The European Investment Bank has a chronic 'revolving doors' problem

Over the past few months, two investigations have exposed how former European Investment Bank vice president Vazil Hudak had in multiple cases joined the leadership of companies for which he had either helped arrange or even approve loans while working at the bank. 

In one instance, he was appointed board member of Budapest airport — after he had signed a €200m loan for a controversial expansion project.

In a second case, Hudak is listed on the Slovak electric vehicle battery start-up Inobat’s website as a co-founder. In February 2019, he told Slovak press. “I believe that the EIB advisory hub will also play a key role in supporting the newly established consortium of companies in Slovakia – InoBat."

In June 2020, seven months after Hudak left the EIB, Inobat publicly announced the EIB was considering a loan application. The project was on the EIB’s webpage as “under appraisal” from April 2020 to April 2022 , the time during which the Bank requested the European Commission for opinion on the project.

Lawyers for Hudak state Inobat ultimately decided to proceed without an EIB loan.

In both cases, according to business registries in Slovakia and Hungary, he was in the process of joining the companies during his 12-month cooling-off, without even seeking the approval of the EIB’s Ethics and Compliance Committee.

Politico revealed in March 2024 that Hudak’s Budapest airport case was under investigation by the European anti-fraud office. Lawyers for Hudak inform EUobserver that this case was closed with no further action in October 2024.

Worse still, this revolving door case is just one of at least two others, investigated by the EU Ombudsman, involving former EIB vice presidents who have gone to work for clients of the bank almost immediately after leaving their posts.  

In one case, Emma Navarro went to work for Spanish energy company Iberdrola in January 2021, just three months after having left her position as EIB vice president, where she signed loans worth billions of euros to the same company.  

In another, Dario Scannapieco, only a month after stepping down as EIB vice president, went to head Italy’s state lender Cassa Depositi & Prestiti SpA which often works with the EIB as a financial intermediary.

Concluding that the way the bank had handled this case was “inadequate and constituted maladministration,” the ombudsman reiterated her recommendations to allow the Bank’s Ethics and Compliance Committee “to impose measures to mitigate any potential conflicts of interest risks it identifies”.

Toothless 'code of conduct'

However, the EIB has not yet amended the Management Committee's Code of Conduct to ensure that all activities that may give rise to a conflict of interest are subject to approval by the Ethics and Compliance Committee. 

Yet, perhaps most worrying is that the Bank's responses to recurring conflicts of interest in its highest echelons have so far not resulted in any meaningful corrective action being taken.

Absurdly, in other words, the bank relies on potential perpetrators to decide in advance whether conduct from which they are certain to benefit may or may not be a violation of the bank´s ethical rules

While the code of conduct was modified and a longer cooling-off period was introduced, the bank has not reacted to, or even commented on, the Hudak case.

Not only has the EIB failed to condemn Hudak’s blatant violation of EIB´s Management Committee Code Conduct, for example, it has continued to forge ahead in a similar way in other cases.

Despite the closed European Anti-Fraud Office’s investigation into a possible conflict of interest concerning one of its investments, the EIB insisted in a comment to Politico that it will continue disbursing the loan for the Budapest airport expansion. 

This is unacceptable. The EIB's shareholder governments, through their board directors, must investigate and publicly explain why a vice president was permitted to take advantage of their position for personal interest.

The EIB’s leadership should report how it will address its revolving door problem and prevent similar abuses from occurring in the future. 

In fact, had it not been for investigative journalists such as those in Politico and the Jan Kuciak Investigative Centre (ICJK), Hudak’'s shameful conduct and the EIB’s failure to prevent and respond to these findings would have never been exposed.

MEPs also urged the EIB to tackle the risk of conflicts of interest as early as 2017.

Nearly four years later, in June 2021, the European Parliament reiterated its call for the bank to tighten up its post-employment policy to bring it into line with that of the European Commission and similar institutions. 

Yet almost a year after the European Ombudsman concluded her second inquiry into the revolving door problem at the EIB and after two damning investigations into Hudak’s behavior, the EIB has given no indication that it even recognises the existence of this chronic problem. 

In comments in a recent Politico article on the Inobat case, the EIB denied any responsibility, claiming that its Ethics and Compliance Committee (ECC) hadn't received a request for an opinion from Hudák on his involvement with InoBat.

Absurdly, in other words, the bank relies on potential perpetrators to decide in advance whether conduct from which they are certain to benefit may or may not be a violation of the bank´s ethical rules. 

If this is how the bank handles conflicts of interest, then the use of billions of EU public funds, which should be working in the interest of European citizens, is in serious trouble.

Instead of the EIB shrugging its shoulders at yet another revolving door case, it must understand these new revelations as a wake-up call to drive the necessary changes that will enable it, as a key EU institution, to retain public legitimacy. 

This piece was amended on 29 January 2024 to note that according to Hudak’s lawyers, the OLAF investigation into Hudak and Budapest airport was closed in October 2024 with no further action, and to clarify that ultimately Inobat did not proceed with a loan from the EIB. In both cases, Hudak's lawyers state there were misunderstandings as to the starting point of him joining these companies.