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EU to probe Barroso's new job at Goldman Sachs

Martin Kuebler, BrusselsSeptember 12, 2016

Two months after former EU Commission head Jose Manuel Barroso announced his new position at US banker Goldman Sachs, the EU is investigating whether the job meets ethical standards. Martin Kuebler reports from Brussels.

A file picture dated 21 October 2014 shows then European Commission President Jose Manuel Barroso delivers his last speech as President at the European Parliament in Strasbourg +++ (C) picture-alliance/dpa/P. Seeger
Image: picture-alliance/dpa/P. Seeger

Jose Manuel Barroso, the former president of the European Commission from 2004 to 2014, is facing accusations that he has damaged the EU's "integrity and reputation" with his decision to join US investment bank Goldman Sachs.

On Sunday, European Commission President Jean-Claude Juncker announced he had ordered a probe into Barroso's new role at Goldman Sachs - the institution with strong links to both the 2007-2008 financial crisis and the Greek debt debacle, which destabilized the euro currency - to determine whether Barroso had breached EU ethics guidelines.

In his letter to EU Ombudsman Emily O'Reilly, Juncker said he would be seeking clarification from Barroso on his new responsibilities and the terms of his contract with Goldman Sachs. He also assured the ombudsman that Barroso would be treated as a lobbyist when received in Brussels, not as a former president.

Juncker's move came after widespread criticism since the announcement in early July that Barroso would serve as the bank's non-executive chairman and adviser on the impact of the UK's decision to leave the EU. At the time, Goldman Sachs said the hiring had "nothing to do with the outcome of the Brexit vote."

Barroso took the job 20 months after leaving office, well beyond the EU rules that restrict former commissioners from taking new jobs for 18 months. But the rules also stipulate that commissioners are obliged to act "with integrity and discretion" after their time in office, something that many contend the former Portuguese prime minister has failed to do.

"It's very hard not to interpret this move as the former Commission president swapping sides, against the EU," said Vicky Cann, a transparency campaigner for the Corporate Europe Observatory (CEO). "It will just compound the already high level of European skepticism that we already see."

'Challenging time for the EU'

Last week, O'Reilly, who in her role investigates complaints about misadministration in EU institutions, agencies and bodies, sent a letter to Juncker requesting clarification on the Commission's position on Barroso's appointment.

"Your predecessor's action has generated understandable international attention given the importance of his former role and the global power, influence and history of the bank with which he is now connected," O'Reilly wrote in her call for Juncker to take action.

O'Reilly also asked whether the Commission was considering issuing any guidance to Michel Barnier, a former EU commissioner and close colleague of Barroso, who is leading the European Commission's Brexit negotiating team as special adviser, when it came to meetings with his former boss. Though the EU's transparency rules cover meetings with lobbyists, they don't apply to meetings with special advisers - meaning any such meeting is unlikely to be recorded by the Commission.

"Mr. Barroso's move has generated concern at a very challenging time for the EU and particularly in relation to citizen trust in its institutions," she added, emphasizing that "former commissioners have the obligation to behave with integrity."

She also cited the public outrage sparked by the appointment, referring to a petition by EU staff calling for "strong exemplary measures to be taken against Barroso, whose behavior dishonors the European civil service and the EU as a whole." As of Monday, the petition addressed to the three presidents of the European institutions had collected nearly 140,000 signatures.

Barroso's new job is "a very severe attack on the trust of EU citizens in their institutions and the EU project, which is already very low," an EU staffer behind the petition told DW. "We don't need this - absolutely not."

"It is, at the worst possible moment, a disastrous symbol for the EU and a gift horse for the europhobes that a former Commission president is associated with the unbridled and unethical financial values that Goldman Sachs represents."

Commission took too long to act: transparency campaigners

The ethics probe was welcome news to transparency organizations on Monday, though many have criticized the Commission and Juncker for waiting more than two months to respond.

"This should have been the first thing they did when this case first came to light," said Cann, of the COE. She pointed out that Juncker could have taken the decision back when he first heard of the news from Barroso, but instead "he chose to sit on his hands for two months.

"This is the result of public pressure," she told DW. "The Commission has been pushed on the back foot on this by public opinion, by the various petitions, by [members of the European Parliament] and by some very robust comments by the European ombudsman, who's been very proactive on this."

"It's a very good step that they've taken, it sets an important precedent," said Carl Dolan, EU director for Transparency International. But the fact that the Commission took so long to act "makes it look a bit like they were forced into it."

Dolan said the work of the ethic committee will need to be "swift and transparent," and he stressed that the group's minutes, advice and opinion should be published as soon as possible - "within the next two or three weeks."

Both Dolan and Cann think the current 18-month "cooling off" period should be increased to at least three years for commissioners and, in the case of former presidents, five years. They also believe the regulations should rule out all jobs that have a likelihood of provoking conflicts of interest, and ban all lobbying directed at EU institutions.

Dolan believes there's a good case to be made against Barroso for breach of integrity or discretion, and thinks financial sanctions are a possibility. Those could include the possibility of the former president being stripped of his EU pension or transition allowances, which are paid to commissioners for up to three years after the end of their mandate.

But Dolan thinks that any financial hit won't be first in Barroso's mind. "The financial incentives are important, but perhaps more symbolic than anything else," he said. "I think the main deterrent here is actually Mr. Barroso's reputation."