The Final Call

Corporate lobbyists threaten democracy

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A wide view of the dialogue titled, “Sustainable Development as an Answer to the Economic and Financial Crises”, held ahead of the June 20 high-level segment of the UN Rio+20 Conference on Sustainable Development, in Rio de Janeiro, Brazil. Photo: UN Photo/Guilherme Costa

Louise Kantrow, permanent representative of the International Chamber of Commerce, received thunderous applause when she told her audience June 19 that “businesses are taking the lead” in global negotiations on climate change and sustainable development.

For many observers, Ms. Kantrow’s blunt words highlighted just how strong of a grip private multinational companies have upon supposedly democratic processes.

In a statement aptly titled “Reclaim the UN from corporate capture,” the environmental organization Friends of the Earth (FoE) complained that, “There are … real concerns about the increasing influence of major corporations and business lobby groups within the UN.”

The report went on to detail the extraordinary level of businesses’ influence over the positions of national governments in multilateral negotiations.

“Business representatives dominate certain UN discussion spaces and some UN bodies; business groups are given a privileged advisory role; UN officials move back and forth (from) the private sector; and—last but not least—UN agencies are increasingly financially dependent on the private sector.”

One blatant example of this “corporate capture” of the UN is the Anglo-Dutch oil giant Shell, which, thanks to senior executive representatives in several corporate lobbying groups, was omnipresent during the Rio+20 negotiations.

Shell sent delegates to the discussions and round tables of the above-mentioned International Chamber of Commerce, the International Petroleum Industry Environmental Conservation Association, the UN Global Compact, the World Business Council for Sustainable Development, and the International Emissions Trading Association.

Yet, according to Paul de Clerck, campaign coordinator at FoE, “More than one year has passed since the UN presented its report on Shell’s pollution of Ogoniland (Nigeria). But we are still waiting for a comprehensive plan from Shell to clean up its mess.”

The first step recommended by the UN was the establishment of a $1 billion emergency fund to clean up the region.

“So far, Shell has committed to nothing, despite its participation in all kind of environmental and sustainable development debates,” Mr. de Clerck told IPS.

“It is not acceptable that companies like Shell should be in the driving seat of processes for sustainable development,” Nnimmo Bassey, of FoE International, told IPS. “That is a recipe for disaster for our planet and peoples. Corporate polluters should not (be drafting) laws, they should face the laws.”

But the UN is not the only international institution threatened by the influence of multinational businesses.

Tightly woven groups of professional go-betweens and loyal supporters of multinationals who have passed through the revolving doors that link governments and private corporations are now facing growing scrutiny from civil society activists.

In Europe, the head of the European Central Bank, Mario Draghi, is facing a formal inquiry by the European Union ombudsman because of his membership in a well-known international banking lobby group.

On July 24, the ombudsman’s office announced that it was launching the investigation following allegations that Mr. Draghi’s membership in the so-called Group of 30 “is incompatible with the independence, reputation and integrity of the ECB.”

The EU has been the subject of multiple complaints, because, according to civil society groups, many of its agencies allow a revolving door to admit and dispatch senior executives who bring corporate agendas to democratic fora.

One of the leading critics of this policy, the Corporate Europe Observatory, a multinational and public policy watchdog group, claims that many “senior European decision-makers leave office and go straight into lobby jobs, or (alternately) lobbyists join the EU institutions.”

In such cases, Olivier Hoedeman of the Corporate Europe Observatory told IPS, “The risk of significant conflicts of interest is great, undermining democratic, public-interest decision making.”

According to Mr. Hoedeman, the Corporate Europe Observatory “is working with the Alliance for Lobbying Transparency and Ethics Regulation to challenge the revolving door and to demand that it is effectively regulated.”

The Corporate Europe Observatory was the first group to complain about Mr. Draghi’s membership in the Group of 30, whose members include heavy-hitters in the international banking sector like William C. Dudley, former managing director at Goldman Sachs and former president of the Federal Reserve Bank of New York.

European activists and analysts have been growing more anxious about the influence of private investment banks on public financial policies, especially as the European sovereign debt continues to spiral out of control.

As the Corporate Europe Observatory put it, “Given the euro crisis, the huge bailout operations of big banks, and the on-going debate on how to regulate banks in the light of the financial crisis, it should be obvious that safeguards are needed to ensure that the President of the European Central Bank remains independent.”

Indeed, Goldman Sachs’ links to numerous present officials at ministries of finance and other state agencies in Europe are extraordinary and worrisome. In a recent debate in Berlin, sociologist Wolfgang Streeck, director of the prestigious Max Planck Institute for the Study of Societies, denounced what he called “the diarchy in financial capitalism.”

Mr. Streeck said that European democratic states are presently suffering under the dictatorship of the deregulated financial markets, controlled by corporations like Goldman Sachs, while at the same time, most of their institutions are led by former executives of those very same corporations.

A salient example of Mr. Streeck’s thesis is the current, non-elected Italian head of government Mario Monti, who was the international adviser to Goldman Sachs from 2005 until 2011. In Goldman Sachs’ own words, Mr. Monti’s mission was to provide advice “on European business and major public policy initiatives worldwide.”

Given that Goldman Sachs and similar investment banks are pivotal in managing the sovereign debt of numerous European countries, it seems almost absurd that they are simultaneously preparing speculation schemes against the solvency of those very same states.

Following the announcement that the EU ombudsman had launched an official investigation into Mr. Draghi’s professional past, the Corporate Europe Observatory urged him to step down as president of the ECB.

In a letter addressed to Draghi, the group wrote, “Any president of the ECB has to make it absolutely clear that he or she is not under the influence of the financial lobby at any time. In particular at this dramatic point in the history of the EU, with the euro crisis and an ailing banking sector – recipient of trillions of euros in aid—it is completely unacceptable if doubt can be cast on the independence of the Bank’s president from the financial lobby.”