21st Feb 2024

Multi-million market for inside EU knowledge

  • Corporate intelligence firms make police-type organigrams of who is who in the EU capital (Photo:

"Monitoring" — the trade term for detailed surveillance of EU institutions — accounts for 60 to 70 percent of EU lobby companies' activities in Brussels, contacts at leading firms say.

"You can't do anything unless you monitor what the EU institutions are doing," David Earnshaw, the EU chief of Burson-Marsteller, one of the biggest lobby companies in the city, told this website.

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"Our clients are with us because we are their eyes and ears in Brussels and sometimes their mouth, but more the eyes and ears than the mouth," Karl Isaksson, the EU chief of Kreab Gavin Anderson, a competitor, said.

Monitoring mostly concerns open source material — following EU websites and press briefings or sending interns to MEPs' hearings.

Earnshaw noted that back in the 1990s he would walk to the European Commission's headquarters almost daily to pick up envelopes with internal documents.

But "nowadays there's so much out in the open" that instead of waiting for "red hot" EU papers, clients ask for weekly newsletters containing the latest developments and Burson-Marsteller's analysis.

It is similar to what journalists do in the EU capital.

Alongside the small army of 20,000 or so lobbyists said to work in Brussels, there are 965 people accredited as press to EU institutions, about 100 of whom do financial reporting.

Duncan Lumsden, a co-founder of MLex, an Internet news agency specialising in anti-trust news, told EUobserver that open sources should not be scoffed at.

He said one of his best scoops was in 2009 about Belgian energy firm Electrabel. MLex got the story — that Electrabel had bought a French rival without EU permission, prompting a huge fine — not because he had an inside tip-off, but because MLex employs "well-resourced geeks" who know where information is published and what it means.

"One of our researchers has 27 tabs on his [Internet] browser which he opens every couple of hours a day," he noted.

In another aspect of EU transparency, institutions often give draft laws to lobbyists and media because they want an informal reaction from industry.

Kreab Gavin Anderson's Isaksson, who also heads Epaca, the EU lobbyists' trade association, said: "Under the Epaca code of conduct, we are not to trade in confidential documents ... it's about having a dialogue and exchanging ideas. It's fascinating how open it all is."

Putting the spotlight on open sources is nice PR for the lobbyist sector itself, however.

Lobbyists resent the idea that their profession is somehow shady or harms public interests.

Daniel Gueguen, who runs Pact European Affairs in Brussels, told EUobserver: "I have the French Legion d'honneur [a state gong]. To get this you have to be tip-top clean."

Earnshaw said he stopped Burson-Marsteller from lobbying for tobacco firms because they "kill" smokers and because it might harm the careers of the "talented, young people" on his payroll.

But professional ethics have their limits.

Burson-Marsteller is happy to work for Ukrainian President Viktor Yanukovych (tainted by allegations of gangsterism).

Other lobby companies (such as EUK Consulting and Luther Pendragon) are happy to pick up tobbaco contracts and Hume Brophy, another EU lobby company, still works for Trafigura, a British oil trader blamed for one of the worst pollution disasters in recent history.

Meanwhile, access to exclusive information has not lost its value.

Gueguen noted that the Lisbon Treaty has had a double impact on lobbying.

It has boosted "co-decision," giving more law-making power to MEPs and putting more information in the open. But it has also boosted "comitology," the retroactive tweaking of EU laws by "implementing acts," giving more power to behind-closed-doors committees of EU and member states' officials.

The EU does not publish the names of the people who do comitology, but Gueguen is paid to get them so that his clients know who to target.

He added that if you need to know how a new law might hurt your business, there is no substitute for the full text of a European Commission draft proposal.

In terms of what Reuters' clients want, the news agency's Brussels bureau chief, Luke Baker, told this website that he will run a story if at least five EU sources say the same thing. But he added: "It's always more valuable to get hold of a document ... a document is gold dust."

To get the inside stuff, you have to know how the EU machine works and to gain people's trust.

Commercially valuable material mostly comes from commission departments on agriculture, competition, consumer affairs, energy, environment, fiscal affairs, health, the single market and trade.

The EU press service publishes decisions shortly after commissioners make them on Wednesdays. But Reuters does not wait for the mid-day press briefing.

Its reporters try to get news already on Mondays, when commissioners' chefs-de-cabinet pre-agree most of the details. Sometimes they get it the Friday before that, when the commission's 27 directors general pre-agree another large part. It also targets lower-level EU officials, who get draft documents in "inter-service consultations" weeks earlier.

In some cases, you get the first draft from "expert groups" — committees of academics, lawyers and businessmen, who help EU officials to prepare legislation — well before the inter-service consultations start.

"You have so many of them [EU documents] circling among so many people, there are lots of opportunities [to get them]," Baker said.

"Confidentiality is subjective. A paper might be highly confidential for DG [directorate general] agriculture, but DG single market might have access to it and think it's OK to give it out," Gueguen noted.

For his part, MLex's Lumsden said EU anti-trust officials and the EU courts in Luxembourg "do not leak."

But if the commission is investigating, say, six companies for alleged price-fixing, at one point it sends questionnaires to up to 50 other firms in the sector, one of whose lawyers usually gives a "read-out" of the EU line of enquiry.

There are few shortcuts to gaining EU officials' trust.

You have to put in the time and you have to master the subject so that sources get information from you in return. "For the past 25 years, I have invited someone to lunch every day ... and even if I ask nothing, I always try to bring something myself," Gueguen said.

EU officials are often expats who live jeek-by-jowl with lobbyists and reporters in Brussels and who are open to making friends because they left their old ones back in their home country.

But they are not soft targets.

The tension which comes from sleeping with the enemy — sometimes literally — can work the other way.

"I had a girlfriend who worked in DG comp. But I would never ask her about what she did — you just don't do that. There was no pillow talk about anti-trust cases," one journalist on EU anti-trust decisions said.

In terms of word-of-mouth leaks, Alexander Dyevre, who works in Brussels for Ceis, a French corporate intelligence company, noted: "Commission people are happy to bitch about their boss in the open. But they are very sensitive about giving away details of their work. It's quite impressive to see."

The code of silence is related to EU commission security services' increasingly hawkish methods.

People are wary of dishing out restricted documents in case they have electronic tracers which identify who gave them out.

When EUobserver in 2010 got a file on EU-Russia affairs, security staff went on to its reporter's Facebook page to see if he had EU official "friends" and then called them in for a grilling.

There are shortcuts to gaining trust if you are willing to pay.

Most big lobby firms hire former EU officials in a practice which NGOs call "revolving doors" and which buys them relationships with acting EU staff.

Brussels-based NGO Corporate Europe Observatory has a list of 27 former officials who changed sides in recent years. But there are many more.

One is Peter Guilford, who runs GPlus, a lobby company which is helping Gazprom, Russia's energy champion, to beat an EU probe into alleged price-fixing. "During his time in the EU commission, he was at the forefront of negotiations ... to resolve anti-trust and state aid investigations," GPlus' website says.

Two more are Siegbert Alber and Sven Norberg.

Alber used to be an attorney general at the EU court of justice but now works for Alber & Geiger, a Berlin-based firm whose other half, Andreas Geiger, described the company to EUobserver as a "lobbying law firm."

Norberg used to be DG competition director but is now an "adviser" for Kreab Gavin Anderson. "He lobbies for a lot of companies. He is very well connected and very active ... If your client is a bank which is buying another bank, you send these kind of people to the [commissioner's] cabinet to tell them they should approve it, that this merger is important for Europe," a contact at another Brussels-based law firm said.

There are other ways

Lobbyists also have other tricks up their sleeve.

"Academics are seen as whiter than white. But if a university is doing research which is funded by your client and it has an expert on one of the panels [EU expert groups], you can ask them: 'Will this go through or not?' One contact was sending us SMS-es during the talks in his group. The value is, if you know one day before your competitors what the document will contain, you can move quickly to protect your shares," a source at a big EU lobby firm told this website.

Lobbyists also hire corporate intelligence firms to get clients what they want.

ETS & Network, a French corporate-intelligence-cum-lobbying company, has a sizeable office in Brussels.

Aegis, Ceis, Control Risks Group, Diligence, Geos, GPW and Kroll's modus operandi is to get staff — some of whom have a background in EU countries' or US intelligence services — to drop in to the EU capital from London or Paris to recruit individual lobbyists, journalists or retired EU officials on a project-by-project basis.

They task each of them to find out a separate piece of information, which is later collated into a final report that also uses material from similar work in other cities.

They do not tell their agents who else they have hired, their client's brief or who the client is and they get them to sign non-disclosure agreements on what they do.

"You find people who can penetrate certain circles and gather information and add a degree of analysis, people who have access to information or who can get it quicker than you can. If I have six months to do a sensitive case, I can be going to Brussels every two weeks to talk to people," a contact at one firm said.

A typical brief is to make an organigram about people who might influence an upcoming EU decision and the relationships between them.

The research involves private-eye-type analysis — who attended an important meeting, who went to university with a top politician.

If need be, Belgium also has plenty of private eyes for hire — 858 licensed ones according to its justice ministry.

EUobserver contacted a few of them to ask if they had done EU-related work. Nobody said they did. But Jan Claus, who runs Antwerp-based private detectives Claus & Partners, noted: "We would do it. No problem. We can make background checks, where someone has worked, their links to different companies. It's allowed under Belgian law to make background checks."

Private intelligence does not always target the EU. Sometimes lobbyists hire intelligence firms to get the skinny on other lobbyists. Sometimes EU institutions use them against big corporations.

A Paris-based contact at one intelligence firm said the commission has paid him to probe companies which transfer sensitive technologies to non-EU countries in a practice deemed to harm EU interests.

"Let's say it's the aerospace industry, or medicine. One [EU] contractor is working with a second [EU] contractor, but it also has a relationship with a third [non-EU] contractor and the commission suspects it is giving the second contractor's know-how to the third one to sweeten the deal ... The commission has no [formal] powers to investigate this themselves. So it hires someone like me to do a report on the sector. The fake report is 10 pages long, but the real one is a [confidential] annex which is two pages long," the source explained.

If all else fails, there is always out-and-out bribery.

The commission's anti-fraud office, Olaf, told EUobserver it investigated six alleged cases of corrupt EU officials between 2007 and 2011.

One unnamed EU official in DG agriculture was in June this year sentenced by Belgian courts to 40 months' jail.

The official had told companies in France and the Netherlands at what price on international commodities markets the commission would start to subsidise EU cereal exporters. Its "export refunds" programme is worth €300 million a year and can be exploited for insider trading.

EU officials' big wages are a prophylactic against graft. But its staff regulations can also protect people against repercussions.

In 2008, reporters from the British newspaper The Sunday Times, posed as Chinese lobbyists who offered a DG trade official, Fritz-Harald Wenig, a bung for advance notice of EU anti-dumping decisions.

Wenig was caught on tape suggesting they put money for him in a bank account which he could access after he retires.

But when the commission suspended him and fined him, the EU court in Luxembourg overturned its decision on a technicality and Wenig is now retired on full perks.

Quantifying the unquantifiable

There are clues out there to how much the EU intelligence market is worth.

A Berlin-based academic, Dieter Plehwe, in February said it is between €1.5 billion to €3 billion a year based on an estimate of 20,000 lobbyists each being paid €100,000 for their services.

EUobserver sources said a government relations contract, such as Burson-Marsteller's pro-Yanukovych work, can be worth €60,000 a month.

Crisis-management can be worth more. A credit card company was recently paying an EU lobby firm €125,000 a month because the commission threatened to wreck its business model.

There are about 50 law companies in Brussels which also lobby the EU. But if a senior partner at a British law firms bills you, it might cost the guts of €1,000 an hour, twice the cost of a partner at a lobby firm.

The EU is a tiny part of big corporate intelligence companies' work — 0.5 percent, a contact at one firm said. Intelligence companies charge clients €50,000 or more for a report. They pay their agents €2,000 or more for a couple of weeks' worth of moonlighting.

The fake Chinese lobbyists offered Wenig €100,000 to make the leaks worth his while.

But despite the clues, there is no hard number for the inside EU knowledge market.

About 5,000 lobby firms, trade associations, regional authorities, NGOs and in-house PR staff from big companies have told the commission's voluntary register how much they get for EU work.

But when Alter-EU, a coalition of pro-transparency NGOs, examined the register in June it said people uploaded so much bogus data it is a waste of time to add it up.

For its part, EUobserver identified 80-or-so Brussels-based lobby firms which file audited financial results at the National Bank of Belgium or other national authorities.

Their combined turnover is about €150 million a year.

But this number also comes with a big red flag.

For starters, the Belgian bank requires all "small" companies — defined as having sales of less than €7.3 million a year — to report EBITDA (earnings before interest, tax, depreciation and amortisation) but not turnover.

EBITDA is normally similar to turnover. But many EU lobbying firms have complicated international structures or outsource their services, which clouds the picture.

Many bill their EU work in offices in other cities in order to get around the Belgian taxman.

Dozens fail to report up-to-date figures despite being obliged to do so. "Some companies ... still have to fulfil the legal obligation to file their annual accounts," the Belgian bank's spokesman, Dirk Tuymans told this website in September, two months after the 2012 due date.

Some lobby firms in Brussels are also letterbox entities which exist so the parent company in Berlin or Paris can pretend to clients it is big on the EU.

And other ones exist primarily as vehicles for "self-employed" executives to charge fees to employers.

GPlus' accounts in London say that in 2011 it paid Soluzione Settembrini, a firm registered in the St Gilles district in Brussels, €480,000. Soluzione Settembrini is controlled by Gregor Kreuzhuber, a former commission spokesman who now works for GPlus on the Gazprom account.

His company also employs one other person. But the half-a-million-euro fee might make Kreuzhuber one of the best-paid lobbyists in town.

For his part, Burson-Marsteller's Earnshaw — who manages a lot more money than GPlus does in Brussels — also has a company, called David Earnshaw, registered in central Brussels. But his offshoot reported a more modest EBITDA of €165,723 last year.

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