For sale : access to the decision-taking process

 

 

The Lowenbrau saga has raised another issue as to the extent that revolving door recruitment should be regulated. By revolving door recruitment I am referring to the movement from government service to private sector lobbying and vice-versa of holders of political office as well as of senior civil servants. As a result of such recruitment, an investment is being made in the access to the decision-taking process which is purchased or offered for sale.

Last Sunday, The Malta Independent on Sunday understandably raised the issue with reference to former Minister John Dalli in the article Revolving doors: John Dalli denies conflict of interest in Lowenbrau deal  (TMIS 22 January). However, the issue is much wider. It is a matter which is of concern in respect of the manner of operation of lobbying which in this country is largely unregulated. It has already happened not just in Mr Dalli’s recruitment with the Marsovin Group but also when the Corinthia Group recruited both Mr Dalli as well as current EU Commissioner Karmenu Vella.

It concerns both holders of political office as well as senior civil servants, including senior officers of authorities exercising executive authority.

There is much to learn from foreign jurisdictions as to the manner in which such recruitment should be regulated. A recent example which made the international headlines was the recruitment by Goldman Sachs of Josè Manuel Barroso, former President of the European Commission.  An ethics panel had described Mr Barroso’s behaviour as morally reprehensible even though it concluded that he was not in breach of the EU Integrity code.

Corporate Europe Observatory had then commented that the Barroso recruitment had “catapulted the EU’s revolving door problem onto the political agenda, causing widespread jaw-dropping and reactions of disbelief, making it a symbol of excessive corporate influence at the highest levels of the EU.”  Corporate Europe Observatory had also referred to the recruitment of other former European Commissioners by various corporations and emphasised that it is hard to avoid the conclusion that as a result of this behaviour European politicians are seen to be acting for private interests over the public interest.

This is the real significance of revolving door recruitment:  it needs to be ascertained that the potential abuse by holders of political office of milking public office for private gain is regulated. It is not just another layer of regulation or unnecessary bureaucracy.

The issue is however more complex than the recruitment of holders of political office at the end of their political appointment. It is also of relevance even when such holders of political office are appointed to such office from the private sector as can be ascertained through the current hearings by the US Senate of the Trump administration nominees. It is also applicable to senior civil servants from the wider public sector.

Parliament is currently debating a Standards in Public Life Bill, which at this point in time is pending examination at Committee stage. Unfortunately, revolving door recruitment as well as lobbying have not been considered by the legislator!   Revolving door recruitment is an exercise in selling and purchasing access to the decision-taking process. It is high time that it is placed under a continuous spotlight.

published in The Malta Independent: Wednesday 25 January 2017

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Revolving doors: John Dalli and beyond

 

 

The Lowenbrau saga is developing further, much beyond its original obvious intent. The new twist is whether, and to what extent, the use of revolving doors by politicians as soon as their political office draws to an end is permissible.

The use of revolving doors is a reference to the practice of some politicians to join the Board of Directors or team of advisors of business/industry in an area which they would have been responsible for regulating when in office.

The practice in the EU and some other countries is to postpone the possible entry of former Commissioners (holders of political office) in the areas they previously regulated by three years. This signifies that former Commissioners (or Ministers) are forbidden (unless they obtain prior clearance) from joining Boards of Directors and/or organisations  of lobbyists for a number of years.  A case in point was the recent Barroso appointment to the Goldman Sachs Board which whilst being considered as being morally reprehensible was not deemed to be a breach of the EU integrity code.  

As far as I am aware, the Standards in Public Life Bill currently pending before Malta’s Parliament does not address the issue. The issues to be addressed are various. Primarily, however, it is urgent to establish a cooling-off length of time during which time persons active in public life should not take up posts in the private sector in order to ensure the observance of an ethical benchmark.

John Dallis taking up the post of Chairman of Marsovin is only one example. There are various others amongst which the posts which John Dalli himself as well as Karmenu Vella (present Commissioner and former Minister for Tourism) had taken up with the Corinthia Group in the past.

In fairness the applicability of such an ethical standard should also be considered for top civil servants, who should approach the use of revolving doors with extreme caution.  

A Christmas carol for Jason Azzopardi

i-am-the-ghost-of-christmas-past

 

Just like Ebenezer Scrooge, Jason Azzopardi is haunted with scenes from his past. Scrooge had to deal with the Ghost of Christmas Past while Jason has been spotlighted by the Auditor-General in three separate reports. These deal with issues forming part of the political responsibilities which he shouldered when part of the Lawrence Gonzi Cabinet.

The first report was presented one year ago and dealt with the issuance of encroachment permits on the eve of the 2013 general election.  The Auditor-General then commented on Minister Jason Azzopardi’s intervention in the issuance of encroachment permits, emphasising that his intervention was “unwarranted”.

Pompous as ever, Jason Azzopardi insisted that he acted within the parameters of the law. He was not capable of recognising that he erred. Nor was he publicly chastised in any way by his own political party which has called for everybody’s resignation, except his own.

Two other reports were published by the Auditor-General last week.  Both deal with government land: its acquisition in one case, its transfer in another.

The first report investigates the acquisition of 233, 236 and 237, Republic Street Valletta.  The Auditor-General, in this investigation identified significant shortcomings in the process of negotiation, critically and negatively conditioning Government’s negotiating position. “This serious shortcoming,” states the Auditor-General, “was raised in concerns raised by the Permanent Secretary,” who was over-ruled.

Notwithstanding the corrective measures subsequently taken, the process remained flawed. This, emphasised the Auditor-General, represented a fundamental weakness in the process of negotiation (with HSBC), “effectively limiting Government’s bargaining power”.  Bad governance at its worst!

The second report deals with the investigation on the transfer of land at Ta’ L-Istabal, Qormi.   The Auditor-General concluded that “failure in terms of good governance, to varying degrees, is a recurring theme that emerged” throughout his review of the matter. The Auditor-General also noted “extraordinary haste” when as a result of problems being identified authorisations were obtained and contracts signed in a matter of two days.

The Auditor-General lists a number of public officers as being responsible for the mess created when conditions attached to a contract concerning government property were cancelled illegally without Parliament’s approval in terms of legislation regulating the disposal of government land.

Describing this mess, the Auditor-General states that he “did not find any direct evidence of political pressure exerted in the processes reviewed.” The emphasis obviously is on the words “direct evidence” as reading through the report it is amply clear that a selection of the top brass within the civil service would not act in such blatant defiance of the law unless they had at least tacit approval of the holders of political office to which they were responsible. The civil service officials mentioned by the Auditor-General as being directly responsible are: The Director General, the Notary and the Assistant Director Contracts of the Government Property Division.

The Auditor-General makes this very important consideration: “ …………… an element of political pressure was asserted by the Chair Vassallo Builders Group Ltd, who alleged that Marsovin Ltd had prior agreement with the ‘Minister’ and the GPD. The Director Marsovin Group Ltd negated this allegation, as did the Minister of Finance, the Economy and Investment and the Parliamentary Secretary for Revenues and Land, who indicated that they were not aware of the case at the time. Queried in this respect, the Chair Vassallo Builders Group Ltd indicated no knowledge of who the ‘Minister’ was. While the NAO cannot rule out pressure being exerted by any of the aforementioned, or possibly by other persons who did not come to this Office’s attention, the facts of the case render immediately evident that pressure was in fact exerted to the detriment of Government’s interests.”

Ultimately the responsibility for this mess lies on Jason Azzopardi’s lap. He has a lot of pending explanations. He will obviously not resign as clearly he only pays lip service to good governance.

In addition, this report from the Auditor-General possibly throws some light on another incident: the loan of €250,000 by a certain Nazzareno Vassallo to the PN’s commercial arms on the eve of the 2013 general elections. We were then informed that the loan was of a commercial nature on commercial terms.

The proof of the pudding is in the eating. How can anyone believe Jason Azzopardi and his political party preaching adherence to good governance when as recently as 2012 they made a mess on all that they could lay their hands on?

Referring to Joseph Muscat’s gross administrative incompetence and the scandals popping up every other day is no solution. The more we unravel from the past the more clear it becomes that both the Labour Party and the Nationalist Party, each in its own way, as a result of their shady methods of operation, cannot be trusted with the reins of power.

published in The Malta Independent : Tuesday 27 December 2016

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 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