Tuesday, March 20, 2012

ECON MEPs hide conflict of interest

The Committee for Economic and Monetary Affairs (for short, ECON) of the European Parliament (for short, Europarl or EP) is the watchdog of the ECB1. In Goldman-Greece-Draghi we document possible failings in its handling of the nomination of the president of the ECB. Here, we look into the seeming failure by some members of ECON to disclose affiliations with some organizations, notably the European Parliamentary Financial Services Forum (EPFSF) and the Transatlantic Policy Network (TPN). We use this opportunity to highlight important members in the area of financial legislation.

Cast: Wolf Klinz, Peter Skinner, Sharon Bowles, Arlene McCarthy,  Edward Scicluna, Sylvie Goulard.

Notes
  1. Accordingly ECON keeps a "monetary dialogue" with the ECB. Transcripts are publicly available, which is a good thing. But there's a caveat: each participant's speech is in the original language. As a result, the monetary dialogue's transcript may contain any combination of English, French, Greek, German etc. We're told by the press liaison of ECON that news agencies have never complained. This leads us to believe that they don't care much about the monetary dialogues. Alternatively, perhaps, they rely on skilled polyglots who translate them. 
Overview

Members of the EU parliament (MEPs) are required to fill a declaration of financial interest (template) that stipulates:
Pursuant to Article 4(2)a of the Code of Conduct I declare my occupations during the three-year period before I took up office with the Parliament, and membership during that period of any boards or committees of companies, non governmental organizations, associations or other bodies established in law.
There are two organizations whose ECON members, in their majority, don't declare. These are the EPFSF (members: 2008, present), and the TPN (members: 2008, present). A new code of conduct requiring greater transparency dates back to December 2011 (Euractiv).
 
EPFSF's stated role is to promote exchange between MEPs and the financial industry. It is chaired by Wolf Klinz (ALDE). He is seconded in this role by Peter Skinner (S&D).

The stated mission of the TPN is vague, but with the presence of the US Chamber of Commerce in the network and the Chairman of Goldman Sachs International as its honorary president, Peter Sutherland, one doesn't need to be lectured by an expert as to what the general inclination of that organization is. The European Parliamentary Committee of TPN is chaired by Peter Skinner and it includes Wolf Klinz.

Notice that there are ECON members who are affiliated with neither. There are a little over 20 that are in EPFSF and only but a few have disclosed in full. There are about 80 members in ECON, including substitutes. 

We discuss next the important players in the area of financial legislation.

Financial legislators

Wolf Klinz was Chair of the Special Committee on the Financial, Economic ans Social Crisis (CRIS). Peter Skinner was co-chair. The US equivalent is the senate panel led by Levin and Coburn (McClatchy).

The Chair of ECON, Sharon Bowles (ALDE) and another long serving UK member of ECON, Arlene McCarthy (S&D),  both are members of both the EPFSF and TPN. The Vice Chair and long serving member of ECON, Edward Scicluna is a member of TPN. Sylvie Goulard (ALDE) holds the networking record with EPFSF, TPN and a third organization, the European Policy Center (EPC, members: 2010). Incidentally, the already mentioned Peter Sutherland is also Chairman of EPC.

None of those mentioned declared their affiliation with EPFSF. Only one, Peter Skinner, has mentioned his affiliation with TPN. All but Klinz are the in the Who's who of European regulators (DerivAlert). It is probably incomplete, though, because, as noted Klinz was Chair of CRIS. 

The table at the bottom of this article summarizes the declarations of lesser known MEPs with regard only to EPC, EPFSF and TPN. It includes all the MEPs who are members of EPFSF. It's quite possible there are undiclosed affiliations for other organizations and/or among members who are not in EPFSF.

In addition to failing to disclose some affiliations, quite a few of the declarations we reviewed were sloppy as well. For example, among the MEPs mentioned, Edward Scicluna writes that he is on the board of five private companies, but does not list their business names. He also mentions 'economic consultancy', which is virtually useless. Knowing that he represents Malta, which is an offshore financial center, it's not trivial.

Follow the herd: it's safe

Arlene McCarthy mentions her membership in the European Internet Foundation (EIF), but adds "independent and non-partisan". Just because their website says so? C'mon it's childish to repeat it.

I'm guessing MEPs are comfortable become members of these groups out of some herd instinct: it can't be wrong doing the same thing as many other MEPs, right? Well, that's exactly what the organization wants the public to think: it gives it a veneer of prestige.

There is hardly one lobby in the world that calls itself a lobby. They all use euphemisms, if not self proclaimed virtues, to describe themselves. A think tank that calls itself independent without specifying with respect to what, is, strictly speaking, nonsense. If the untold reference is "corporations" but the funding comes from corporations then the nonsense masks a deception.

Anecdotal evidence that MEPs are either naive or behave on the assumption that the general public is naive is found in a statement by Sylvie Goulard who, to justify her interactions with lobbies, cites Bruegel (an 'independent think tank') as a provider of academic quality research that she's keen to rely on (press release). Sylvie Goulard tops the number (3) of (undisclosed) affiliations, two of which, we noted, are presided by the chairman of Goldman Sachs International, Peter Sutherland. 

It seems as if one cannot turn over a stone without finding this bank lurking underneath it. Bruegel, which recently deplores EU bloggers lack teeth (turkey voting for X-mas?), is no exception to the rule. Mario Monti, a Goldman Sachs alumni, is its founder and Chairman (honorary). Jim O'Niel, the head the asset management divisions who gained notoriety for coining an acronym (BRICS), is also a member

Implication

Whatever the thought process that led the leading MEPs to think it was OK, or thought nobody would notice, to fail to disclose certain affiliations, their judgment is in question. Don't expect a change anytime soon at Europarl Econ. The same faces at the top were recently re-elected (PSE), except for one. The latter (Marfil) presumably retired. His replacement, who has no relevant experience, is also of Spain. Was he his protégé? Just a conjecture.

Table 

Yes/No is on the basis of the declaration as accessed in March 2012 vs the organization's membership list at the same date. Click on the name to open the declaration.
Declarations of financial interest
MEP EPC EPFSF TPN
Burkhard Balz
No
Sharon Bowles (Chair)
No No
Philippe De Backer
No
Sari Essayah
Yes
Elisa Ferreira
No
Vicky Ford
Yes
Jean-Paul Gauzes
No
Sylvie Goulard No No No
Gunnar Hoekmark
Yes
Anne Jensen
No
Othmar Karas
No
Wolf Klinz
No No
Philippe Lamberts
No
Olle Ludvigsson
No
Arlene McCarthy
No No
Gay Mitchell
No
Bill Newton Dunn
No
Sirpa Pietikaeinen
No
Antolin Sanchez Presedo
No
Olle Schmidt
No
Peter Skinner
No Yes
Kay Swinburne
No
Ramon Tremosa i Balcells
No

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