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Former EC President, José Manuel Barroso, appointed non-executive chairman of Goldman Sachs International #RevolvingDoors

News item

Wednesday 20 Jul 2016

Copy of the letter sent to the European Ombudsman concerning the appointment of the former President of the European Commission, José Manuel Barroso, as non-executive chairman of Goldman Sachs International.  Letter organised by Barbara Spinelli MEP on behalf of 53 Members of the European Parliament.

Brussels, 20 July 2016 To: Ms Emily O’Reilly – European Ombudsman

Dear Ms O’Reilly, On 8 July 2016, Goldman Sachs International announced the appointment of Mr José Manuel Barroso as non-executive chairman of Goldman Sachs International (GSI). He will also be an advisor to Goldman Sachs (1) . Mr Barroso Barroso was Portugal’s prime minister from 2002 to 2004, and later served as president of the European Commission from 2004 to 2014.

Mr Barroso led the Commission that acted at the heart of the financial and economic crisis of 2007-2008, and was involved in the economic adjustment programmes promoted by the socalled “Troika”, as also highlighted in the Resolution of the European Parliament of 13 March 2014 “on the enquiry on the role and operations of the Troika (ECB, Commission and IMF) with regard to the euro area programme countries”.

On 11 April 2016, the United States Department of Justice announced a $5.06 billion settlement with Goldman Sachs related to Goldman’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. According to the Department of Justice, “the resolution requires Goldman to pay $2.385 billion in a civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and also requires the bank to provide $1.8 billion in other relief, including relief to underwater homeowners, distressed borrowers and affected communities, in the form of loan forgiveness and financing for affordable housing. Goldman will also pay $875 million to resolve claims by other federal entities and state claims. Investors, including federally-insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Goldman between 2005 and 2007”. (2)

Article 245(2) of the Treaty on the Functioning of the European Union states “The Members of the Commission may not, during their term of office, engage in any other occupation, whether gainful or not. When entering upon their duties they shall give a solemn undertaking that, both during and after their term of office, they will 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 the event of any breach of these obligations, the Court of Justice may, on application by the Council acting by a simple majority or the Commission, rule that the Member concerned be, according to the circumstances, either compulsorily retired in accordance with Article 247 or deprived of his right to a pension or other benefits in its stead”. 1 http://www.goldmansachs.com/media-relations/press-releases/current/jose-manuel-barroso-appointed.html 2 https://www.justice.gov/opa/pr/goldman-sachs-agrees-pay-more-5-billion-connection-its-sale-residentialmortgage-backed 2 Accordingly, article 1.2. of the Code of Conduct for Commissioners (C(2011)2904) provides that “The above rules are without prejudice to the duty to behave with integrity and discretion pursuant to Article 245 of the Treaty (TFEU) even beyond the period of 18 months after ceasing to hold office”.

Considering the prominent role played, at that time, by the European Commission in dealing with the consequences of the economic and financial crisis at the European level, we ask the European Ombudsman to investigate whether the appointment of Mr Barroso as nonexecutive chairman of Goldman Sachs International can constitute a violation of the duty to behave with integrity and discretion according to article 245 TFEU. At the same time, we ask to the European Ombudsman to evaluate if the response given by the current European Commission to such an appointment can constitute a violation of article 41(2.c) of the Charter of fundamental rights of the European Union (obligation of the administration to give reasons for its decisions).

Article 16 of the Staff Regulations of official of the European Communities establishes “An official shall, after leaving the service, continue to be bound by the duty to behave with integrity and discretion as regards the acceptance of certain appointments or benefits. Officials intending to engage in an occupational activity, whether gainful or not, within two years of leaving the service shall inform their institution thereof. If that activity is related to the work carried out by the official during the last three years of service and could lead to a conflict with the legitimate interests of the institution, the Appointing Authority may, having regard to the interests of the service, either forbid him from undertaking it or give its approval subject to any conditions it thinks fit […]”. Unlike the Code of Conduct for Commissioners, the Staff Regulations of officials of the European Communities provide for a “cooling-off” period of 2 years applicable to all the personnel working in the EU Institutions. Hence, there is an evident difference in treatment between Commissioner and the rest of the staff. Therefore, we ask the European Ombudsman to assess if this different regime is in compliance with the principle of equality and non-discrimination enshrined in the Treaties and the Charter of fundamental rights. If not, we ask to evaluate if the appointment of Mr Barroso could be deemed legitimate having regard to the “standard” cooling-off period of 24 months as per the Staff Regulations of officials of the European Communities. Finally, we reiterate the request, already made by the European Ombudsman, to revise the Code of Conduct for Commissioners in order to strengthen its transparency and to align it with the Treaty rules.

Best regards,

Barbara Spinelli – GUE/NGL Group

Kateřina Konečná – GUE/NGL Group 3

Nessa Childers – S&D Group

Bart Staes – Greens/EFA Group

Patrick Le Hyaric – GUE/NGL Group

Ivo Vajgl – ALDE Group

Sabine Lösing – GUE/NGL Group

Fabio De Masi – GUE/NGL Group

Marina Albiol Guzmán – GUE/NGL Group

Miguel Urbán Crespo – GUE/NGL Group

Ana Maria Gomes – S&D Group

Isabella Adinolfi – EFDD Group

Paloma López Bermejo – GUE/NGL Group

Paul Tang – S&D Group

Molly Scott Cato – Greens/EFA Group

Benedek Jávor – Greens/EFA Group

Tomáš Zdechovský – EPP Group

Yannick Jadot – Greens/EFA Group

Eva Joly – Greens/EFA Group

Curzio Maltese – GUE/NGL Group

Marisa Matias – GUE/NGL Group

Nicola Caputo – S&D Group Josep-

Maria Terricabras – Greens/EFA Group

Karima Delli – Greens/EFA Group

Piernicola Pedicini – EFDD Group

Julia Reda – Greens/EFA Group António

Marinho e Pinto – ALDE Group

Pascal Durand – Greens/EFA Group

Laura Ferrara – EFDD Group

Martina Anderson – GUE/NGL Group

Lynn Boylan – GUE/NGL Group

Matt Carhty – GUE/NGL Group

Liadh Ní Riada – GUE/NGL Group

Marco Valli – EFDD Group 4

Helmut Scholz – GUE/NGL Group

Kostadinka Kuneva – GUE/NGL Group

Marie-Christine Vergiat – GUE/NGL Group

Xabier Benito Ziluaga – GUE/NGL Group

Brando Benifei – S&D Group Fabio

Massimo Castaldo – EFDD Group

Marco Affronte – EFDD Group

Laura Agea – EFDD Group

Daniela Aiuto – EFDD Group

Tiziana Beghin – EFDD Group

David Borrelli – EFDD Group

Ignazio Corrao – EFDD Group

Rosa D’Amato – EFDD Group

Eleonora Evi – EFDD Group

Dario Tamburrano – EFDD Group

Marco Zanni – EFDD Group

Marco Zullo – EFDD Group

Maria João Rodrigues – S&D Group

Costas Mavrides – S&D Group

1 http://www.goldmansachs.com/media-relations/press-releases/current/jose-manuel-barroso-appointed.html

2 https://www.justice.gov/opa/pr/goldman-sachs-agrees-pay-more-5-billion-connection-its-sale-residentialmortgage-backed