March 18, 2011 / 8:58 AM / 9 years ago

UPDATE 1-SPECIAL REPORT-How lobbyists rewrite Europe's laws

For PDF: link.reuters.com/qud68r (Updates with Scicluna comment in first section, Strasser spokesman's comment in section "Turn a law on its head") * Lobbying a growing trade, helped by bankers

* ‘Normal’ practice in Brussels would shock Washington

* Few MEPs see conflict of interest in second jobs

* One MEP: I don’t get money or women, just champagne

By John O’Donnell

BRUSSELS, March 18 (Reuters) - Few people have taken Klaus-Heiner Lehne up on the invitation posted on his website to find out more about “Europe, politics and me”. If they did, they might be surprised how much the 53-year-old German fits into his working week.

At home in Duesseldorf, Lehne is a partner at law firm Taylor Wessing. Every Friday he works at the firm’s offices, minutes away from the designer shops of the city’s leafy Koenigsallee. Lehne’s firm advises the business elite of Germany’s most economically powerful state, once home to coal and steel barons and now to many of the country’s biggest industrial companies.

For the rest of the week, you’ll find him in Brussels, where he is a member of the European Parliament (MEP). There, he co-writes business laws, including, in the past, EU rules for company mergers and takeovers, corporate accounting, and investor rights.

A conflict of interest? Lehne doesn’t see any.

“It would be a lie to say that I don’t profit professionally from the fact that I have been active in politics over a long time period,” he concedes. But he defends his dual role and plays down the income from law. “It strengthens independence,” he says, by securing him a job after politics.

Lehne’s situation is far from unique. Many of the European Parliament’s 736 members keep close ties or even employment with industry during their five-year stint as legislators.

Take Edward Scicluna, who sits on the parliament’s Economic and Monetary Affairs Committee which wrote laws for hedge funds last year. He is also the non-executive chairman of two investment funds run by British bank HSBC. Elmar Brok, a parliamentarian who negotiated the main law governing the EU, the Lisbon Treaty, also works for Bertelsmann. Its late German owner and Brok’s one-time paymaster, Reinhard Mohn, aspired to shape the so-called European project.

Both defend their dual roles. Neither feels compromised. “It is not true that I drafted the law on hedge funds, nor did I table any amendments,” says Scicluna. “The investment funds are equity and bond funds for small savers and pensioners for which HSBC is the manager, and my relationship with HSBC is no different from any depositor whose money is administered by a bank.”

“There are some members of parliament who have far, far, far higher income from side jobs,” says German MEP Anja Weisgerber, who also has a second job, with corporate lawyers GSK Stockmann.

GSK, where Weisgerber works alongside Theo Waigel, the former German finance minister known as father of the euro currency project, is explicit about the benefits to clients. “We follow European Union law-making with special interest,” it writes on its website. “Many of our professionals have, because of their involvement in Europe’s bodies and institutions, a personal stake in the successful development of ... financial markets.”

For Brussels insiders, this is normal. But Bruce Stokes, who has studied the growth in EU lobbying for the German Marshall Fund, a Washington-based think tank, says it surpasses anything he has seen in Washington, itself famed for the reach and power of industry to influence policy.

“I was shocked when I found out about MEPs holding down second jobs,” says Stokes. “I cannot think of any comparable conflict of interest in Washington.”

The influence of lobbyists covers all industries, but at the present — as Europe tries to push through bank reforms in the wake of an economic crisis that has cost 4.6 trillion euros ($6.5 trillion) in public aid and guarantees — the financial sector’s voice is particularly keen to be heard. Is it time the close relationship between MEPs and big business came under increased scrutiny? Stokes thinks so. “Faith in the democratic system depends on the perception that it’s fair,” he says. “Does it smell fair? As an American, no. I think it smells to high heaven.”

INTO VACCUUM, LOBBYISTS RUSH

Many of Europe’s citizens know their parliament only as the inventor of rules dictating the size of bananas or width of tractor tyres. Few are aware it now decides most laws affecting business as well as a range of economic reforms.

Public interest in the powerful institution has never been high and may be waning. Turnout at European elections dropped over the last decade, watered down by new EU entrants like Poland and Slovakia where fewer than three in 10 cast their vote. Even in countries like Germany, one of the EU’s founding members and its biggest state, turnout slid to a modest 43 percent at elections in 2009 from 45 percent 10 years earlier.

Even some MEPs seem uninterested in the club they’ve joined. While many are active, others are rarely seen in the warren of corridors that lead to their cramped offices, most equipped with a sofa bed, shower and small side-room for their assistants.

Romanian soccer tycoon Gigi Becali, who was arrested shortly after his election on accusations he ordered bodyguards to kidnap three men he suspected had stolen his car, has turned up for only 30 percent of the parliament’s votes on new laws, according to votewatch.eu, a website that follows lawmakers.

But as voter interest drifts, lobbyists and big business have become increasingly active in the EU’s political capital, targeting a core group of parliamentarians who have been left by absentee colleagues to write law for Europe.

GROWING FREELY

Last year, more than 4,700 lobbyists registered for an identity card — brown to distinguish them from the white ones regular visitors use. The increase has been disguised by the absence of reliable records, according to Alter EU, a group that is pressing for greater transparency. It puts the number of Brussels lobbyists at 15,000.

The rise of the Brussels’ lobby has come as relations between industry and parliamentarians have tightened, says the German Marshall Fund’s Stokes.

It’s no surprise that a boom has accompanied Europe’s efforts to reform finance. Financial services make up about 6 percent of the EU economy but account for a far larger share in countries like Britain, Ireland and Luxembourg. About half of profits at individual banks end up in the pay packets of staff — and some in the hands of its growing lobby.

Brussels is not the only place lobbyists set out to influence lawmakers and mould legislation. But they do it with considerably more freedom here than in, say, Washington. Members of Congress on Capitol Hill are confined by a strict code that forbids paid-for trips and meals. Lobbyists there must register how much they spend every three months, saying whom they visited and what was discussed. This information is posted on the internet, detailing everything down to the names of those involved.

Brussels’ voluntary register, where some firms claim to have spent no more than the cost of a taxi ride to the local airport over the course of the year, is often ignored altogether by local lobbyists.

Yet lawyers from companies and industry bodies now routinely write the amendments that European parliamentarians insert into laws on everything from controlling poisonous chemicals to hedge fund speculation.

TURN A LAW ON ITS HEAD

It’s a practice Lehne describes as “completely usual” in Brussels: “It’s normal. I don’t have any problem with that. The deciding factor is whether I as a parliamentarian can put my name to it. It is not the case that everything that comes from the lobby is bad per se.”

Lehne says he would even consider amendments from his law firm’s clients although such a request has “practically never happened.

“I would look at that proposal just as I would every other,” he says. “I would decide if it was good or bad. Why should I reject it on principle? That would be nonsense.”

Weisgerber, who was involved in rewriting EU legislation to control the use of dangerous chemicals, is also used to receiving ready-made lobby amendments. “It does happen,” she says. “I don’t see anything wrong with that. I often change or modify them. The majority, you write yourself.”

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