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26th Jul 2021

Revolving doors at the EU commission's finance unit

  • Links between the EU Commission and the financial sector go "far deeper than a mere reliance on the industry's expertise," says Corporate Europe Observatory (Photo: European Commission)

The European Commission's unit for banking and financial regulation has a "revolving door problem", with a high proportion of top officials joining companies they were overseeing, according to an NGO report.

"Out of the five former directors between 2008-2017 who have now quit the Commission, four went to work for companies they once oversaw or lobby firms that represent them," Corporate Europe Observatory (CEO), a transparency organisation, noted in a report published on Thursday (12 April).

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  • Faull joined Brunswick in 2017 (Photo: europeanbusinesssummit)

The research, done with Yiorgos Vassalos, a PhD student and teaching assistant at the French University of Lille, focuses on the years when the commission addressed the financial crisis and was tasked with increasing regulation of the sector.

It shows that one of the three heads of unit who worked on financial regulation between 2008 and 2017 and have now left the commission, went on to work for the financial industry.

The reports mentions the case of Jonathan Faull, a respected commission official who ended his career as head of the UK task force ahead of the Brexit referendum.

Faull, who was head of the DG Fisma - the commission's directorate-general for financial stability, financial services and capital markets union - from 2010 to 2015, joined Brunswick, a lobby consultancy, after he retired from the commission in 2017

The research also points out that six out of twenty-seven heads of units and seven out of a total of twenty-two deputy heads of units in this period have worked for the financial industry before joining the EU executive.

"This goes far deeper than a mere reliance on the industry's expertise," CEO's report says. "It is not a stretch to say that directors may well have this next step in their careers in the back of their minds while still in public office."

Window-dressing policies?

"If this is the case," the NGO asks: "could this incite them to promote window-dressing policies, rather than risk any measure that might upset their potential future employers?"

The revolving doors for top civil servants at the DG Fisma - the commission's directorate-general for financial stability, financial services and capital markets union - follows a trend also set by commissioner themselves.

Vassalos and CEO note that two out of the three EU commissioners in charge of finance between 2008 and 2017 "went to work for financial interests after the end of their mandate".

Ireland's Charlie McCreevy, who served from 2004 to 2010, became "the first former commissioner in history to be given the red light" by the institution when he tried to create a bank when he left office.

One week after the end of the so-called cooling off period, when former commissioners have to report over their job plans, McCreevy was hired by Bank New York Mellon. He later also joined other financial firms such as Sentenial, World Spreads and Celsius Funds.

Another commissioner, the UK's Jonathan Hill, was former lobbyist when he joined the EU executive.

After his resignation following the Brexit vote in 2016, he joined Freshfields, "a law firm that lobbies EU Institutions for Lloyds, London Stock Exchange, and the Futures Industry Association, among others," according to the report.

The third commissioner in charge of financial services during the period is Michel Barnier, a French politician who "didn't go through the revolving doors after his mandate" and is now the EU Brexit negotiator.

Social identification

These cases, as well as others such as Nelly Kroes' move to Bank of America Merril Lynch, or Jose Manuel Barroso's to Goldman Sachs, "indicate the revolving door problem exists at the level of the highest political leadership," CEO insists.

This, it adds, surely gives a clear signal to DG FISMA's staff that the revolving door is a normal part of their careers, if not a characteristic of the most successful and high-level careers."

Corporate Europe Observatory calls on the commission to "protect itself from conflicts of interest."

It says the institution should "act to limit the revolving door, and adopt strict conflict of interest rules, cooling off periods, and post-career sanctions that break the social identification of its financial regulation department with the strongest firms it is supposed to be regulating".

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