Sunshine Laws to Track European Lobbyists
November 7, 2007 18:58 | by Pratap Chatterjee
A lone tree stands at the traffic circle between the steel and glass office buildings of the European Parliament in Brussels. A sign below the tree, planted by the Society of European Affairs Professionals (SEAP), reads: "Important issues must be resolved by discussion and decision, with determination, patience and dedication."
In early October, a small group of activists charged that more than any of these virtues, it was money and secretly wielded influence that was deciding important issues. At a lunch-time protest, the activists covered the tree with dozens of yellow paper cut-outs of the Euro, and held up a sign of their own: "End Lobbying Secrecy." The activists charge that powerful industry groups such as SEAP, which represents more than 200 corporate lobbyists, exert undue influence on European legislative decisions, operate in secret and avoid oversight.
"Nobody knows who's actually lobbying on behalf of whom," says Caroline Lucas, a British Member of the European Parliament (MEP), who came out the official buildings to join the activist protest. "There's a massive corporate lobby here, but it's secretive and it has access to the Commission in a way that we, as parliamentarians, frankly can only dream of. There is no kind of register - I think it is absolutely crucial. That's the only way to ensure that people have confidence in the system, in the decisions that are made here."
The system now includes more than 15,000 lobbyists who work in Brussels to aggressively lobby the dozens of major European Union (EU) institutions that control tens of billions of Euros in funding as well decide the strict environmental, labor and financial rules that govern the 27 EU member countries. Some 90 percent of these lobbyists are believed to work on behalf of industry, with civil society groups such as environmentalists and trade unions making up less than ten percent. Together they spend an estimated 750 million Euros ($1 billion) a year to influence the European bureaucrats.
An hour after the protest at the tree, the activists joined hundreds of staff and lobbyists at a parliamentary hearing room to listen to the first ever hearing on the regulation of lobbyists within the EU system. Representatives of companies ranging from Daimler-Chrysler, the car manufacturer, and Kraft, the processed food giant, squared off against consumer and environmental groups including Friends of the Earth and Public Citizen.
The parliamentary hearing followed a March decision by the more powerful European Commission (which is the executive branch of the European Union, rather like the White House, see box) to begin maintaining a voluntary registry of lobbyists. Part of the European Transparency Initiative, voluntary registration is scheduled to begin in spring 2008. If it hasn't proven effective after a year, the Commission may consider compulsory registration.
Estonian Siim Kallas, the commission's anti-fraud czar, who issued the "European Transparency Initiative" is a strong advocate for regulating the industry. "Brussels and Washington are widely recognized as the two lobbying capitals of the world. In both places, legislation is being drafted affecting the lives and economic interests of hundreds of millions of citizens," he wrote in an op-ed for the February 6, 2006 Wall Street Journal. "It'd be arrogant, and indeed a sign of ignorance, to claim that European politicians can't be corrupted."
The Commission's transparency initiative also proposes that lobbyists produce financial disclosure estimating their annual revenue, with a percentage breakdown of which clients or donors pay what. "Because there is nothing wrong with lobbying, there should be nothing to hide," wrote Kallas.
Much, however, remains undefined: The European Transparency Initiative has a broad definition of who is a lobbyist and what must be recorded as lobbying activity. And since lobbyists don't have to tell parliamentarians or bureaucrats which companies employ them, it is nearly impossible to monitor or assess the impact of their lobbying efforts.
Also, the European Commission's initiative does not necessarily apply to lobbyists who meet with members of the European Parliament, who play a lesser, although critical role, in the European system of government. The Parliament's rules will be drawn up by the more industry-friendly Alexander Stubb, a Finnish MEP, who is the rapporteur on lobbying for the European Parliament's constitutional affairs committee. Stubb recently told Public Affairs News, an industry magazine, that there was no need to create a mandatory system. "Because my view on lobbying is if it ain't broke, don't fix it."
The current system, under which lobbyists receive a one-year pass to enter the European Parliament premises after signing a code of ethical behavior, was sufficient, he continued. "In my three years, and having seen probably around 500 different lobbyists in my office, I've encountered zero abuse of the code of conduct and I think it's worked quite well," he said.
Later this year, Stubb's committee will vote on a report that will be attached to the transparency initiative, and will recommend what rules should cover lobbying in the parliament. (In theory the Parliament could even mandate stricter regulation than that laid out by the European Commission.)
Large and influential as the EU lobbyist industry is, it is dwarfed by its US counterpart. There are some 35,000 registered lobbyists in the United States, who recorded expenditures of $2.61 billion in 2006, according to the Center for Responsive Politics, a Washington, DC-based non-profit.
Craig Holman, a registered lobbyist from Public Citizen, another Washington, DC-based non-profit, was invited to testify to the parliamentarians on October 8. He explained that under the US model, created in 1995, a lobbyist is defined as a person who receives significant pay for lobbying activity, makes more than one lobbying contact in a six-year period, and dedicates at least a fifth of his or her time to lobbying activity for a particular client. These lobbyists have to list whom they contact for which client, as well as the amounts and sources of their income.
Passed in September, a new US federal law dramatically curtails the kind of gifts lobbyists can give lawmakers. For example, it restricts breakfast meetings to coffee and doughnuts, dinners to "finger foods," and bans sit-down dinners.
The Center for Public Integrity, also a Washington, DC-based non-profit, reports that rules for US federal lobbyists are weaker than those in all but a handful of states. For example, 37 states require some detailed information on each lobbyist's expenses, while the federal government does not. Some 24 states also have independent ethics commissions that include members of the public or retired judges to investigate and enforce lobbying rules.
Conflicts of Interest
Lobbyists have been at the heart of several major US political scandals in the last few years, despite the fact that they are much more heavily regulated than their European counterparts. Last year alone, 22 members of Congress and their staff were indicted for corruption, some of it related to lobbying.
The most notorious example of lobbying excess is Jack Abramoff, who pleaded guilty in January 2006 to three criminal felony counts related to corruption of public officials and defrauding Native American tribes. In addition, from 1995 to 2001, Abramoff's law firm was paid at least $6.7 million by the Commonwealth of the Northern Mariana Islands (CNMI) for helping to draft policy that allowed manufacturers to maximize the Marianas' status as a US territory: The islands were able to label their products "Made in the USA," and at the same time were exempted from US immigration and labor laws. Abramoff's dealings with a Russian energy company were also subject to a Federal Bureau of Investigations inquiry. Executives of Naftasib funneled millions through Abramoff to influence votes in the US Congress on legislation that helped make it possible for the International Monetary Fund to bail out the faltering Russian economy.
While such major scandals have yet to hit Europe, a number of minor incidents have illustrated flaws in the system. For example, several parliamentarians and top European bureaucrats have been accused of taking "revolving door" jobs with industry when they quit their government jobs. After serving as European director general for enterprise, Jean-Paul Mingasson became general adviser at UNICE, the European employers' federation; on leaving his post as European environment director-general, Jim Currie joined British Nuclear Fuels Limited.
In January, Amsterdam-based organization Corporate Europe Observatory (CEO) exposed that Rolf Linkohr, a 25-year veteran MEP, made a similarly questionable transition. After playing an active role in parliamentary committees responsible for energy issues, Linkohr went on to direct a commercial lobbying consultancy: the Center for European Energy Strategy (CERES). Its clients are large energy corporations.
While Linkohr was running CERES, he was also appointed as a special advisor to European Energy Commissioner Andris Piebalgs. "CERES' corporate clients can be expected to receive advice from Mr. Linkohr and his colleagues about how to advance their commercial interests vis-a-vis EU energy policies. Providing such advice and analysis is likely to be Mr. Linkohr's main source of income," wrote CEO in an open letter to Piebalgs. "At the same time, Linkohr is supposed to provide the energy commissioner with advice about how to shape EU energy policies to serve the public interest."
When Kallas, the anti-fraud czar, received the CEO letter, he asked all 55 special advisers to the Commission (some of whose identities were secret!) to confirm there was no conflict of interest between their roles. When Linkohr did not reply within the deadline, he was fired.
Others in the public relations and lobbying industry have been caught using ethically questionable tactics. Cancer United, a group launched in Brussels in October 2006, invited MEPs to join its advisory board. The group claimed to represent a coalition of doctors, nurses and patients advocating for equal access to cancer care in the European Union. It turned out that Cancer United was a front group set up for pharmaceutical giant Roche by public relations firm Weber Shandwick. (Roche makes Herceptin for breast cancer, Avastin for bowel cancer and Tarceva for lung cancer.) When the Guardian newspaper (UK) revealed Roche's role, members of the Cancer Union's advisory board hastily resigned.
Lobbyists Fight Initiative
At the October European Parliament hearing, industry representatives denied that Europe could have US-style scandals. For one thing, they claimed that parliamentarians cannot take private donations toward their election campaigns - a major source of corruption in the US (This is not completely true, as industry does funnel money into elections in several countries in Europe, such as Finland and the Netherlands, although at a much smaller level than in the United States.)
Lyn Trytsman-Gray, a lobbyist for Kraft and president of SEAP, warned that US-style regulation imposes an undue burden on industry. "We spend 40 to 60 man days in the US to comply with federal disclosure," she told the hearing. (Public Citizen's Holman publicly questioned her estimate, saying that filling out the necessary forms took him four hours every six months.)
Thomas Tindemans from Council of Bars and Law Societies of Europe opposed financial disclosure, arguing that it would conflict with confidentiality laws in several European countries. "Public disclosure for clients of lawyers should be refined," he said.
Curiously, some industry lobbyists spoke in favor of a mandatory regulation of lobbyists. "We don't oppose a voluntary system, but we don't see how it would work," said José Lalloum of the European Public Affairs Consultancy Association (EPACA). He noted refusal to sign the register would put lobbyists at a competitive disadvantage.
This rather surprising opinion is a trick, says Paul de Clerck of Friends of the Earth Europe, who was also invited to speak on the panel. "The lobbyists are playing a dirty game. They have been lobbying against a mandatory system, and now that they have got a voluntary system, they have started to demand a mandatory system [as a diversion]."
De Clerck was also representing the Alliance for Lobbying Transparency and Ethics Regulation (Alter-EU), a coalition of civil society activists who staged the protest at the tree outside the European Parliament. The group demanded a series of reforms including mandatory registration, ethics rules for lobbyists and a code of conduct for European Union officials, as well as an independent monitoring system with effective sanctions. Alter-EU also sought balanced representation in the 1,000-odd European Union advisory bodies that are currently dominated by corporate lobbyists. Finally de Clerck recommended a three-year "cooling-off" period before European Union officials who retire or resign can conduct lobbying activities.
After the three-and-a-half hour hearing ended, rapporteur Stubbs said he was leaning toward the activist demands to increase oversight of lobbyists. But, he drew laughs at the conclusion of the hearing, when he added that he was "open to lobbying on that question."
While the European Parliament debates reform in Brussels, some European countries have already acted. Hungary, Lithuania and Poland recently introduced mandatory registration. But activists in these countries say that the process has not been very successful so far.
Adam Foldes, from the Hungarian Civil Liberties Union, estimates that fewer than half the lobbyists in his country have signed up. "The government only has 176 registered individuals and organizations who claim to have taken part in a total of 26 acts of lobbying. Most of them handed in blank forms. And I know that the real lobbyists, who are the most active, have not even registered," he told CorpWatch. The Hungarian government has the authority to impose fines of up to Euro 40,000 ($56,000) but has so far levied none.
Pratap Chatterjee is an advisory board member of the Corporate Europe Observatory, which paid for his trip to the European Parliament hearings. He is also managing editor for CorpWatch. This article first appeared on the US-based website Z-Net.