When business and politics intertwine

It seems as if barely a week goes past these days without a high-level summit taking place in Brussels to discuss issues relating to the euro-zone crisis. Much has been said about the roots of the crisis but no one can deny that in the background is the lack of trust that people have in their national politicians and European institutions.

Lack of trust was a key reason why last year protestors across Europe and in the US occupied public spaces and it was also the reason behind the “Gorilla” protests in Slovakia. (The Gorilla scandal dominated Slovak politics earlier this year when evidence emerged of a possible cover-up of alleged secret deals on privatisations between a large financial group and politicians. At one point, 30 000 Slovaks took to the streets to protest as a response.) Meanwhile, a recent Eurobarometer survey (carried out before the Gorilla scandal came to light) shows that 92 per cent of Slovaks think there is corruption in national institutions. Like many other citizens in the EU, 70 per cent of Slovaks consider that there is corruption within European institutions too.i

With the euro-crisis serving to ensure that the EU plays a bigger and bigger role in our lives, it has never been more important for the EU to boost transparency and anti-corruption measures to improve public trust. At the EU level, it is the Slovak Commissioner, ex-diplomat Maroš Šefčovič who is primarily responsible for Commission accountability, ethics and transparency.

No scandal of the magnitude of Gorilla has happened at the EU level. But the close ties between policy-makers and businesses keen to influence the direction of policy is at the heart of the Gorilla story, and this can also be found at the EU level.

Just this month, the Alliance for Lobbying Transparency and Ethics Regulation (of which Corporate Europe Observatory is a leading member) published a report showing that two thirds of the non-governmental advisory groups working with the Commission's Enterprise and Industry department, are dominated by big business interests. The research showed that there are 482 corporate advisors influencing key areas of policy, such as international trade, consumer protection, and food via these advisory groups; by contrast, there are only 255 advisers in total to represent small and medium-sized businesses, NGOs, academics and trade unions.ii

The excessive influence of business lobbyists on politics and policy-making can and does undermine public decision-making. Transparency International calls this 'legal corruption'iii; others call it 'regulatory capture'.

Commissioner Šefčovič is on the record as saying, “It is clear that transparency and accountability are an essential prerequisite for the integrity and the credibility of our political institutions”. But is all that could be done being done on these issues?

In 2011, Commissioner Šefčovič relaunched the EU's Transparency Register (there is no lobby register in Slovakia) where those who seek to influence EU affairs should sign-up. Since then, the number of lobbyists registering has grown, yet fundamental flaws remain. The register remains voluntary and many key lobby players including Deutsche Bank and Monsanto have failed to sign up. Meanwhile the quality of the registrations is very mixed and the Commission does not put sufficient effort into proactive scrutiny and verification of the data. As a result, while the existence of the register is a positive step, it is a long way from becoming an effective and reliable tool.

Commissioner Šefčovič is also responsible for tackling the risk of conflicts of interest which can arise when staff go through the 'revolving door' between the EU institutions and business. The current EU rules contain several loopholes: staff at the Commission who work on contract (rather than being permanent) are not automatically covered; there is no ban on Commission staff going on sabbatical to work as a lobbyist for big business; and there is no automatic cooling-off period for staff who leave and become a lobbyist.

While the Commission is currently reforming the regulations which govern officials' behaviour, Mr Šefčovič has not taken the opportunity to propose reforms which would tackle some of these issues. By contrast, tougher revolving door rules were introduced in the US by President Obama on his first day in office.

Current proposals from the Commission and the Council to amend the regulation which gives public access to EU documents threaten to weaken the rules by excluding some categories of papers from the scope of the rules. Documents excluded would include those containing information about investigations into inappropriate state subsidies to businesses, unfair competition, and the awarding of contracts by the EU institutions.iv The European Parliament has opposed much of this agenda and it is backed up by the Swedish and Finnish Justice Ministers. Meanwhile Commissioner Šefčovič's press spokesman was recently quoted as criticising what he refers to as “nutty NGOs” who put in detailed information requests – hardly appropriate comments from the office of the transparency commissioner!v

In these areas, the Commission has not demonstrated the kind of proactive approach to ethics and transparency required to step-up the fight against forms of legal corruption such as the excessive business influence at the EU level.

This is a missed opportunity for the Commission - and potentially a risky one. As Gorilla shows, once a scandal happens it can deeply damage political institutions and the faith that citizens have in them. And this is not a time when the EU can afford to take the faith and trust of the European citizens for granted.

Written by Roman Havlíček (Bankwatch) and Vicky Cann (Corporate Europe Observatory)

This article first appeared on EurActiv.sk on 17 July 2012: http://www.euractiv.sk/komentare-000338/komentar/ked-sa-biznis-a-politik... 

iSpecial Eurobarometer Report 374: Corruption. February 2012.

iiWho's driving the agenda at DG Enterprise and Industry? ALTER-EU. July 2012. http://www.corporateeurope.org/pressreleases/2012/industry-experts-dominate-key-areas-policy-making

iiiMoney, politics and power: corruption risks in Europe. Transparency International. 2012.