European Commission: Take action to stop revolving doors
Open letter to President von der leyen, Vice-Presidents Dombrovskis, Timmermans, and Jourová
Civil society groups demand action from the European Commission on revolving doors. In a open letter they list proposals that follow on a case in the European Banking Authority, that showed how the Commission is responsible for loopholes.
Dear President von der Leyen, and Executive Vice-Presidents Dombrovskis and Timmermans, and Vice-President Jourová,
With the support of 29 organisations, we urge you to act regarding the practice of revolving doors that has repeatedly damaged the reputation and independence of the EU institutions - recently in the European Banking Authority (EBA) with its executive director, Adam Farkas, moving to be the CEO of one of the most powerful financial lobby groups in Brussels, the Association for Financial Markets in Europe (AFME).
In May this year, the EU Ombudswoman Emily O`Reilly deemed it “maladministration” that the EBA allowed the aforementioned move of Adam Farkas. This judgement followed an outcry from the civil society and the European Parliament (EP). Already in January the EP passed a resolution condemning the EBA decision, asking the Commission to strengthen its rules on revolving doors.
In the following, we state where we see a need to strengthen the existing rules as well as their enforcement.
1. Enforce the rules: We call on the Commission to duly enforce the rules on post-public employment within the Commission and in all EU agencies.
Art. 16 of the EU Staff Regulations provides for the legal basis to forbid a job move by officials of the EU institutions to engage in lobbying. The Ombudswoman, in her inquiry into the EBA case, criticised the fact that the option to forbid a job move was not invoked by the EBA: “If this move did not justify using the legal option (...) to forbid someone from moving to such a role, then no move would.” It is worth noting that the EBA is not the only example. We frequently see other EU institutions ignore that option.
2. Sharpen the rules: We call on the Commission to sharpen the rules concerned with revolving doors
The EBA case has shown that the existing rules (esp. Art. 16 in the EU Staff Regulations and Art. 1 in the Commission Decision C(2018) 4048), apart from not being applied properly, are not sufficient to protect the integrity and independence of the EU institutions.
We argue it is necessary to sharpen the Staff Regulations in at least three ways:
* Make the existing possibility to forbid a job move an obligation, when a conflict of interest cannot be ruled out.
* Extend the rules for a lobby ban period to avoid undue lobbying to two and three years for senior officials and presidents or executive directors respectively.
* Reform the rules so that an authorization granted for a job move can be reversed if rules have not been complied with properly.
The Commission Decision needs to be sharpened in terms of at least one point: The EBA case has made it clear that the wording in the Commission Decision on the “fundamental right to engage in work” is being used to override all other concerns. This became clear from statements made by, among others, the Chairman of the EBA.
Yet, forbidding one specific job for a certain amount of time is not the same as preventing the right to engage in work. We thus see a clear need for changes to be made in the Commission Decision in order to clarify that the fundamental right to work is not jeopardized by forbidding specific job moves, when they are in conflict with the responsibilities laid out in the Staff Regulations and EU Treaties.
3. Strong rules across the EU: We call on the Commission to make sure that strong rules on conflict of interest and revolving doors are implemented across all EU institutions
Revolving doors are not a challenge for the EBA alone. There have also been cases concerning other EU institutions which have been widely considered as illegitimate moves from a public to a private institution. This has undermined the public trust in EU institutions. The answers given by 27 EU agencies to MEP Sven Giegold, when asked how they deal with conflict of interest, also show the unevenness and lack of consistency in the implementation of the EU Staff Regulations. Rules on conflict of interest should thus follow the same high standard across all EU institutions, making sure that revolving doors are stopped and the independence of EU institutions is maintained.
4. Conflicting EU rules: We call on the Commission to explain how two EU rules can be in conflict with each other and ask to harmonize these rules. Meanwhile, the Commission should make sure that EU Staff Regulations are fully complied with.
Another case at the EBA shows that two EU rules contradict each other: According to Art. 11 of the EU Staff Regulations, the management and all staff at the EBA must avoid any conflict of interest regarding the banks they supervise and can have no economic stakes in those banks. Yet, the
Chairperson of the EBA, José Manuel Campa, holds shares of his former employer, Banco Santander, which is a bank supervised by the EBA. Confronted with the matter, the EBA stated in a letter to the Greens of the EP from 27 November 2019 that Mr Campa is obliged to hold his shares of Banco Santander due to the rules laid out in Art. 92 and 94 of Directive 2013/36/EU (the Capital Requirements Directive). Obviously, two rules are contradicting each other here. We find it unacceptable that the Chairman of the EBA has an economic stake in a bank he is supposed to supervise. A procedure should be in place to deal with these kinds of contradictions and to ensure that the regulations designed to protect the integrity of the institutions and to eliminate the risk of corruption cannot be overridden.
5. Consult the public: We call on the Commission to do a public consultation when creating an independent body to supervise and enforce the rules on revolving doors.
We welcome that Vice-President Jourová has been entrusted by the President of the Commission to work with the EP and the Council on setting up an independent ethics body common to all EU institutions. We see this process as a crucial step towards better enforcement of ethics rules. In light of the fundamental importance of supervising mechanisms to maintain public trust in the EU institutions, we ask the Commission to be inclusive, so as to ensure that the widespread concerns over revolving doors are properly included in the decision on the role and mandate of the ethics body.
6. Create a culture of integrity by fostering staffs’ knowledge and skills
An important step in the creation of functional ethics systems is to ensure that the staff are familiar with the rules in place and understand why they exist. Yet, a report by the European Court of Auditors found the EU staff lacking in knowledge of ethics rules. The European Commission should spearhead a move towards improving staff knowledge and understanding of the ethical framework by providing supporting material and encouraging the staff to attend relevant training.
We sincerely hope you will consider the issues above and reply.
Alliance of Lithuanian Consumer Organizations
Association For Promotion Sustainable Development
Corporate Europe Observatory
Fair Finance International
Fuel Poverty Action
Fund Our Future
Global Policy Forum Europe
Positive Money UK
Secours Catholique - Caritas France
Society for International Development
The Good Lobby
Transparency Task Force
Veblen Institute for Economic Reforms