Tuesday

20th Aug 2019

EU commission under fire over Barroso bank job

  • Barroso oversaw the managing of Europe's debt crisis, party triggered by Goldman Sachs (Photo: europarl.europa.eu)

The European Commission has tried to stave off criticism after its former president, Jose Manuel Barroso, went to work with US investment bank Goldman Sachs.

It said that Barroso, under EU rules, had no obligation to notify the commission about his decision.

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Commissioners are required to tell the executive if they want to take up a sensitive job within 18 months after they leave office.

"After the 18 month period of cooling off, there is a reasonable assumption that the access to priviliged information or possible influence are no longer an issue, and they no longer obliged to notify," the commission’s spokesman, Margaritis Schinas, said on Monday (11 July).

The current commission president, Jean-Claude Juncker, learned about Barroso’s decision after bank made it public and did not want to comment on Barroso's choice, Schinas said.

Goldman Sachs said last Friday that it was hiring Barroso to be an advisor and non-executive chairman of its international businesses, as it struggles with the fallout from Britain's vote to leave the EU.

Goldman Sachs, and other investment banks, is facing uncertainty as it is based in London, but offers services across Europe - a model that could be disrupted if the UK were to end up with limited access to the bloc's single market.

The commission spokesman also rebuffed calls to amend the rules for former commissioners on taking up controversial posts.

The Goldman Sachs job is highly sensitive because the bank was under fire for its role in the Greek debt crisis. Its personnel helped Greek authorities to mask the real level of its debt.

Schinas declined to comment on the politics of Barroso's decision. But one EU official, who asked not to be named, said Barroso's move was "not smart".

Backlash

Others did not shy away from open attacks.

"Barroso's decision … is morally and politically deplorable”, said Gianni Pittella, leader of the Socialist and Democrats group in the European Parliament.

"After 10 years of mediocre governance of the EU, now the former EU Commission president will serve those who aim to undermine our rules and values," he added.

The Brussels-based lobby watchdog, Corporate Europe Observatory's (CEO), said the commission’s line - that Barroso acted within the rules - was "pathetic".

"Major loopholes exist in both the rules and the way in which they are implemented … there should be a mandatory cooling-off period of at least five years for former commission presidents regarding direct and indirect corporate lobbying activities," the NGO’s Nina Holland said.

She noted that nine of Barroso’s former commissioners had gone to work for big business after their terms ended in 2014.

Timing

Meanwhile, the timing of Barroso's move could hardly have been worse for the commission.

Eurosceptic movements around Europe have long accused EU officials of trampling on ordinary people’s welfare to serve the interests of elites in developments that came to a head in the Brexit vote.

France's far-right Marine Le Pen tweeted that the Barrose move was "not a surprise for people who know that the EU does not serve people but high finance".

French socialist MEPs called on Goldman Sachs to let him go.

In a statement on Monday they called the appointment "outrageous and shameful”. They said that he breached the EU treaty and should be stripped of his EU benefits and pension.

They cited article 245 of the EU treaty, which says that commissioners should respect the "obligations arising therefrom and in particular their duty to behave with integrity and discretion as regards the acceptance, after they have ceased to hold office, of certain appointments or benefits."

Legacy

Barroso led the commission through the tumultuous years of the euro crisis and related bailouts.

Under his tenure, the EU set up financial rescue funds to help troubled countries and their banks, but at the cost of severe austerity in Greece, Ireland and Portugal.

Goldman Sachs was one of the US investment banks at the heart of the 2008 financial crisis that triggered the events when lenders traded failing mortgages as parts of complex financial instruments.

Earlier this year, the Wall Street firm agreed to a civil settlement of up to $5 billion (€4.52bn) with federal prosecutors and regulators to resolve claims resulting from the marketing and selling of faulty mortgage securities to investors.

Goldman Sachs also helped Greece to hide part of its deficit in the early 2000s, by using so called currency swaps. But the currency trades end up doubling the Greek deficit and leading to the edge of ruin.

Barroso himself had been a student leader in an underground Maoist group during his university years.

The 60 year-old served as prime minister of Portugal between 2002 and 2004 before heading the EU's executive for 10 years.

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