Special Reports
 
 


 

CORPORATE LOBBYING:
FRIEND OR ENEMY OF DEMOCRACY?

by

PETER CRISELL

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"Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people. To destroy this invisible government, to befoul the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day."

Theodore Roosevelt April 19th 1906!

Introduction

It’s a fascinating quirk of history that the innocuously domestic word ‘lobby’ has taken on a more sinister meaning. ‘Lobby’ and ‘lobbying’ suggest unseemly and surreptitious access to those in power. A lobby was just a room, corridor or vestibule used as an entrance hall in a building. The lobby in a legislative building was used as a meeting place where legislators met individuals or organisations who were there to try and influence policy or legislation. Only later did those involved and their activities become known as ‘the lobby’ and ‘lobbying’.

But what is so sinister about lobbying? It appears to be an essential and desirable part of the legislative process of democratic governments. Many decisions made in the legislature are made as a direct result of lobbying by parliamentary colleagues, constituents or outside pressure groups. Lobbying influences the knowledge, values and actions of decision-makers who may lack the resources to analyse each issue in detail. It has its uses at all stages of the decision making process. Lobbying can begin before a matter is on the political agenda or it can retrospectively seek to influence the implementation of decisions already made. A variety of methods are used, such as: networking, personal contacts, meetings, phone calls, and position papers. Indirect methods can be used through informal contacts and by using the media which, by influencing public opinion, exerts pressure on the legislators.

All well and good, one might say. However, the problem arises when a powerful, well-financed corporate lobby – focused on maximising profits and with scant regard for the wider public interest – corrupts the democratic process by buying influence and power. This is what excites public mistrust and suspicion. In such a situation, legislators are seen as part of a powerful club from which the wider population is excluded.

Big business often has its own in-house lobbying expertise but it can also use external professional advice. In the last ten or twenty years, there has been an enormous growth in the advanced economies, of professional lobbyists who advocate causes on behalf of clients. The companies and individuals describe themselves as being in ‘public relations’ or ‘public affairs’ (it is called ‘government relations’ in the US), or as ‘political consultants rather than ‘lobbyists’. It has been estimated that in the UK these lobbying businesses employ more than 14,000 people and are worth nearly £2 billion. In the USA, there were reckoned to be more than 12,000 registered lobbyists in Washington in 2011, spending $3.32 billion (1).

The political background

The growth of lobbying reflects the changing nature of political participation in policy making. The evidence of membership figures and voter turnout suggests that participation of the traditional kind, such as joining a political party or trade union and voting in elections, has declined in recent years throughout the western world. People often look to other organisations outside the formal political process to represent their views. This means that non-governmental organisations, groups and associations are involved in shaping and influencing the development of government policy. They range from local community groups and local charities to trade unions and multinational companies.

Global lobby groups like Greenpeace and Amnesty International have developed new kinds of political activism like sit-ins and direct action and use social media to organise themselves and to express their views. Such activities appeal more to younger people who are disillusioned with conventional politics. This trend has compelled democratic legislatures to accommodate their own procedures to allow external organisations and the public to take a greater part in shaping policy. Legislatures have done so in a number of ways, such as improving external pre-legislative scrutiny of bills and involving the public in parliamentary committee inquiries and consulting with outside organisations on developing policies.

In the contemporary world, policy proposals emanate from think-tanks, academic and professional bodies, interest groups and charities. Policy is debated in a wide variety of forums inside and outside the parliamentary process. However, among all the different organisations seeking to influence government, the corporate lobby attracts the most public suspicion for nefarious activities and dodgy dealing.

A recent survey of 2000 members of the public in the UK, conducted by global research agency OnePoll, shows that older males are particularly concerned. While 37 per cent of men believe that lobbying 'does more harm than good to British democracy', only 28 per cent of women feel the same. 39 per cent of respondents aged 55+ 'agreed strongly' that lobbying needs to be regulated more tightly, compared with 25 per cent of 18- to 24-year-olds. 44 per cent of the 25-34 age group was the most likely to agree or strongly agree with the statement that 'lobbying is an essential part of the democratic process'. (2) But it is corporate lobbying power which is viewed with the most suspicion.

Corporate lobbying

High profile corporate scandals like Enron and Arthur Andersen in the US – as well as the calamitous excesses of the banks and financial institutions - fuel suspicions that governments cravenly submit to the lobbying power of big business. This is a major issue in the Leveson enquiry in Britain which is currently examining the overmighty influence of the Murdoch media empire on government. It is at the point of contact between commercial profit and the political process where public scepticism is engendered.

Where the power of lobbyists is perceived as excessive, the wider public interest is seen as sidelined or ignored and the democratic institutions that are supposed to represent them as compromised or bought off.


The rapid growth and sheer size of the ‘public affairs’ companies are eloquent testimony to their power and effectiveness. Like other businesses, lobbying companies must be commercially profitable to survive. They presumably get the results their clients demand, otherwise the clients would not use them and they would not thrive. Those companies that rely on their own ‘in-house’ expertise of legal advisers, public affairs advisers, corporate communication specialists, strategic planners etc. would presumably not employ them all if they too didn’t get results.

The suspicion that the public interest is being usurped by big business does not extend to other lobbying groups who, for example, campaign on behalf of child poverty or animal welfare. Big business lobbying is about securing shareholder profit and market share, a rather different agenda. The globalisation of markets has led to the fear that corporations can take over government itself. Author, George Monbiot, claims companies are “seizing powers previously invested in government and using them to distort public life to suit their own needs. The provision of hospitals, roads and prisons in Britain has been deliberately tailored to meet corporate demands rather than public needs. Urban regeneration programmes have been subverted to meet the needs of private companies, and planning permission is offered for sale to the highest bidder”. (3)

The revolving door

Big business not only lobbies government but becomes part of it. Directors of companies are often seconded to work for the civil service. Once installed, they may be involved in government procurement roles or serve on advisory committees and are thus well placed to communicate corporate needs directly to government. The traffic is two-way. Retired politicians and senior civil servants often pursue a second career as advisers or consultants to private industry, thus becoming lobbyists themselves! The prospect of such preferment surely makes them sensitive to corporate needs while they are still in office. Small wonder that this ‘revolving door’ policy, is regarded with suspicion by citizens who are not part of the charmed circle. Leaked communications between Shell, operating in Nigeria, and the US embassy showed Shell boasting that the company “had seconded employees to every relevant department” of the Nigerian government and so knew “everything that was being done in those ministries”.(4)

This surely reinforces concerns about the excessive power of lobbyists. The revolving door is a well known phenomenon in the US. In an article in The Washington Post, T.W. Farnam wrote of an estimate in 2011 suggesting that nearly 5,400 former congressional staff members had become federal lobbyists over a ten-year period, and 400 lawmakers made a similar jump (5).

Big business and the lobbying industry have always been aware of these public concerns, engaged as they are in massaging and presenting their public image. The standard solution to the vexing problem of public perception is to lobby in secrecy. Some lobbying organisations in the UK, for example, attempt to disguise their true identities by setting up front organisations that purport to be independent policy think tanks. Many of them promote right wing views in support of free markets, privatisation, tax cuts etc. but in practice their agenda is to influence public policy without revealing their hand. Such organisations are remarkably coy about revealing the source of their funding. In the UK the scandal involving the resignation this year of cabinet minister, Liam Fox, illustrates how the transparency of information demanded of the public sector meets the unregulated opacity of the privately funded lobby group.


In the US, the Israeli government and the tobacco industry have been playing a similar game and have been accused of putting up front organisations to lobby for their cause.


Legal controls on lobbying


The lobbyists don’t quite have it all their own way. In the US, the Lobbying Disclosure Act 1995 requires systematic disclosure of lobbying, allowing lobbyists and public officials to justify their actions. The rules specify how much a lobbyist can spend on specific activities, and how to report expenses but like many legal rules, ways can be found to evade them.(6) This inevitably leads to further tightening of the law. Following the Jack Abramoff lobbying scandal, the Legislative Transparency and Accountability Act 2006 was passed which, among other things, prohibited lobbyists from buying gifts and meals for legislators, and only allowed privately funded trips if lawmakers obtained prior approval from a commissioned ethics committee.

In the UK, the Liam Fox affair has led to calls for a tightening of the rules on lobbying politicians and for a statutory register of lobbying organisations. The government has proclaimed its determination to push through a shake-up of lobbying rules before 2015.
Prime Minister David Cameron has been hit by a series of lobbying rows since he described the industry as the "next big scandal waiting to happen".

Lobbying and corruption

Bribery in its crudest form i.e. cash in a brown envelope, can play its part in the lobbying process. For example, in the UK ‘lobbygate’ scandal in 1998, lobbyist Derek Draper was caught on tape, boasting to an undercover reporter from The Observer newspaper posing as a businessman, about how his firm could sell access to government ministers and create tax breaks for their clients. Draper said that "there are 17 people who count in this government ... [to] say I am intimate with every one of them is the understatement of the century." In case the reporter wondered what prompted Draper’s self-aggrandising claim, the lobbyist explained it all. "I just want to stuff my bank account at 250 pounds an hour", he declared.

Smoother operators in the lobbying business prefer subtler methods like making philanthropic donations. It is now commonplace for corporations to fund, part-fund, sponsor, or donate toward the cost of 'public' projects such as education, thus ensuring that decisions in the public domain are made in the interests of private businesses.

The anti-corruption group, Transparency International (TI) warned in a report published on June 6th this year that the close relationship between business and government has enabled corruption and undermined economic stability in Europe. It highlights the gaps in governance that contributed to the financial and political scandals in nearly every European country in the last year. In its report, Money, Politics, Power: Corruption Risks in Europe, it calls on legislators to make lobbying and campaign finance more transparent (7). The way decisions are made and the processes by which political groups are funded are opaque, a troubling situation as Europe tries to dig itself out of its acute economic crisis. 19 of the 25 countries surveyed in the TI report do not regulate lobbying, and only ten ban undisclosed political donations outright. The UK is one of 12 European countries that has no upper limit on political donations. There is no regulation of lobbying. Small wonder that senior executives of one of Britain’s largest lobbying firms, Bell Pottinger, were secretly recorded in 2011 boasting about the company’s access to the heart of Government and how it uses ‘dark arts’ to bury bad news coverage and influence public opinion.

The last year has seen high profile corruption trials in France and Italy. Elsewhere, there has been the political corruption scandal over MPs’ expenses in the UK, a pension fraud scandal in Norway, patronage scandals in the Czech Republic and Romania and conflicts of interest scandals in Bulgaria, Finland and Slovenia. In such circumstances, it is hardly surprising that, in a Eurobarometer survey carried out in the 27 EU member states in September 2011, 74% of Europeans believe that corruption is a major problem in their country. 47% of all Europeans think that the level of corruption in their country has risen over the past three years and 40% believe that a too close relationship between business and politics contributes to corruption. Two in three Europeans (67%) believe that corruption is part of their country’s business culture.

TI has also called on the EU to set an example by adopting robust rules on lobbying inside its own institutions. There are reckoned to be between 15,000 and 30,000 lobbyists based in Brussels, most representing industry. As a result, a large proportion of EU laws and policies are heavily influenced by corporate lobbying. On virtually every issue (from energy policy to food labeling to banking), industry lobbyists outnumber and outspend public interest NGOs. The European Parliament has become a major lobbying target. Corporate Europe Observatory (CEO), a research and campaign group on corporate lobbying in the EU cites the battle in 2011 around food labeling rules (8). It was, says CEO, “a telling example of how a massive investment in industry lobbying can pay off, with MEPs opting for a labeling scheme that had been developed and promoted by industry, instead of the more consumer-friendly ‘traffic-light’ option.” It also draws attention to coordinated lobby campaigns to influence member state governments into blocking or weakening proposed legislation. It refers to the “financial industry’s scaremongering lobbying,” which persuaded key governments to withdraw support for a global financial transaction (Robin Hood) tax, effectively torpedoing the proposals.

Over the last 7-8 years, there’s been an often lively debate about the role of lobbying in EU decision-making. This has led to some progress in transparency around lobbying, although the EU’s lobby transparency register, upgraded in 2011, remains voluntary and full of loopholes. After a number of revolving door scandals involving ex-Commissioners who went into corporate lobbying jobs, the ethics rules for Commissioners were tightened a little last year. A growing number of Members of the European Parliament (MEPs) have expressed concern about the influence of lobbyists over EU decision-making and have called for measures to prevent a corporate takeover. Images of ‘bolting horses’ and ‘stable doors’ come to mind.(9)

Other international agencies are also susceptible to the strong-arm tactics of the corporate lobby. The food industry needs no lessons from the tobacco industry in this regard. In 2003 the US sugar lobby pressured the US Department of Health to threaten to withhold its $406 million funding from the World Health Organisation. The WHO had published a scientific report on the health dangers of consuming too much sugar. Public health, it seems, is of little importance when huge profits are at risk.(10)

Corporate lobbying and the wider agenda

The overweening power of corporate lobbying has to be viewed against the prevailing orthodoxy of the neoliberal global capitalism of recent decades. The global financial crisis of 2008 when the world economic system was brought to the brink of complete collapse suggests that the neoliberal project, driven by a transnational corporate elite, has failed and is losing its legitimacy with electorates in Europe and elsewhere.
 
In recent decades, the globalisation of production and shift of manufacturing to the emerging new centres of growth outside the industrialised North was accompanied by the globalisation and world-wide liberalisation of finance. The productive economy became the servant of global financial markets and financial investors. This in turn led to speculative movements of capital around the globe and the instability that goes with it.

The ‘free market’ ideology of neoliberalism meant growing freedom and power for the large corporations and diminishing power for the nation state. The privatisation agenda, the ‘outsourcing’ of government services to private business, the revolving door traffic between the state and private business are testimony to the success of the neoliberal agenda. It seems hardly surprising that the corporate lobby is now viewed with suspicion by ordinary folk. It is they and not the still prospering corporate fat cats who are bearing the brunt of the current economic crisis.


There are signs that the public have had enough. As CEO says: “New citizens movements such as the Indignados and Occupy have emerged that demand real democracy instead of de facto government by market forces, whether in the shape of big business or the financial markets. Trade unions and other citizens groups are stepping up their actions to defend the welfare state. It is from these progressive forces - and pan-European alliances between them - that the pressure for a different Europe will come.”

Such movements give grounds for modest optimism that there will be some countervailing pressure against excessive corporate influence and capture of political decision-making. Democratic renewal depends on transparency, clear ethical rules and accountability to the wider society. As the crisis in the world economy grows deeper, the demands for reform can only grow louder.

                                                                                                            Peter Crisell


References
(1) http://www.opensecrets.org/lobby/index.php

(2) reported in PR Week (19 April 2012) http://www.prweek.com/uk/features/1127517/Reputation-Survey-Lobbying---Lobbyists-struggle-convince-public/

(3) Monbiot, G. (2000) Captive State: The Corporate Takeover of Britain, London: Pan.

(4) http://www.guardian.co.uk/business/2010/dec/08/wikileaks-cables-shell-nigeria-spying

(5) (September 13, 2011). "Revolving door of employment between Congress, lobbying firms, study shows". The Washington Post

(6) http://www.nytimes.com/2012/01/08/us/illinois-lobbying-disclosure-rules-often-leave-holes.html

(7) http://www.transparency.org/enis

(8) http://www.corporateeurope.org

(9) http://www.thebureauinvestigates.com/2012/06/06/just-how-corrupt-is-europe/

(10) http://www.guardian.co.uk/society/2003/apr/21/usnews.food