Wednesday

18th Jan 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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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

Opinion

The 89ers and the battle against populism

It falls to the Europeans who were born around 1989 and grew up in a peaceful Europe to build a fresh new vision for the EU that transcends the ideological, educational and national cleavages of the past.

Stakeholders' Highlights

  1. Caritas EuropaEU States to Join Pope Francis’s Appeal to Care for Migrant Children
  2. UNICEFNumber of Unaccompanied Children Arriving by sea to Italy Doubles in 2016
  3. Nordic Council of Ministers"Nordic Matters" Help Forge Closer Bonds Between the UK and the Nordic Region
  4. Computers, Privacy & Data ProtectionThe age of Intelligent Machines: join the Conference on 25-27 January 2017
  5. Martens CentreNo Better way to Lift Your Monday Blues Than to Gloss Over our Political Cartoons
  6. Dialogue PlatformThe Gulen Movement: An Islamic Response to Terror as a Global Challenge
  7. European Free AllianceMinority Rights and Autonomy are a European Normality
  8. Swedish EnterprisesHow to Create EU Competitiveness Post-Brexit? Seminar on January 24th
  9. European Jewish CongressSchulz to be Awarded the European Medal for Tolerance for his Stand Against Populism
  10. Nordic Council of Ministers"Adventures in Moominland" Kick Off Nordic Matters Festival in London
  11. PLATO15 Fully-Funded PhDs Across Europe on the Post-Crisis Legitimacy of the EU - Apply Now!
  12. Dialogue PlatformInterview: Fethullah Gulen Condemns Assassination of Russian Ambassador to Turkey

Stakeholders' Highlights

  1. Zero Waste EuropePublic Support Needed to Promote Zero Waste in More Municipalities
  2. Belgrade Security ForumEU Cannot Afford to Ignore the Western Balkans as Populism Surges
  3. Dialogue PlatformFethullah Gulen Calls for an Investigation on the Assassination of Russian Ambassador to Turkey
  4. World VisionAmid EU Talks on Migration, Children on the Move Remain Forgotten and Unprotected
  5. Centre Maurits CoppietersAlex Salmond Receives Coppieters Award for His Service to Scotland and Europe
  6. International Partnership for Human RightsStrong Support for Hamburg Declaration on Human Rights Defenders
  7. Swedish EnterprisesHow to Use Bioenergy Coming From Forests in a Sustainable Way?
  8. Counter BalanceReport Reveals Corrupt but Legal Practices in Development Finance
  9. Swedish EnterprisesMEPs and Business Representatives Debate on the Future of the EU at Winter Mingle
  10. ACCAFifty Key Factors in the Public Sector Accountants Need to Prepare for
  11. UNICEFSchool “as Vital as Food and Medicine” for Children Caught up in Conflict
  12. European Jewish CongressEJC President Breathes Sigh of Relief Over Result of Austrian Presidential Election