The European Ombudsman, Emily O'Reilly, ruled on Monday 11 May that the European Banking Authority (EBA) should not have allowed its former Executive Director, Adam Farkas, to become the CEO of the Association for Financial Markets in Europe (AFME), one of the main lobbies of the financial sector.
The investigation, launched following a complaint by the Change Finance coalition and supported by several MEPs, found two cases of maladministration by the EBA.
The Ombudsman further found that the restrictions put in place by the Authority to authorise this transfer were not “sufficient” in relation to the risk of conflict of interest and that it would, in any event, not have been able to effectively monitor their implementation.
The investigation also revealed that Mr Farkas’ access to confidential information was not immediately cut off. While the EBA was informed of the job move on 1 August 2019, its outgoing Executive Director had access to confidential information until 23 September 2019.
Moreover, the Mediator rejects the “right to work” justification invoked by the EBA to justify this revolving door case. “The ‘right to work’ is important but has to be interpreted in line with the public’s right to trust in EU banking supervision and the right to an administration of the highest standards”, she explains.
In the future, she recommends that the EBA make use of the possibility of prohibiting its senior executives from holding certain positions after their mandate for a period of two years and to set criteria for such a prohibition.
She also calls on the Authority to put in place internal procedures to immediately cut off access to confidential information for staff members who change posts.
From the outset, the European Parliament was outraged by the ‘Farkas’ affair. In a resolution adopted in January (see EUROPE 12405/11), they asked the EBA to reconsider its decision and indicated its readiness to deny Mr Farkas access to its premises.
To prevent a new conflict of interest, MEPs also rejected the candidacy of Gerry Cross, who came from AFME, to succeed Adam Farkas at the EBA (see EUROPE 12415/9).
The EBA has three months to respond to the European Ombudsman’s recommendations, which can be found at the following link: https://bit.ly/2zsQ0ed (Original version in French by Marion Fontana)