy industry. Yet this does not appear to have happened. Based on evidence gathered by CEO via access to documents, it seems that the Commission has not undertaken any assessment of possible conflicts of interest considering Lippold's previous career at ExxonMobil. CEO considers there is a risk of conflicts of interest arising in his current role which the Commission has not recognised, explored or taken any action to prevent.

CEO believes that the current rules are weak in this area and instead of relying on officials to step forward to raise potential conflicts of interest, the institutions themselves should be proactive in scrutinising all incoming staff, including whenever they move to a new job internally.

Flawed

These cases appear to indicate flaws with the EU's current revolving door rules – and it is time for a revamp. All EU bodies should make sure that they have robust rules in place which ensure that all incoming and outgoing staff are scrutinised for potential conflicts of interest and that any necessary restrictions, recusals or cooling-off periods are applied to protect the public interest.

As CEO has said elsewhere, it is time that the revolving door was taken more seriously and that the rules became fit for purpose.

Further information on these and other revolving door cases can be found at CEO's web page RevolvingDoorWatch

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Thursday, 12 July 2012

DG Enterprise needs to kick corporate lobbyists out of its expert groups

ALTER-EU presented its new report on the dominance of corporate lobbyists in DG Enterprise's expert groups at a packed event in the Residence Palace, Brussels, this week, organised in partnership with the Austrian Trade Union Federation and the Austrian Federal Chamber of Labour.

Dennis de Jong MEP and Lluís Prats representing DG Enterprise, both speaking on the panel, told us that the Commission had sent a paper to the MEPs just a few hours earlier recognising that there was indeed 'industry over-representation' in 17 expert groups under this DG. Our report claims this is the case for 32 groups.

We looked at the list of 17 groups which the Commission recognises to be problematic.[1] We were surprised to see that two of our case studies from the report were not even included. The FP7 Security Advisory Group, which has nine corporate representatives and only three from academia; and the European Business Organisation Worldwide, which is a lobby group in its own right, that has been given the status of a Commission expert group.

The FP7 Security Advisory Group also presents a problem of conflict of interest with the same companies that advise the Commission on the research agenda, applying for the money on offer.

And why aren't other groups such as the Working Group on Emission from Non Road Mobile Machinery Engines which has 35 corporate representatives and only one academic seen as a problem by the Commission?

In any case, there is some progress in that at least there is consensus around 17 groups and the Commission is now considering whether to 'reduce the number of members from Industry in order to rebalance the composition of the group' (according to the document it sent to the Parliament). What is less clear is why the Commission needs six months to do this and why it should continue receiving biased advice from them in the meantime[2].

We believe MEPs should refuse to lift the reserve they have imposed to 20% of the expert group budget until the composition of groups has been sufficiently changed.

Lluís Prats also claimed DG Enterprise has reduced the number of its expert groups to 73. We based our report on data we retrieved from the Commission's expert groups register on April 3, 2012. At that time there were 83 groups under DG Enterprise. The day after our event (July 11), there were still 80 groups there. Which shows that it is impossible for citizens to have an exact picture of what is going on with Commission's advisory bodies. The Commission should define specific times for when the register is updated and guarantee that between updates the situation presented is accurate. If it wants to adhere to principles of transparent governance the registers need to be reliable.

Andreas Botsch from the European Trade Union Institute (ETUI) told the event that DG Enterprise has practically stopped involving unions in its advisory bodies over the last decade. Today, only 11 union representatives participate in advisory groups compared with 482 corporate representatives. DG Enterprise is ignoring employees and workers who play such an important role in running the economy. Botsch criticised the general orientation of the Commission according to which the supply side is all that it counts while the needs of consumers and employees are marginalised.

The Commission spokesman ended his remarks by saying ''we are DG Enterprise and Industry, we talk to business, this is who we are''. He had previously said: ''it is important that the voices of companies and enterprises, not only SMEs, are heard in this process. It is with their profits, with their growth, with their increase in productivity, with their products that we will be able to get out of this economic crisis we are in.'' By saying this, he demonstrated that he had missed the main point of ALTER-EU's report, maintaining that the Commission's ideological bias in favour of the interests of big corporations is justified.

This is despite the fact that large corporations provide only a small percentage of the overall employment in Europe (with SMEs and the public sector providing the vast majority of jobs), and despite the fact that the profitability of big corporations seems to be unconnected and sometimes even opposed to improving living standards of citizens. DG Enterprise seemed to be sticking to the dogma that what is good for big business is good for all, while still recognising that some expert groups have to be ''rebalanced''.

Monica Macovei MEP from the European People's Party couldn't attend due to political circumstances in Romania. She nevertheless expressed her full support for ALTER-EU's work in a written statement saying the composition of DG Enterprise's expert groups ''does not reflect societal interests well'' and therefore ''we must continue to push for more transparency and wider representation in the Commission's advisory groups''.

[1] 1) Working group on Motor Vehicles, 2) Working group on Motorcycles, 3) Working group on Agricultural Tractors, 4)• Fertilisers Working group, 5) Working group Measuring Instruments, 6) Advisory Committee on Community Policy regarding Forestry and Forest-based Industries, 7)• Expert group on the Annual European Tourism Forum, 8) Working group on Explosives, 9) Eco-design Consultation forum, 10)Ferrous and non-ferrous metals competitiveness expert group, 11) Strategic Advisory Board on Competitiveness and Innovation (STRABO), 12) High Level Forum for a Better Functioning Food Supply Chain, 13)• CARS 21, 14) European Multi-Stakeholders Platform on ICT Standardisation, 15)• Expert group on the revision of the LeaderSHIP strategy, 16) Ad-hoc Advisory Group on Non-Annex I Products, 17) Raw Materials Supply group

[2]''The aim is for these groups to have a modified and balanced composition by the start of 2013 at the latest'', says the Commission's document sent to the Parliament.

You can find below the videos of the event:

- Introduction and presentation of the report by ALTER-EU

- Intervention of Lluís Prats from DG Enterprise

- Intervention of Dennis de Jong MEP

- Discussion

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Wednesday, 11 July 2012

Severin: Time for action

It is now 16 months since the cash-for-influence scandal rocked the European Parliament and led to the resignation of two MEPs (Ernest Strasser and Zoran Thaler). A third MEP, Adrian Severin of Romania was sacked by the Socialist group but refused to resign from the Parliament. After the scandal, MEPs developed a new Code of Conduct aimed at preventing this from happening again, but it only came in on 1 January 2012 and cannot be applied retrospectively. So what happened next to Severin?

You may be surprised to learn that Severin is still an active MEP despite video tape evidence of him charging 12 000 euros for “two to three days’ work” which included persuading MEP Sebastian Bodu (Romania, European People’s Party) to table an amendment. Severin was promoting this amendment on behalf of a corporate client and expected to be paid for the service (information which was concealed from Bodu at the time). What Severin did not realise was that his corporate client was fake and that this was a sting operation by journalists at the Sunday Times.

Shockingly, Severin has faced no punishment from the European parliamentary authorities since the scandal broke. Documents secured by Magdalena Moreh, the Brussels-based correspondent for Romanian Public Television (TVR), show that the European Anti-fraud Office (OLAF) recommended that Severin be considered for sanction under the Parliament’s rules of procedure. After an investigation, OLAF concluded that Severin “did not act independently when he supported an amendment to European legislation in the legislative process in return for payment”. OLAF has also passed its file to the authorities in Severin’s home country of Romania and recommended “judicial action”.

European Parliament President Martin Schulz has the power to impose one of the, albeit weak, sanctions at his disposal on Severin. Yet according to sources close to President Schulz, his decision will depend on what action the Romanian authorities take.

In January 2012, in a somewhat bizarre development, Severin complained to the European Ombudsman about the way in which he had been investigated by OLAF; the Ombudsman has yet to rule on this complaint. Meanwhile, OLAF wrote in its concluding note to the previous President of the European Parliament Jerzy Buzek that while it had received Severin's full cooperation during their investigation, they were not able to “acquire forensic electronic data in the European Parliament or to conduct interviews with witnesses due to the European Parliament’s refusal to provide the necessary support”. Elsewhere OLAF has said that the Parliament refused to cooperate with their two attempts to search Mr Severin’s office and those of the other MEPs.

The Parliament was apparently concerned about OLAF's remit to investigate and the immunity of MEPs. OLAF has now told CEO that its Director-General Giovanni Kessler and Martin Schulz have recently launched talks to clarify the legal situation concerning OLAF’s investigation of Members of the Parliament.

In another recent development, the senior Socialist MEP Lidia Geringer de Oedenberg (who is also a member of the Bureau which is responsible for the enforcement of the new MEP code of conduct) wrote a comment piece in which she defended Severin’s actions and argued that he should be considered innocent until proven guilty. The Alliance for Lobbying Transparency and Ethics Regulation has published a robust response to her article.

The case of Severin has clearly challenged the parliamentary authorities, as well as the previous European Parliamentary leadership of Mr Buzek and the current presidency of Mr Schulz. And with the Romanian investigations still pending, it remains unclear whether President Schulz will sanction Severin and show, once and for all, that agreeing a payment in return for influencing parliamentary business is totally unacceptable.

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Wednesday, 4 July 2012

Another year without real transparency

The Transparency Register has not been the success the Commission claims it is. In a recent article in the European Voice (“A year of living transparently”, 21-27 June), Maroš Šefcovic, the European commissioner for administration, describes the Transparency Register as “a great success” and highlights it as proof of the EU institutions’ efforts to be “as transparent as possible”.

The Alliance for Lobbying Transparency and Ethics Regulation (ALTER-EU) – of which Corporate Europe Observatory is a part – recently published an analysis of the quantity and quality of the registrations. Our conclusion was not as cheerful as the commissioner’s. The register is very far from giving a full and accurate picture of the lobbying activities in Brussels. Lobbyists do not take it seriously and many continue to boycott it.

Voluntary approach will never be effective

The commissioner says the voluntary approach is “by far the simplest and most effective means of keeping track of lobbying activities”. Simple as it may be, it is not effective at all if the aim is to provide a tool that allows for the effective monitoring of lobbying.

A great number of law firms that lobby (which are notorious for their opposition to transparency) are absent from the register. More than 120 enterprises active in lobbying have not registered either. And let us be clear: these are not just any company, but big players such as Deutsche Bank, Monsanto, Goldman Sachs or Apple. So there is still a lot going on in the shadows.

Regarding mandatory disclosure, Mr Šefčovič resorts to the stale argument of the lack of a legal basis. In fact, this is a matter of political will, rather than of legal bounds. There are possibilities that could be considered, like an inter-institutional agreement, as proposed by the European Parliament in a resolution in 2008.

If the Commission takes the initiative now, mandatory registering could be achieved in two or three years’ time. In any case, registration should be a requirement for lobbyists who wish to have regular access to European politicians and officials.

Reliability at risk

Furthermore, the register is littered with inaccurate data, misleading entries and blatant attempts to hide the real nature of lobbying activities (hence the title of our analysis: ‘dodgy data’). Many registrants fail to reveal what topics they have lobbied on, on whose behalf and with what budget.

The financial disclosure figures, essential to get a sense of the volume of lobbying, often appear to be inaccurate or misleading: in fact, more than 50 registrants claim to spend less than €1 on lobbying a year. The highest lobbying expenditure for a company in Brussels is declared by the American camera-equipment producer Panavision, which declares spending €35million. This is more than ExxonMobil, Shell and GDF Suez combined, which seems rather unrealistic.

Last year, ALTER-EU members objected to Shell’s declared lobby expenditure, considering it to be unrealistically low. The European Commission rejected this, but shortly after, Shell adjusted its entry (it increased tenfold, from €400,000 to €4 million).

The Commission says that it does checks on the data in the register but it seems clear that they do not have the capacity and perhaps the technology to really be able to verify the data in the way that is needed.

With all its shortcomings, the register is still a long way off from being a useful tool which would effectively monitor lobbying in Brussels. The conclusion is inescapable: if the Commission, Parliament and Council are committed to lobbying transparency, mandatory registering is unavoidable and urgent action is needed, including more rigorous checks to identify those that currently make a mockery out of “living transparently”.

Written by Koen Roovers (ALTER-EU) and Ester Arauzo (Corporate Europe Observatory)

This article is a longer version of the letter “Transparency list is being abused” published in The European Voice, on 28 June 2012

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Monday, 2 July 2012

The MEP code of conduct: six months on

“The new code of conduct will be a strong shield against unethical behaviour.” That was the verdict of the then European Parliament President Jerzy Buzek who had just shepherded the new MEP code of conduct through both his own European People's Party (EPP) group and the rest of Parliament. The development of the code followed the cash-for-influence scandal which saw three MEPs disgraced for tabling amendments in return for payment or lucrative second jobs and greater transparency via the new code was supposed to stop MEPs from ending up in the pockets of wealthy lobbyists. The code came into force on 1 January 2012, so six months on – how well has it fared so far?

Not readable, not searchable

At the heart of the code is a new declaration of interest form which MEPs were required to complete by the end of March. The new form asked for much more information about additional income, including from second jobs; membership of boards; shareholdings with public policy implications and other information. Many MEPs are said to have struggled with filling it in by the deadline, and some sought advice from the new advisory committee (made up of five MEPs) about how to do so.

Since then, most if not all MEPs have completed the form, but a statistical overview is not readily available. In fact, scrutiny of these declarations of interest continues to be difficult.




Many are handwritten (which can be hard to read, bordering on illegible); they can be completed in any EU language (which makes them hard to compare); and are not translated and uploaded onto a searchable database as the Alliance for Lobbying Transparency and Ethics Regulation had strongly recommended. Overall, the new forms may include more information than before, but they remain as challenging and time-consuming to scrutinise as ever. But such scrutiny remains incredibly important as there are concerns that some MEPs are not complying with the rules by completing the declarations as fully as they should.

Non-existent scrutiny

In May, Belgian media reported that ex-prime minister and current MEP Jean-Luc Dehaene had stock options granted by AB InBev (where until last year he served on the board) potentially amounting to around three million euros. Friends of the Earth Europe, CEO and other groups immediately wrote to the new President of the Parliament Martin Schulz (Socialist & Democrat) to raise the question of why those stock options were not declared in Mr Dehaene’s declaration of interest dated 27 February 2012. There is also the very serious question of whether, if Mr Dehaene does indeed hold these stock options, of whether they create a risk of a conflict of interest for MEPs who should act independently and in the public interest.

No response has yet been received to this letter but it is understood that Mr Schultz has now met with Mr Dehaene and that the case has been referred to the advisory committee for further investigation.

In this case, it was the media that first raised this issue. The parliamentary authorities have not devoted time to monitor or scrutinise MEPs' declarations or to clarify when things are not understandable (or legible). Instead, the parliamentary authority role seems to have been confined to purely one of administration and uploading the declarations when they receive them.

This is disappointing as codes of conduct do not tend to implement themselves and some proactive action and oversight is required, especially as a new system beds in.

Ex-MEP lobbyists with privileges

CEO has asked the Parliament a series of access to documents requests about how the rules will be implemented and enforced in one specific area ie. the clause in the new code which bans former MEPs from using their life-long Parliament access pass if they are undertaking lobbying activities. It is not clear how many former MEPs go through the revolving door into Brussels lobby jobs, but CEO is aware of a number of recent cases including Erika Mann, John Purvis, Christian Rovsing, Piia-Noora Kauppi and Karin Riis-Jørgensen

CEO had assumed that the new code would mean that former MEPs engaging in lobbying would surrender their lifelong access badge (a perk awarded to all former MEPs when they leave office) at least for the duration of their subsequent lobby activities. Afterall, how else could you effectively enforce this provision in the code? But in fact, that is not how the Parliamentary authorities have interpreted the rules and as a result, it is understood that no former MEP has surrendered their pass. Instead the EP says it is “encouraging former Members engaging in representational activities to apply for [separate] accreditation via the Transparency Register … for the moment additional guidelines for the implementation of [this article] of this Code have not been produced.” It is not known whether any of the former MEPs listed above have accessed the Parliament for lobbying purposes using their life-long pass, but a check shows that none of the above are currently in the EP’s register of lobbyists, the Transparency Register.

Maybe it's too easy to criticise the European Parliamentary authorities for their hands-off approach to implementing the code of conduct for MEPs. Afterall, presumably they take their instructions from MEPs themselves - and perhaps the most shocking development since January has been the way in which senior MEPs have been willing to water-down and undermine the new code.

Gifts under the radar

In May, the Bureau (which is made up of senior MEPs including the parliament's vice presidents and the archaically named 'quaestors') voted to, in effect, weaken the rules regarding what MEPs need to declare when it comes to the receipt of hospitality and gifts. As a result, MEPs would no longer need to declare hospitality such as hotel accommodation received from a third party if it did not exceed a value of €300 per night. Paid travel would also not need to be declared unless it was in business class or first class. Undoubtedly, many EU citizens, who rarely get to travel business class or stay in swanky hotels, would likely be astounded by this move.

Cecilia Wikstrom MEP (Liberal) branded the move as "a complete disgrace" and the decision was the subject of a particularly damning European Voice editorial. The Bureau hid behind its argument that they were simply acting in their role to interpret and implement the rules, but the effect was clear and what they decided was clearly a big step away from the original intention of the code of conduct. The EPP is the largest party in the Bureau, and to add insult to injury, Joseph Daul, the leader of the group in the Parliament later blocked any plenary debate taking place on the Bureau's decision, despite a request from the leaders of the Socialists, Liberals and Greens. MEPs, some of whom have been furious at this development, are now hoping that the Constitutional Affairs committee will take action to overturn the Bureau's decision although that will require plenary support.

Need for vigilance

CEO and other transparency groups welcomed the code of conduct when it came into force six months ago, but since then we have become more and more disheartened about how the parliamentary authorities and some MEPs themselves have responded to it. President Schulz inherited the code; he should take care that under his term of office, it does not morph from Buzek's “shield against unethical behaviour” into a fig leaf behind which unethical behaviour continues, business as usual. This blog was updated on 3 July 2012.

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