How to deal with ethics and transparency in the EU Corporate Europe Observatory

If anything, the EU law-making is complex. Some even claim it’s undemocratic, which is far from true, but the lack of transparency has a negative impact on the credibility of the European political system. The EU itself has estimated the real cost of corruption in financial terms, but the political cost in terms of democratic legitimacy and public perception of the EU is much more relevant. In recent years there have been some corruption scandals (though fewer than in national politics) that have led to the implementation of new transparency rules, including codes of conduct, whistleblowing channels, disclosure of interests, lobbying and revolving doors. You have probably heard of the film “The Brussels Business: who runs the European Union”, and one can hear plenty of stories in Brussels about irregular influence on law-makers. Bearing in mind that almost 80% of the European legislation is made in Brussels, it can be argued that there is a lack of control over the 754 Members of European Parliament and over the Commission, where primary laws are being fast-tracked in the last years (primary laws describe the central sources of law such as the founding treaties that prevail all other sources of law). 

Moreover, at the EU level there is a strong tradition of building a political consensus, at least on the big issues. On the one hand, EU leaders work at an intergovernmental level and gather in the Council to reach big agreements and treaties, but on the other hand, the secondary law has to do with regulations and technical concerns. So, this includes reforms in all political areas you can think of, from banning certain chemicals or fishing quotas to regulating credit rating agencies, are set at EU-level.

How are the deals done? 

Since March 2011, the comitology is the process for setting the rules. Then the Commission proposes legislation for the Parliament to read. There is a register of comitology documents, but MEPs are excluded from the process. Very often, there is not even a plenary vote on legislation that has been agreed by the Commission and the Council. A very common way to reach agreements is the trialogue, which is a gathering of officials from the Commission, the EU Parliament and delegates of the Member States. Usually the Parliament has no say in agreements reached by the Ministers at the closed-doors Council meeting, which is legal under current treaty provisions, but looks very undemocratic. This way is very difficult to check if the system is transparent at the EU level. While it is true that the corruption scandals around the Commissioners have diminished in the recent years, these days the EU ombudsman has launched an investigation into the Commission's secrecy around 'Dalligate', the tobacco lobbying scandal that led to the resignation of EU health commissioner John Dalli in October 2012. Apparently, the Commission failed to fulfil its obligations under the current EU transparency legislation, refusing access to documents and thus incurring in secrecy in the OLAF investigation.

Since then, the Commission and the Parliament have set a joint transparency register though it is still voluntary. There are still many lobbyists that have decided to remain unregistered. This will not enable public scrutiny over policy-making.

The Commission also published the new whistleblowing guidelines for EU staff members in December 2012 in order to detect fraud and mismanagement, showing that the Commission stands behind individuals who decide to ‘blow the whistle’. As a matter of fact, a recent Transparency International report highlighted the lack of whistleblowing legislation as a key integrity weakness in the majority of European countries. A good instrument to tackle corruption is the Anti-corruption Report to be published in June 2013, which will highlight and review relevant issues to improve transparency in governance (public procurement, whistleblowing, etc.) across the EU, country-specific as well as in the EU institutions. For the Commission, ethics has been a very important issue, as it is considered essential in order to have the trust of the citizens (though this is also fostered by the pressure and criticism from NGOs and even from some MEPs). But probably, written codes will not make any real difference. 

All Member States have laid down their own written ethical codes but these are not always properly implemented. In the recent years, European citizens are losing trust in the integrity of their national governments. The question is whether rules are enough. Accountability is in the public interest as much as efficiency. So the real problem is not the lobbyists trying to convince decision-makers, but the transparency itself. Let’s put it this way, industrial interests are not necessarily evil, as long as they are declared and the public is aware of them. Institutions need to be open but need to listen to the relevant economic actors. This can be properly regulated by the codes of conduct, useful to monitor confidential meetings and reports. 

 What can be improved?

It's common-place that interest groups make efforts to influence government decisions. On the one hand, lobbying can improve policy-making by providing valuable insights; on the other it can bring unfair advantages for vested interests. In the context of financial crisis and political reform, the stakes of lobbying are higher than ever, so the decision making needs safeguards to ensure transparency and integrity. There is a growing concern over lobbying and the response of EU institutions. In the wake of the financial crisis, lobbying has received increased attention. So far, over 5,000 lobbyists have voluntarily registered with the EU institutions, but as they say "it takes two to lobby". Despite the general perception that lobbyists prefer opacity with regards to the disclosure of their activities, the OECD survey shows that the majority of lobbyists surveyed supports mandatory disclosure of information. So why are the EU institutions reluctant to the mandatory register? Good question!

The president of the Spanish Association of Institutional Relations Professionals (APRI), Rosa Rotondo, has asked Spanish Parliament to include lobbyists in the Transparency Act, as she considers it urgent to regulate its operation in order to prevent corruption.  Rotondo has defended the role performed by groups of influence as a transmission belt between civil society and public authorities, and has emphasized the need for Spain's to define the relationships between lobbies and MEPs. The regulation and transparency of lobbyist activities would not only reduce corruption but it would also promote business competitiveness.

Here are some principles to provide decision-makers with guidance to lobbying regulation: 

  • Definition of lobbyist and lobbying activities targeted by regulation should be clear and unambiguous
  • Disclosure requirements should provide information on objectives, beneficiaries and funding of lobbying activities
  • Set rules to avoid misuse of confidential information and prevent revolving door practices
  • Regular disclosure and auditing to ensure compliance in daily practice
  • EU institutions should enable stakeholders – including civil society organisations, businesses, the media and the general public – to scrutinise lobbying activities.

To conclude, the industry’s assistance in the EU law-making is very powerful, for the MEPs are unable to legislate in areas they do not know about. For instance, there was a proposed law to set tougher capital requirements for Banks, which alarmed banks around Europe, for they feared that these requirement would force the sale of their balance-sheet portfolios. As a matter of fact, banks teamed up with MEPs who succeeded in pushing through a delay to the rules, originally foreseen for early 2011, until 2012. Giles Merritt (Friends of Europe) claims that there cannot be an industrial and economic strategy “without picking the brains of industry and business”. But as they say, appearances matter, and more than ever, policy-making must not threaten the legitimacy of the EU institutions. 

Photo Credits: Dalligate by Corporate Europe Observatory via flickr