The disputed Commissioner: Cañete involved in new controversies

UPDATE:

On April 3rd, three days after publishing this article, Commissioner Cañete came into the media spotlight again due to his wife being among the people listed in the Panama Papers - the scheme revealed by the International Consortium of Investigative Journalists (ICIJ) and the Sueddeutsche Zeitung, of wealthy people using offshore companies often constructed to hide wealth and avoid taxes. Micaela Domecq Solís-Beaumont was empowered by the Panama-based company Rinconada Investments Group (set up in 2005 and active until 2010) to approve financial transactions. Commissioner Cañete did not include this company in his declaration of interests dated 19 September 2014 (nor in the latest one of 14 July 2015)

The Commission's spokeperson Margaritis Schinas affirmed on 4th April that according to the information provided by Commissioner Cañete there is no conflict of interest, as Commissioner Cañete and his wife are married with a separation of property agreements and that his declarations of interests was in line with the code of conduct for Commissionners. He added that the company had been inactive for several years, before the Commissioner took office (though was active when he was holding office in Spain).

Once more Cañete is involved in a scandal related to his and his immediate family's financial interests. For how long will the Commission continue to defend its climate commissioner in the face of major controversy?


Cañete is no stranger to controversy: he was the subject of a 2014 petition by over half a million EU citizens to prevent him from taking office due to his links with the oil industry and the risk of conflicts of interest. Now he faces two more controversies.

Spanish public company Acuamed, managed by the Spanish Ministry of Agriculture, Food and Environment, is being investigated for fraud over the irregular awarding of contracts when Cañete was Minister. The Commissioner is also involved in fresh controversy in his current role, due to the fact that in 2015 he gave the go-ahead for Australian company Berkeley to exploit a uranium mine in Spain. Berkeley is represented in Brussels by Manuel Lamela, who was Cañete's Deputy in the Spanish Agriculture Ministry for three years.

Before his appointment Corporate Europe Observatory (CEO) warned about the dangers of Cañete becoming Commissioner and has exposed his extensive lobby contacts with the private sector during his first year of office. Amidst the lack of coverage in the Brussels media on this story, CEO joins several Spanish civil society organisations and political parties, as well as several MEPs from different political groups in demanding that the Commission investigates both cases, and holds Cañete accountable if evidence of wrongdoing is found.

The Acuamed case and former Minister Cañete

Acuamed, a public water management company under the responsibility of the Spanish Ministry for Agriculture, Food and Environment, has been under investigation since January 2016 by the Spanish High Court for an alleged fraud worth several million euro that took place over several years, also when Commissioner Cañete was Minister (2011-2014).

The Court is investigating irregular contracts awarded by Acuamed to several big construction companies, including Fomento de Construcciones y Contratas (FCC), Acciona, Befesa, Sogecosa, and Altec. The allegations are that those companies received water contracts in exchange for 'presents' such as luxury trips, jobs for relatives or cars for the persons involved. Allegations also suggest that during the construction phase budgets would be 'artificially inflated' by up to ten per cent of the cost, money that would go into the pockets of the construction companies. As MEP Maite Pagazaurtundúa Ruiz (ALDE) explains in her parliamentary question to the Commission, Acuamed “is being investigated for fraud to the tune of almost €27.5 million. [Spanish High Court] Judge Velasco and the Anti-Corruption Public Prosecutor’s Office are examining allegations of fraud in the award of works contracts, and of certificates, invoices and payments being falsified to increase the amounts paid to the successful tenderers.”

The Acuamed contract that points most closely to Commissioner Cañete is the contract to Fomento de Construcciones y Contratas (FCC) for work on the desalination plant of Bajo Almanzora in Almería, Spain. The alleged involvement of the man who is now Climate and Energy Commissioner has moved several MEPs to ask the Commission to explain how it plans to act.

In his parliamentary question of 27 January 2016, Green MEP Jordi Sebastià notes, “A witness has said that the Director-General of Acuamed ordered preference to be given to FCC and indicated that these orders came directly from Miguel Arias Cañete, the current Climate Action and Energy Commissioner who was at that time the Spanish Agriculture Minister.”

Spanish media has extensively covered how according to Eloy Velasco, the judge investigating the case, “top officials at the Ministry agreed an illegal compensation to FCC” for €10 million for the desalination plant and another €40 million for the decontamination of a dam.

[Own translation: Noticias de Navarra. Score against corruption. Acuamed scandal reaches Arias Cañete. Former Agricultural Minister participated in the meeting with FCC where he dealt with the “illegal” payment to the company, according to the judge.]

This money was agreed as part of the costs to cover flood damage occurred in 2012; El País reports that as Minister, Cañete ignored reports that Acuamed should in fact not cover those costs. Instead, Cañete discussed compensation with FCC at a meeting in February 2014 and ordered the State Attorney to see if it would be legal to pay part of those costs.

Part of these payments were agreed, but according to the judge, Acuamed ultimately refrained from paying the money to FCC once the legal complaint which kickstarted the investigation was made public.

Furthermore, Acuamed had received EU funds from the ERDF (European Fund for Regional Development) and the Cohesion Fund. The fact that the company received EU funding prompted several MEPs and media to ask the Commission whether the EU anti-fraud agency should investigate irregularities in Acuamed's use of EU funding. For instance, MEP Marina Albiol Guzmán (GUE/NGL) affirms in one parliamentary question to the Commission that, “since 2013 it [Acuamed] has been working on a project worth EUR1700 million, a large proportion of which – 'around €1000 million' in 2013 alone, according to the company itself – has been funded by the EU. The Spanish Anti-Corruption Office (Fiscalía Anticorrupción) has discovered that over €20 million of the funding allocated to the project has been siphoned off.”

The Commission referred to the EU funding of Acuamed in a press briefing on 26 January 2016, explaining that it has informed the European Anti-Fraud Office (OLAF) of the issue, making it possible for them to consider opening an enquiry. They also mentioned that as it involves EC funds there is a division of responsibility in terms of management and implementation of the projects and that they are waiting for the correspondent information from the Spanish authorities.

On 7 April, OLAF confirmed to Corporate Europe Observatory that it has analysed the information received on the Acuamed case and opened a coordination case. This means that OLAF will provide assistance to investigations carried out by the Spanish judicial authorities. OLAF added that its assistance is covered by judicial secrecy and that it would therefore make no further comment about the case.

Environmental umbrella group Ecologistas en Acción has already demanded the resignation of Cañete as Commissioner due to his implication in the Acuamed scandal.

Green light for a controversial uranium mine

On 21 May 2015 Commissioner Cañete signed a positive opinion for Australian mining company Berkeley to set up a very controversial open site uranium mine in Spain. Apart from the severe health and environmental risks of uranium mining, the site is located in one of the Special Protected Areas for Birds, part of the Natura 2000 network, under the protection of the Habitats Directive 92/43/EEC.

As three MEPs from the Left group (GUE/NGL) write in a question to the Commission, “Berkeley's only lobbyist registered with the EU is Manuel Lamela, who was Mr Cañete's undersecretary when he was Spain's Minister of Agriculture. Manuel Lamela was registered as a lobbyist on 26 December 2014, a month and a half after Miguel Arias Cañete was appointed Commissioner.”

Manuel Lamela's law and accountancy firm is Acountax Madrid, and as the parliamentary question explains, it joined the EU Transparency Register on 26 December 2014. The only client it lists in its registration is Berkeley Minera España SA, and it says Acountax only initiated economic activity in July 2014. Acountax is registered in the Spanish Commercial Registry as starting operations on 11 September 2014, which was when Arias Cañete was in the process to be designate Commissioner.

Spanish radio network Cadena Ser, which first exposed this case, argues that Manuel Lamela has no background in the energy or mining sector, and that he is actually working in the private sector in health issues. If we check the Transparency Register, the main EU dossiers in which the firm declares interests are agrifood and health sector.

The Left MEPs conclude that “Mr Lamela's presence provided Berkeley with privileged access to the Commission's Energy Department.”

Berkeley denies that it hired Manuel Lamela because of his previous connection to Cañete. And according to Cadena Ser, Cañete's Cabinet has denied that Lamela's role had any influence on the positive opinion signed by Cañete on behalf of the Commission. Cadena Ser, and later several political groups in Spain as well as environmental organisations have requested to see the full report from Cañete's office giving a positive opinion on the mine. Up till now Cadena Ser has only seen a document full of redactions; the Commission argued that the rest was classified as secret at the request of Berkeley.

Corporate Europe Observatory asked the Commission using the freedom of information regulations and both DG Energy and DG Clima informed us that in the period that we covered in our question, from 1^st November 2014, there was no meetings held by DG Energy, DG Clima, Commissioner Cañete and his cabinet which included Manuel Lamela, Berkeley or Acountax.

In the Spanish media the case has been widely reported and described as influence trafficking.

[Own translation: El País. Revolving Doors. Lamela lobbied his former boss Cañete in the EU on behalf of a uranium mine. An Australian company hired as 'lobbyist' a former high official that was second in command to the current Environment Commissioner.]

The length of time since Lamela and Commissioner Cañete stopped working together (2003) is long enough to exclude the risk of a formal conflict of interest, although allegations of Lamela accessing an 'old-boy network' persist. Lamela’s formal career to date does not indicate great energy expertise, while he appears to have been hired as the only lobbyist to act on behalf of Berkeley with DG Energy, and his company joined the EU transparency register just a few weeks after Commissioner Cañete took office in Brussels.

Political parties such as Izquierda Unida and the Socialist party (PSOE) and environmental groups in Spain have demanded the suspension of the mining permits to Berkeley until these allegations, and the roles of Manuel Lamela and Commissioner Cañete, are investigated and the positive Commission report is declassified and made public. The Commission and Cañete himself need to give a far greater account of the awarding of the uranium mine contract to Berkeley, including the role of Lamela.

Cañete's background

Corporate Europe Observatory was one of a number of groups which opposed the appointment of Cañete to the Juncker Commission in 2014, let alone to the climate change portfolio.

Before he took office activists exposed the controversies in which Cañete had been involved. His family, in particular his wife Micaela Domecq Solís, has significant interests in the agriculture sector, a field in which Cañete has always shown a keen interest as politician.

More controversial though was Cañete's involvement in petroleum companies, which was especially concerning given his appointment to lead climate and energy policies. A shareholder in two companies handling petroleum supply – Petrolífera Dúcar SL and Petrologis Canaris SL – he owned shares worth €326,000although he announced divestment of both companies when he was made the designate-Climate Change Commissioner in September 2014. He was also President of both companies during his time as a Spanish Member of Parliament – and only stepped down when he became Agriculture Minister. However, control remains in the family, with his brother in law, Miguel Domecq Solis, who is now the President of both companies.

Indeed, it was only a backroom deal between the major parties in the European Parliament which allowed Cañete to become Commissioner – with the support of the Socialists and Democrats group, in exchange for the Conservatives’ (EPP) support for French socialist Pierre Moscovici, now Commissioner for Economic and Financial Affairs, Taxation and Customs. The approval of Cañete left the Greens and other small parties in the EP and the half million citizens who had signed the petition to prevent Cañete becoming Commissioner fuming about the deal.

His appalling record as Environment Minister in Spain was also not a good precedent for his role as Commissioner. Among other things he passed a very controversial coastal law favouring private interests. Cañete had ties with the construction and real state sectors, which benefitted from the coastal law. He also gave the first go ahead for an impact assessment for oil company Repsol to drill for oil in the Canary islands despite huge popular opposition and flaws in the procedure.

Research by Corporate Europe Observatory has also shown how during his first year in the European Commission Big Energy has dominated Cañete's lobby meetings agenda. He was the Commissioner with by far the most meetings with third parties. During his first 11months in office Cañete and his Cabinet had 6 times more meetings with the private sector than with public interests groups (269 vs 45). Fossil fuel interests dominated the agenda.

CEO's work also showed that Cañete's arrival in the Commission appears to have led to a significant boost in meetings with the industry lobby from Spain – totalling 22 per cent of all his encounters. Almost 40 per cent of the encounters that Cañete and his Commission Cabinet had with Spanish industry took place in Spain, where the Commissioner is a frequent presence at corporate events. A staggering 95 per cent of Cañete's encounters with Spanish organisations were with industry, versus not a single one with NGOs or trade unions.

CEO's research confirms that the fears about Miguel Arias Cañete becoming Commissioner for Climate Action and Energy were well-founded. The preferential access that Cañete has given to Big Energy, and in particular to the fossil fuel industry, the biggest culprit in causing climate change, is reflected in the policies that he is leading. The corporate capture of climate and energy policies can be seen in the proposals that his departments drafted during his first year in office, for instance on car regulations, the reform of the Emissions Trading Scheme which is the main EU climate policy, the all-encompassing Energy Union, or the EU's insufficient contribution to the UN climate negotiations.

Brussels silence

Given that the Spanish press has been full of powerful headlines about the scandals surrounding Commissioner Cañete, it is rather surprising to see the comparative silence on this story in Brussels.

[Own translation: La Sexta. News. Miguel Arias Cañete does not give explanations. Cañete remains silent in his first public appearance after the Acuamed scandal exploded.]

Corporate Europe Observatory has asked the Commission for statements or other comments on these two cases. Referring to the Acuamed case, a spokesperson responded: “With regard to the allegations made in the context of Acuamed, the European Commission already reacted publicly. The Commission has no further comments to add”, giving the link to the press briefing mentioned above in this article. When a journalist asked whether the Commission considered “Cañete's polemics payments” came under national jurisdiction or whether the Commission would also investigate, the response was, “There is a legal investigation which is underway in a Member State and in that sort of case the Commission would not comment as long as it is underway.”

As for the uranium mine case, the Commission clarifies that the non-binding opinion adopted by the College is signed by the respective portfolio Commissioner [Cañete in this case] but that “granting authorisations/permits is the sole responsibility of the Member State; neither the European Commission nor a single EU Commissioner approves or signs permits.”

The press officer refers also to three responsesⁱ to MEP parliamentary questions on the uranium mine case, one by Commissioner Cañete himself, on behalf of the Commission.

There are four other parliamentary questions on the issue of the uranium mine with no answer yet. MEPs from diverse groups including Greens, Left (GUE/NLG) and Socialists (S&D), have asked the Commission many different questions.

Remarkably, no question that raises issues about Manuel Lamela and his connection with Commissioner Cañete has been answered, despite having exceeded the maximum time limit. Questions range from demanding to know Manuel Lamela's contacts with Arias Cañete's office, to whether the Commission consider Berkeley to have benefited from the pre-existing relationship between Commissioner Cañete and the lobbyist Manuel Lamela or what action is the Commission planning to take.

Four questionsⁱⁱ related to the Acuamed scandal are still waiting for an answer.

Although the Commission says there is no reaction by Commissioner Cañete, Spanish media has reported differently. For instance, according to Cadena Ser, Cañete's Cabinet has denied that Lamela's role had any influence on the positive opinion signed by Cañete on behalf of the Commission.

In any case, the Commission should go beyond answering the questions posed by several MEPs. They should follow the Acuamed case closely and ask serious questions to the Spanish investigators, not only as Commissioner Cañete was then the responsible Minister, but because it appears that a witness in the Court has said that orders came directly from him in some cases. The Commission should also examine the handling of the Acountax-Berkeley case, which of course happened while Cañete was in the Commission. And the Commission should also listen to the many demands to disclose the report giving the positive opinion on the uranium mine, given the public interest in the issue and the major risks for the local population and environment that the mine will pose.

Besides, much more is needed to avoid a situation where Commissioners with such a clear risk of conflicts of interest take office. Stronger rules on revolving doors for Commissioners and other officials are long overdue.

Perhaps it is not surprising that Commissioner Cañete, a politician with close links to the private sector, has presided over climate and energy policies which support the interests of Big Energy. If evidence of wrongdoing in either the Acuamed or Berkeley cases is found, Commissioner Cañete should be forced to resign.
 

i http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=E-2014-009856&language=SV