Lobbying industry marred by questionable methods and ethics | World | DW | 05.03.2010
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Lobbying industry marred by questionable methods and ethics

Lobbying is an essential part of a democracy - used to inform lawmakers on different issues. But, is it being hijacked by multinational corporations and special interest groups that can pay to get their ideas across?

Image of a Mövenpick Hotel sign.

Germany's donation scandal involves a part owner of Mövenpick Hotels and two political parties.

Recently, Germany's pro-business Free Democratic Party (FDP) and the conservative Christian Social Union (CSU) were accused of accepting donations in exchange for a tax break for the hotel industry when it emerged that the two parties had received close to 2 million euros ($2.8m) from German billionaire August Baron von Finck through his company, Substantia AG. The recent value added tax (VAT) reduction for hotel stays from 19 percent to 7 percent will greatly benefit the Mövenpick Hotels chain, which is partly owned by the billionaire.

This donation scandal is an illustration of the pitfalls of campaign finance, and the quid pro quo relationship that exists between political parties and their sponsors. The case has brought the issue of lobbying in Germany to the forefront, and questions regarding the regulation of this industry stretch beyond the country's borders to Brussels where a good number of decisions affecting Germans are made.

Lobbying in the economic crisis

The scandal involving the FDP, CSU and von Finck demonstrates the connection between campaign financing and lobbying. However, lobbyists also rally when a certain industry faces more regulation and government restrictions. Corporate Europe Observatory Researcher Erik Wesselius told Deutsche Welle that increased spending of an industry that is set to be regulated "illustrates a fundamental problem if people spend a lot of money to manipulate lawmakers."

Image of Canary Wharf, London.

Lobbyists have flocked to Brussels on behalf of Britain's financial services industry.

This especially poses a problem for industries where multinational corporations are being pitted against smaller companies that have few or no organized groups lobbying on their behalf. According to Robert Schadler, Senior Fellow in Public Diplomacy at the American Foreign Policy Council, in the United States the financial crisis "affected lobbying in that while the financial crisis affects the whole country, it has highlighted a traditional tension frequently represented by Main Street versus Wall Street."

The current situation in the financial services industry demonstrates how lobbying can be unfair to those who cannot afford to get their views heard by lawmakers. "If the lobbyists all come from one side, you can imagine that the information that the decision makers get also becomes one-sided," Wesselius said.

Manipulation and misinformation

In the United States, President Obama's controversial healthcare reform plans have led to a rise in lobbying activity for this sector. The issue, which has been wrought with emotion and controversy, illustrates a new form of lobbying that is becoming more common in the United States - grassroots lobbying.

Schadler told Deutsche Welle that "one of the interesting things in the United States that the lobbying industry has done is spending a lot of money to energize segments of the American population and thereby pressure Members of Congress who are concerned about their reelection." Grassroots lobbying is currently very popular in the United States, in part because US members of Congress are elected for two-year terms. MEPs, who are elected for five years, are less likely to be concerned about reelection in the short term.

protest against healthcare reform in Washington D.C.

Grassroot lobbying is provoking strong sentiment on US healthcare reform.

The healthcare sector has used grassroots lobbying to provoke strong sentiment in the American population: "With healthcare, one sees a lot of partially either exaggerated or partially accurate sloguns and information that inflame electorates," Schadler said. This kind of lobbying also takes place in Europe when NGOs ask their members to write letters to their MEPs, but it is "less-developed than in the US," Wesselius said.

Front organizations are also established in Brussels to forward a particular cause. Wesselius cites the founding of the European Partnership for Energy and the Environment (EPEE) as an example. The EPEE, which at first glance resembles an environmental organization, was set up by the producers of cooling substances that contribute to global warming. Its website only mentions that cooling substances are good for the ozone layer. This is a perfect example of how the establishment of a front organization and the omission of essential information on their website are used by lobbyists to manipulate lawmakers and misinform citizens.

Regulation of the lobbying industry

One of the major differences between lobbying in the EU and the US is the requirement for US lobbyists who are paid to advance a particular cause to be registered. The lobbying disclosure register, which is mandatory in the US, contributed to the discovery of American lobbyist Jack Abramoff’s dubious financial activities.

Abramoff, Ralph E. Reed Jr., Grover Norquist, and Michael Scanlon lobbied against the interests of the Native American clients they were representing in the casino industry, overbilled them, and then split the profits. Abramoff’s illegal activities were uncovered because of information in the lobbying disclosure register, Wesselius said. He feels that making such a registry mandatory (the current one is optional) would lead to more transparency in the European lobbying industry.

"Only by knowing who is influencing policy can you prevent policy capture by specific interests," he added.

Author: Chiponda Chimbelu
Editor: Rob Mudge

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