EU Revolving Doors (II): European Ombudsman Investigation in the case of Petra Erler / Günther Verheugen

Previous article on EU Revolving Doors (I) / Günther Verheugen, Honoris Causa in Romania: Go Frack Yourself, Activists Said

I was mentioning in an earlier post that the European Ombudsman has issued a press release last week that it will investigate the formal complaint addressing the way in which the European Commission has handled “revolving doors” cases, stemming from the original complaint filed last year by Corporate Europe Observatory, Greenpeace, LobbyControl, and Spinwatch.

According to EU terminology, the term “revolving doors” is used to describe a move by public sector staff to closely linked jobs in the private sector, or vice versa. The EU Ombudsman shall address potential cases of conflicting interests within the European Commission during the last three years and identify cases that warrant inspection.

So let’s see what were the complainants direct and indirect references to Günther Verheugen, recently awarded the Doctor Honoris Causa at Babes-Bolyai University in Romania this week, an initiative welcomed with protests from activists inviting the former EU Commissioner to: “Go Frack Yourself”.

To frack is not only a mere invective, but a direct reference to the action of hydraulic fracking in mineral exploitation. Industrial fracking or fracturing is used in the extraction of petroleum or natural gas such as shale gas. While in France, they have a ban on extraction of shale gas despite heavy industrial lobby Total CEO calling recently for shale gas ban lifting and Hollande is still resisting this temptation), in Romania PM Victor Ponta turned around 180° as compared to last year public debate and asserted that he is highly in favour of shale gas extraction and is interested in developing key partnerships with Chevron, for instance.

Could this be part of the majestic deal he has with President Traian Basescu in maintaining a formal institutional collaboration in exchange for Chevron interests, Basescu is reportedly a declared fan of industrial partnerships such is the case with Chevron in shale gas extraction or Rosia Montana Gold Corporation in the case of gold exploitation?

In the case of shale gas extraction, imagine for instance what would become of Baile Felix Resort near Oradea or other resorts sentenced to death by shale gas fracking? No public debate whatsoever or at least no formal public debate.

Back to Verheugen and the Ombudsman Complaint, I shall quote hereafter the relevant excerpts related to his lobby involvement (full text of the complaint available HERE):

Case: Petra Erler. “In February 2010, Dr Petra Erler, who was Head of Cabinet to Commissioner Verheugen (DG Enterprise and Industry), left the Commission. In April 2010, alongside Professor Verheugen, she established the European Experience Company (EEC) which offers its clients “creative solutions and the best strategy for your success in dealing with European institutions”. Petra Erler became Managing Director of the European Experience Company, while former Commissioner Verheugen is a 50 per cent shareholder. Yet Petra Erler only applied for authorisation from the Commission to undertake this activity on 30 August 2010, at least four months later, in contravention of the requirements of Article 16. Her belated application appears to have been prompted by media coverage of her case. In her application for authorisation she writes: “I regret if I have not fully complied with art 16 staff regulation, since I was not aware that this duty was applicable to me and unfortunately was also not made aware.” The Commission’s reply to Dr Erler’s request for authorisation says “we take note of the regret you have expressed regarding the late notification of this new activity…”

There is no evidence that this failure was met with a sanction, despite the seniority of Petra Erler’s role at the Commission, the controversial nature of her new activities, the publicity that this case attracted at the time, and the requirement that the Commission should ensure full adherence to the rules by all staff at all times. Additionally, DG Enterprise and Industry is a DG where concern about conflicts of interest should be taken especially seriously considering the nature of its work.  According to the EEC’s own website, the company undertakes activities on behalf of clients, such as: “intensive management seminars … in cooperation with experts from European institutions; analytical background papers and strategy recommendations in the area of EU-policy; support for your public relations endeavours in European affairs”.

We note that the EEC’s website also says that “We will not engage in any kind of lobbying activity. We are committed to dialogue, and believe in the right strategy and the strength of the argument.” We further note that Petra Erler tells the Commission in her application that “the company is and will not be engaged in any lobby activities”. Yet, the European Transparency Register describes lobbying as “activities carried out with the objective of directly or indirectly influencing the formulation or implementation of policy and decision-making processes of the EU institutions”.

It is hard to see how the work of the EEC, as described above and on its website, would not fall within this definition of lobbying. We consider that this should have provoked significant concerns about the risk of a potential conflict of interest arising in this case. Yet the Commission wrote to Petra Erler that they were “pleased to authorise this activity”, attaching two conditions to this authorisation: she should not establish contact with or approach the services that came under the authority of Commissioner Verheugen or any former colleagues who were members of the cabinet; she should not advise companies who have been addressees or beneficiaries of any individual decision prepared by the services under the authority of Commissioner Verheugen

We consider that the conditions applied to Petra Erler were too narrow and would not prevent the risk of conflicts of interest from arising. Commissioners’ senior staff including Heads of Cabinet are surely involved in a wide number of issues which stretch far beyond the scope of their immediate portfolio. Yet there were no wider restrictions or a cooling-off period placed on her to account for this.

Our concern that this revolving door case was not treated as seriously as it should be, appear to be backed up by the views of the staff members of the Joint Committee / COPAR who also strongly objected to approval being given in this case. The meeting of the ‘Joint Committee’ or COPAR held on 5 October 2010 discussed a specific case where an official had applied for permission to undertake a new activity under Article 16 of the Staff Regulations; these minutes have been released via access to documents. At the conclusion of the meeting on 5 October 2010 which included a lengthy discussion on this case, the staff representatives on COPAR gave a unanimously negative opinion about the approval of this case, citing concerns about possible conflicts of interest and how ambiguities about the case had not been sufficiently tackled. This led to the minutes of the meeting recording that there was a divided opinion (“un avis partagé”).

Yet a mere two days later on 7 October 2010, Michel Magnier at the Commission wrote to Petra Erler to say that her proposed new activity was approved, subject to the restrictions outlined above. We consider that it was maladministration that the Commission did not take into account the strong views expressed by the staff representatives of COPAR by either refusing to approve the proposed activity, or at least taking some more time to reconsider it in the light of the significant objections raised. This maladministration is especially worrying in the context where there is a good deal of ambiguity about the terms ‘consultancy’ and ‘lobbying’ which are at the heart of this case and which should have been fully probed.

After all, one person’s ‘lobbyist’ is another person’s ‘consultant’. The staff representatives of the committee were right to raise this point and to expect a thorough response from Commission officials. In response to a letter sent by Corporate Europe Observatory on 11 June 2012 regarding the case of Petra Erler, the Commission replied on 13 September 2012 rejecting the suggestion that their application of Art. 16 was inadequate or that maladministration had occurred.

They emphasised that the “right to work is an overriding principle” including “to pursue a freely chosen or accepted occupation” and “to make the fullest use of the skills and experience the person has acquired”. The Commission appears to ignore the distinction between an individual’s chosen or accepted occupation and an occupation that is acceptable vis-a-vis their legal obligations, undertaken with prior informed consent as part of undertaking the work of a public official, to abstain from situations that create potential conflicts of interest. In terms of acceptable occupations, immediately becoming a lobby consultant for hire by any private client, on dossiers previously worked on in an official capacity, is clearly one such situation.

Nonetheless, the Commissions argues that as Art. 16 “is an exception to this general principle and must thus be interpreted in that light,” a “blanket general prohibition on future employment with other employers in the same or a related field would be contrary to this general principle”. This response seems misdirected, as the Complainants have at no point suggested such a blanket or general prohibition.

The Commission further argues that having taken into account the opinion of the various stakeholders (DG Enterprise, the Secretariat General, the Legal Service and the Joint Committee) and “Ms Erler’s declaration that any form of lobbying of the Commission in the course of her new activity would be excluded, the Appointing Authority took a balanced decision that imposed restrictions complying with the general principle of proportionality.”

They further stated that the restrictions were substantial, and that Corporate Europe Observatory’s proposal for wider restrictions “would impose an unreasonable burden upon her which would infringe article 16 of the Staff Regulations and her fundamental right to work.” The problem with this response is the apparent failure to consider whether Erler’s new activity would be “directly or indirectly influencing the formulation or implementation of policy and decision-making processes of the EU institutions”, but instead taking at face value the statement that she would not be involved in any form of lobbying. Furthermore, simply stating that a balanced decision was taken does not assuage concerns about the rapidity with which it was taken after serious objections were raised by one of the key stakeholders, the Joint Committee, of which the Commission notes that “the members representing personnel were not in favour.” Nonetheless, the Commission simply asserts that “the opinion of the Joint Committee is not the conclusive element in a Decision.”

With respect to the four month delay in applying for permission, the Commission states that in cases of non-compliance with statutory obligations, “the situation is examined to ascertain whether this is the result of administrative oversight on the part of the person concerned or is of a more serious nature. Several criteria are examined: good or bad faith, the existence of damages etc”, and that Erler’s case was not considered to fall into the more serious category. It has already been noted that Ms Erler had stated that she was not aware this duty was applicable to her and “unfortunately was also not made aware”. Given these facts, it is difficult to see how good practice and full implementation of the Staff Regulations will ever become a reality, if the Commission neither ensures its staff are made aware of their obligations, especially at such a high level, nor establishes any repercussions whatsoever when they are not met.

Nonetheless, with respect to all points raised in the letter, the Commission rejects the accusation of maladministration as completely unsubstantiated, and asserts that “you have not provided any evidence to show and inadequate implementation of Article 16”. The Complainants find the Commission’s assertions to a be an unsatisfactory response to the substantive evidence presented and concerns raised. […]

Petra Erler was Head of Cabinet to Commissioner Verheugen until February 2010. In April 2010, alongside Professor Verheugen, she established the European Experience Company which offers its clients “creative solutions and the best strategy for your success in dealing with European institutions”. The Commission wrote to Dr Erler that they were “pleased to authorise this activity”, attaching two conditions to this authorisation: she should not establish contact with or approach the services that came under the authority of Commissioner Verheugen or any

former colleagues who were members of the cabinet; she should not advise companies who have been addressees or beneficiaries of any individual decision prepared by the services under the authority of Commissioner Verheugen. The Complainants consider that the conditions applied to Dr Erler were too narrow and would not prevent the risk of conflicts of interest from arising. Commissioners’ senior staff including Heads of Cabinet are likely to be involved in a wide number of issues which stretch beyond the scope of their immediate portfolio. Yet there were no wider restrictions or a cooling-off period placed on Dr Erler to account for this.

This is especially concerning considering that the staff representatives of the Joint Committee who were consulted on this case gave a unanimously negative opinion on it, citing concerns about possible conflicts of interest and how ambiguities about the case had not been sufficiently resolved. This led to the minutes of the meeting recording that there was a divided opinion (“un avis partagé”). Yet a mere two days later on 7 October 2010, Michel Magnier at the Commission wrote to Petra Erler to say that her proposed new activity was approved, subject to the restrictions outlined above”.

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About Cristina Popa

Cristina is a WordPress blogger who regularly writes or shares updates on media, public affairs and various topics of interest. You may follow her on Communication for Development WP blog or Twitter @CristinaPopa0
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