On Tuesday 30 March, 73 MEPs from the EPP, S&D, Renew Europe, Greens/EFA and The Left groups called the European Commission to account after Euractiv recently revealed the amounts paid out in contracts with the ‘Big Four’ auditors and the risk of conflicts of interest.
In a letter sent to the European Commission on the initiative of Philippe Lamberts (Greens/EFA, Belgium), MEPs call on it to take “strong actions” to “avoid the risk of undue influence by private consultancy firms on its decisions and on the design of structural reforms in sensitive areas of public policy”.
According to Euractiv, between 2016 and 2019, the European Commission is reported to have spent almost half a billion euros on contracts with the four consulting giants (PwC, KPMG, Deloitte and EY) to develop recommendations for its structural reform support programme, which is designed to help Member States implement reforms in a wide range of public policy areas, from justice to healthcare.
This amount is considered outrageous by MEPs, who are asking the Commission to explain why the proportion of external private contracts has soared in recent years compared to in-house expertise and contracts with experts hired by international organisations, universities and NGOs.
They also want to know the total amount spent on outsourcing studies from private consultancies between 2016 and 2020 for all Commission Directorates-General.
Another problem highlighted by MEPs is that these companies have, in several cases, been awarded contracts to advise on public policy areas where they have clients.
This is particularly the case for PwC, which, for example, participated in a reform of the Belgian national tax audit system, while the Luxleaks scandal revealed that PwC and the other three ‘Big Four’ were involved in the development of practices that helped more than 340 multinationals to circumvent tax legislation.
A look back at the BlackRock case
Last year, MEPs had already strongly criticised the contract awarded to US asset manager BlackRock to conduct a study on the integration of environmental and social factors into bank supervision (see EUROPE 12574/9).
Their mobilisation led the European Ombudsman to look into the matter. In her investigation, Emily O’Reilly concluded that the Commission should have been more vigilant in checking that BlackRock was not subject to a conflict of interest before awarding the contract, and she made a series of recommendations (see EUROPE 12609/26).
In their letter, MEPs take the opportunity to ask the Commission for a “detailed account” of the measures taken since then to follow up these recommendations in order to avoid future conflicts of interest.
The Commission defends itself
The European Commission reacted publicly to these revelations on Wednesday 31 March. “The aim here is not just to give money to consultants. The work that we are doing through the structural reforms is to make sure that we give our Member States the best available advice on how to pursue structural reforms in their countries”, said one of its spokespersons, Vivian Loonela.
The Commission has various channels for doing this, including in-house expertise, which forms a “large part” of the advice provided to Member States, she stressed. The use of external experts from the private sector is another possibility.
In doing so, Mrs Loonela assured that the Commission was closely monitoring the risk of conflicts of interest and taking appropriate action where necessary.
See the letter: https://bit.ly/3sEKpIo (Original version in French by Marion Fontana)