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Lobbying is big business in Europe and pretty much everywhere else. The risks it poses to democratic and administrative processes are pretty obvious, so why is it tolerated? Frances Cowell asks what practical measures can contain its worst excesses and finds that Europe has some work to do.

Gűnther Oettinger almost certainly over-stepped when, two months following his retirement in May as European Commissioner for Budget and Human Resources, he founded a political consulting firm. Neelie Kroes, as EU Competition Commissioner, too, having criticised Germany’s ban of Uber, then took a job on the firm’s public policy advisory board. When his term ended as President of the Commission in 2014, José Manuel Barroso accepted a non-executive role with Goldman Sachs. Could their decisions while in office have been influenced by the prospect of lucrative work afterward? It’s a fair question.

Political and regulatory lobbying is big business everywhere. According to the Transparency Register, EU lobbyists spent a guestimated €2.0 to €2.5 billion in 2016, with European Chemical Industry Council, Instituto de Telecomunicaciones of Portugal, Insurance Europe, Google and the European Federation of Pharmaceutical Industries among the biggest spenders, each splurging upward of €5 million in 2016. US lobbyists spent even more: $3.8 billion in 2018, though their economy is smaller than the EU’s.

Firms that spend this much on lobbying activities presumably consider it good value for money, and there is ample evidence that the efforts of lobbyists influence the content of regulations. Some would say that is not necessarily a bad thing: regulators do well to listen to private sector concerns and understand the real-world effects of proposed rules.

But lobbying is not public consultation. Rather than seeking the view of all concerned, it tilts the arguments in favour of the biggest payers.

Closing the door

Lobbyist devote time and resources to “inform” legislators and regulators of the issues they want to promote. In theory at least, the worst that can do is to present biased information, which the regulators can then heed or dismiss. But there is more: leaving aside the question of gifts and emoluments, a more sinister aspect to lobbyists’ activities lurks.

Gűnther Oettinger

The “revolving door” is hardly a passage to balanced discussion on the merits of any new regulation. Messers Oettinger, Kroes and Barroso will tell you that an EU commissioner’s salary is typically about €20,000 a month. Compare that to firms’ lobbying budgets and it must be very tempting for a mortal commissioner to succumb to the charms a deep-pocketed prospective employer.

Viewed in this way, you would be forgiven for asking: at what point does lobbying become just plain corruption?

Neelie Kroes

Whichever way you look at it, there seems to be a strong case for limiting, or at least regulating, lobbyists. The reflexive reaction to the worst excesses would be to ban all senior Commission employees, and certainly commissioners, from working as lobbyists. The problem is that it is not really enforceable, as it would be too easy to circumvent, for example by describing lobbying activity as something else. To make a ban stick, you’d need to ban all subsequent employment, which clearly is infeasible. In fact a ban of any sort is likely to be worse than ineffective, as it would aggravate the problem by driving the activity underground.

José Manuel Barroso

Another way is to try and restrict post-Commission lobbying, for example by stipulating a period after finishing work, during which the ex-Commissioner cannot take up work that could entail a conflict of interests. In fact, such a restriction is already in place: commissioners must now wait two years (and the President three years), but that applies only to lobbying that is related to the commissioner’s portfolio. It is not clear how that would apply to Mr Juncker, for example.

Lobbying is not only lucrative, it is also murky: how do you tell whether or how a decision has been influenced by lobbyists? Sunlight being the best detergent, a workable solution is to bring the whole business into the open, for example by demanding registration and reporting of all lobbying-related activities.

Register the register

To an extent this is already being done too: the Transparency Register , operated jointly by the European Parliament and the EU Commission since June 2011, covers not only lobbyists, but also law firms, NGOs, and think tanks. It records information on staff numbers, the legislative proposals they have attempted to influence, and the amount of EU funding involved. But it has two big short-comings. One is that it omits information about how much each firm spent on lobbying; the other is that it is voluntary, with no effective penalties for posting inaccurate or incomplete information. Rather, ill-defined “misbehaviour” can be punished only by a commented deletion from the registry and withdrawal of access. Surely we can do better than that?

A more effective registry system would be mandatory and demand explicit links between legislation or regulation proposals and lobbyist, recording details such as the name of the commissioner concerned and all decisions within the Parliament and the Commission related to each lobbyist’s interests, as well as the names and interests of the firms they work for. All posted information should be verified in the lobbyist’s audited accounts and publicly available in searchable databases. Penalties for breaches, such as posting inaccurate or incomplete information should entail de-registering of the lobbyist, banning of the sponsoring firm and public naming and shaming of both. At the very least.

The EU prides itself on its probity and openness, and has much to be proud of. All the more reason to clean up this particular mud-stain.

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Frances Cowell
Australian-born and European by adoption, Frances Cowell writes and speaks at conferences about investment risk and governance, financial market stability and business ethics in financial markets – and the implications for the wider political economy. She believes Europe must urgently assume the lead in protecting and preserving liberal democracy, the rule of law and the multi-lateral institutions and alliances that it depends on.

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