When former Commissioners go for private sector

Conflict of interest and transparency

Is there a potential conflict of interest to move straight from the vice-presidency of the European Commission (EC) to senior advisor of a large bank ? According to the EC there is not. So on the 6th of July, the Commission gave Günter Verheugen the green light to his recruitment by the Royal Bank of Scotland. At a time when banks spare no way to minimize the ongoing bank reform at the European level. But the former Vice-President and Commissioner for Industry of Commission Barosso I is not alone in this case. The Euros investigated.

The Commission’s note of 2003 that established the Committee : never published before

The ad hoc Ethics Committee was created in October 21st 2003 by a decision of the Commission, which has not been published in the Official Journal of the EU. The first Committee members were appointed May 19th 2004. These were : - Filippo Pandolfi, the former Commissioner, Vice-President for Science, Research, Development, Telecommunications and Innovation, under Delors’ Commission II (1990-1993) - Karel Van Miert, former Commissioner, Vice-President Competition under Delors’ Commission III (1993-1995) - John Murray, former Member of the Court of Justice (ECJ) in 1991-1999. The current members of the Committee were appointed December 15th 2009. They are : - Michel Petite, President of the Committee, former Director General of the Legal Service of the European Commission - Rafael Garcia-Valdecasas, former judge at first instance court in Luxembourg - Terry Wynn, former British MEP (Labour / PES) and Chairman of the committee budget to Parliament from 1999 to 2004.

On April 28, 2010, the Commission learned in the papers that its former Vice-President and Commissioner for Industry Günter Verheugen, was now a senior advisor and Vice-President to the Royal Bank of Scotland.

However, a code of conduct regulates the career of commissioners and states that the Commission must be informed of their intentions in a period of at least one year after their tenure. In cases where the position is related to matters which the Commissioner was in charge of, an Ad Hoc ethics Committee should assess the risks of conflicts of interest.

As regards Verheugen, the committee was convened immediately and gave a positive opinion, which was confirmed on the 6th of July by the European Commission. Verheugen will be able to fill the positions of : political advisor for the Bundesverband der Deutschen Volksbanken und Raiffeisenbanken, senior adviser/Vice Chairman of the German branch for the Royal Bank of Scotland, member of international advisory board at Fleischman Hillard International Communications and advisor to the Union of Chambers and Commodity Exchanges of Turkey. But these companies are not the only ones to lust for the address book and the expertise of a former commissioner.

Alter-EU and Transparency International, coalitions in favor of transparency in EU lobbying, have heartfelt potential conflicts of interest in three other appointments, which happened quickly and within a short period of time from late April to early May 2010. They involve Meglena Kuneva (BNP Paribas), Benita Ferrero-Waldner (Munich Re), and Charlie McCreevy (Ryanair). Alter-EU sent several open letters to the Commission calling for a clear definition of the concept of conflict of interest, and the establishment of a period of freezing of two or three years during which former commissioners could not work for the industry on the dossiers they were in charge of at the Commission.

Does conflict of interest exist ?

Natacha Cingotti is in charge of transparency issues and lobbying for Friends of the Earth Europe, a network of sustainable development organizations. She was surprised by the statements of the Royal Bank of Scotland and BNP Paribas : “firms openly welcome and highlight the influence and international contacts of their new hires, and it is not perceived as a conflict of interest”.

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Meglena Kuneva

European Commissioner for Consumer Protection from 2007 to 2009

Cingnotti is also working for Alter-EU, a coalition of 165 international organizations that monitors the activity of lobbying in Brussels. She notes that the Commission’s register of lobbyists treats industry and associations alike. “It helps to mix things, and the type of influence exercised by multinationals is placed on the same level as that of non-profit organizations. Lobbying as a whole is seen as reflecting the views of various interest groups, like something very democratic”. That is why Friends of the Earth focuses exclusively on corporate lobbying, meaning lobbying of large firms.

When asked about the new positions filled by former Commissioners, the European Commission confirms that it is widespread, and that is not perceived as problematic : since the renewal of the Commission in late 2009, 11 Commissioners have notified activity in the private sector. The list is not available but the case of Joe Borg, for FIPRA a public affairs firm, and Louis Michel, for Credimo a real estate and mortgage funding company, have been reviewed by the Committee.

It should be noted that the Ethics Committee met 11 times and never gave an unfavorable opinion. But according to its president, Michel Petite, former Director General of the Legal Service at the Commission in 2008 and now working for the law firm Clifford Chance, “the Committee gives an opinion, and it’s the Commission itself that takes the final decision”. The other two members of the Committee are : Rafael Garcia-Valdecasas, former judge of the Court of First Instance in Luxembourg and Terry Wynn, former British MEP (Labour/PES) and chairman of the Budget Committee in the European Parliament from 1999 to 2004. Until now, the composition of the Ethics Committee that evaluated the case of Verheugen and other former commissioners of Commission Barosso I had never been revealed ! And no rule provides.

Former Commissioners’ discretion at stake

Looking more closely, the recently publicized recruitment of four former commissioners suggests a risk of conflicts of interest. The Bulgarian Meglena Kuneva, who is now working with the bank BNP-Paribas, has been working on a Credits directive when she was in charge of the Consumers portfolio. When contacted about this BNP Paribas highlighted the recent “feminization campaign of staff officers and its growing international orientation” without elaborating.

Munich Re, the worldwide Reinsurance Company, hosted Benita Ferrero-Waldner in its supervisory board. The former Commissioner for External Relations has been a great fan of a project called Desertec. It is a network of solar power plants in North Africa, which would provide the European Union as a whole with electricity. And Munich Re is a major player in the project. In a press release of February 2009, former Commissioner, and Minister of Foreign Affairs under Wolfgang Schüssel, quoted Martin Luther King to convince of the ecological emergency to implement the “project of the century” before it is too late. Is Ferrero-Waldner working directly or indirectly on this project ? The public relations department of Munich Re, declined to respond and refers to a terse press release. The former Commissioner also accepted paid positions with Norman Foster Associate, star architects for major projects, and Gamesa Corporacion Technologica, a company specialized in renewable energy technology. In such circumstances the advice of Benita Ferrero-Waldner in any case would be invaluable for companies involved in the Desertec project.

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Benito Ferrero-Walnder

European Commissioner for Trade and European Neighbourhood Policy from 2009 to 2010.

As regards Ryanair has found in his new Director Charlie McCreevy, former commissioner for Internal Market and Services, a defender as valuable : the recurrent complaints of European airlines to the Commission on Ryanair, could jeopardize the financial operation of the low-cost airline. Air France, in particular, denounced the regional subsidies received by Ryanair through small airports where the low-cost airline based its activity. With KLM and Alitalia, Air France estimates the total collected this way by Ryanair to 660 million Euros, in low range, for the year 2008.

Large European airlines companies believe that regional aid should be monitored at EU level as state aid are under the strict laws on competition. Ryanair would indeed be in a very bad financial shape negative if regional subsidies were subjected to European competition laws. The regions have also complained about the lack of redress for them when the company requested an increase of grants already awarded. Ryanair is threatening to settle overnight in a nearby airport and, unlike regions, which are required to pay support for a defined period, the company can leave the airport without being prosecuted.

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Charlie McGreevy

European Commissioner for Internal Market and Services from 2004 to 2010

McCreevy, former Minister of Finance and Minister of Tourism in Ireland, has long been an admirer of the success of Ryanair. In 2006, Michael O’Leary, Ryanair’s CEO, launched a bid for the controversial takeover of Aer Lingus, the other major Irish company. While the Commission consider the matter, McCreevy, spoke enthusiastically of Ryanair’s success : “In many respects, Ryanair is an impressive success story. The company has transformed the lives of people, the possibilities of doing business, and even behaviors”. But the Commission has nevertheless prohibited the acquisition of Aer Lingus.

One can only imagine that McCreevy will seek to use its information and its influence to prevent Ryanair from loosing regional aid. Is it therefore a conflict of interest ?

The “code of conduct for Commissioners” does not even mention the concept. The Ethics Committee is convened when the new position occupied by a commissioner is “in connection with his old portfolio”. The argument between the EC and the defenders of lobbying transparency is about this. Meaning is McCreevy’s old Internal Market and Services portfolio up against his current position at Ryanair ? The complaints about the company should fall under the Directorate General of Transport. Alter-EU, however, noticed that in the new Barroso Commission, the complaints about Ryanair are now under DG Competition and therefore Market...

A revision of the code of conduct : definitely maybe...

But the “code of conduct for commissioners” includes very little on the topic : the Ethics Committee is responsible for determining whether the new activity is “compatible with the European Union Treaty”. And usually when things are at issue, the former commissioner is at most recommend not to be in charge of questions regarding its old portfolio, and not to contact anyone with whom he was connected during his tenure . According to Michel Petite “there is a conflict of interest when a person knows a business under a circumstance [being a Commissioner] and acts on this very same business under another”. He added that Commissioners “should be able to work” after their mandate.

Article 213 of the EU Treaty simply states that “when entering upon their duties they [Commissioners] shall give a solemn undertaking that, both during and after their term of office, they will respect the obligations arising therefrom and in particular their duty to behave with integrity and discretion as regards the acceptance, after they have ceased to hold office, of certain appointments or benefits”. Alter-EU and Transparency International require a revision of the “code of conduct” to clarify the definition of what is expected from former Commissioners and make more transparent the work of the Ad Hoc Ethics Committee. The recommendation is also included in a study commissioned by the European Parliament in 2008. Moreover, the revision of the code is a commitment made by José Manuel Barroso at the start of his second term. Michael Mann, Spokesman for Inter-institutional Relations and Administration, however argues that “nothing has been implemented in this direction for now” and that “the Commission is satisfied with current procedures”.

Beyond the definition issues of conflicts of interest and the review of the “code of conduct for Commissioners”, the problem with these appointments is that of governance and the role played by large companies in decision making regarding European and State levels. In some countries, there is a greater tolerance for the circulation of elites between the political and the economic areas. The highly technical decisions to make, especially at European level, contribute even more to shorten the list of competent persons on a dossier. Clearer provisions concerning political careers could still change profoundly the situation. A procedure should be launched soon to the Commission’s Ombudsman as regards the appointment of members of the Ad Hoc Committee and their decisions, in order to make them transparent and available to the public.

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Donya Feki

Journaliste française établie à Bruxelles, Donya a travaillé pour « Les Dernières nouvelles d’Alsace », le journal « La Croix » et Radio France. Elle enseigne actuellement à l’IHECS, Institut des Hautes études en Communications sociales, et fait ses (...)


Directrice du développement Groupe, coordinatrice des rédactions

Après un Master en communication et négociation internationale à l’Université de Provence, et un Master en Journalisme politique et communication institutionnelle à l’international à l’Institut d’Etudes Politiques d’Aix-en-Provence, Maha a rejoint le (...)
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