Barroso’s new job at Goldman Sachs angers EU – MEPs call for sanctions over former Commission chief

Former European Commission President José Manuel Barroso’s move to join Goldman Sachs International has set off a furious reaction among some EU politicians and watchers, and generated renewed interest in how to deal with potential conflicts of interest when top Commission officials leave and enter the private sector.

Barroso, who was prime minister of Portugal from 2002 to 2004 and the Commission’s president between 2004 and 2014, was appointed last Friday as chairman and a senior adviser at the international arm of the U.S. investment banking powerhouse. He will move to London to advise the bank on the U.K.’s negotiations to leave the European Union.

“These shameful revolving doors between politics and business foster doubts on the integrity of democratic politics,” said Sven Giegold, a Green MEP. “Barroso’s quick change-over damages the reputation of the European Commission.”

 

Jean Quatremer, the EU affairs correspondent for the French daily Libération, was harsher. In an opinion piece, he wrote: “Barroso has given Europe the finger.”

Even a trade union of EU staffers, Unity Union, said his appointment would “discredit our institution.”

According to an EU diplomat, the current Commission President Jean-Claude Juncker was not told in advance and “probably [he] was not happy,” but the two men called each other after Barroso’s appointment was announced.

“As a general rule, President Juncker does not wish to comment on decisions made by a predecessor,” said Margaritis Schinas, the Commission’s chief spokesperson, as he confirmed Juncker had not been aware of the move.

Despite the indignation, Barroso has not breached any revolving-door rules of the institution he used to lead.

Rather, what seemed to irk many EU insiders was his comment to the Financial Times on how he can be an asset for the Wall Street bank in navigating its ways through the Brexit situation.

“Of course I know well the EU, I also know relatively well the U.K. environment,” the FT quoted Barroso as saying, adding “if my advice can be helpful in this circumstance I’m ready to contribute, of course.”

Barroso is not a banker by profession but as a former president of the Commission he has deep knowledge of and ready access to EU officials, diplomats, and national leaders, which he can tap into to help Goldman Sachs.

Call for sanctions

In a statement Monday, the French Socialist delegation to the European Parliament called for sanctions on Barroso by cutting his pension from the Commission when he reaches 65 years of age. He is now 60.

 

Such a penalty is possible under article 245 of the Treaty on the Functioning of the EU, which says European commissioners must “respect the obligations arising therefrom and in particular their duty to behave with integrity and discretion as regards the acceptance, after they have ceased to hold office, of certain appointments or benefits.”

In case of a perceived breach of this rule, the Commission or a simple majority of countries within the Council of the EU can launch a legal procedure against Barroso. When he was appointed Commission president he pledged to the European Court of Justice to uphold his duties according to the Treaty.

A diplomatic source told POLITICO it was probably too soon for the Council of the EU to discuss the matter. As for the Commission, it neither announced nor ruled out the possibility of issuing a legal opinion on the matter at a press conference Monday.

Goldman Sachs International has a complicated history with EU officials. Mario Draghi, the president of the European Central Bank, Carlos Moedas, the new Portuguese commissioner for research, science and innovation, and Mario Monti, the former European commissioner for competition, also spent time working for the U.S. bank.

During the Greek economic crisis Goldman Sachs was criticized for having helped Athens hide its financial situation in order to enter the eurozone in 2000.

No revision to the rules

On Friday, the lobbying watchdog, Corporate Observatory Europe, called on the Commission to extend the cooling-off period, within which former officials cannot take lobbying jobs, from 18 months to three years. This period for Barroso ended on May 1, and most of the former top Commission officials under him took jobs in the private sector before this period had ended, following approval from the College of Commissioners.

Since his departure in November 2014, Barroso has given the Commission more than 20 job notices, most of them as a guest lecturer.

Ironically, when Barroso was the Commission president, he strengthened the code of conduct for former officials after several revolving-door scandals.

Sources in the Commission said Barroso’s current situation is not a breach of the code, but more a question of personal judgment.

Schinas, the spokesperson, said the code of conduct would not be revised, and added that if Barroso meets with Commission officials in the future, he is likely to be considered as a lobbyist from the U.S. bank, not as their former boss.

France has called on the former head of the European Commission, Jose Manuel Barroso, not to take up a job advising US bank Goldman Sachs on Brexit.

French Europe Minister Harlem Desir called the move “scandalous” and said it raised questions about the EU’s conflict of interest rules.

Ex-commissioners are free to take up a new role 18 months after leaving.

Despite accepting the job after 20 months, Mr Barroso has come under fire for ignoring the spirit of the rules.

Mr Desir drew attention to the ill-timing of the job with Goldman Sachs.

“It’s a mistake on the part of Mr Barroso and the worst disservice that a former Commission president could do to the European project at a moment in history when it needs to be supported and strengthened,” he told the French parliament, referring to Europe’s shock after Britain voted to leave the EU on 23 June.

 

The bank hired Mr Barroso as an adviser and non-executive chairman of its international business, with a brief of advising the bank on the consequences of Brexit.

Mr Barroso has said he hopes to bring his EU experience to bear as the bank’s London operation deals with Britain’s imminent negotiation of withdrawal from the EU.

In his new role, Mr Barroso will be able to draw on his intimate knowledge of the EU and have access to many officials and politicians he worked with at the European Commission.

Mr Desir’s attack in the French parliament was the latest in a sustained tirade against Mr Barroso’s appointment, with some calling it “shameful”.

French Finance Minister Michel Sapin told reporters on Tuesday “If you have loved Europe, you shouldn’t do this to it, especially not now,” adding: “But this doesn’t surprise me from Mr Barroso.”

Jose Manuel Barroso’s decision to join Goldman Sachs Group Inc. is “morally unacceptable,” French President Francois Hollande said, adding to criticism of the former European Commission president’s decision to work for the U.S. investment bank.

Hollande, asked about Barroso during his annual Bastille Day television interview on Thursday, said Goldman Sachs was implicated in the financial crisis that began with U.S. sub-prime mortgages and in helping Greece cover up its debt.

“And we find out several years later that Mr. Barroso will join Goldman Sachs,” Hollande said. “It’s legally possible but it’s morally unacceptable.”

The New York-based bank said on July 8 that Barroso, who headed the European Commission from 2004 until 2014, will serve as non-executive chairman of its international unit and help advise on international issues. Those could include the fallout from Britain’s vote to leave the European Union. Barroso, 60, was prime minister of Portugal prior to his EU role.

European Commissioner Pierre Moscovici, a former French finance minister, said Barroso’s decision was “bad for the image” of the commission. French European Affairs Minister Harlem Desir said Wednesday it was “morally, politically and ethically a mistake.” Gianni Pittella, head of the Socialist Group in the European Parliament, said it was “deplorable from a political and moral point of view.”

In Portugal, the Socialist Party said Barroso led the EU’s executive arm during “the worst years of the European project” and his “prize” was to join a company that’s the main cause of “the destruction of social rights in the European Union.” His own Social Democratic Party said it saw “no issue,” while the EU has said Barroso’s move doesn’t violate its ethics rules.