Flemish daily De Tijd, quoting anonymous sources in the Belgian Central Anti-Corruption Agency and the Belgian Federal Court, writes today that an unnamed French lobbying firm active in Brussels has sold confidential information on upcoming tenders for EU contracts to a consortium of Belgian consultancies. This allowed the Belgian consultancies to prepare their offer in such a way that their competitors had no chance to win these contracts. The Belgian authorities started investigating this case after they had been alerted by the EU anti fraud agency OLAF and the French justice. The Belgian fraud investigators are reported to have found several suspect payments by the Belgian consultancies to the French lobby firm. The newspaper article suggests that the lobby firm may even have bribed EU officials to obtain the confidential information. The facts under investigation date back to the year 2006.
This story comes just a week after I spoke at a debate on EU lobbying transparency in the European Parliament, organised by the European Voice, where representatives of the lobbying sector claimed that contrary to Washington DC, lobbying in Brussels is characterised by high ethical standards and an absence of scandals, suggesting there was a need for rather less than more transparency obligations on Brussels lobbyists.
The problem with this type of reasoning has always been that the fact that we don’t know of any major lobbying scandal does not mean that there were no lobbying scandals. It only means that we (the general public) don’t know about such scandals. And the continued lack of transparency, in particular on the financial aspects of EU lobbying, does make it much easier for wrongdoers to hide their traces.
It will be interesting to find out more details about this case, but even at this stage it demonstrates that the for-profit lobbyists' favorite image of Brussels as some kind of village full of well-behaved gentleman-lobbyists, is in fact a misleading illusion. With the European Commission currently undertaking a review of the first year of its voluntary and flawed “Register of Interest Representatives”, and negotiations on a shared EP-Commission lobbying register to resume soon, there now seems to be a compelling new argument for strong transparency and ethics obligations for EU lobbyists – something that public interest groups have been calling for since long.
Tuesday, 15 September 2009
Unnamed French EU lobbying firm accused of fraud and bribery
Register fails to throw light on corporate-funded patient groups
Before the summer break Danish MEP Margrete Auken asked the Commission who the patients’ organisations that it consults with represented. The question was sparked by revelations from the Danish daily Information that some of the biggest pan-European patient organisations are almost entirely dependent on funding from pharmaceutical giants such as Pfizer, GlaxoSmithKline, Novartis and Merck. The Danish newspaper revealed that the International Alliance of Patients Organizations (IAPO) gets roughly 97% of its revenue from the industry, while the European Patient's Forum (EPF) receives 88% of its overall income from corporate sponsors. MEP Auken urged the Commission to ensure that the groups it consults with genuinely represent European patients, rather than big pharmaceutical corporations.
What does the Commission's voluntary lobby transparency register reveal about the lobbying and funding sources of EU-focused patients groups? Very little.
Just seven of the 27 patient groups surveyed by Corporate Europe Observatory have registered. This means almost 75% of patients groups are boycotting the Commission's register, including the International Alliance of Patients Organizations mentioned above. The European Patients’ Forum is registered, but like the other registered patient groups, it has not disclosed its corporate sponsors. The Commission currently does not require reporting on specific funders, only broad categories of public or private sources. The Commission's register was launched with the intention to secure visibility around who lobbies to influence EU decision-making, on whose behalf and with what funding. In its current form, the register simply does not answer these key questions, as the example of the patients’ groups shows. If the register is to become a truly representative and a reliable source of information for media, citizens and decision makers, it not only has to become (de facto) mandatory but the disclosure requirements must be significantly tightened. Lobby groups should be obliged to disclose their funders and sponsors. Otherwise, the Commission will continue to allow corporate-funded patient organisations to operate in the shadows, pretending to represent European patients.
Thursday, 10 September 2009
Whatever happened to... Fritz-Harald Wenig
It's a year ago this week that the Sunday Times reported that a high-level official from the Commission’s trade department had offered to leak commercially sensitive information in return for financial rewards. Undercover reporters from the UK newspaper posing as lobbyists for a Chinese businessman offered the official – Fritz-Harald Wenig – a payment of € 100.000. Wenig was reported to have suggested putting the money in a frozen bank account which he would be able to access after he retired. According to the newspaper, Wenig disclosed information about a pending anti-dumping case concerning a Chinese candle-making firm as well as other cases.
The allegations led to Wenig being suspended and the case being investigated by Olaf, the EU’s anti-fraud agency. As the outcome of the Olaf inquiry is nowhere to be found in the public domain, Corporate Europe Observatory contacted the agency for clarification. Olaf told us it “finalised its investigation on 29 January 2009 and forwarded its findings to the European Commission as well as to the competent Belgian authorities.” But whether Olaf found Mr. Wenig guilty of any wrongdoing remains unclear. Referring to legal restrictions, Olaf informed us that it is “not entitled to provide more details”. When we contacted the European Commission’s Trade department, we were informed that Mr. Wenig retired in May 2009. But apart from that, more than seven months after Olaf finished its inquiry, it seems that the Commission has still not made up its mind about the case. According to a DG Trade spokesperson, the investigations are not yet closed and the matter remains confidential.
The allegations made against Mr. Wenig in the Sunday Times article raise serious questions about the political culture at the Commission’s trade department. It is therefore imperative that the Commission draws clear conclusions on the implications of the case and announces these publicly.
Two observations. When Mr. Wenig retired in May, his age was 61. Is that a normal age for retirement at the Commission? And why has there been a silence of over a year on a controversial case like this? Surely the Commission isn't intending to cover up this issue?
Monday, 7 September 2009
Lobbying through the media
Industry lobbying to water down the proposed EU investment fund directive is intensifying week by week. Earlier this year Corporate Europe Observatory showed how the European Commission’s voluntary register in fact revealed very little about the tremendous levels of lobbying by the financial services industry.
Many major industry players have not even registered. For those who have, the information disclosed is generally very limited. Recent reports in the press suggest that the financial services industry is gearing up for another attack, again raising yet more questions about the need for a tighter definition of what should be included on the Commission's register - and when.
According to PR Week UK, the European Venture Capital Association (EVCA) is on the verge of hiring Brussels-based lobby consultancy FD Blueprint on "a pan-European media and PR brief" to help improve the image of the private equity industry in the run-up to the decisive European Parliament vote on the investment fund directive.
As the contract is for boosting EVCA's "media relations activity in the run-up to crucial EU legislation" it is doubtful whether this contract will ever show up in the Commission's register. This is an area where the Commission should act to close a major loophole.
The Commission asks for disclosure of “all activities carried out with the objective of influencing the policy formulation and decision-making processes of the European institutions”, but in practice consultancies tend to exclude media work, even when the goal is clearly to influence EU decision-making.
In the case of the EVCA contract, this is very clear. According to PR Week, "FD Blueprint will work on behalf of the entire European industry focusing on EU-level issues [...] The private equity industry has a number of audiences it has to address - the principal one being the politicians responsible for drafting the legislation in the European parliament."
If the Commission does the right thing and requires media work that is part of EU-focused lobbying campaigns to be disclosed, there's another very important change it should also make. Currently, consultancies are only expected to report once per year. In its current report in the register, Blueprint mentions clients and turnover from 2007. The frequency of reporting should clearly be increased, particularly for consultancies.
Without this change, information about lobby work done this autumn would only become visible in the register in 2011, long after the lobby battle around the investment fund directive is over.
Thursday, 27 August 2009
Lobbyists receiving EU money must be transparent
A large number of think tanks which receive funding from the EU Commission are boycotting the Commission’s lobby transparency register, as Commissioner Kallas recently highlighted. “I find it surprising that think tanks that receive substantial amounts of Commission funding, including 17 of the top 20 recipients, have not followed our invitation to join,” Kallas commented. “In fact, some of those we support are the least co-operative. Perhaps a “reminder” is needed, so I fully support the idea of my colleague, commissioner Figel, to include an invitation to join the Register in the next call for proposals to access the “Europe for Citizens Programme”.”
Expecting recipients of Commission funding to join the lobby transparency register is hardly unreasonable – assuming that the think tanks will actually disclose their sources of funding (which is not currently required by the Commission). But why not go further than a mere “invitation to join”? And what about those other think tanks which do not receive funding from the Commission? Many of these are also refusing to join the register.
Still, the approach of Commisisoners Kallas and Figel might help overcome the transparency boycott of at least some think tanks. Perhaps the Commission could broaden this approach and also start putting pressure on other recipients of Commission payments. Concretely, the Commission should consider making lobby transparency a condition for consultancies that win Commission contracts.
An estimated €2 billion of work each year is contracted out by the Commission. This includes services such as media monitoring and press relations, constructing websites, organising press conferences and seminars, and running promotional campaigns. A significant number of contracts for communications work and media campaigns are run by ‘public affairs’ firms that also provide lobbying services for corporate clients – which means they should be on the register.
Among the Commission’s favorites are Ogilvy and Edelman, who have both joined the register. Edelman recently won a Commission contract worth 1,563 million euro (leading a consortium with three smaller companies). Edelman’s task is “to improve the provision of Public Information on the European Union in Ireland”, as part of efforts “to promote better public understanding of the EU on a longer-term basis.” Ogilvy last month landed a 760,000 euro contract to do a “communications and outreach campaign on biodiversity”
But other consultancies with similar Commission contracts have not joined the transparency register. Take the example of DLA Piper, whose Brussels-based office that combines legal advice and lobbying services (see also "Confidential: Law Firm Lobbyists at Work"). Last month DLA Piper won a bid for a 498,750 euro contract to set up a database for the Commission on “unfair commercial practices in the EU” that will detail how the EU's directive on this matter is being implemented. In March this year, DLA Piper announced it had won a Commission contract to “improve European e-commerce legislation”, producing a study with recommendations on issues like “data protection, service provider liability, electronic payments, consumer protection, digital copyright and child safety.” Is it too much to ask that DLA Piper ends its boycott of the lobby transparency register and discloses which (corporate) clients it is lobbying for?Preventing conflicts of interest
In fact lobby transparency is particularly important for consultancy firms that carry out tasks for the European Commission. These public affairs firms inevitably gain privileged access to information, privileged access to insiders within the Commission and other potential benefits. With such privileged access, conflicts of interest can arise. This problem is most likely to occur when the firms carrying out this work for the Commission are also lobbying for corporate clients, who pay the firms to promote their messages and enhance their reputation in the corridors of power. Consultancies, including DLA Piper, may be tempted to abuse the role granted to them through these contracts to unduely advance the interests of their corporate clients.
This is not idle speculation. There are clear examples where public affairs consultancies appear to have taken advantage of their contracts with the Commission to promote the aims of other clients on their books. Weber Shandwick, which worked for the commission Directorate-General for Consumer Affairs for several years, organised a controversial Commission press event on ‘Fighting Obesity’ in November 2006. At the event Markos Kyprianou (then Commissioner for Consumer Affairs) praised several major food, drink and retail companies for their role in tackling obesity, including McDonalds, Unilever, Pepsi Cola, Coca Cola and Kraft. Their chief executives were invited to present their commitments to the press and journalists were also shown a video clip titled “Industry tackles obesity” which highlighted the beneficial role played by McDonalds, while featuring Pepsi Cola, Coca Cola, Kraft and Unilever products. At least two of the five multinationals praised were Weber Shandwick clients at the time (Coca-Cola and Unilever) – and two of the others (McDonalds and Kraft) have previously been represented. The press event was criticised by industry and NGOs and critical questions were raised by MEPs. But it is unlikely to be an isolated example. Weber Shandwick informed CEO that since December 2007 the company has withdrawn from doing contract work for the Commission.
The Weber Shandwick case shows that, beyond enforcing lobby transparency, the Commission should introduce safeguards against conflicts of interests and the abuse of the opportunities provided by outsourcing sensitive tasks. Such outsourcing has in fact been questioned in an EP resolution, calling on the Commission to reconsider its outsourcing “in the light of such high sums for consultant contracts and the negative experience of awarding contracts to external firms in the past”.
Friday, 31 July 2009
Confidential: Law Firm Lobbyists at Work
As law firms continue to evade transparency on their lobbying activities by boycotting the European Commission’s register of interest representatives, Corporate Europe Observatory decided to shed some light on the extent of law firm lobbying in Brussels.
Law firms are not required to register their activities – the Commission’s register remains voluntary for all interest representatives – and in July, just four law firms had registered.
A quick survey by CEO shows that while 16 law firms in Brussels have lobbyists registered with the European Parliament, none of these firms appear on the Commission’s register. Of these 16, international firm DLA Piper seems to lead the field, with six members of staff registered as lobbyists at the European Parliament.
Ten individuals from five Brussels law firms are registered as members of the Society of European Affairs Professionals (SEAP), the body established to represent and lobby on behalf of public affairs professionals. DLA Piper is also a member of the European Public Affairs Consultancies Association (EPACA).
Indeed a number of the Brussels law firms appear keen to promote their lobbying activities to potential clients – while preferring not to sign up to the transparency register. As previously noted, 110 law firms are listed in the European Public Affairs Directory, with seven of these highlighting lobbying as one of the services they offer. A larger number of law firms advertise their lobbying services via their own websites.
International firm Freshfields Bruckhaus Deringer, for example, publishes an online brochure highlighting how they “offer clients strategic policy advice and help to shape EU legislation and administrative decisions.”
The brochure goes on: “A large part of our work relates to shaping draft EU legislative measures. We analyse the potential effect of draft legislation on our clients’ business activities and in co-operation with our clients define threats, opportunities and strategic goals. We then devise and implement detailed campaigns, encompassing both legal and public affairs advice.”
Indeed Freshfields’ lawyer Paul Bowden has even recorded a video message to potential energy clients encouraging them to lobby the EU over the third phase of the Emissions Trading Scheme (ETS).
US firm Covington and Burling describe themselves as “one of the leading law firms in Brussels” when it comes to public affairs, “helping to ensure that industry’s voice is heard in the EU legislative process and in administrative decision making”. They are also particularly proud to advertise the expertise of their European Policy Advisor, Wim van Velzen – a former MEP and vice president of the European People’s Party.
Another US firm, White and Case, are also keen to promote their lobbying skills, telling potential clients that “White & Case lawyers were involved in the preparations for Europe’s legislation on electronic waste before any draft texts were published”.
Other firms, such as WilmerHale, maintain a low public profile for their lobbying services. They do not appear to have any lobbyists registered with the European Parliament and none of their staff appear to be registered with SEAP.
Of course nobody is pretending that law firms are not involved in lobbying – what is in question is the need for transparency. Law firms claim that their clients’ confidentiality must be maintained.
Cleary there are good arguments for confidentiality when representing a client in court, but there is no reason why law firms should be exempt from the general rule that registered lobbyists must disclose the names of their clients and give an indication of the income generated from lobbying on behalf of these clients.
Given the extent of law firm lobbying in Brussels, the law firms’ boycot of the register is unacceptable. It is now more than a year since the register was launched – the Commission must act to remedy this flaw.
Monday, 13 July 2009
The Commission's bad excuse for not delivering lobby transparency
As yet, it is not clear whether the Commission will announce changes to the lobby transparency register before the summer break or wait until September.
Officials from the Commission's Secretariat-General are in charge of drawing up conclusions from the review of the register's first year, incorporating stakeholder feedback. A central figure in this process is Jens Nymand Christensen, who told EurActiv that "contributions to the review reflect what we knew a year ago: some think we haven't gone far enough, and others think we've gone too far. We've tried to find the middle ground". Nymand Christensen's approach does not exactly bode well for the quality of the Commission's review.
While the input from stakeholder groups should clearly be considered, the Commission’s job is to make whatever changes necessary to ensure the transparency register fulfils its goals: securing visibility around who lobbies EU decision-makers, on whose behalf and with what financial means. Aiming for "the middle ground" between the positions of different lobby groups will not result in a quality outcome. Instead it leads to a lowest common denominator approach that effectively gives the anti-transparency lobbyists victory. A closer look at the contributions to the Commission's stakeholder consultation for the register review reveals why.
Comments have been sent in by eight groups, half of which are corporate lobbies, and the other half of which are public interest groups and coalitions. Transparency International, the Civil Society Contact Group, consumer lobby BEUC and ALTER-EU have called for mandatory registration, closing the loopholes in financial disclosure and adding the names of lobbyists to the register.
In stark contrast, EPACA and SEAP (on behalf of the for-profit lobby consultancies), the council of law firms as well as AmCham (US firms) all urge the Commission not to go beyond the current level of transparency. In its comments, EPACA warns that it "could produce a reversal in the trend of additional registrations, and some deregistration, if the Commission changed the ground rules on financial disclosure". This implicit threat of leaving the register is repeated at the end of EPACA’s text. In the light of the Commission's 'finding-the-middle-ground' approach, there is every reason to fear that EPACA's threats will make the Commission shy away from common sense improvements to the register.
