Friday

15th Dec 2017

Opinion

Barroso’s bank job: A failure of integrity

  • Barroso is under fire for taking a top job at Goldman Sachs bank (Photo: europarl.europa.eu)

This summer saw what is by many standards the biggest 'revolving door' scandal in the history of the European Union, when former EU commission president Jose Manuel Barroso took up a job with Goldman Sachs International.

The move created an immediate stir, with politicians across Europe condemning the former commissioner, and more than 62,000 people demanding stronger rules on ex-EU officials’ career moves of this kind.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

A further 130,000 have signed a petition by EU staff pressing for “strong exemplary measures” against Barroso; both petitions ask for the EU to drop his entitlement to an EU pension. Still, those who could actually start a case against Barroso – the European Commission and the Council – remain silent.

What are they waiting for?

Their responsibility is quite clear.

According to EU Treaty article 245, commissioners are supposed to show “integrity and discretion” when taking up a new job. If they do not, council or commission can open a case that can lead to a loss of their pension.

Perhaps the reason for their inactivity so far is an inability to think of any scenario in which Barroso at Goldman Sachs would pose a problem to them or the EU at large?

Corporate Europe Observatory can think of at least five.

1. Vested interests in Brexit negotiations

Clearly, a megabank like Goldman Sachs with European headquarters in London has a vested interest in the outcome of these negotiations: the easier the UK's access to the single market and the more liberal the terms for investing, speculating and lending, the better.

It’s no surprise then, that Goldman Sachs and other US investment banks have signed an oath of allegiance with the UK government. And it is not hard to imagine Barroso using his contacts and insider knowhow to squeeze out more privileges for the financial sector during the negotiations.

2. Fending off financial regulation

Goldman Sachs, like all Wall Street investment banks, is very concerned with regulation. It prefers very little of it, and as light-touch as possible.

Whether it’s the fight against food speculation or the struggle for a financial transaction tax, you can always count on Goldman Sachs being involved - trying to derail regulation attempts.

Imagine when the financial transaction tax re-emerges on the political agenda, Barroso could step forward as a fierce opponent of a proposal his own commission tabled, and use his knowledge about the difficult negotiations on the tax to help defeat it.

3. Opening doors for lobbyists

Goldman Sachs is a massive presence on the Brussels lobbying scene - although not necessarily flying its own colours. Very often its lobbyists are representing broader coalitions, such as the derivatives industry or the futures industry.

Often, the bank is also able to squeeze itself into advisory groups set up by the commission, the European Central Bank, or the financial markets authorities. Imagine Barroso putting his address book and expertise on the table in order to open more doors for Goldman Sachs.

4. A bank for scandals

Goldman Sachs has delivered quite a few of these over the past decade. This year, the bank admitted to misleading investors in the run-up to the financial crisis in 2008, accepting a fine of $5 billion.

Closer to home, the banks' involvement in fraudulent manoeuvres inflicted losses of hundreds of millions of dollars to European financial institutions. What would it mean for the EU institutions if a former commission president was to be public face and voice of a bank involved in scandals in the future?

5. Overly intimate relationships between big business lobby groups and commission

From the EU-US trade deal, TTIP, to the heavy influence of big banks on financial regulation, the European Commission has been much criticised for its proximity to big business lobby groups. The series of earlier revolving door cases which saw commissioners joining the ranks of big business lobby groups are a case in point.

Goldman Sachs has employed its share of ex-commissioners in the past, Mario Monti and Peter Sutherland joined following their political terms, but as former commission president Barroso still outdoes them.

Seeing the risks attached to a former commission president working for this highly controversial bank, we clearly need a reform of the rules that let Barroso off the hook. The rules stipulate, for instance, a cooling-off period of 18 months to be observed in questionable cases such as this one.

However, address books do not expire in such a short time. Extending the cooling-off period to three years for commissioners, and five years for former presidents, would make more sense.

But there is urgency to act in the short term as well.

Article 245 is there to protect the reputation of the European Union by preventing former commissioners from abusing know-how, connections and expertise built up while in public office.

With the credibility of the European Commission at stake, the institution cannot neglect its duty to sanction Barroso’s breach of the EU Treaty and finally revoke his pension.

But aside from some angry outbursts within the French government, most member states have remained silent while the Commission stays passive, refusing to hear the alarm.

What are they waiting for? Certainly not for public support to back tough action against Barroso - it’s already here and growing by the minute.

Corporate Europe Observatory is a Brussels-based NGO specialising in oversight of lobby groups

EU commission under fire over Barroso bank job

Barroso did not break any rules and the rules do not need changing, the EU commission said, after its former chief joined the bank that helped to break Greece at a turbulent time in Europe.

German bank woes prompt fear of EU crisis

Germany has denied reports that it was preparing to rescue its biggest lender, Deutsche Bank, amid concern over a new systemic crisis in Europe.

Barrosogate: What next?

Barrosogate is putting to the test an already weak oversight system of former EU commissioners and highlighting the limits of the lobbying regulatory regime.

Barroso had deeper ties to Goldman Sachs

The US bank made "confidential" suggestions on changes to EU policy changes during the former Commission chief's time in office, newly released documents reveal.

Iceland: further from EU membership than ever

With fewer pro-EU MPs in the Iceland parliament than ever before, any plans to resume 'candidate' membership of the bloc are likely to remain on ice, as the country prioritises national sovereignty and a more left-wing path.

Stakeholders' Highlights

  1. Dialogue PlatformThe Gülen Community: Who to Believe - Politicians or Actions?" by Thomas Michel
  2. Plastics Recyclers Europe65% plastics recycling rate attainable by 2025 new study shows
  3. European Heart NetworkCommissioner Andriukaitis' Address to EHN on the Occasion of Its 25th Anniversary
  4. ACCACFOs Risk Losing Relevance If They Do Not Embrace Technology
  5. UNICEFMake the Digital World Safer for Children & Increase Access for the Most Disadvantaged
  6. European Jewish CongressWelcomes Recognition of Jerusalem as the Capital of Israel and Calls on EU States to Follow Suit
  7. Mission of China to the EUChina and EU Boost Innovation Cooperation Under Horizon 2020
  8. European Gaming & Betting AssociationJuncker’s "Political" Commission Leaves Gambling Reforms to the Court
  9. AJC Transatlantic InstituteAJC Applauds U.S. Recognition of Jerusalem as Israel’s Capital City
  10. EU2017EEEU Telecom Ministers Reached an Agreement on the 5G Roadmap
  11. European Friends of ArmeniaEU-Armenia Relations in the CEPA Era: What's Next?
  12. Mission of China to the EU16+1 Cooperation Injects New Vigour Into China-EU Ties

Latest News

  1. Estonia completes two out of three priority digital bills
  2. EU countries are not 'tax havens', parliament says
  3. Tech firms' delays mean EU needs rules for online terror
  4. Slovak PM: Human rights are not a travel pass to EU
  5. British PM limps to EU capital after Brexit defeat
  6. US pleads for clarity on Brexit aviation 'black hole'
  7. Tusk migration note prompts institutional 'hysteria'
  8. Migration looms over summit, as Africa pledges fall short

Stakeholders' Highlights

  1. EPSUEU Blacklist of Tax Havens Is a Sham
  2. EU2017EERole of Culture in Building Cohesive Societies in Europe
  3. ILGA EuropeCongratulations to Austria - Court Overturns Barriers to Equal Marriage
  4. Centre Maurits CoppietersCelebrating Diversity, Citizenship and the European Project With Fundació Josep Irla
  5. European Healthy Lifestyle AllianceUnderstanding the Social Consequences of Obesity
  6. Union for the MediterraneanMediterranean Countries Commit to Strengthening Women's Role in Region
  7. Bio-Based IndustriesRegistration for BBI JU Stakeholder Forum about to close. Last chance to register!
  8. European Heart NetworkThe Time Is Ripe for Simplified Front-Of-Pack Nutrition Labelling
  9. Counter BalanceNew EU External Investment Plan Risks Sidelining Development Objectives
  10. EU2017EEEAS Calls for Eastern Partnership Countries to Enter EU Market Through Estonia
  11. Dialogue PlatformThe Turkey I No Longer Know
  12. World Vision7 Million Children at Risk in the DRC: Donor Meeting to Focus on Saving More Lives