SWEET tax deals by governments for multi-national corporations and laws designed to minimise their tax liabilities is turning the spotlight on the multimillion lobbying industry.
Earlier this year, Irish citizens learned that the Irish Financial Services Centre had their own representatives, the Clearing House Group, within the Department of the Taoiseach, being serviced by his staff with meetings attended by senior civil servants from various departments including finance.
The extent of their influence was gleaned from Freedom of Information requests by MEP Nessa Childers, whose demand that their minutes be made public has been partly met.
Now, the European Parliament has taken on board her call to ensure that financial sector lobbying resulting in tax avoidance and aggressive tax planning must be made transparent — and the EU members must act on this report.
The EU is currently revising its lobbying rules designed to make the activities of the 20,000 or so lobbyists in Brussels know, while Ireland is putting in place a code to deal with this growth industry.
Like Brendan Howlin, the public expenditure and reform minister, the EU says it wants to go beyond curtailing criminality and towards transparency, where the public will be better informed of who is influencing the policies that influence their daily lives.
Lobbyists are not confined to the usual bodies the public automatically thinks of — alcohol, tobacco, farmers, and bankers for instance. It covers all those diplomatically known in the industry as “public affairs” — in-house and independent consultants who work to influence policy for their clients.
The world’s biggest — most are American — public affairs and public relations houses — are in Brussels, but increasingly law firms can be classified as lobbyists. Lawyers with their own codes of confidentiality are creating their own layer of difficulty when it comes to transparency.
Lobbyists also come from consumer groups, non-governmental organisations (NGOs), churches, think tanks, and foundations and the host of bodies that turn up in Brussels looking after patients and consumer bodies, but are in fact funded by industry and representing their interests. NGOs range from the well-known and respected, such as Oxfam and Transparency International, to smaller bodies, some part-funded by the European Commission, and others funded by groups of citizens with a political agenda.
There is also the myriad of publications, aimed at specialist audiences in business and industry, who employ journalists to research and write with a question mark over where the line is drawn between traditional, journalistic, public interest, and vested interest.
Much of lobbyists’ time is spent not necessarily bending the ear of those making or voting on policy, but on keeping a watchful eye to know as far in advance as possible what is being planned and thought. And even when the politicians have agreed a law, the finishing details can offer lots of opportunity for vital tweaking. As the regulations that will allow it to operate as part of the system are put together, it goes through what is known as the comitology procedure. This consists of committees of national experts chaired by the commission and involving the European Parliament.
The commission’s policy is not to allow lobbyists past the door, but as in Washington and every European capital there are other ways, including hosting conferences where those in charge of all kinds of policies are invited and rub shoulders with those who would like their views taken into account. There are also official channels for this — such as the public consultation the commission launches before drawing up the outline of legislation where submissions from all and sundry are sought.
Five years ago, the commission launched its first lobby register and then two years ago, joined with the European Parliament to launch a joint transparency register to which 5,500 lobbyists have signed up to voluntarily.
The increase in the Parliament’s powers, where they have equal say in almost all issues with member states, has seen an explosion of the “public affairs” business in Brussels, increasingly focused on the MEPs. A recent study revealed just how much MEPs rely on lobbyists and their industry experts with many of the thousands of amendments MEPs submit to draft legislation having been drafted by lobbyists.
Grappling with the huge complexity of revising and shutting loopholes in the current lobbying rules is not easy,
Commission vice president Maros Sefcovic wants it to go further, and give citizens access to a wide range of information.
“Citizens have a right to know: How the European institutions are preparing their decisions? Who participates in preparing them? Who receives funding from the EU budget? and what documents are held or produced to prepare and adopt the legal acts? They have a right to access those documents, and make their views known, either directly, or indirectly, through intermediaries that represent them. If they use all these instruments at their disposal, citizens can be much better informed than ever before. Transparency facilitates scrutiny and hence accountability.”
But striking a balance between data protection, avoiding undue influence, welcoming input, and keeping administrative costs down is not easy. One idea is to have a number of registers to respond to the different groups, such as lawyers working for their clients on competition cases or lawyers lobbying for changes in policy on behalf of their profession or their clients. Lawyers do not always want to declare for whom they are working, arguing it’s a matter of confidentiality.
Making the register mandatory is another thorny issue. The mandatory register in the US has many loopholes, the commission believes, and applies only to individuals who have had more than two contacts with a cabinet official over a certain period of time, and which has dedicated 20% of its time to lobbying. The result is that the lobbying firms work just under the 20% threshold, and large companies divide up the work in a lobbying campaign so nobody qualifies to be on the register. A US bar association report pointed to the deficiencies: “To date there have been no formal enforcement actions filed and only three formal settlements entered.”
Sefovic said: “I am not convinced we should copy paste a model that does not actually provide as much information and coverage as the one we have designed ourselves”.
He appears to be indicating that he favours keeping the register voluntary — something transparency lobbyists argue against with Alter-EU calling for all officials to publish their lobbying contacts online, as the While House does and which may be extended to cover congress.
Other issues to be tackled are the revolving door where those working for the institutions and so privy to what can be very valuable information are recruited by the industry they have been regulating.
The issue of asking lobby groups to say how much they receive and from whom poses difficulties, and as a result there will be some changes. For instance, NGOs are asked to give their full budget and show where it comes from. This is frequently useful in unmasking who is behind organisations, for instance patients’ groups where one can see most of the funds come from a particular medical company.
*EU’s transparency register: http://europa.eu/transparency-register/