Are revolving doors in the EU Bubble spinning out of control?

Are revolving doors in the EU Bubble spinning out of control?

One in three (9 out of 26) outgoing EU commissioners who left office in 2014 have gone “gone through the revolving door” and taken up roles in corporations or other organisations with links to big business. So what, you may ask? Well, this trend has given rise to concerns that it may lead to a possible conflict of interest.

The fear is that the interests of the corporate and commercial world would unfairly benefit from recruiting former commissioners to a variety of paid and unpaid roles, who could lobby on their behalf.

The tight-knit world of politicians, civil servants, industrialists, and lobbyists known as the 'Brussels bubble' can lend itself to detrimental relationships between regulators and the regulated. Add in the phenomenon of the ‘revolving door’ between the public and private sectors, and there is great potential for conflicts of interest.

Campaigners say the revolving door reflects one aspect of what they have dubbed the "corporate capture" of the EU decision-making process. This, however, is not a new problem.

Back in 2011 Corporate Europe Observatory (CEO), LobbyControl and others demanded better rules to tackle what has become known in Brussels as the ‘revolving door’ after a series of scandals involving previous commissioners.

Fresh fears have now been voiced about the exact same issue by the Brussels-based Alliance for Lobbying Transparency and Ethics Regulation (ALTER-EU).

The alliance says there is risk of an "unhealthily close relationship" developing between the EU's executive body and private interests. In its view, at least eight revolving door roles, held by four commissioners, should not have been authorised at all, due to the risk of possible conflicts of interest.

These include the reported authorisation of Viviane Reding, former commissioner from Luxembourg (and now MEP), to sit on the boards of the mining company Nyrstar 1, Agfa Gevaert, and the Bertelsmann Foundation, which has strong ties to the global media giant of the same name.

The case of another ex-commissioner, the Estonian Siim Kallas, to provide consultancy to IT company Nortal, is also highlighted. Neelie Kroes, the former commissioner from The Netherlands and another member of the Barroso II commission–which handled the fallout from the global financial crash of the late noughties– is now reportedly on the payroll of Bank of America Merrill Lynch.

According to transparency campaigners, Karel De Gucht, the former EU commissioner from Belgium, has joined major private equity firm CVC and wealth management firm Merit Capital.

Former Trade Commissioner De Gucht, who started the EU-US trade negotiations on The Transatlantic Trade and Investment Partnership (TTIP), is also said to have "received the blessing" of the current Commission to join the telecoms company Belgacom (now known as Proximus) and has taken on new roles at the European Business Summit and Bilderberg Conference.

De Gucht, a former government minister in Belgium, has in the past been criticised by civil society for the way he allegedly consistently put big business in the driver’s seat of EU trade negotiations.

Back in 2011, when the issue was first raised, campaigners were told by the Barroso II Commission that its reformed rules reflected “best practice in Europe and in the world”. But a recently published analysis about the departing members of the second Barroso Commission suggests that the revolving door rules remain inadequate and poorly implemented. There have been a total of 26 departing Barroso II commissioners with a total of 115 post-Commission roles between them.

CEO says that of these 115, 96 have been formally authorised, of which 36 were considered by the Commission's own ad hoc ethical committee.

The group says that one in three (9 out of 26) outgoing commissioners who left office in 2014 have gone through the 'revolving door' into roles in corporations or other organisations with links to big business. Four commissioners have allegedly taken at least eight roles between them which campaigners insist should have been rejected outright by the Commission.

The busiest former commissioner is Barroso, a former Prime Minister of Portugal who served two, five year terms as president, with a reported 22 notified new roles.

According to a damning new report by campaigners, all have gone into "problematic" roles in big business or other organisations with links to big business. The study, "Revolving doors spin again–Barroso II commissioners join the corporate sector", calls for stricter rules to prevent potential conflicts of interest.

But it is not just transparency groups that have raised concern. Earlier this year, the European Ombudsman Emily O'Reilly said that the European Commission should make its processes on revolving doors cases “more robust” to avoid conflicts of interest.

Her intervention came after Corporate Europe Observatory highlighted what it called the "shocking" case of former UK MEP Martin Callanan who took up a consultancy post soon after losing his MEP job in the last European Parliament elections.

Jorgo Riss of Greenpeace, one of the complainants in the case, says, “Recruiting via the revolving door is one of the most important tactics available to big business lobbyists and we've been concerned about it for years".

In the hierarchy of EU decision-makers, the 28 European commissioners, one for each of the member states, would probably be regarded as the most important. Individually and collectively they are responsible for initiating and negotiating laws and regulations affecting 500 million citizens.

Campaigners from CEO and Lobby control say it was therefore "shocking" to see the way in which five out of 13 departing commissioners, who served in the first Barroso commission, (2004 to 2010) spun through the revolving door into problematic new roles after leaving office.

Former commissioners, who collectively had just been handling the fall-out from the financial and economic crises, joined the boards of reinsurance giant Munich Re, bank BNP Paribas, and mortgage and life insurance company Credimo, to name just a few.

Most "notoriously" Charlie McCreevy the former commissioner from Ireland, who had been the commissioner for the internal market, joined the derivatives trading unit of global investments company BNY Mellon, the board of Ryanair, and the board of Sentenial, which offers payment technology to banks.

Meanwhile, Gunter Verheugen, the former German commissioner for Enterprise and Industry, founded consultancy firm the European Experience Company with his former Head of Cabinet. He also joined the international advisory board of lobby consultancy FleishmanHillard and became Senior Advisor and Vice Chairman of global banking and markets in Europe, Middle East and Africa at the Royal Bank of Scotland (RBS) Niederlassung Deutschland.

The furore that resulted was immense. Over 50,000 people signed a petition to demand action to block the revolving door. Eventually the rules, contained in the Code of Conduct for Commissioners, were reformed and some improvements were introduced.

But researcher Vicky Cann told The Brussels Times that more needs to be done, saying, “Our research on the ex-members of the second Barroso Commission shows that the revolving door rules remain inadequate and poorly implemented. The close relationship between the EU executive and the corporations it regulates leaves the door wide open to corporate capture and potential conflicts of interest.

"At least eight of the roles taken up by former commissioners should have been rejected outright by the Commission, while others reveal a cavalier attitude to the risk that corporate interests could significantly benefit from the recruitment of former commissioners to a variety of paid and unpaid roles,” adds Cann.

Her comments are echoed by Nina Katzemich from LobbyControl who commented, “The revolving doors between the Commission and the private sector keep spinning. The ban on lobbying for departing commissioners needs to be extended to a full three years, explicitly covering both direct and indirect lobbying."

She added, "The attitude to the risk of corporate capture through revolving door moves has to be changed and new rules properly implemented".

The European Parliament's code of conduct for MEPs, approved in 2011, state that “former MEPs who engage in professional lobbying or representational activities directly linked to the EU decision-making process may not, throughout the period in which they engage in those activities, benefit from the facilities granted to former members under the rules laid down by the Bureau to that effect”.

However, Corporate Europe Observatory says that currently there is no process to monitor or enforce this part of the code and ensure that former MEPs do not use their lifelong access pass for lobbying purposes.

When MEPs leave the European parliament they are entitled to a transitional allowance equivalent to one month's salary for every year they have been an MEP, with a minimum pay-out of six months' salary and a maximum of 24 months.

CEO says, "In theory, the transitional allowance ensures that ex-commissioners do not need to rush to find a new job for financial reasons after leaving the commission and thus risk a possible conflict of interest.

"By all calculations, the allowance is very generous and if ex commissioners are to have such an entitlement it is right that they have ethical obligations for the same length of time."

The campaigners have now made a series of new recommendations to tackle the revolving door phenomenon including: an explicit ban on ex-commissioners accepting any new role that risks creating a conflict of interest and an absolute lobby ban, both for three years; an overhauled authorisation process and full transparency on all new roles taken by former commissioners.

By Martin Banks

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