Barroso’s
bank job: A failure of integrity
By CORPORATE EUROPE
OBSERVATORY
BRUSSELS, TODAY,
17:56
This summer saw what
is by many standards the biggest 'revolving door' scandal in the
history of the European Union, when former EU commission president
Jose Manuel Barroso took up a job with Goldman Sachs International.
The move created an
immediate stir, with politicians across Europe condemning the former
commissioner, and more than 62,000 people demanding stronger rules on
ex-EU officials’ career moves of this kind.
A further 130,000
have signed a petition by EU staff pressing for “strong exemplary
measures” against Barroso; both petitions ask for the EU to drop
his entitlement to an EU pension. Still, those who could actually
start a case against Barroso – the European Commission and the
Council – remain silent.
What are they
waiting for?
Their responsibility
is quite clear.
According to EU
Treaty article 245, commissioners are supposed to show “integrity
and discretion” when taking up a new job. If they do not, council
or commission can open a case that can lead to a loss of their
pension.
Perhaps the reason
for their inactivity so far is an inability to think of any scenario
in which Barroso at Goldman Sachs would pose a problem to them or the
EU at large?
Corporate Europe
Observatory can think of at least five.
1. Vested interests
in Brexit negotiations.
Clearly, a megabank
like Goldman Sachs with European headquarters in London has a vested
interest in the outcome of these negotiations: the easier the UK's
access to the single market and the more liberal the terms for
investing, speculating and lending, the better.
It’s no surprise
then, that Goldman Sachs and other US investment banks have signed an
oath of allegiance with the UK government. And it is not hard to
imagine Barroso using his contacts and insider knowhow to squeeze out
more privileges for the financial sector during the negotiations.
2. Fending off
financial regulation.
Goldman Sachs, like
all Wall Street investment banks, is very concerned with regulation.
It prefers very little of it, and as light-touch as possible.
Whether it’s the
fight against food speculation or the struggle for a financial
transaction tax, you can always count on Goldman Sachs being involved
- trying to derail regulation attempts.
Imagine when the
financial transaction tax re-emerges on the political agenda, Barroso
could step forward as a fierce opponent of a proposal his own
commission tabled, and use his knowledge about the difficult
negotiations on the tax to help defeat it.
3. Opening doors for
lobbyists.
Goldman Sachs is a
massive presence on the Brussels lobbying scene - although not
necessarily flying its own colours. Very often its lobbyists are
representing broader coalitions, such as the derivatives industry or
the futures industry.
Often, the bank is
also able to squeeze itself into advisory groups set up by the
commission, the European Central Bank, or the financial markets
authorities. Imagine Barroso putting his address book and expertise
on the table in order to open more doors for Goldman Sachs.
4. A bank for
scandals.
Goldman Sachs has
delivered quite a few of these over the past decade. This year, the
bank admitted to misleading investors in the run-up to the financial
crisis in 2008, accepting a fine of $5 billion.
Closer to home, the
banks' involvement in fraudulent manoeuvres inflicted losses of
hundreds of millions of dollars to European financial institutions.
What would it mean for the EU institutions if a former commission
president was to be public face and voice of a bank involved in
scandals in the future?
5. Overly intimate
relationships between big business lobby groups and commission.
From the EU-US trade
deal, TTIP, to the heavy influence of big banks on financial
regulation, the European Commission has been much criticised for its
proximity to big business lobby groups. The series of earlier
revolving door cases which saw commissioners joining the ranks of big
business lobby groups are a case in point.
Goldman Sachs has
employed its share of ex-commissioners in the past, Mario Monti and
Peter Sutherland joined following their political terms, but as
former commission president Barroso still outdoes them.
Seeing the risks
attached to a former commission president working for this highly
controversial bank, we clearly need a reform of the rules that let
Barroso off the hook. The rules stipulate, for instance, a
cooling-off period of 18 months to be observed in questionable cases
such as this one.
However, address
books do not expire in such a short time. Extending the cooling-off
period to three years for commissioners, and five years for former
presidents, would make more sense.
But there is urgency
to act in the short term as well.
Article 245 is there
to protect the reputation of the European Union by preventing former
commissioners from abusing know-how, connections and expertise built
up while in public office.
With the credibility
of the European Commission at stake, the institution cannot neglect
its duty to sanction Barroso’s breach of the EU Treaty and finally
revoke his pension.
But aside from some
angry outbursts within the French government, most member states have
remained silent while the Commission stays passive, refusing to hear
the alarm.
What are they
waiting for? Certainly not for public support to back tough action
against Barroso - it’s already here and growing by the minute.
Corporate Europe
Observatory is a Brussels-based NGO specialising in oversight of
lobby groups
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