Will 2018 finally bring a revolving doors reform?

In the wake of former Commission President José Manuel Barroso’s controversial hiring by investment bank Goldman Sachs International, public pressure for a reform of the Commission’s ethics rules reached unprecedented levels. But instead of the ambitious measures that had been demanded, the Commission delivered a year full of inaction in 2017, dragging its feet until the spotlight had moved on.

But the push for reform continues from within the European Parliament, from the Ombudsman’s office and from civil society. Many different strands of work will need to be wrapped up in 2018, including two Ombudsman inquiries, a Parliament discussion on the use of transitional allowances to prevent conflicts of interest, and finally, Parliament’s reaction to the Commission proposal for reforming Commissioners’ ethics rules.

Here’s a roundup of the various factors that might push a reform of the revolving-door rules in 2018.

How not to do transparency

Since 2015, the European Commission has been publishing a list of new roles taken up by senior officials after they leave public office. Hailed as a step forward at the time, this list has actually become a prime example of how not to do transparency.

The most recent annual report was published in the last working week of 2017, but instead of listing the latest cases, it features only information from 2016. It also only contains information on those new roles of senior officials which were assessed and found to include lobbying activities relevant to areas of responsibility during the officials' last three years in office. For 2016, that is only five cases, a tiny proportion of all the likely total of ethics assessments done in a year.

What's missing from the Commission’s report is information – even if just top-line statistics – on roles that were fully authorised or fully rejected, cases where conflicts of interest could potentially appear but not in connection with lobbying or advocacy, roles taken up during sabbaticals, and revolving door moves of employees not considered ‘senior officials’ even though the same rules do apply to them.

It is then not surprising that the report contains a mere five cases relating to four officials. The fact that it was published during the Christmas period, when there is less attention from the public and the media, also leaves a sour taste. All this furthers the impression that the Commission’s report is mere window dressing, that doesn't actually increase transparency or improve public scrutiny over the way the ethics rules are implemented.

This, indeed, goes against the recommendations the European Ombudsman issued back in 2012 and again in 2014, which insist that “the Commission should not limit itself to publishing only the information legally required under the new Article 16(4) of the Staff Regulations[29].”

The Commission's poor transparency report is inexcusable, other bodies have been able to publish information on senior officials' new roles in a prompt manner. For instance, the UK’s Advisory Committee on Business Appointments publishes a monthly list of authorisations that include merely the official's name, their old and new job titles and organisations, the dates of the move and what the authority has decided about that role.

Like the Ombudsman, we believe that the European Commission must change the way it approaches the issue of transparency regarding revolving doors moves. This must include publishing information of cases it authorises as soon as possible, and the use the annual report to compile information of all cases assessed and all pertaining conditions set out.

Table 1: Cases listed in European Commission Annual Report 2016 https://ec.europa.eu/info/sites/info/files/occupational-activities-of-fo...

When it comes to the five cases the Commission did report, there are indications of the weakness of the rules in place and of their patchy implementation. Excluding Christina Tufvesson, who took up roles in not-for-profit development organisations, these senior officials were allowed to take up roles in firms actively lobbying the European Commission (Plusvalue, Covington & Burling, and Eurohumph, now registered as Madelin Innovation).

Particularly concerning, Péter Balás was allowed to become a senior policy adviser ‘on regulatory aspects of multilateral and bilateral trade policy’ for one of the biggest law firms in Brussels. He joined the firm in June 2016, just a few months after leaving his role in the Commission.

On the other hand, Robert Madelin was authorised to create his own consultancy firm, Eurohumph - later registered as Madelin Innovation – with a blanket approval to take on clients and activities without having to notify the Commission. Media reports have since shown that via his Madelin Innovation, the former Director-General became Chair and Director of a big EU lobby firm, FIPRA International. As this work is contracted via his company, Madelin did not seek authorisation.

The blanket clearance provided to Madelin presents a strange contrast to other authorisation conditions in cases where former Director Generals were permitted to set up a consultancy company, yet had to seek authorisation for each new acitvity (e.g. Jonathan Faull, a former senior official with a career comparable to that of Madelin). Read Corporate Europe Observatory's analysis of the role here.

These cases highlight the weakness and poor implementation of the current ethics rules for departing staff from the top level of the Commission. But they also beg the question: what would a job need to look like to be rejected?

The European Ombudsman is currently engaged in a follow-up inquiry into the way the Commission handles revolving doors cases of senior employees, after she already published an earlier report on the issue that took on complaints from Corporate Europe Observatory. We expect a verdict to be published in 2018.

There is a clear need for stronger rules, including wider lobby bans, and stricter monitoring of former officials’ the new. The cases above also underline some of the flaws and inconsistencies in the implementation of the rules, with requirements and conditions put in place varying widely. Implementation needs to be stricter and more consistent.

Allowances to avoid conflicts of interest

In November 2017, the European Parliament’s Committee for Budgetary Affairs (CONT) presented a new report on an often under-discussed ethics subject entitled 'Transitional allowances for former EU office holders – too few conditions?'.

A transitional allowance is a sum of money paid to former EU employees or politicians once they leave office. There is a variety of justifications for the transitional allowance system, but at its core these allowances are meant to reduce the financial incentives for ex-officials to take up roles from which conflicts of interest could arise.

The Parliament’s report reviewed the transitional allowance systems in place in the European institutions, which covers the European Commission, the Parliament, the President of the European Council and the Secretary General of the Council of the European Union, the Court of Justice, the Court of Auditors, the European Investment Bank, the European Central Bank, the Ombudsman, and the European Data Protection Supervisor.

Transitional allowances can be important tools in preventing potential conflicts of interest otherwise created by revolving doors jobs. Corporate Europe Observatory and the Alliance for Lobby Transparency and Ethics (ALTER-EU) have long campaigned for them to be used more explicitly to incentivise adequate and strict cooling-off periods.

The Parliament’s report confirmed our concerns that transitional allowances are being poorly implemented, particularly due to very weak monitoring, and that former EU staff and politicians receiving these allowances are still allowed to take up roles that raise concerns of conflict of interests.

The Parliament’s report also provides useful suggestions, including:

• Harmonising rules across EU bodies.

• Verifying whether the transitional allowances are serving their stated purpose.

• Designing transitional allowances that actually keep former EU officials or policy-makers from taking up new employment incompatible with their former public role.

• Strengthening the relationship between transitional allowances and post-office employment restrictions.

• Enhancing monitoring of continued entitlement to transitional allowances, for instance, by requiring annual ‘proof of income', such as the last tax return.

We are waiting to see how the European Parliament will follow up on the report’s findings. It is clear that disilusioned EU voters – and taxpayers – are unlikely to take a liking to ex-EU staffers being paid after they leave an EU job, unless the payments are tied to strict ethics obligations. CEO welcomes any effort to make that relationship clear and more easily enforceable.

The reform that wasn't

The big focus of 2017, however, was the prospect of a reform of ethics rules for former EU Commissioners. This took centre stage following Goldman Sachs' hiring of former Commission President Barroso.

President Juncker first announced a slight tweak to the ethics rules in November 2016. This reform encompassed only an extension of the period during which ex-commissioners need to notify the Commission of any new role (two years for ex-commissioners, three years for former Commission presidents).

While the European Commission hailed the proposal to extend the notification period as a major improvement and its definitive answer to 'Barrosogate', nothing substantial changed for almost a full year. In September 2017, in Juncker’s State of the Union speech, the issue finally re-emerged, with a new proposal to reform the Code of Conduct for commissioners and an implementation date of February 2018.

Unfortunately, when it comes to revolving door rules, the proposal is underwhelming. It is limited to the same slight extension of the notification period that had already been announced in 2016 and, other than that, only foresees a renaming of the Commission’s advisory ethics body to 'Independent Ethics Committee'.

The reform to change the Code of Condut for Commissioners was designed in its entirety by the European Commission itself, discussed and approved by the current members of the Commission, that is, the very same people who will be bound by its rules. There was apparently no room for independent experts or even citizens’ views to shape this process.

The only missing step ahead of a full implementation of the new rules, set for February, is the European Parliament’s pending opinion on the proposal. We expect this to be published soon and hope it will defend a stronger reform as has been demanded by MEPs several times.

At Corporate Europe Observatory, we expect MEPs to call for an additional extension of the notification period from two to three years for former commissioners, and from three to five years for former presidents of the commission. Beyond this, the Parliament should demand a strenghtening of lobbying bans. Even more importantly, we ask for the independent ethics committee to be made fully independent and not only in name as the Commission proposes.

Ombudsman investigates

The last piece of the puzzle is the ongoing inquiry by the European Ombudsman on the Commission's handling of revolving doors cases of ex-commissioners. The inquiry was launched in February 2017 following three different complaints, including one from ALTER-EU, which criticised a range of aspects from procedural issues in the handling of Barroso move to Goldman Sachs, to the overall handling of former commissioners’ conflicts of interest.

In July 2017 the Ombudsman wrote to the European Commission with a series of questions mostly dealing with the procedures for handling conflicts of interest beyond the notification period, and the role of the Ad-Hoc Ethics Committee which played a crucial role in the context of Barrosogate.

The European Commission has in the meantime replied to the Ombudsman, touting once again its small tweaks to the Code of Conduct and the rebranding of its ethics body as serious improvements.

Corporate Europe Observatory and ALTER-EU believe that the Commission’s weak ethics system constitutes a failure to to properly enforce the European Treaties and the scheduled reform wil do little to remedy this status quo, and prevent another Barrosogate.

We now await the European Ombudsman’s conclusions.

Barroso back in town

Crucial to the Barrosogate affair was the possibility that he had been hired by Goldman Sachs International to lobby the EU institutions or to provide advice on how best to do so. At the beginning of the scandal, President Juncker announced that Barroso would from now on be treated as a lobbyist, and not as a former president, who otherwise has special privileges.

Reacting to this, Barroso promised President Juncker in an open letter that he had not been hired to perform any lobbying activities. This document also formed the basis for the assessment of Barroso’s new role by the Commission’s Ad-Hoc Ethics Committee, which eventually deemed his move to the investment bank acceptable.

It was particularly bewildering then, to see media reports about Barroso’s return to Brussels in October 2017 to lobby the sitting Commissioner for Jobs, Growth, Investment and Competitiveness Jyrki Katainen - less than a year after his role had been authorised based on the promise he would not perform any lobbying. The next day, a meeting with Goldman Sachs to discuss “trade and defence policy” appeared on the lobby meetings list on Katainen’s official website.

We have since requested to see the email exchanges and notes of meeting between Katainen’s department and the investment bank, but were told that no such documents exist as the meeting was arranged via telephone call. This reply is clearly unsatisfactory.

The question remains: has Barroso broken his promise? It certainly looks like it. If so, the Commission must consider this unambiguous proof of how weak its ethics assessments are, and it must increase the threshholdfor authorising new roles.

What to expect of 2018?

When it comes to revolving doors, 2017 did not bring the promised reform. The European Commission continued to drag its feet and waited for the public attention to die down. The ball is now in the court of the European Parliament and the European Ombudsman – this is where we can expect a genuine push for change.

Yet the Commission needs to be open to their recommendations. We should not have to wait for another huge scandal to see the political appetite for these necessary reforms happen.