Through the revolving door: politicians for sale at a discount

Barroso.GoldmanSachs

 

US Investment Bank Goldman Sachs announced last week that it had “hired” former EU Commission Chairman Josè Manuel Barroso as an advisor and non-executive hairman of the Goldman Sachs International arm.

The New York Times quoting co-CEOs of Goldman Sachs International Michael Sherwood and Richard J. Gnoddle explained the relevance of the appointment as being “Josè Manuel’s immense insights and experience including a deep understanding of Europe”. Earlier this week, the EU Observer  further commented that Goldman Sachs hired Barroso “as it struggles with the fallout from Britain’s vote to leave the EU”.

Based in London but offering services across Europe, Goldman Sachs may be faced with limited or no access to the EU’s single market as a result of Brexit. Hence the need to hire Barroso as an advisor and lobbyist as the United Kingdom and the European Union prepare for the negotiations leading to the UK’s exit from the European Union which can be triggered any time in the forthcoming weeks through a declaration in terms of article 50 of the Lisbon Treaty.

Barroso’s engagement with Goldman Sachs is one which will be much debated as, like nine other members of the Commission which he led between 2009 and 2014, he has been catapulted into the corporate boardroom through the revolving door. His value to Goldman Sachs is his knowledge of the privileged information to which he had access during his 10-year tenure as President of the EU Commission and, the influence which he may still have on a number of key EU officials.  This gives great value to his advisory/lobbying role with Goldman Sachs.

European Union regulations on the possible activities of its former Commission members draw a cut-off line after an 18-month cooling-off period at the end of their tenure when, as stated by an EU Commission spokesperson, “there is a reasonable assumption that the access to privileged information or possible influence are no longer an issue”.   This is contested by the different political groupings in the EU Parliament who maintain that the cooling-off period for EU Commissioners taking up sensitive jobs after ceasing their duties as Commissioners should be extended from 18 months to five years the present length of time is insufficient to ensure that the EU is really the servant of ordinary people and not of multinational corporations or international financial institutions.

This debate at a European Union level contrasts to the provisions of the Standards in Public Life Bill currently being debated by the Maltese Parliament which Bill, so far, does not make any provision on the regulation of lobbying in Malta in any form or format.

It is not unheard of in Malta for politicians to move through the revolving door from the Cabinet to the private sector boardroom or its anteroom, and back again. Three such cases of former Cabinet Ministers in Malta in the recent past come to mind : John Dalli and his involvement with the Corinthia Group and later the Marsovin Group, Karmenu Vella who similarly was heavily involved first with the Corinthia Group and subsequently with the Orange Travel Group as well as with Betfair and finally Tonio Fenech’s recent involvement in the financial industry.

Being unregulated, lobbying through the revolving door is not illegal but it can still be unethical and unacceptable in a modern democratic society as it can result in undue influence of corporations over the regulatory authorities.

Piloting the debate on the Standards in Public Life Bill on Monday 11 July, Deputy Prime Minister Louis Grech recognised the deficiencies of the Bill and declared that a register of lobbyists in Malta was a necessity. While this is a welcome statement and a significant first step forward, it is certainly not enough, as a proper regulation of lobbying in Malta is long overdue. This involves much more than registration of lobbyists or even the regulation of revolving door recruitment in both the private and the public sector.

If done properly, lobbying is perfectly legitimate. It is perfectly reasonable for any citizen, group of citizens, corporations or even NGOs to seek to influence decision-taking. In fact it is done continuously and involves the communication of views and information to legislators and administrators by those who have an interest in informing them of the impacts of the decisions under consideration. It is perfectly legitimate that individuals, acting on their own behalf or else acting on behalf of third parties, should seek to ensure that decision-takers are well informed before taking the required decisions.

However, for lobbying to be acceptable in a democratic society, it must be done transparently. In particular, through regulation it must be ensured  that lobbying should not be transformed into a  process through which the decision-takers make way for the representatives or advisors of corporations to take their place. Lobbying activities must be properly documented and the resulting documentation must be publicly accessible.

Hopefully, Parliament will take note and act.

 

published in The Malta Independent on Sunday: 17 July 2016

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