At its meeting on 18 March 2015, the Commission authorised De Gucht's proposed moves as long as he
“refrained from lobbying the Commission and / or its departments for eighteen months after leaving the Commission on behalf of Belgacom, and that he protected collective responsibility and confidentiality in respect of matters covered by the Commission during his two terms of office”.
The Commission also authorised De Gucht's new role at Merit Capital NV.
At its meeting on 15 April 2015, the Commission authorised De Gucht's proposed move to the European Advisory Board of CVC Capital Partners, provided that:
"Mr DE GUCHT protected the collective responsibility and confidentiality in respect of matters covered by the Commission during his term of office, and refrained from lobbying the Commission and/or its departments on behalf that company within eighteen months of leaving office".
Karel De Gucht was EU trade commissioner 2010-2014 and previously commissioner for international cooperation and aid. On behalf of the EU, he concluded many trade negotiations, including with Canada (CETA), South Korea and East African countries. De Gucht was also a strong proponent of free trade and he launched the EU-US trade talks (also know as TTIP, the Transatlantic Trade and Investment Partnership). He was a controversial Commission figure, especially considering his advocacy around the inclusion of ISDS (investor-state dispute settlement) provisions in TTIP, despite a huge public backlash.
Now De Gucht has Commission authorisation to join the management boards of Belgacom and Merit Capital as well as becoming Professor of European Law at the Vrije Universiteit Brussel and President of the Institute of European Studies at the Vrije Universiteit Brussel.
Belgacom is a telecoms company operating in Belgian and international markets, including under the names of Proximus and Skynet. Over 53 per cent of Belgacom's shares are owned by the Belgian state and it is the biggest operator in the country.
Belgacom itself is not in the EU lobby transparency register but Proximus is. It joined on 3 December 2014, just after new rules came into force to prevent unregistered lobby groups from meeting with commissioners, members of their cabinets, and directors-general. The main dossiers Proximus says that it works on are listed as telecom single market, digital agenda and digital single market. “Trade” figures in a longer list of 'fields of interest'. Proximus says that it has the equivalent of one full time person working on EU lobby activities but that its annual lobby costs in 2014 amounted to less than €9,999. It says “We have a dedicated team across several business units who are following EU matters internally. It is impossible to put a figure on this cost.”
Belgacom is a member of the lobby group European Telecommunications Network Operators' Association (ETNO). ETNO and Skynet lobbied EU trade officials on TTIP in meetings behind closed doors when De Gucht was European Trade Commissioner. Skynet was present when DG Trade met with industry representatives to assess their interest in the intellectual property rights chapter of TTIP in April 2013 and in a meeting in July 2013, Commission officials briefed ETNO on the first TTIP negotiation round and promised to “further analyse and discuss internally” ETNO’s position “to identify if new elements should be brought into the negotiations”. The telecoms/ IT sector is the third biggest lobbyist, after the agribusiness/ food sector and cross-sector business groups lobbying on TTIP in the two years to February 2014, meaning it had the third largest number of behind-closed-doors meeting with DG Trade.
In December 2014, Belgacom's director for regulatory affairs joined with ETNO and others for a lobby meeting with UK Conservative MEP Vicky Ford on the Digital Single Market.
When CEO contacted Belgacom about this appointment, we were told: “I cannot help you with your request as the Belgian government hasn't communicate yet about the appointment of a new member of the board at Belgacom and who this might be”. The Belgian government is entitled to appoint half of the members of the Belgacom board.
De Standaard reports that the Belgian minister for telecoms Alexander De Croo would not confirm that De Gucht would take a seat on the Belgacom board. A statement said “The government has not yet decided on this.” If the move goes ahead, it would be remunerated.
Merit Capital NV
De Gucht has also received authorisation to join the board of Merit Capital, an independent private bank and stockbroker based in Antwerp but with additional offices in Deurle, Hasselt, Kortrijk and Leuven, as well as Zürich.
De Gucht's Commission declaration of financial interests of 28 March 2011 indicates that he was previously a member of the board of directors of Merit Capital Group (formerly Sequoia International) prior to joining the European Commission. He apparently represented Immo Degus on the board from 2000-2004. During this time, he was also a member of the Flemish Parliament and of the Belgian House of Representatives.
De Gucht's 2011 declaration also makes clear that he owned 65,000 shares in Merit Capital (then valued at approximately €475,000) and 50 per cent of Immo Degus. His 2014 declaration says that he owns an "usufruct" proportion of five per cent of Immo Degus (comprising real estate assets) and an "usufruct" proportion of 744,700 Merit Capital shares, estimated to be worth €1,900,474.
De Gucht describes Immo Degus as a “company active in real estate in Belgium”. It is registered at an address in Berlare and there are only two directors, De Gucht's wife Mireille Schreurs and his son Jean-Jacques. De Gucht himself was chairman of the board of directors and CEO from 1987 to 2004; he was a member of the board of directors until May 2006.
De Gucht's other son also appears to be involved in Merit Capital. In the 2013 accounts for the company, Frederic De Gucht is listed as a director (until 17/5/2016) and his given address is the same as the Berlare address referred to above. His linked-in profile indicates that he has been in this role since 2009.
Merit Capital is not in the EU lobby register. However, Merit is active in Belgisch Financieel Forum, as well as the Belgian Corporate Finance Association, and it is a member of Febelfin, the main Belgian financial lobby group. Febelfin explicitly states that they are doing EU lobbying for their members and Febelfin is part of the European Banking Federation which is very active at the EU level.
In his authorisation request De Gucht makes clear that he was already a 10 per cent shareholder in Merit Capital and that he had previously been a director. The role is unremunerated.
Karel De Gucht was also previously a director of Dexia from 1996 until 2004 where he also served on the “strategic committee and the nomination committee”. Dexia collapsed following the financial crisis and received taxpayer bailouts of €6 billion.
CVC Capital Partners
CVC calls itself "one of the world’s leading private equity and investment advisory firms" and it says that it "manages capital on behalf of over 300 institutional, governmental and private investors worldwide", with commitments of more than US$71 billion in funds from investors. Its portfolio focuses on companies in Europe, US and in Asia, including some major names, at least some of which are likely to have an interest in TTIP or other EU trade policies. De Gucht's lobby ban, as set out by the Commission, should also cover its portfolio companies too, and for a far longer period of three years. CVC is not part of the EU lobby transparency register.
The Commission's authorisation documents show that this role will be unremunerated but that "De Gucht may have access to..." further information has been redacted, implying that perhaps other benefits or knowledge could be accrued in this role. De Gucht said "To my humble opinion there is no link with my previous mandate as Commissioner for Trade." The ad hoc ethical committee said:
"It could be argued that Mr De Gucht's activities as Trade Commissioner negotiating trade and investment agreements with many countries in the world and acquiring privileged insight into both the EU's negotiating strategies and the investment conditions and policies in partner countries, could be seen as elements of incompatibility under paragraph 1.2 of the Code of Conduct for Commissioners. However, these elements concern legal frameworks for trade and investment operators, which are in the public domain. They do not change the fact that these operators remain exposed to competitive market conditions and it is difficult to see how Мr De Gucht's former experience and knowledge could create special privileges and advantages for СVC Partners or for himself."
The committee concluded that the risk was "too remote" and the Commission authorised the role.
The Commission's rules
The current code of conduct for commissioners says that when they leave office they must abide by an 18 month notification period, during which time they must seek Commission authorisation for any new professional activities. The code further stipulates that the Commission should seek the view of its ad hoc ethical committee if the new professional activity is related to the commissioner's former portfolio. All commissioners are banned for 18 months from lobbying “members of the Commission and their staff for his/her business, client, or employer on matters for which they have been responsible”. The lobby ban is waived when former commissioners take up public office. In CEO's view, there are several loopholes and problems with these rules. The notification and lobby ban periods are far too short; lobbying is not defined; and the targets and content of proscribed lobbying are too narrowly-drawn.
As an ex-commissioner, De Gucht is entitled to a very generous transitional allowance after leaving the Commission of between 40 and 65 per cent of final basic salary for the three years after he has left office. In addition, the transitional allowance scheme provides for commissioners to earn up to a further €9000 (approximately) a month from other sources without their pay-out being affected. In CEO’s view, the transitional allowance, the purpose of which was to enable ex-commissioners to not have to seek out immediate new employment, and thus avoid the risk of possible conflicts of interests, clearly needs to be reformed.
Before publishing this statement, we contacted De Gucht for a response to our concerns but none was received.
Update 7 September 2015: A news website has reported that the Belgian government's cabinet has approved the nomination of ex-commissioner De Gucht to the board of Belgacom (now known as Proximus). It was reported that the nomination must still be formalised by both the board of directors of Proximus and by the remuneration committee of the telecommunications company.
Update 28 October 2015: You can read our new report The revolving doors spin again, Barroso II commissioners join the corporate sector on our website. The report includes this case and many others, analyses all the revolving door moves of the Barroso II Commission and includes a spreadsheet which collates all known information about the 100 plus new roles of the former commissioners.
Update 5 May 2016: Yesterday, De Gucht was voted onto the board of ArcelorMittal, the world's largest steel and mining company, for a period of three years. This vote took place just a few days after the end of the requirement contained in the code of conduct for ex-commissioners to seek Commission authorisation for new roles. The 18-month ban on lobbying by ex-commissioners has also now ended. De Gucht's pay at ArcelorMittal is not known but De Tijd reports that at the company's AGM last year, the shareholders approved a 'basic pay' for non-executive directors of €144,000.
De Gucht has now also joined the board of Proximus, previously known as Belgacom. The move had been authorised by the Commission, as detailed above, but was not immediately approved by the Belgian government. De Tijd reports that his remuneration from Proximus is €25,000 per year, plus €5,000 per meeting attended.
ArcelorMittal is a major EU lobbyist declaring €1,500,000 - €1,749,000 lobby spend per year. IntegrityWatch reports that the company has had at least 27 meetings with top Commission officials since December 2014, including with Commissioners Moedas, Šefčovič, Katainen, Thyssen, Timmermans and Moscovici. ArcelorMittal has repeatedly been criticised by CEO and other civil society organisations for profitting from carbon markets, lobbying hard against any proposals that threatened to close the loopholes in the EU's Emissions Trading Scheme (EU ETS), and lobbying against raising ambition for the 2020 emissions targets. In 2013, CEO estimated that the company's annual emissions were approximately equal to those of the Czech Republic, despite the greenwash it promotes. The CEO and chairman of ArcelorMittal is Lakshmi Mittal, a multi-billionaire and one of the UK's richest people.
"This new revolving door move by ex-Commissioner De Gucht, alongside other new moves by former Commissioner Kroes, exemplify why the Commission's 18 month lobby ban and notification period are not sufficient. It's not hard to understand why the multinational corporation ArcelorMittal, with its direct financial interest in EU policy-making, would want to recruit a recently-departed commissioner to its board. It is also safe to say that even after 18 months out of office, contact books and insider know-how remain highly relevant. This is why we argue that all former commissioners should be explicitly forbidden from accepting any new role which risks creating a conflict of interest with their former role as a European commissioner for three years after their departure. This should include a full and comprehensive three year lobbying ban. The Commission should wise-up and apply such provisions in this case.”
"In CEO's view, there is a genuine risk of possible conflicts of interest arising from these corporate revolving door moves. The Belgian government should not appoint De Gucht to the management board of Belgacom. As former EU trade commissioner, De Gucht was in an absolutely key role for EU business interests, including setting up the TTIP negotiations, and the Commission should have have taken a far tougher line on these cases. The Commission's lobby ban is insufficient. All lobbying, including indirect lobbying or providing strategic lobby advice, should be banned, and for a far longer period of three years."