Fund Lobby Admits to Masquerade

In a long standing lobbying battle on new EU regulation of hedge funds and equity funds, one of the defining moments was in May this year, when the European Parliament was to vote on its position. Shortly before the big day, MEPs received a letter signed by hundreds of small and medium sized enterprises (SMEs) begging them to work for a weak position of the parliament. In the letter they claimed that some proposals would hurt innovative companies who would find it harder to come by the kind of venture capital that the funds allegedly provide. A cry from small companies to appease and guide MEPs on the future of innovative companies, or so it seemed.

But scratching below the surface, Corporate Europe Observatory (CEO) soon discovered that the origins of the letter showed that there was a very strong link indeed between the companies in question and the investment funds affiliated to the private equity fund lobby organisation European Venture Capital Association (EVCA). An investigation of a sample indicated that the vast majority of SMEs were actually owned wholly or partially by the very funds they were speaking out in favour of. And more, there was evidence that leading figures in the EVCA secretariat played a role in writing the letter, though EVCA itself did not appear anywhere in the text. An initiative invented and implemented by the EVCA secretariat it seemed.

What was indicated in the report from CEO is now confirmed by EVCA in a recent statement to the Danish daily Information: EVCA orchestrated and steered the initiative, not the SMEs.

”Managers of the companies wanted to bring the message to the politicians, and the EVCA was the natural body to facilitate”, EVCA chairman Javier Echarri stated to the newspaper.

The Danish daily went out of its way to get the Danish companies on the signatory list to comment, but managed to get statements from only three of them, two of which do not know how the names of their companies had ended up on the list.

The article also carried statements from a variety of lobbyists and lobbying experts, most of whom condemn EVCA's behaviour. The term is ”astroturfing” - lobbying by pretending to be something other or someone else to boost the legitimacy and trenchancy of your demands. A masquerade that clouds the insight of politicians and the public into the ”who is who” and the arguments and intentions at play in a debate.

This kind of manoeuvre should be brought to a halt. This would require an overhaul of the Commission's current code-of-conduct for lobbyists, which is too weakly worded (and lacks sanctions) to ensure ethics in EU lobbying.

”Kapitalfonde stod bag små firmaers finanslobbyisme”, Information, 1. September 2010,

Corporate Europe Observatory; ”Venture Ventriloquists”, June 2010,

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