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25th Jul 2021

EU bank agency pledges to curb improper lobbying

  • Former European Commission president Jose Manuel Barroso (r) notoriously joined US bank Goldman Sachs in 2016 (Photo: European Commission)

Other institutions should follow the lead of an EU bank agency in preventing improper staff moves to industry, the EU Ombudsman has said.

"The EBA [European Banking Authority] has worked hard to give full effect to the recommendations I issued ... I am confident that the wide range of measures it has introduced will help it avoid damaging revolving door moves in the future," the Ombudsman, Emily O'Reilly, said on Tuesday (1 September).

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"Other EU institutions and agencies should draw on these new EBA safeguards when revising their own rules," she added.

"Revolving doors" refers to EU officials who exit their jobs to enter the private sector, creating the risk that they will exploit their insider knowledge and contacts.

The EBA, which employs 159 staff in its office in Paris, deals with sensitive information on EU bank oversight.

But last August, it let its former executive director, Adam Farkas, join the Association for Financial Markets in Europe (AFME), a lobby group.

And to add insult to injury, it let him keep access to confidential files for almost two months after it knew he was leaving.

For his part, the head of the EBA, José Manuel Campa, stopped short of admitting to wrongdoing in a letter to O'Reilly dated 28 August and published on her website.

But he conceded that his handling of the AFME case did not look good.

"We are confident that the EBA maintains high standards of independence in its work," Campa said.

"However, we recognise that, in order to maintain public confidence, we must also be perceived to be, and demonstrate that we are, independent," he added.

And he "recognised that it took some time to completely remove access to confidential information".

Unveiling a new policy at his agency, Campa said he was ready to forbid top staff from making such moves in future "where necessary".

He blocked another former executive director from joining TheCityUK, another bank lobby group, in May, to show that he was serious, he noted.

And the EBA published a new ethics guide for staff and put in place systems so that access to confidential material would be "suspended immediately" if need be, Campa said.

O'Reilly's call for other EU institutions to follow suit comes after strings of similar affairs.

Former European Commission president Jose Manuel Barroso joined US investment bank Goldman Sachs before personally lobbying EU commissioners in one notorious case.

But several other commissioners and dozens of other top staff have made similar moves.

Meanwhile, O'Reilly, the EU watchdog, also extracted a promise from the commission that Farkas, the former EBA man, would be placed under a cordon sanitaire.

"I also welcome the European Commission's decision to put in place a two-year commission-wide cooling-off period on meetings with the CEO of AFME until 1 February 2022," O'Reilly said on Tuesday.

The Irish former journalist has, in the past, faced internal EU criticism for playing hardball on sensitive issues.

But Campa, the EBA chief, for one, voiced approval of her tough approach to protecting the EU's good name despite his own AFME red face.

"The EBA agrees fully with your [O'Reilly's] statement that maintaining public trust is an important interest of the EBA, and that citizens need to be reassured that the EBA is taking all possible steps to ensure that it remains independent from the banking sector," he said in his letter.

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