Corporate lobby offensive against Commission transparency plans

On March 21st 2007, the European Commission announced its conclusions from two years of discussion on regulating EU lobbying in the context of the European Transparency Initiative (ETI).

Two years of heated debate had followed the March 2005 speech in which EU Commissioner Siim Kallas highlighted the lack of transparency within which Brussels lobbyists operate. Given the lobbyists' strong influence on EU policy-making, this lack of transparency could undermine the legitimacy of EU decision-making process, he warned. In his speech Kallas dismissed the voluntary codes of conduct administered by Brussels-based corporate lobby associations SEAP and EPACA as ineffective and un-transparent. The debate has since then witnessed a continuous clash between these two associations and the Alliance for Lobby Transparency and Ethics Regulation (ALTER-EU) which has been championing the compulsory registration of lobbyists operating in Brussels.

In the final Communication on follow-up to the ETI, presented in March this year, the Commission announced that it will break with the status quo, primarily by introducing an online transparency register for all types of lobbyists working to influence EU decision-making, including corporate lobby groups, think tanks, consultancies, law firms, and NGOs.[1] "All these groups or bodies are invited to register publicly whom they represent and what their objectives are," Kallas explained.[2] "They are invited to declare funding sources and major clients. This ensures the Commission as well as the public can identify and assess the driving forces behind positions taken and interests presented."

Regrettably, the register, which will be launched in spring of 2008, will be voluntary for lobbyists to join. The Commission's choice to start with a voluntary register is disappointing, as experience with such registers show that they are unlikely to be effective.[3] At the same time, it is a major breakthrough that the Commission now very clearly expects all EU lobbyists to provide transparency about their lobbying, including on whose behalf they lobby and with what budgets. This is a major departure with the past, which brings an end to the self-regulation approach of the last ten years, where lobbyists faced no external transparency obligations. Commissioner Kallas has stated that he is "100% confident" that the register will succeed: "It will work. There will be a register, and the vast majority of lobbyists will join it."[4] It is important to note that the Commission has made clear that if compliance levels turn out to be low, it will make registration mandatory. Crucially, the new register will include financial transparency, requiring lobbyists to disclose how much they spend on lobbying and where the funds for this lobbying activity come from. Such information is currently virtually absent from the public domain, due to widespread secrecy on the side of corporate lobbyists.

Despite the choice to start with a voluntary register, the commercial lobbyists' associations have responded with fury to the Commission's proposal. EPACA and its sister organisation SEAP have over the last few months launched a high-profile counter-campaign against the Commission plans.[5] EPACA has even threatened to boycott the register.[6] EPACA and SEAP represent a large number of Brussels-based lobby consultancy firms, which employ professional lobbyists that work mainly for industry clients. In the US, this profession is known as "hired-gun lobbyists". It is particularly the financial transparency obligations that have caused outrage among the lobby consultants, who in a media offensive have denounced the Commission's transparency plans as 'excessive', 'an unnecessary burden', 'discriminatory and unworkable' and 'voyeurism' (see also "Recent statements by EPACA and SEAP"). The financial transparency obligations would not only violate the confidentiality they have promised their clients, but also EU competition law, the lobby consultants claim. Part of the barrage of often contradictory arguments against the Commission plans is also the claim that "money does not equal influence" and that financial disclosure is therefore irrelevant or even "dangerous" Ironically, the opposition against the Commission's transparency drive includes global lobby consultancy giants whose Washinton D.C. offices have lived up to far more stringent mandatory lobby disclosure rules for over a decade now.[7] Apart from SEAP and EPACA, the Kallas plans have also been criticized by Brussels-based law firms, who have claimed that lobby transparency obligations would harm client privacy. The Law Society of England, for instance, has argued that it is impossible for lawyers to distinguish between legal, economic and political advice to clients.[8] At the same time, it is clear that the Brussels-based lobby consultancy sector is far from united in its opposition to the Commission's plans. An example is the Brussels-based consultancy Whitehouse Europe, whose director distanced himself from the EPACA stance in a letter published in the European Voice.[9] In a remarkable statement published late August, eight major German industry associations expressed their support for the Commission's initiative, including financial transparency.[10]

When EPACA accused the Commission of a "fundamental misconception"on the issue of financial transparency, Kallas responded that he thinks "facts on funds invested in lobbying" are a "meaningful indicator of the importance of the issues at stake". "Nobody would pay real money for lobby services without expecting something in return - and that 'something' is influence", Kallas clarified.[11] On the issue of client confidentiality rules, Kallas simply observed that "of course a transparency initiative challenges confidentiality."[12] In a speech to an audience of lobby consultants in mid-June, Kallas made his position very clear: "there is no point in lobbying against a decision already taken. The register will open in spring 2008." In an explicit message to SEAP and EPACA, Kallas stated that "the profession therefore has two options - the first...is to work against the initiative, in which case self-regulation will prove a failure, leading us towards mandatory registration, for which there is probably sufficient support in both the European Parliament and in the broader public."[13] But even this clear language has not ended the counter-campaigning.

The aggressive campaigning by SEAP and EPACA contradicts text book lobbying wisdoms that the most effective lobbying is the kind that happens in the earliest stage of decision-making and preferably goes unnoticed. The fierce reaction of these lobby consultants reflects their surprise and outrage that they have been unable to preserve the status quo against what they interpreted as a temporary threat which would fade away as have previous challenges in the past. This was certainly what David Earnshaw from Burson-Marsteller expected in the summer of in 2005 when he commented that "lobbying firms are perfectly capable of regulating themselves" and went on to observe that "the lobbying debate flares up at regular intervals in the EU, about once every 10 years. Each time it is largely the same questions that are discussed."[14] In 1996-97, a far less broad-based discussion about regulation of EU lobbying had ended prematurely with the conclusion that voluntary codes of conduct overseen by the lobby consultants' clubs themselves would suffice.[15] SEAP and a second lobby consultancy coalition (ater re-launched as EPACA) were established around this time with the purpose of preventing the introduction of transparency and ethics rules around EU lobbying. But contrary to Earnshaw's expectations, the debate over EU lobbying has only grown in strength in the last two years. The Commission's compromise of instating a register but on a voluntary basis does break with the status quo and goes some way towards securing greater visibility around EU lobbying, despite its obvious weaknesses.

Unfinished business

The ALTER-EU coalition has now entered its third year of campaigning. Since its launch in spring 2005, ALTER-EU's mission has been to challenge excessive influence of corporate lobby groups in EU decision-making.[21] "As the first steps in addressing these problems", the founding statement reads, "the Commission should take determined action to improve transparency around lobbying and ensure that no business groups are given privileged access and influence on EU policy-making." Transparency around lobbying is clearly no panacea, as the experience from the US, not the least during the Bush administration years, shows. But strict disclosure rules make it possible to follow 'the money trail' and monitor how much is invested in lobbying by different corporations and lobby groups. It enables scrutiny that can lead to scandals being discovered in time, as was the case with the corrupt super-lobbyist Jack Abramoff. As Craig Holman of Public Citizen puts it: "disclosure did not prevent him breaking the law but it made sure he got caught".[22] Transparency around lobbying is absolutely necessary, but far from sufficient to counter excessive industry influence.

For ALTER-EU, the challenge will be to secure that the Commission (and the European Parliament) will go beyond transparency and start seriously addressing the problematic phenomena of revolving doors, conflicts of interest, and a whole range of different forms of privileged access and undue influence enjoyed by corporate lobbyists. Commissioner Kallas has shown some commitment in this respect, by terminating the contract of Rolf Linkohr, lobbyist for large energy corporations and one of 55 'special advisers' working for European Commissioners, for instance.[23]

Transparency battle ahead in the Parliament

A major remaining question is how the European Parliament will respond to the Commission's decision to launch a lobby transparency register. The parliament has started drafting its own report on lobbying, which is expected to be finalised in a plenary vote in December.[24] The Commission has suggested that the European Parliament should introduce a compatible set of transparency obligations. This would mean that lobbyists will only have to register once and that a more complete overview of who lobbies the EU institutions (and on whose behalf and with which funding) would become easily accessible. At this stage it looks far from certain that the parliament will follow the Commission's example, let alone show the way as a frontrunner on transparency.

While many MEPs are very clearly committed to support or go beyond the Commission initiative, others seem inclined to preserving the status quo. Finnish conservative MEP Alexander Stubb, the Parliament's lead rapporteur on these matters, has repeatedly echoed EPACA's discourse, for instance by criticizing "the misconception that money equals influence". In an op-ed published in the European Voice, Stubb even seems to argue that the European Parliament's current rules are superior to the Commission's lobby transparency register that will be launched in spring 2008.[25] The parliament has an online register of those lobbyists that have permanent access passes, but the information disclosed is extremely limited and in no way comparable to the Commission's intention to secure visibility about who lobbies, on whose behalf and with which budgets. The coming months will show whether the European Parliament will do the right thing and go beyond the Commission's voluntary initiative, for instance by introducing incentives and sanctions that would secure higher levels of compliance.

The Commission's "deliberate industrial focus"

A major obstacle to deeper democratic change is the 'what's-good-for big-business-is-good-for Europe' ideology that is still firmly entrenched and shaping many EU policy initiatives. A telling example is the response by EU research Commissioner Janez Potocnik to CEO's June 2007 complaint about the role of industry in the Commission's decision-making process in the field of agrofuels.[26] Potocnik made no attempt to deny that industry-dominated advisory bodies such as BIOFRAC and the European Biofuel Technology Platform have been enormously influential, but instead defended this as an achievement: "European Technology Platforms have been conceived as a means to help realise the Lisbon Strategy. The platforms can play a key role in better incorporating industry's needs into EU research priorities by bringing together stakeholders, led by industry, to define a Strategic Research Agenda and to suggest possible directions for its implementation. This is the underlying rationale for the deliberate industrial focus of technology platforms, which was indeed, as you note correctly, reflected in BIOFRAC and is also manifest in the composition of the Biofuels Technology Platform."[27] This vision, in which international competitiveness is the primary objective and industry is seen as the natural primary stakeholder, is fundamentally at odds with democratic concepts, where decision-making is shaped and controlled by citizens and elected representatives.

Recent statements by EPACA and SEAP

"There is a difference between transparency and voyeurism. There are certain things happening in commercial relationships that have nothing to do with transparency. Anything that has to do with fees charged by consultancies to their clients is a private matter."
Jose Lalloum, EPACA chairman [28]

"Contrary to what Kallas states in his speech, the self-regulation of European affairs practitioners is rigorous and effective"
Rogier Chorus, former SEAP chairman [29]

"There is a fundamental misconception that money equals influence."
Catherine Stewart, SEAP vice-president [30]

"At a time when the goal should be to restore faith in the European idea and confidence in its institutions, the emphasis of the transparency debate around lobbying will unjustifiably get refocused by campaigning activists and headline-seeking journalists on 'cash and sleaze', with the innuendo that the EU institutions are complicit. How could the Commission not have thought this one through?"
Eamonn Bates, member of EPACA's management board [31]

"It might be counterproductive because it links money to influence. That's a dangerous link to make."
Jose Lalloum, EPACA chairman [32]

Firms may "conclude that it would be better to be criticised for not registering at all than exposing themselves to the risk of being targeted by anti-business activists eager to demonstrate that the scale of corporate resources is distorting the EU policy process."
Eamonn Bates, member of EPACA's management board [33]

"In the end, he [Mr Kallas] won't have a single consultant registering to his project."
Jose Lalloum, EPACA chairman [34]

"The disturbing fact is that when the voluntary system falters, Siim Kallas, will no doubt blame the public affairs consultancy profession, despite the fact that he ignored its advice. Indeed, he has started already. Outrageously, in a speech given on June 18 in Brussels [...], he accused public affairs consultancies of not wanting to sign a registry and not supporting transparency. Nothing could be further from the truth."
Eamonn Bates, member of EPACA's management board [35]

Hired-gun lobbyists in last-ditch battle against EU transparency plans

Will Commission and Parliament stand firm against backlash from vested interests?

Unfinished business

Transparency battle ahead in the Parliament

The Commission's "deliberate industrial focus"

Recent statements by EPACA and SEAP

Notes