Corporate Europe Observatory

Exposing the power of corporate lobbying in the EU

Transformation needed for Transparency: Looking towards the lobby register review

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In September last year, CEO submitted four complaints to the Transparency Register's secretariat about entries that broke the rules, following ALTER-EU analysis showing the lobby register's data was still incomplete and inconsistent. Over the following three months, the Joint Transparency Register Secretariat, charged with dealing with these complaints, responded to our complaints. We're now facing the two year review of the lobby register, and signs of real political level debate and transformation are not promising. What can the results of our complaints, last year's public consultation on the register and its annual report, tell us about the voluntary lobby register's progress so far? And what is needed to ensure a transformation towards true transparency?

Europabio: insufficient material evidence (that's what we said!)

Our complaint against Europabio, a large and influential biotechnology lobby platform, was based on its unrealistically low financial declaration and number of lobbyists. They listed two lobbyists, despite having a 17-person office in Brussels, with the primary purpose of representing biotechnology in the EU. They declared a lobby expenditure of less than 50,000 euros in 2010, despite its annual turnover being 1.3 million euros, and despite the fact that administrative and staff costs should be included in this sum (with estimates of employing a corporate lobbyist in Brussels costing up to 100 000 euros per year).

However, in response to our substantive concerns, the register secretariat concluded “these elements were not in themselves material evidence” and refused to open an investigation. They conceded however to perform a “routine quality check” of Europabio's registration. Which led to Europabio updating its entry, increasing its number of lobbyists from 2 to 8, and multiplying its lobby expenditure from 50 thousand euros in 2010, to 200-250 thousand euros in the first ten months of 2012. An update which was astonishingly in line with our contentions, given that our substantive concerns had not been sufficient evidence to open an investigation! Their lobby expenditure however still seems too low.

The mathematics of aviation: errors corrected?

CEO also complained about the entry of the Association of European Airlines. The register's guidelines clearly state that “Any person benefiting from an accreditation for access to the European Parliament's buildings should be counted as a full 1 person/year”. AEA however listed 1.5 lobbyists, despite listing [then] 6 individuals with Parliamentary passes. The register secretariat contacted AEA, which “fully understood the need to correct its registration...[and] accepted to update its data and to provide some complementary information in its registration”, which “now complies with the requirements of the Register”.

AEA's update kept the figure at 1.5 lobbyists, adding that “the [now] 4 accredited persons each spend no more than 35% of their time working on matters under the scope of the register, and therefore we declare 1.5 persons to be active in interest representation”. This calculation of full time equivalents may not be unreasonable in itself, but what is unreasonable is that the rules clearly state that 1 pass = 1 person. So how can the body charged with overseeing the implementation of these rules say that this complies with the requirements of the Register?

This may be a small and simple thing – but if the register secretariat aren't taking the rules about the small and simple things seriously, then what are the implications for the bigger and more complex concerns?

Law firms, still a law unto themselves

Law firms that provide lobbying services, as well as the more traditional legal services, have been reluctant to embrace transparency from the beginning, and most remain unregistered. Of those that have registered, many violate the requirement to disclose their lobby clients. After ALTER-EU's July 2012 Dodgy Data report, at least two such firms - 'White and Case' and 'Reed Smith LLP' – were suspended from the Register for breaching this guideline.

Reed Smith LLP had, by September 2012 been reinstated, having amended their entry to include a client list. However, despite declaring a lobby budget of 10 million euros, they listed only one client, bringing in a turnover of less than 50 thousand euros. Even more curiously, Reed Smith LLP listed zero persons as being involved in their 10 million euro lobbying practice, and left the section on main EU initiatives lobbied on blank. We thought it was a staggering omission that Reed Smith's revised entry, riddled with contradictory information and glaring omissions, was reinstated merely because they listed one client. So we complained that Reed Smith's updated entry still violated the guidelines.

The register secretariat investigated and informed us of the result: Reed Smith itself had decided it shouldn't remain in the Register. What does that mean? Well, the law firm told the register secretariat its main purpose for registering was to receive automatic alerts on consultations, and when the register secretariat replied that this was a “side benefit but shouldn't be the main purpose of a registration, the firm reconsidered its registration and decided to withdraw from the Register.” A striking circumvention of the rules of the register, illustrating that until lobby transparency is truly mandatory, those most reluctant to be transparent will simply withdraw when challenged to provide the full story.

CEO also submitted a complaint about another law firm that failed to declare its clients, Linklaters LLP. Its entry said that “Linklaters LLP does not engage in lobbying related activities but exclusively provides legal advice to its clients”, but Linklaters website said they have “a proven track record of advocacy before the European Commission” - clearly a form of interest representation. And under 'main EU initiatives covered the year before by activities falling under the scope of the Transparency Register', they noted several EU policy dossiers.

The register secretariat responded that Linklaters accepted to “update its data and correct the anomalies due to a misinterpretation of the rules”, and closed the case. However, instead of listing lobby clients, Linklaters now states “Own activity without client mandate” and that “The activities of Linklaters LLP are protected by confidentiality rules as may be the case in the different jurisdictions in which the firm is active.” Their website now says Linklaters has a “proven track record of client defense before the European Commission.” Yet, under its public and administrative law section, Linklaters boasts that its “relationships with public bodies enable clients to benefit from direct access to public decision-makers” - extremely strange for an organisation that insists it does not engage in activities intended to directly or indirectly influence law and policy-making.

Inconvenient truths?

The response of these law firms brings us back to the uncomfortable truth about the role of law firms in lobbying at EU level. Lets take a step back. The European Union is a body whose existence and remit is based on treaty law, and which deals with the making and revision of laws. Legal expertise is required and used in lobbying all the time, and using legal language or arguing about the interpretation of legal texts is a common lobbying strategy. As any lawyer, or person familiar with the legal system or policy-making world, knows, both treaty and case law are open to different and often contradictory legal interpretation. It is exactly these kinds of lobbying services that law firms tend to offer and provide to clients, when they refer to 'government relations' and 'public policy' – offering to represent a legal interpretation of an existing or proposed law to public officials, which is favourable to the interests of a company client. Indeed, in Washington DC, law firms are the biggest players in the lobbying industry.

It stands to reason – and is a principle of law and investigative integrity - that client confidentiality in legal cases, such as representing a client in court, is necessary. However, client confidentiality when providing interest representation – or lobbying - services, as defined by the Commission and Parliament1 – should be subject to the same transparency requirements as any other kind of actor involved in lobbying. Why? Because in a democratic system, citizens have a right to know who is trying to influence their lawmakers, on behalf of whom, on what topics, and with what budgets. When law firms seek to directly or indirectly influence the formation or implementation of policy and decision-making processes, on behalf of clients, they must be subject to the same transparency requirements as everyone else.

What have our complaints taught us about how the lobby register is policed?

  • If you don't like the rules, fine, just say why not and break them anyway;
  • If you want to be transparent enough to be in the transparency register - but not so transparent that you have to disclose your lobby clients - no worries, just say you don't lobby but insist on staying in the lobby register;
  • If you don't want to play by the rules, no problem, just withdraw from the register;
  • And of course, if you really don't want to play by the rules, don't sign up in the first place.

Well, forgive us for saying so, but that's not how a transparency register - designed to enable public scrutiny and help create a level the playing field between lobbyists - must work if its going to foster genuine respect for transparency, on behalf of lobbyists and on behalf the institutions.

Public consultation and annual report

According to the register's first annual report, which came out in November 2012, the 5000+ entries in the register have an error rate of more than half. Of the 404 quality checks performed by the register secretariat, between March and September 2012, 215 (62.5%) were non-compliant! But despite the enormous scale of inaccuracy, Commissioner Šefčovič, the Commissioner in charge of transparency issues, noted in November that theregister secretariat had handled only five complaints since March 2012.2

Five complaints is very few considering the staggering proportion of non-compliant entries. But it also seems fair to say that such a small number of complaints can engender only very limited conclusions about the complaint process itself. Which makes it quite mysterious that the register secretariat's annual report outlines the conclusion that: “Due to the independence of their profession, law firms feel that their professional representative associations should handle complaints regarding an alleged violation of conduct codes and decide relative sanctions on their account. ”

Or perhaps not so mysterious, since almost all the non-registered organisations that responded to the public consultation on the register, last summer, were law firms. Despite receiving responses from only 23 non-registered organisations (9%), compared to 234 registered organisations (91%), the concerns expressed by unregistered law firms have apparently been given an entirely disproportionate weight. As indicated by the spurious conclusion, and very dangerous option, presented in the annual report of “an ad-hoc, derogative and exceptional formula for category I [law firms and lobby consultancies] entities claiming a need for client confidentiality.” The notion of excluding law firms – and by extension to the rest of category I, professional consultancies and self-employed consultants – from disclosing who they are lobbying for, would undermine the very purpose of the register: to provide transparency about who is trying to influence our laws. Such an "option" is antithetical to the goal of lobby transparency.

Transformation not technical tweeks

One outcome from the public consultation that it is vital to note however is that the “main reason cited by non-registrants for not being registered is that registration is not compulsory.” And contrary to the desire of lobbying law firms for “ad hoc, derogative and exceptional formula” about disclosing clients, not only did all NGOs support a move towards more transparency, but public affairs consultancies also do, on the condition that any future tightening of these requirements should be mandatory and applied equally to all interest representatives.

Corporate Europe Observatory believes that all the evidence points towards the need for transformation of the register, not merely a few technical tweeks. Transformation into a mandatory, more comprehensive, better monitored register, that can ensure high-quality and comprehensive data about who is trying to influence our laws. But unless our MEPs - who've already committed to the transformation to a mandatory register3 - act fast and effectively, the opportunity for real change - locked into the two year review - may be lost to more conservative, less ambitious elements.

  • 1. Interest representation covers "activities carried out with the objective of directly or indirectly influencing the formulation or implementation of policy and the decision-making processes of the EU institutions, irrespective of the channel or medium of communi­cation used, for example outsourcing, media, contracts with professional intermediaries, think-tanks, platforms, forums, campaigns and grassroots initiatives. These activities include, inter alia, contacting Members, officials or other staff of the EU institutions, preparing, circulating and communicating letters, information material or discussion papers and position papers, and organising events, meetings or promotional activities and social events or conferences, invitations to which have been sent to Members, officials or other staff of the EU institutions. Voluntary contributions and participation in formal consultations on envisaged EU legislative or other legal acts and other open consultations are also included."
  • 2. Along with the five complaints that Commissioner Sefcovic refers to between March-November, CEO submitted the four complaints detailed above in September 2012. The annual report mentions that in addition to the five complaints, “three complaints have been received by the JTRS in September 2012.” which we presume means that our four (three accepted) complaints are not included in this.
  • 3. Decision adopted by European Parliament vote, 11 May 2011: "Repeats, however, its call for the mandatory registration of all lobbyists on the TR and calls for the necessary steps to be taken in the framework of the forthcoming review process in order to prepare for a transition to mandatory" (P7_TA(2011)0222).
Europabio: insufficient material evidence (that's what we said!)Our complaint against Europabio, a large and influential biotechnology lobby platform, was based on its unrealistically low financial declaration and number of lobbyists. They listed two lobbyists, despite having a 17-person office in Brussels, with the primary purpose of representing biotechnology in the EU. They declared a lobby expenditure of less than 50,000 euros in 2010, despite its annual turnover being 1.3 million euros, and despite the fact that administrative and staff costs should be included in this sum (with estimates of employing a corporate lobbyist in Brussels costing up to 100 000 euros per year).However, in response to our substantive concerns, the register secretariat concluded “these elements were not in themselves material evidence” and refused to open an investigation. They conceded however to perform a “routine quality check” of Europabio's registration. Which led to Europabio updating its entry, increasing its number of lobbyists from 2 to 8, and multiplying its lobby expenditure from 50 thousand euros in 2010, to 200-250 thousand euros in the first ten months of 2012. An update which was astonishingly in line with our contentions, given that our substantive concerns had not been sufficient evidence to open an investigation! Their lobby expenditure however still seems too low.The mathematics of aviation: errors corrected?CEO also complained about the entry of the Association of European Airlines. The register's guidelines clearly state that “Any person benefiting from an accreditation for access to the European Parliament's buildings should be counted as a full 1 person/year”. AEA however listed 1.5 lobbyists, despite listing [then] 6 individuals with Parliamentary passes. The register secretariat contacted AEA, which “fully understood the need to correct its registration...[and] accepted to update its data and to provide some complementary information in its registration”, which “now complies with the requirements of the Register”.AEA's update kept the figure at 1.5 lobbyists, adding that “the [now] 4 accredited persons each spend no more than 35% of their time working on matters under the scope of the register, and therefore we declare 1.5 persons to be active in interest representation”. This calculation of full time equivalents may not be unreasonable in itself, but what is unreasonable is that the rules clearly state that 1 pass = 1 person. So how can the body charged with overseeing the implementation of these rules say that this complies with the requirements of the Register?This may be a small and simple thing – but if the register secretariat aren't taking the rules about the small and simple things seriously, then what are the implications for the bigger and more complex concerns?Law firms, still a law unto themselvesLaw firms that provide lobbying services, as well as the more traditional legal services, have been reluctant to embrace transparency from the beginning, and most remain unregistered. Of those that have registered, many violate the requirement to disclose their lobby clients. After ALTER-EU's July 2012 Dodgy Data report, at least two such firms - 'White and Case' and 'Reed Smith LLP' – were suspended from the Register for breaching this guideline.Reed Smith LLP had, by September 2012 been reinstated, having amended their entry to include a client list. However, despite declaring a lobby budget of 10 million euros, they listed only one client, bringing in a turnover of less than 50 thousand euros. Even more curiously, Reed Smith LLP listed zero persons as being involved in their 10 million euro lobbying practice, and left the section on main EU initiatives lobbied on blank. We thought it was a staggering omission that Reed Smith's revised entry, riddled with contradictory information and glaring omissions, was reinstated merely because they listed one client. So we complained that Reed Smith's updated entry still violated the guidelines.The register secretariat investigated and informed us of the result: Reed Smith itself had decided it shouldn't remain in the Register. What does that mean? Well, the law firm told the register secretariat its main purpose for registering was to receive automatic alerts on consultations, and when the register secretariat replied that this was a “side benefit but shouldn't be the main purpose of a registration, the firm reconsidered its registration and decided to withdraw from the Register.” A striking circumvention of the rules of the register, illustrating that until lobby transparency is truly mandatory, those most reluctant to be transparent will simply withdraw when challenged to provide the full story.CEO also submitted a complaint about another law firm that failed to declare its clients, Linklaters LLP. Its entry said that “Linklaters LLP does not engage in lobbying related activities but exclusively provides legal advice to its clients”, but Linklaters website said they have “a proven track record of advocacy before the European Commission” - clearly a form of interest representation. And under 'main EU initiatives covered the year before by activities falling under the scope of the Transparency Register', they noted several EU policy dossiers.The register secretariat responded that Linklaters accepted to “update its data and correct the anomalies due to a misinterpretation of the rules”, and closed the case. However, instead of listing lobby clients, Linklaters now states “Own activity without client mandate” and that “The activities of Linklaters LLP are protected by confidentiality rules as may be the case in the different jurisdictions in which the firm is active.” Their website now says Linklaters has a “proven track record of client defense before the European Commission.” Yet, under its public and administrative law section, Linklaters boasts that its “relationships with public bodies enable clients to benefit from direct access to public decision-makers” - extremely strange for an organisation that insists it does not engage in activities intended to directly or indirectly influence law and policy-making. Inconvenient truths?The response of these law firms brings us back to the uncomfortable truth about the role of law firms in lobbying at EU level. Lets take a step back. The European Union is a body whose existence and remit is based on treaty law, and which deals with the making and revision of laws. Legal expertise is required and used in lobbying all the time, and using legal language or arguing about the interpretation of legal texts is a common lobbying strategy. As any lawyer, or person familiar with the legal system or policy-making world, knows, both treaty and case law are open to different and often contradictory legal interpretation. It is exactly these kinds of lobbying services that law firms tend to offer and provide to clients, when they refer to 'government relations' and 'public policy' – offering to represent a legal interpretation of an existing or proposed law to public officials, which is favourable to the interests of a company client. Indeed, in Washington DC, law firms are the biggest players in the lobbying industry.It stands to reason – and is a principle of law and investigative integrity - that client confidentiality in legal cases, such as representing a client in court, is necessary. However, client confidentiality when providing interest representation – or lobbying - services, as defined by the Commission and Parliament1 – should be subject to the same transparency requirements as any other kind of actor involved in lobbying. Why? Because in a democratic system, citizens have a right to know who is trying to influence their lawmakers, on behalf of whom, on what topics, and with what budgets. When law firms seek to directly or indirectly influence the formation or implementation of policy and decision-making processes, on behalf of clients, they must be subject to the same transparency requirements as everyone else.What have our complaints taught us about how the lobby register is policed?If you don't like the rules, fine, just say why not and break them anyway;If you want to be transparent enough to be in the transparency register - but not so transparent that you have to disclose your lobby clients - no worries, just say you don't lobby but insist on staying in the lobby register;If you don't want to play by the rules, no problem, just withdraw from the register;And of course, if you really don't want to play by the rules, don't sign up in the first place.Well, forgive us for saying so, but that's not how a transparency register - designed to enable public scrutiny and help create a level the playing field between lobbyists - must work if its going to foster genuine respect for transparency, on behalf of lobbyists and on behalf the institutions.Public consultation and annual reportAccording to the register's first annual report, which came out in November 2012, the 5000+ entries in the register have an error rate of more than half. Of the 404 quality checks performed by the register secretariat, between March and September 2012, 215 (62.5%) were non-compliant! But despite the enormous scale of inaccuracy, Commissioner Šefčovič, the Commissioner in charge of transparency issues, noted in November that theregister secretariat had handled only five complaints since March 2012.2Five complaints is very few considering the staggering proportion of non-compliant entries. But it also seems fair to say that such a small number of complaints can engender only very limited conclusions about the complaint process itself. Which makes it quite mysterious that the register secretariat's annual report outlines the conclusion that: “Due to the independence of their profession, law firms feel that their professional representative associations should handle complaints regarding an alleged violation of conduct codes and decide relative sanctions on their account. ”Or perhaps not so mysterious, since almost all the non-registered organisations that responded to the public consultation on the register, last summer, were law firms. Despite receiving responses from only 23 non-registered organisations (9%), compared to 234 registered organisations (91%), the concerns expressed by unregistered law firms have apparently been given an entirely disproportionate weight. As indicated by the spurious conclusion, and very dangerous option, presented in the annual report of “an ad-hoc, derogative and exceptional formula for category I [law firms and lobby consultancies] entities claiming a need for client confidentiality.” The notion of excluding law firms – and by extension to the rest of category I, professional consultancies and self-employed consultants – from disclosing who they are lobbying for, would undermine the very purpose of the register: to provide transparency about who is trying to influence our laws. Such an "option" is antithetical to the goal of lobby transparency.Transformation not technical tweeksOne outcome from the public consultation that it is vital to note however is that the “main reason cited by non-registrants for not being registered is that registration is not compulsory.” And contrary to the desire of lobbying law firms for “ad hoc, derogative and exceptional formula” about disclosing clients, not only did all NGOs support a move towards more transparency, but public affairs consultancies also do, on the condition that any future tightening of these requirements should be mandatory and applied equally to all interest representatives.Corporate Europe Observatory believes that all the evidence points towards the need for transformation of the register, not merely a few technical tweeks. Transformation into a mandatory, more comprehensive, better monitored register, that can ensure high-quality and comprehensive data about who is trying to influence our laws. But unless our MEPs - who've already committed to the transformation to a mandatory register3 - act fast and effectively, the opportunity for real change - locked into the two year review - may be lost to more conservative, less ambitious elements. 1. Interest representation covers "activities carried out with the objective of directly or indirectly influencing the formulation or implementation of policy and the decision-making processes of the EU institutions, irrespective of the channel or medium of communi­cation used, for example outsourcing, media, contracts with professional intermediaries, think-tanks, platforms, forums, campaigns and grassroots initiatives. These activities include, inter alia, contacting Members, officials or other staff of the EU institutions, preparing, circulating and communicating letters, information material or discussion papers and position papers, and organising events, meetings or promotional activities and social events or conferences, invitations to which have been sent to Members, officials or other staff of the EU institutions. Voluntary contributions and participation in formal consultations on envisaged EU legislative or other legal acts and other open consultations are also included." 2. Along with the five complaints that Commissioner Sefcovic refers to between March-November, CEO submitted the four complaints detailed above in September 2012. The annual report mentions that in addition to the five complaints, “three complaints have been received by the JTRS in September 2012.” which we presume means that our four (three accepted) complaints are not included in this. 3. Decision adopted by European Parliament vote, 11 May 2011: "Repeats, however, its call for the mandatory registration of all lobbyists on the TR and calls for the necessary steps to be taken in the framework of the forthcoming review process in order to prepare for a transition to mandatory" (P7_TA(2011)0222).
 
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