Through the revolving door: politicians for sale at a discount

 

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 Chairman 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 as 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

Awaiting Brexit?

Will the United Kingdom exit the European Union? There is the distinct possibility that the answer to that question will depend on how long it takes for a decision to be taken.

The main political parties in the United Kingdom are currently dealing with the fallout of the Brexit referendum. The Conservatives are in the process of electing a new leader to replace David Cameron, who has resigned, and Labour leader Jeremy Corbyn is licking the wounds inflicted by the Vote of No Confidence passed by Labour’s Parliamentary Group.

In the meantime, the EU is awaiting the triggering of the exit procedures as established by Article 50 of the Lisbon Treaty. David Cameron has conveniently passed on the baton to his successor, so far undetermined. Two of the contenders for this position, Theresa May and Michael Gove, on the other hand, have said that if elected, Article 50 will definitely not be triggered before the end of the year.

Given that applying Article 50 of the Lisbon treaty signifies the potential cancellation of a large part of EU legislation currently applicable in the UK, it stands to reason that it is only through an Act of the United Kingdom Parliament that the authority to trigger the application of Article 50 of the Lisbon Treaty can be attained.

A basic bone of contention is whether the UK will trigger the provisions of Article 50 before or after it enters discussions with the EU. Commission President Jean-Claude Juncker is adamant that no discussions should take place before the UK triggers Article 50. Yet this does not make sense for the UK, because once Article 50 has been triggered, there is no going back. It makes much more sense, and is also in line with the provisions of the Lisbon Treaty, for the EU and the UK to discuss the terms of an exit in accordance with their respective political priorities.

The issues are clear enough: whether access to the European single market should be tied to the four freedoms, that is freedom of movement of capital, goods, people and services.

Implementing Brexit should mean that the UK’s position is crystal clear: it is against the free movement of people. In fact, this is what the “taking back control” phrase of the ‘leave’ campaign means. Translated into an agreement regulating the UK’s exit from the EU, it should mean that there is no possibility of the EU conceding access to the single market. But will the UK’s political position be that clear and unequivocal? Many in the leave campaign want to have their cake and eat it. They want the benefits of membership (access to the single market) without shouldering the burdens (free movement of people). This is clearly not possible and can be made amply clear in formal or informal discussions prior to triggering Article 50.

The (new) UK government will have some serious homework to do before it sits down at the negotiating table. If it sticks to the Brexit conclusions, the terms of the agreement regulating the UK’s exit from the EU should not take long to identify. It will, however, not be that simple and ultimately it will depend on the composition of the new UK government.

_________

Article 50 of the Lisbon Treaty

1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.
3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

published in The Malta Independent on Sunday : July 3, 2016

Il-libertà tal-moviment tal-persuni fl-Unjoni Ewropeja u r-Renju Unit

Waħda mill-affarijiet li ħarġet ċara mis-Summit tal-Unjoni Ewropeja tal-bieraħ hi li l-benefiċċju tal-aċċess għas-suq wiehed mhuwiex mingħajr responsabbiltajiet. Ilha ċara imma hemm għamel ta’ bir-ruħu mod ieħor.

L-aċċess għas-suq wieħed Ewropew iġib miegħu numru ta’ responsabbiltajiet bażiċi. Waħda minn dawn hi l-aċċettazzjoni ta’ dawk li nirreferu għalihom bħala l-erba’ libertaijiet  [the four freedoms] : il-libertà tal-moviment liberu tal-merkanzija, tal-kapital, tas-servizzi u tan-nies.

Ir-Renju Unit irid jillimita l-libertà tal-moviment liberu tan-nies.

Għadhom ma fehmux li r-regoli mhumiex a la carte. Għax dawn huma prinċipji fundamentali li fuqhom hi mibnija l-Unjoni Ewropeja.

Stimi jindikaw li fir-Renju Unit hemm 3.3 miljun ċittadin mis-27 pajjiżi l-oħra membri tal-Unjoni Ewropeja li minnhom 2.1 miljun qed jaħdmu.

Min-naħa l-oħra hemm 1.2 miljun ċittadin mir-Renju Unit li qed jgħixu fis-27 pajjiż membri tal-Unjoni Ewropeja. L-ikbar komunitajiet qegħdin fi Spanja ( 309,000), l-Irlanda ( 255,000), Franza (185,000) u l-Ġermanja ( 103,000). 800,000 huma ħaddiema u d-dipendenti tagħhom fil-waqt li 400,000 huma pensjonanti.

Skond iċ-ċensiment tal-2011 kien hawn 6,652 ċittadin tar-Renju Unit jgħixu f’Malta. Nafu ukoll li madwar 28,000 Malti kellhom dritt tal-vot fir-referendum tar-Renju Unit.