Business, EU – Baltic States, Legislation

The true figure of representatives from diverse NGOs, private firms, law companies and trade unions which are in daily contact with the EU officials –mostly the commission as the only legal-draft-proposing institution in the EU – is unknown because of the lack of regulation. Besides, the practical activity of various kinds of lobbyists in Brussels is not subject to regulations either. But then at the end of June 2008 important steps had been taken by the Commission: a catalogue of bodies seeking to influence the EU policy formation was opened for registration.

This register is a voluntary arrangement; however it intends to show lobbyists’ interest in a more transparent way. This initiative at the same time intends to increase accountability over all the lobbyists working around the Commission – the main EU institution entitled to propose new EU legislative acts.   

Short history and the US practice

Jack Abramoff.

Brussels’ biggest lobbying firms have agreed to a US-style regulation regime in January 2006, after several financial scandals sweeping across the Atlantic which involved criminal case against a Washington lobbyist, Jack Abramoff. At that time the European Public Affairs Consultancies’ Association (Epaca) for the first time dropped its longstanding opposition to registration and public disclosure of clients. The Epaca chairman, John Houston said on that occasion to the Financial Times: “We have no problems with declaring our clients and registering. As to whether fees should be declared, we have an open mind” (30 January 2008, p.2).

Epaca unites about 30 consulting-representative companies, including some important global ones, which unites a small fraction of about 600 individual lobbyists out of about total 15 thousand. Precise figures are unknown: on one side because of lack of adequate regulations, on another, because the “lobbying group” unites various professions, e.g. lawyers, accountants, NGOs, think-tanks and trade unions. For example, the EU officials leaving their terms in the EU headquarters often turn their knowledge and connections for “consultative work”; however they need the Commission permission, which is rarely denied. Latest data for the lobbyist’s organisations collected in the European Public Affairs Directory, 2004 showed 2.081 representative offices (and 1.834 in 1996). The number of major corporations with representative offices in Brussels has been more stable during the last decade at about 315. 

A coalition of 140 groups advocating lobbyists’ reform, Alter-EU discussed during 2006-07 with the Commission and Epaca a common code and set up an independent European Public Affairs Council. In February 2006 Siim Kallas, the EU Administrative Affairs Commissioner published a consultation paper on lobbying and transparency. The commissioner explained that he personally preferred compliance-based regime to a rule-based one. Self-governing codes of conduct were always present however covering only a fraction of those 15,000 lobbyists working within the EU system. 

First attempts to regulate lobbyists’ activity among the EU institutions have been made soon after the first elections to the European Parliament (EP) in 1979. Pressure on the members of the parliament (MEPs) have been generally inefficient as this institution for about two decades performed purely consultative functions which in reality did not affect legislative process. Instead, many MEPs and their associates have close ties to companies and corporate interests. These “interests” are often undeclared when MEPs take part in drawing up legislation while taking part in EPs committees. The EP’s approach to lobbying activity is seen in the EP’s Rules of Procedure: lobbyists are obliged to register with the EP and respect the code of conduct published in the Rules, Annex IX (3). Lobbyists are issued specially marked passes which are subject to annual renewal. Out of about 15,000 lobbyists some 4,435 are officially registered with the EP. 

The US experience is wellworth mentioning as American system is much more detailed and about half a century old. The US Federal Regulation of Lobbying Act was first introduced in 1946; then in 1995 the Lobbying Discloser Act was adopted. Under the US system lobbyists must file both details of their clients and fees received. In contrast to that, lobbyists in Brussels (besides those working in the parliament) have been unregistered until recently. In recent decades several major US companies opened offices in Brussels, e.g. Microsoft, General Motors, Procter&Gamble, etc.

Lobbyism and transparency

The lobbyists’ activity representing particular interests of their organisations towards the EU officials, i.e. EU lawmakers in the Commission and other Union’s bodies, consists of preparing and circulating letters, information or position papers and organising various promotion events. For example, the Commission respects the work of various NGOs and wants to know more on their activity as the EU provides about 1 billion euro a year for NGOs activity.

Such lobbying activities are regarded as an important part of a democratic system and ensure that the EU policy-makers are aware of how their decisions (as well as adopted regulations and directives) will impact different sectors of economy and population in the member states.

The new European register of interest representatives, which was both assisted and welcomed by the lobbyists’ organisations in Brussels, is intended to bring more transparency to their activity.  

See: http://webgate.ec.europa.eu/transparency/regrin/welcome.do?locale=en)

This Register, which was formally opened for registration on 23 June 2008 is prepared within the context of the European Transparency Initiative and intends to show the EU citizens what interests are influencing the EU decision-making process and resulted legislation. 

The registration is entirely voluntary but it provides the lobbyists an opportunity to demonstrate their strong commitment to transparency and the full legitimacy of their activity.

Register and the Code of Conduct

Being registered shows that these lobbyists’ organisations would provide citizens and all those interested with detailed information on which specific or general interests they represent, how they influence the legislative process and what resources are used to this end. So, finally it would be clear to all who is behind the lobbying and who is financing “the lobbying initiative”. All information in the Register will be made public. 

The Register is an experimental initiative of the European Commission. For a trial period of one year the Commission will test the practical aspects of the Register and find out how it will proceed further on.

While registering, “interest representatives” commit themselves to the elements of the Code of Conduct. That means that “interests” listed in the register must sign up a code of conduct governing their dealings with Commission staff. The “conduct rules” ensure that all lobbyists are “following the same code and are subject to the same independent scrutiny, enforcement procedures and sanctions; there are no privileges attached to registration except for the promise of an e-mail alert when public consultations are launched by the Commission”.

See: http://ec.europa.eu/news/justice/080623_1_en.htm

Already within the first three days 68 “interests” were registered. If the process proceeds with this tempo, it would take about 3-4 months to register most of the lobbyist’s organisations working in Brussels.   

So far the Register is valid only for the lobbyists working with the Commission. It is expected to make the same register for those working for the Council and the EP.

The new Code of Conduct for Interest Representatives contains seven basic rules, specifying the rules of behaviour for lobbyists while representing their interests. It is important to mention the definition of “interest representation” (or lobbyism); it is “an activity carried out with the objective of influencing the policy formulation and decision-making process of the European institutions”.

See: https://webgate.ec.europa.eu/transparency/regrin/infos/codeofconduct.do

However, this definition does not include the following three activities:

• Concerning legal and other professional advice, in so far as they relate to the exercise of the fundamental right to a fair trial of a client including the right of defence in administrative proceedings carried out by lawyers or any other professionals (competition issues and cases submitted to the Court of Justice are also excluded);
• Concerning social partners as actors in the social dialogue (trade unions, employers associations, etc.). However, when actors activities fall outside the role conferred on them by the Treaties, they are expected to register in order to guarantee a level playing field between the represented interests;
• Concerning activities in response to the Commission’s direct request, e.g. for factual information, data or expertise, invitations to public hearings or participation in consultative committees, etc.    

The lobbyists must follow the following principles in their activity: they are expected to apply the principles of openness, transparency, honesty and integrity. These “conduct principles” are legitimately expected of the lobbyists by citizens and other participants in the decision-making. 

Seven “golden rules” for the Code of Conduct

The lobbyists or “interest representatives” must always follow the following rules:

1. Identify themselves by name and by their activity they represent;

2. Provide correct representation not to mislead third parties and/or the EU staff;

3. Declare the interests and the clients or members they represent;

4. Ensure that the information they provide is unbiased, complete, up-to-date and not misleading;

5. Not to obtain or try to obtain information, or any decision, dishonestly;

6. Not to induce the EU staff to contravene rules and standards of behaviour applicable to them;

7. If employing former EU staff, respect their obligation to abide by the rules and confidentiality requirements which apply to them. See e.g. Rules of professional ethics for members and staff of the European Commission: http://ec.europa.eu/civil_society/code/index_en.htm. 

Breaches of these rules by lobbyists may lead to suspension or exclusion from the Register following a Commission administrative process (with due respect to proportionality and the right of defence).

Registered “interests” are informed that their participation in public consultations will be published on the internet together with the identity of the contributor, unless the latter objects to publication of the personal data on the ground that it would harm his/her legitimate interests. The Commission may, upon request and subject to the provisions of Regulation (EC) No 1049/2001 on access to documents, have to disclose correspondence and other documents concerning the “interest” activities. 

Note: Information on the effect of the Code and the Register on corporate life, see in our BC’s next publications.