An Evaluation of Lobbying in Spain: Analysis and Proposals by Transparencia Internacional España

AN EVALUATION OF LOBBYING IN SPAIN ANALYSIS AND PROPOSALS

Transparency International España is the Spanish chapter of Transparency International, the global civil society organisation committed to fighting corruption in its diverse forms, and to promoting transparency and integrity in public institutions and the private sector. www.transparencia.org.es

Lead Researcher and Editor: Manuel Villoria Project Coordinator and Editor: Ana Revuelta English Translator: Arielle Weismann © 2014 Transparency International España. All rights reserved. Printed on 100% recycled paper. Date: December 2014 © Cover photo: iStockphoto/DNY59 Every effort has been made to verify the accuracy of the information contained in this report. All information was believed to be correct as of December 2014. Nevertheless Transparency International Spain cannot accept responsibility for the consequences of its use for other purposes or in other contexts. This project has been funded with support from the European Commission. This publication reflects the views only of the authors, and the European Commission cannot be held responsible for any use which may be made of the information contained therein.

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TABLE OF CONTENTS AUTHORS AND ADVISORS ................................................................................. 3 EXECUTIVE SUMMARY ...................................................................................... 4 GLOBAL AND SECTORAL ANALYSIS OF LOBBYING ..........................................................................5 TOWARDS LOBBY REGULATION ..........................................................................................................6 CONCLUSIONS AND RECOMMENDATIONS ........................................................................................7 INTRODUCTION ............................................................................................... 12 DEFINITIONS .........................................................................................................................................15 Case 1. Public lobbying in the Savings banks ....................................................................................17 TYPOLOGY OF RISKS ..........................................................................................................................22 Case 2. Public health: actors and influence strategies .......................................................................24 Case 3. Dispute around the varicella vaccine .....................................................................................27 Case 4. The adoption of anti-tobacco legislation: a case of good practice .........................................29 THE SITUATION OF LOBBYING IN SPAIN .......................................................... 33 POLITICAL AND ECONOMIC CONTEXT ..............................................................................................33 REGULATORY CONTEXT .....................................................................................................................37 SOCIAL CONTEXT ................................................................................................................................42 Case 5. The influence of energy companies.......................................................................................44 Case 6. Closing the Garoña nuclear facility ........................................................................................52 INTENSITY AND SCALE OF LOBBYING IN SPAIN ..............................................................................54 Case 7. The Intellectual Property Act .................................................................................................55 Case 8. The Bankia case ....................................................................................................................58 CULTURAL UNDERSTANDING OF LOBBYING ...................................................................................62 Case 9. Party funding and infrastructures...........................................................................................67 SELF-REGULATION OF LOBBY GROUPS/LOBBYISTS......................................................................68 OVERSIGHT: THE ROLE OF THE MEDIA AND CIVIL SOCIETY.........................................................69

LOBBY REGULATION: TRANSPARENCY, INTEGRITY, AND EQUAL ACCESS ........ 72 IMPROVING TRANSPARENCY ............................................................................................................72 PROMOTING INTEGRITY .....................................................................................................................75 Case 10. Revolving doors in the energy and food sectors .................................................................77 Case 11. El Musel Port .......................................................................................................................82 EQUALITY OF ACCESS: LEVELLING THE PLAYING FIELD...............................................................88 Case 12. Digital Territorial Television Licensing .................................................................................91 Case 13. Good practices in the health sector: expert committees......................................................92 CONCLUSIONS AND RECO MMENDATIONS ........................................................ 94 ANNEX 1: METHODOLOGY ................................................................................ 98 ANNEX 2: QUANTITATIVE RESULTS ................................................................ 100 ANNEX 3 : QUESTIONNAIRE ........................................................................... 102

AUTHORS AND ADVISORS Research team: Director and Lead Researcher: Manuel Villoria Mendieta, Universidad Rey Juan Carlos Researchers: Esteban Arribas Reyes, Universidad de Alcalá Jorge Fernández-Rúa, Cariotipo MH5 Ildefonso Hernández Aguado, Universidad Miguel Hernández and Ciberesp Elena Herrero-Beaumont, IE Business School and Vinces Fernando Jiménez Sánchez, Universidad de Murcia Carmen Mateo Alcántara, Cariotipo MH5 and Centro de Estudios de Políticas Públicas y Gobierno UAH Rafael Rubio Núñez, Universidad Complutense de Madrid Project Coordinator and Editor: Ana Revuelta Alonso, Transparency International España Advisory Committee: Pilar Laguna Sánchez, Universidad Rey Juan Carlos Òscar Roca Safont, Oficina Antifrau de Catalunya Bernardo Navazo López, King's College London Asociación de Profesionales de las Relaciones Institucionales (APRI) Foro por la Transparencia External Academic Reviewer: Elena García Guitián, Universidad Autónoma de Madrid Board of Directors, TI-España: Jesús Lizcano Álvarez Antonio Garrigues Walker Jesús Sánchez Lambás Silvina Bacigalupo Saggese

This report is part of Transparency International's project "Lifting the Lid on Lobbying: Taking Secrecy out of Politics in the EU". International Project Coordination: Paul Zoubkov and Suzanne Mulcahy, Transparency International Secretariat

EXECUTIVE SUMMARY The report “An evaluation of lobbying in Spain: Analysis and proposals” examines the state of lobbying in Spain, showing that important public decisions are taken behind a veil of secrecy. Due to insufficient controls on lobbying, it is almost impossible for the public to know who is influencing which decision-makers, by what means and with what effect. Lobbying is understood as any attempt to influence public policy decisions in an orderly and systematised way. In particular, this report dissects the transparency, integrity and equality of access in lobbying practices in Spain, in different sectors such as Energy, Health, Financial, Telecommunications or Public Works. It presents a series of recommendations for improving transparency, promoting integrity and levelling the playing field. In Spain, it is a widely held belief that money buys influence in politics. Similarly, the perception that business and corruption go hand in hand is also widespread (EU AntiCorruption Report, European Commission 2014). According to the 2014 Special Eurobarometer on corruption, 77% of Spaniards believe that corruption is part of the country’s business culture, while 67% believe that the only way to succeed in business is through political connections. Moreover, a staggering 84% of people believe that bribery and connections are the easiest way to obtain public services. These perceptions are even higher among companies, 91% of which see excessive links between money and politics, while 93% think that corruption and favouritism hurt business (Flash Eurobarometer 374, European Commission 2014). Businesses cite as commonplace many practices that are unfair, and sometimes illegal, such as favouring friends and family when conducting business, nepotism and clientelism in the public administration, and opaque political party financing. It is not surprising that trust in government is alarmingly low.

While bribery and influence peddling scandals have continued to make headlines on the front page of newspapers and magazines over the past decade, there is a widespread awareness that some large corporations and interest groups unjustly influence political decision-making (although not always by illegal means). Examples include political party financing, using the “revolving door” and even threatening divestment to stop necessary regulatory changes. The lack of clarity in the concepts and the lack of democratic controls regarding lobbying, leads sometimes to mistake "lobby" and "influence peddling". While lobbying presupposes a certain level playing field, influence peddling, on the contrary, is an abuse of power out of which benefits are drawn. Thus, the state of lobbying in Spain as well as the ongoing corruption scandals create an uneasy feeling that the playing field is not even, and that the decision-making process is biased in several policy areas, in favour of the most economically powerful. The perceived

and actual prevalence of corrupt practices between business and politics fuels a bad image of lobbying. While this activity can be a crucial component of democratic societies, allowing various interests to be heard and bringing very positive elements to decision-making processes, today lobbying carries largely negative connotations in the public mind.

GLOBAL AND SECTORAL ANALYSIS OF LOBBYING This report finds weak points in lobbying policy, legal loopholes and inadequate legislation, focusing on three key areas: transparency, integrity and equal access to public officials. In these three aspects, Spain is well below the desirable situation, getting a resounding fail (21%). The worst area and that requires more clearly an improvement is transparency in lobbying (10%), both by public authorities (access to information, mandatory registration of lobbyists and sanctions, legislative footprint), and by those who exercise lobby (information disclosure). The integrity of lobbying gets a score of 35%. The analysis shows that Spain has laws in place concerning pre and post public employment restrictions and codes of conduct for politicians and senior representatives, but that they are not met at all times. Moreover, there is no official code of conduct for lobbyists, and self-regulation is under development but still insufficient. With regard to equal access to public officials by citizens and interest groups, Spain gets a score of 17%. This aspect refers to the consultation and public participation in decision-making, and to the balanced composition of expert groups and advisors. The formal reality allows, with limits, to ensure the influence of legally recognized organizations in certain areas of decisionmaking, but also a great informality persists in the way that other sectoral and focused practice lobby. In this last area of informal influence is where the vast majority of cases of undue influence and even corruption occur. Furthermore, the report showcases examples in different sectors related to corruption risks and bad or unethical practices, such as: •

Financing of political parties

Case 9. Financing of political parties and infrastructures Case 11. El Musel Port

•

Lack of access to information and transparency in decisionmaking processes

Case 1. Public lobbying in the Savings banks Case 2. Health Sector: actors and influence strategies Case 3. Dispute over the varicella vaccine Case 5. The influence of energy companies Case 6. Closing the Garoña nuclear facility Case 7. The Intellectual Property Act Case 8. The Bankia case

•

Lack of consultation and participation in decisionmaking

Case 5. The influence of energy companies Case 7. The Intellectual Property Act Case 12. Digital Terrestrial Television Licensing

•

Regulatory and technical

Case 2. Health Sector: actors and influence strategies Case 3. Dispute over the varicella vaccine

capture

•

Conflicts of interest and compatibilities

•

Revolving doors

Case 5. The influence of energy companies Case 6. Closing the Garoña nuclear facility Case 8. The Bankia case Case 11. El Musel Port

Case 8. The Bankia case Case 10. Revolving doors in the energy and food industries in Spain

The Report shows as well two examples of good practices related to: •

Consultation and participation in decision-making

Case 4. Adoption of the anti-tobacco legislation

•

Balanced composition of experts groups and advisory bodies

Case 13. Good practices in the health sector: expert committees

TOWARDS LOBBY REGULATION Are our laws sufficient to curb corruption and undue influence in lobbying practices? We cannot help but note gaps in legislation on conflicts of interest, political party financing, transparency, accountability and criminal law itself, which, at the date of publication of this report, contains no crime linked to the illegal financing of political parties. Absent also are strong and effective regulations that protect whistleblowers reporting corruption. These fundamental regulatory shortcomings on the government side need to be addressed alongside any specific regulations on lobbying in Spain, in order to control corruption and malpractices. To a majority of Spanish politicians, lobbying regulation is a pending issue. The lack of regulation might explain why, according to a recent Burson-Marsteller and Cariotipo MH5 survey, 46% of Spanish political representatives interviewed consider opacity as the most negative aspect of lobbying, as opposed to 26% among their European peers. As a proof that lobbying does exist and is widely developed in Spain, 56% of interviewed politicians declares to meet with lobbyists and does so because it is their obligation. Despite the bad image of lobbying, 86% conclude it is positive for the democratic process. The government is currently working on regulation of lobbying, among other measures to pursue a "democratic regeneration", but the proposal is limited to a register of lobbyists in the Congress of Deputies. This was announced by the Government in June 2013, although since then there have been no official statements on it. However, some information was made public from the Congress. On 25 and 26 February 2014, the full House of Representatives passed a resolution promoted by the Parliamentary Group CiU (a two-party centre-right Catalonian nationalist coalition) and agreed with the majority People's Party (PP) in which lobby regulation is included:

"It is considered necessary to promote, as part of the reform of the Rules of the House of Representatives, greater immediacy, proximity and effectiveness of parliamentary scrutiny, and contemplate the regulation of so-called lobbies. Such regulation should be directed to channel the exercise of all activities intended to influence the formulation of policies and decision-making processes, ensuring transparency in the exercise of the right of representatives of civil society and businesses to have access to institutions, as well as observe the code of conduct that will eventually be approved."

This was also agreed by the two lobby associations, the corporate Forum for Transparency (Foro por la Transparencia)1 and the Association of Institutional Relations Professionals (APRI), the association representing professional lobbyists in Spain, which has advocated for regulation since 2007, not least because of the commercial benefits that it could provide them. According to calculations by the latter association, after its creation, the register could enroll about 500 people, associations, employers, unions and NGOs. In addition, the regulation proposed by CiU refers to the need to adopt a code of conduct, which goes beyond the initial objectives of the executive. The agreement would mean significant progress in the field, even though the most consequential lobbying activity that takes place in Spain is not in the legislature but the executive and the leadership of political parties −which have acquired a leading role in political life-2. The key to understanding this fact is that Parliamentary elections are held with closed and blocked lists of candidates. This gives party leaders an enormous power over their elected representatives, who are, once in Parliament, following the instructions of the party rather than the demands and preferences of their voters in the relevant constituency (a constituency that is also very broad). Therefore, trying to influence an MP in Spain is a less effective effort than targeting the party leadership. Equally fruitful for lobbyists are lobbying activities directed toward the executive −especially when a party has an absolute majority− so that it can clearly determine the result of a vote in Parliament. Given the decentralized nature of the Spanish state, this argument could be repeated for regional governments and parliaments. Thus any regulation that focuses solely on the legislature will miss the point, capturing only a fraction of the actual lobbying that takes place vis-à-vis decision-makers in Spain.

CONCLUSIONS AND RECOMMENDATIONS The participation of interest groups in Spain, due to the legislative framework, has become a dual reality. On the one hand, there are models that are institutionalized to a greater or lesser extent, which incorporate different representation and participation criteria. Certain organizations such as trade unions, employers associations, Professional associations or Chambers of Commerce- play a quasi-institutionalized role in the definition of the general interest, along the State. More than 600 norms regulate the formal participation of organized interest groups in different policy areas, and in turn, networks of amongst interest groups and Foro por la Transparencia was created in 2011 by the following consulting companies Analistas Financieros Internacionales (AFI), Cremades&Calvo Sotelo, PricewaterhouseCoopers, Roca Junyent, Solchaga-Recio&Asociados, CyC, and Llorente & Cuenca. See www.forotransparencia.com. See: J. Navarro, J. Cremades, E. Ontiveros, J. Sevilla, C. Solchaga: "Para gobernar, luz y taquígrafos", El País, 14 February 2013.

Elena García Guitián and Iván Medina, "Principios e implicaciones de la regulación de los grupos de interés en España" (2014). Draft article for Revista de Estudios Políticos, Political Science and International Relations Departament, Universidad Autónoma de Madrid.

governments are created in different sectors through diverse institutional participatory mechanisms (e.g. the Womenâ&#x20AC;&#x2122;s Council, the Youth Council, the Economic and Social Council, the Environmental Evaluation Council, the Consumers and Users Council, etc.). All of these councils receive the participation of the parties at stake and, as a result, representative employers associations and unions are guaranteed an institutional position to express their opinions on the issues and policies that affect them. Along this formal reality, there is a degree of informality in which hundreds of professional lobbyists, companies, and diverse interest groups try to influence the executive and legislative branches in a world where there are no rules to regulate their access, information on their contacts, the ethical limits of their work, or even a record of meetings. There have been cases of "legal" corruption and undue influence and corruption is perceived to be a major problem in Spain yielding, as a result, strong disaffection in society. This has lead us to worry about the opacity with which, in very relevant areas, lobbying is conducted, due to insufficient information and the absence of rules that would enable to know who influences, how, towards whom, what are the results, with which economic means. There is no record of lobbyists, lobbyists are not required to report their activities, there are no bodies monitoring and controling their activity, and, as if that were not enough, there is insufficient legal and institutional support to keep track of the legislative footprint of our laws.

The lack of information and the bad practices contribute to the fact that the image of lobbying is under suspicion and remains negative in Spain, despite no cases are known where professional lobbyists have been involved in corruption. To improve trust in government and reduce perceptions of corruption, several policy measures are underway, one of them being the proposed regulation of lobbyists. Unfortunately, the current proposal is extremely conservative and does not seem to address the key issues and risks related to lobbying, as it focuses only on a register within Parliament, does not include lobbyists' activity reports, and leaves undefined the code of conduct for lobbyists. We will have to wait for Parliamentary debates to see what finally emerges from the legislature. From the perspective of senior officials and public representatives, a range of measures concerning ethics are foreseen which do not substantially change the rules on conflicts of interest, although they do improve the regulation of party financing as well as introduce the crime of illegal funding. On December 10, 2014, the Transparency Act will fully enter into force for the State level (not for sub-national governments). This law is expected to reduce space for government opacity and help better control the activity of public authorities, especially thanks to some of the sub-national laws being passed in the Autonomous Communities. An example of it is the Public Transparency Law of Andalusia, which requires greater publicity of institutional agendas of governments. Meanwhile, Transparency International Spain and other NGOs push for more stringent regulations to effectively prevent corruption, increase transparency, ensure the integrity and, to the extent possible, ensure political equality in public decision-making. This report aims to be a step in that direction. In the light of this analysis, TI Spain recommends the following measures:

RECOMMENDATIONS TO BUILD A FRAMEWORK THAT ENSURES TRANSPARENCY, INTEGRITY AND EQUAL ACCESS IN LOBBYING

Registration and Disclosure measures 1. The government must conduct a comprehensive review of lobbying risks in order to inform the introduction of a regulation of lobbying of the executive and legislative branches. The review must clarify the rules of the game and define who will receive special protection − for constitutional reasons − when exerting influence, noting who will have this protection, due to relevance to a specific sector, and who will not. This will guarantee a level playing field as well as transparency of the roles and responsibilities taken on. 2. Both Governments and Parliaments should initiate a broad consultation on introducing a register of lobbyists, involving all stakeholders who would be affected by such a register. Any register that is introduced must a) be mandatory and capture all who lobby professionally (anyone who is seeking to exercise influence including for instance not only professional lobbyists, but also private sector representatives [in-house lobbyists], public affairs consultancies, representatives from NGOs, corporations, industry/professional associations, trade unions, think-tanks, law firms, faith-based organisations and academics) and b) cannot be built exclusively to regulate access to the national legislative branch−it must also regulate lobbying of regional Parliaments and the executive branch. 3. Public representatives and officials should clearly report contacts maintained with regard to every policy or political measure, and publicly inform about their work agenda. Public representatives (deputies and senators and local representatives) should publish their agendas and calendars. 4. All registered lobbyists should furnish periodic public reports on their activities, without prejudice to the information that the public officials with whom they meet should provide. They should clearly establish the public officials involved, their classification and the units where the work, the topic on which they sought to influence, the amounts received for this task, or, if a company is exercising influence on its own behalf, the relevant budget, etc. 5. A lobbying Code of Ethics should be introduced, setting clear ethical standards with regard to communicating with and seeking to influence public officials and representatives. Both lobbyists and those targeted by lobbyists and interest groups should be trained on the Code of Ethics. 6. There should be an independent entity or agency that manages the registration system and monitors and sanctions non-compliance, both in the private as well as the public sector (it can be of new creation or an already existing entity that is reorganized to assume this task).

Public Sector Integrity measures 7. The Transparency Act should be fully implemented and, when possible, amended to include greater access to public officialsâ&#x20AC;&#x2122; agendas and the criteria for selecting consulting experts, as well as to enable citizen participation in drafting bills and regulations. The implementation of the act must be closely monitored. 8. The impartiality and independence of the Conflicts of Interest Office should be guaranteed so that the Conflicts of Interest and Incompatibilities Act (which only affects the executive branch) can be applied in a serious and rigorous fashion. This recommendation should be extended to other units, entities, agencies or authorities especially in charge of managing and monitoring conflicts of interest at the autonomous community and local levels, who must also have sufficient resources to effectively do their job. 9. The regulation on incompatibilities of public officials and senior public representatives should be guaranteed. With regard to the 'revolving doors', a supervision should be ensured after the 2-year cooling-off period to prevent undue influence and influence peddling. The regulation on this matter should also apply to independent advisors in public company management boards, state attorneys or financial inspectors. It is important to regulate the process by which the private sector hires public officials from entities that are particularly well-prepared and have privileged information and contacts, such as state attorneys or financial inspectors. Their re-entry into the public arena should be closely monitored, and a hold should be placed on this re-entry in areas where conflicts of interest could occur. 10. The regulation of the process to draft bills and regulations should be reviewed to ensure a level playing field between all interests at stake for each regulated matter. More participation from all interested stakeholders is needed, as well as more information on the consultation and participation mechanisms, more timely information provision, enhanced channels of communication between citizens and the governments/parliaments, and mandatory impact assessments. The legislative technique and the quality of mandatory impact reports should also improve (in particular through the reform of the Government Act and Administrative Procedure Act). 11. A 'legislative footprint' should be introduced which would provide a clear record of the information considered during legislation drafting and detailed record of the legislative process, including the meetings held by deputies and senators with third parties. 12. Concerning the Parliament, conflicts of interest and revolving doors should be more controlled, through proper review of Parliament membersâ&#x20AC;&#x2122; income and assets statements, and rigorous oversight of any incompatibilities and conflicts of interest. Futhermore, a code of ethics should be established whereby it is forbidden to accept gifts. 13. Concerning the judicial branch and for the Public Prosecutorâ&#x20AC;&#x2122;s Office, bans on post-public employment positions should be clearly regulated, and conflicts of interest should be more specifically monitored (for instance, through mandatory assets and income declarations).

Measures related to political party financing 14. Political parties should be barred from cancellation of debt by the banks. 15. Political donations by businesses should be banned. In order to close loopholes in the political financing laws, financing of foundations and other entities tied to the parties should be monitored more closely, with the same limits established for political parties. In particular it should be forbidden for political party foundations to receive donations from companies that have contracted with public administrations.

INTRODUCTION The regional study published by Transparency International in 2012, Money, Power and Politics, found that in most European countries, the influence of lobbyists is shrouded in secrecy and a major cause for concern. When undertaken with integrity and transparency, lobbying is a legitimate avenue for interest groups to be involved in the decisions that may affect them. Problems arise when lobbying is non-transparent and unregulated and where privileged access is granted to a select few while others are excluded from decision-making processes. Corporate lobbying in particular raises concerns because it often involves companies with vast sums at their disposal developing close relationships with law-makers and 3 thus gaining undue and unfair influence in a country’s politics and policies. A recent Eurobarometer survey revealed that 81% of Europeans agree that overly close links between business and politics in their country has led to corruption and more than a half believe that the only way to succeed in business in their country is through political 4 connections. This corroborates the data from Transparency International’s Global Corruption Barometer 2013, which found that in many European countries more than 50% of the people believe that their country’s government is to a large extent or entirely run by a few big 5 interests. Spanish citizens and companies are not strangers to these concerns. It is a widespread belief that in Spain money and politics are too closely linked and that corruption abounds in business.6 According to the 2014 Special Eurobarometer on corruption, 77% of Spaniards believe that corruption is a part of the country’s business culture, 67% believe that the only way to succeed in business is through political connections and 84% believe that bribery and 7 connections are the easiest was to obtain public services . Concerning companies, Spain tops the charts with 97% of companies perceiving corruption, 91% seeing excessive links between money and politics, and 93% finding that corruption and favouritism harm business.8 The poor practices that were observed overall by Spanish companies are: favouring friends and family when conducting business, nepotism and clientelism in administration, and opaque political party financing. It is not surprising that trust in government is at an all time low. Juan Francés, journalist and former communications advisor in various ministries, states in his book, Qué vienen los lobbies! (The lobbies are coming!), that no single law has been approved Transparency International, Money, Politics and Power: Corruption Risks in Europe (Berlin: Transparency International, 2012). www.transparency.org/whatwedo/publication/money_politics_and_power_corruption_risks_in_europe.

European Commission, Special Eurobarometer 397 on "Corruption", February 2014 (Brussels: European Commission, 2014). http://ec.europa.eu/public_opinion/archives/ebs/ebs_397_en.pdf

Transparency International, Global Corruption Barometer 2013 (Berlin: Transparency International, 2013).

European Commission, EU Anti-Corruption Report - Annex Spain (Brussels: European Commission, 2014). http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/anti-corruptionreport/docs/2014_acr_spain_chapter_en.pdf.

European Commission, Special Eurobarometer 397 on "Corruption", February 2014 (Brussels: European Commission, 2014).

European Commission, Flash Eurobarometer 374: Businesses’ Attitudes towards Corruption in the EU (Brussels: European Commission, 2014). http://ec.europa.eu/public_opinion/flash/fl_374_en.pdf.

in the last 10 years without being subject to pressure from lobbies.9 The keys to understanding the spread of political pressure are two very important facts. First, there has been a Europeanisation of political practices and public policies. European institutions have adopted a model of pluralist interaction, which comes into tension with the model of many Member States such as Spain (which is more corporatist) but has a very strong isomorphic effect. The good reception in the EU of the pluralist model is due to the institutional peculiarities of the EU: the absence of European civil society, institutions which are different to national ones, the complexity of issues, fragmentation of the political process, multiplication of interest groups, globalisation of pressure, etc. - all these factors coexisting with a widely perceived failure of democratic controls. Second, economic globalisation and the need for governance that responds to increasing challenges for the states. The increase of the subjects of regulation, their complexity, diversification, internationalisation and technical nature have transformed the relations between public institutions and private and non-governmental actors. These actors provide information, resources, management support and promote the applicability and legitimacy of decisions. As a result, all kinds of groups have proliferated in our democracies that seek to influence, so their interests and models are taken into account, not only nationally, but also in Europe. The relation with these groups has been structured differently in OECD countries. Some have followed a pluralist model, based on recognising the plurality of interests and let those interests interact with each other and with the state in a formal and equal way, without recognising the special statuses or quasi-public functions of any of them. In others, like Spain and many other European countries, the model has been corporatist, giving – even in the Constitution – unions and employers' associations co-configuration functions of general interest with the government, or recognising corporate entities’ (such as professional associations or chambers of Commerce) as having prominent roles in the management of public interests. In Spain, due to the regulatory framework in which they operate, the influence of these groups has resulted in semi-institutionalised models incorporating different criteria for representation and participation. As a result, over 600 rules govern the formal participation of organised groups in different policy areas within a strong corporatist vision. Specific interaction networks in different sectors have been generated, with hundreds of very different bodies for institutional participation (e.g., Women Council, Youth Council, Economic and Social Council, Advisory Council on the Environment, Council of Consumers and Users, etc.). In all these organisations, participation is foreseen and, therefore, influence is ensured to the most representative employers’ and workers’ organisations, plus relevant associations in the field on which decisions are made. Alongside this formal reality, there are spaces where there have been, occasionally, cases 10,11 of "legal" corruption and undue influence. This leads to concern about the opacity with Juan Francés, ¡Que vienen los lobbies!, Destino, 2013. See interview in La Vanguardia, 29 April 2013. www.lavanguardia.com/libros/20130429/54372866931/entrevista-juan-frances-lobbies.html.

Amitai Etzioni, "Political Corruption in the United States: A design draft", Political Science and Politics vol. 47, 2014, N. 1- "A broader definition of corruption views it as an illegal use of public power and resources for private gain, which includes not only or even primarily personal gain, but the deflection of public resources and employment of public power to advance the causes of one or more private (special interest) groups" (p.9), “According to a third definition, political corruption encompasses the use of public power and resources for illegal and illicit (some write “unethical”) purposes” (p.15); "Virtually any act of persuasion that over-comes the free will and judgment of another, including exhortations, importunings, insinuations, flattery, trickery, and deception, may amount to undue influence". http://legal-dictionary.thefreedictionary.com/undue+influence.

For a definition of "undue influence", see: http://legal-dictionary.thefreedictionary.com/undue+influence

which, in very important areas, lobbying activity is conducted, given the absence of rules that ensure there is transparency about who influences, how, to whom, with what results and with what economic means. There is no record of lobbyists, lobbyists are not required to report their activities, there are no bodies monitoring and controlling their activities, and, as if that were not enough, there is insufficient legal and institutional support to keep track of the legislative footprint of Spanish laws. Meanwhile, as we have pointed out, there are hundreds of standards related to participation and hundreds of institutional bodies with presence in corporate and union groups that have a guaranteed institutional position to give their views on the policies that affect them. In sum, the formal reality ensures, with some limits, the influence of legally recognised organisations in certain areas of decision-making, but also a great informality persists regarding the influence of other sectoral and more focused groups, dedicated to the defence of very specific business interests. It is in this last activity of influence where the vast majority of cases of undue influence and even corruption occur. In the end, the lack of information coupled with some bad practices means that lobbying is regarded with suspicion and is generally perceived as negative in Spain, even though there have been no known cases of professional lobbyists being involved in corruption. This report analyses two types of variables with regard to lobbying: •

The first has to do with studying how corrupt practices and undue influence are prevented in the exercise of lobbying or interest representation in Spain. This analysis and the resulting proposals are addressed from an institutionalist perspective. That is, we base our analysis on the theory that good regulation can discourage corrupt or unethical activities, while encouraging good practices that will favour integrity in lobbying and legitimise this activity, which is necessary in any representative democracy.

•

The second asks how decisions on public policies and programmes are taken in Spain and seeks to make proposals to balance the playing field. This is connected with the concern about representative democracy and the quality of decisions. It is certainly a wider concern, more complex than corruption prevention. It will be addressed with less detail, as we hope that future research will enable us to address this dimension in full.

The report is divided in four parts. It begins with a definition of lobbying and a typology of risks of corruption and undue influence related to lobbying in policy-making (Introduction). The following chapter maps the lobbying landscape in Spain, giving a contextual analysis of the national historical, socio-political and legal situation (The situation of lobbying in Spain). The chapter also discusses the intensity and scale of lobbying efforts and the various cultural understandings of the term “lobbying” and perceptions of lobbying practices in the country. Other relevant issues such as self-regulation of lobbying activities and the role of the media and civil society as watchdogs in monitoring and reporting on lobbying activities are also discussed. Following this, the next chapter assesses the degree to which national regulation (public law and private self-regulation) adequately provides for transparency of lobbying activities and public decision-making, integrity in lobbyists and the conduct of public officials, and equality of access to political and administrative decision-making processes (Lobby regulation: Transparency, integrity and equal access). For this purpose we have used a series of 65 assessment questions and included a number of case studies, which highlight incidences of

undue lobbying in sectors such as public health, energy, construction, telecoms/technology and the financial sector. The cases illustrate the risks for society when lobbying is allowed to take place in the shadows or without a proper regulation. We also include two cases of promising practice identified in our research, related to the public health sector. Finally, the report closes with 15 recommendations to improve transparency, integrity and level the playing field (Conclusions and recommendations).

DEFINITIONS The definition of lobbying used for this project is: "any direct or indirect communication with public officials, political decision-makers or representatives for the purposes of influencing public decision-making carried out by or on behalf of any organised 12 group". “Lobbyists” include not only professional lobbyists (interests’ intermediaries), but private sector representatives (in-house lobbyists), public affairs consultancies, representatives from NGOs, corporations, industry/professional associations, trade unions, think-tanks, law firms, faith13 based organisations and academics. In Spain, given the decentralised nature of the state and without contradicting the overall definition, we envisage a set of special players as “lobbyists”: representatives of regional (autonomous communities) and local governments who defend the interests of their region/municipality before the central regulators. At the local level, this influence can be traced back to the corresponding association, such as the Federación de Municipios y Provincias (Federation of Municipalities and Provinces (FEMP)). On occasion, certain ministers may act as representatives of the interests of the sector they manage vis-à-vis the criteria of the ministry in charge of the corresponding regulation. In this case, the Council of Ministers is where this influence peddling should be resolved (this also occurs at the autonomous community level). In sum, the elected representatives (both at the central as well as the autonomous community and local levels) play an institutional role at the service of one of the higher values of our legal system: political pluralism. All of these players are part of the state, and as such help define the general interest. But depending on whether or not they are responsible for drafting the final proposal, they can be considered decision-makers or “lobbyists”. Nevertheless, using the term “lobbying” in a broad sense leads to an over-expansion of the subjects that are potentially covered under this conceptual umbrella and, therefore, it may be more appropriate to narrow the definition of lobbying to:

These definitions draw heavily on the Sunlight Foundation Lobbying Guidelines. http://sunlightfoundation.com/blog/2013/12/03/announcing-sunlights-international-lobbying-guidelines/; the OECD Draft Report on Progress made in implementing the OECD Principles for Transparency and Integrity in Lobbying, published as Lobbyists, Governments and Public Trust, Volume 3: Implementing the OECD Principles for Transparency and Integrity in Lobbying (Paris: OECD Publishing, 2014); and Council of Europe Parliamentary Assembly Recommendation 1908 (2010) on lobbying in a democratic society.

Transparency International, Lobbying in the European Union: Levelling the Playing Field (Berlin: Transparency International, 2012). www.transparency.de/fileadmin/pdfs/Themen/Politik/ENIS_Regional_Policy_Paper_Lobbying.pdf.

Ø

any direct or indirect communication with public officials, political decisionmakers, or representatives, for the purpose of influencing public decisionmaking carried out by or on behalf of an organised group that is private or nongovernmental in nature.

We consider that any proposed lobbying regulation ought to cover all types of professional lobbying. Thus, the definition used purposely excludes individual influence that a person might exert in his or her own interest or in keeping with his or her own convictions: this would be considered part of a citizen’s normal activity in a healthy democracy and not something that would need to be regulated, limited or controlled. Clearly there are grey areas, such as telemarketing campaigns where private citizens contribute to the objectives of an interest group by sending petitions to the government, or campaigns carried out by business owners who meet with public representatives to promote the business’ interests (in this case, if they are defending the interests of an organisation, it would fall under the category of “in-house lobbying”). Thus, in certain contexts where the prevalence of oligarchies can place balanced decision-making at risk, it may be necessary to regulate these cases specifically. This is not the situation in Spain, although at times, owners of large construction companies or the heads of major banks meet with the head of state or the primary opposition party to defend their interests or even to make donations to these parties. These situations are the exception rather 14 than the rule, and the relevant players really only serve sporadically as lobbyists. Bearing in mind the overarching definition, we could consider the following questions: Is lobbying the activity of a political representative who is meeting with others (particularly if the latter are part of the government) to defend the interests of a company that has “hired” him/her for this purpose?

Is lobbying the activity of a public representative who is meeting with others to defend the interests of his/her own family business?

> This is a case of influence peddling where an individual takes advantage of his or her power or position to obtain an outcome from a third party that favours the person or group financing him or her.

> This is a case of a crime of negotiations forbidden to civil servants.

Hence, these practices are a crime in Spain and we do not consider them to be lobbying. Ø

Relationships and negotiations amongst politicians should be understood as part of the normal democratic process, provided that what they are negotiating is political interests, not the interests of companies that could be represented privately. If the objective of the negotiations were direct or indirect personal economic interests, we would be facing cases of corruption that are subject to criminal prosecution.

However, the borders between legitimate political interests and illegitimate interests are not always clear. The first case that we analyse, relating to the savings banks (Case 1) is an example of a very special kind of influence, where some state and autonomous community representatives defended the status quo of the savings banks in order to promote the continuity 14

“Bárcenas afirma que Rajoy intervino en una donación ilegal”, El País, 15 July 2013.

of the funding model of their parties and/or client investment projects that these credit agencies so generously financed, much to the detriment of the general interest. This is a case that, at times, borders on accounting liability, and it is an example of political influence that is difficult to classify as lobbying in the strictest sense of the word, but which is closely related to practices that are ethically reprehensible.

Case 1. Public lobbying in the savings banks Most experts agree that the savings banks played a leading role in the terrible economic crisis that continues to persist in Spain. Thanks to regulation that enabled them to deregulate their activities during the 1990s, savings banks expanded and opened branches throughout the country at a time when big banks were withdrawing their business in Spain and beginning to move into the international arena. To illustrate this point, in 2008, less than 15% of Banco Santander’s revenue was generated in Spain. The exposure to mortgage loans also varied greatly from one case to another. Two additional factors contributed to the vulnerability the savings banks were experiencing at the time the financial crisis hit in Spain: (i) their legal status as non-profit entities without capital, which prevented them from recapitalising in the case of insolvency; and (ii) the strong influence of the autonomous communities over the savings banks and their jurisdiction over them. In broad terms, the savings banks are private, not-for-profit institutions without any share capital. Originally, they had close ties to a concrete region, until the Bank of Spain, promoting their deregulation, allowed them to open branches in other regions. As for the legislation governing them, Act 31/1985 transferred regulatory powers over savings banks to the autonomous communities, while the Bank of Spain has monitored their operation. This supervision has served as a preventive measure, alerting the government agencies to certain risks or deviations, and it has also applied sanctions. The Ministry of Economy has the legal authority to intervene in the savings banks if they fail to heed to recommendations of the Bank of Spain. The savings banks have two governmental entities: the General Assembly – composed of General Advisors – and the Control Commission. The advisors are classified into four categories: municipal authorities (politicians), depositors, founders, and employees. Since Act 44/2002 came into effect, the political participation of the savings banks was limited to 50%, and the terms were restricted to a maximum of 12 years. The Confederación Española de Cajas de Ahorros (Spanish Confederation of Savings Banks (CECA)) is the association to which Spanish savings banks belong. CECA’s primary goal is to strengthen the position of the savings banks vis-à-vis the regulator by defending and representing their interests. According to the experts consulted for this research, CECA played a secondary role as compared to that of the savings banks presidents or autonomous community representatives in negotiations with the central government. In an interview with the CECA, it was affirmed that this association had made a tremendous effort to depoliticise the savings banks: “We have worked hard here to restrict the influence of the Autonomous Communities”.

The regulator – that is, the Bank of Spain – has a team of highly qualified inspectors charged with the task of conducting annual inspections of the various lending agencies. The final step of the inspections involves a series of confidential reports, which they send to the Bank’s executive board, so that it, in turn, issues the corresponding recommendations to the entities. The Bank of Spain’s supervisory activity had always been lauded for its rigour and independence. However, in 2006, the inspectors began to note that their comments were not making it all the way to the entities. The Bank’s executive board was retaining them without issuing the corresponding recommendations. This trend only intensified throughout the crisis. This is evidenced in the fact that in the Monitoring Summary that the Bank publishes each year, the number of letters of formal notice and recommendations addressed to the entities shrank from 97 in 2006 15 to 41 in 2012. In 2006, the inspectors’ indignation grew until the Association of Inspectors of the Bank of Spain – which represents 90% of them – wrote to the vice-president of Spain and the Minister of Economy and Finance, Pedro Solbes. The letter alerted him to the public notification that the Association was going to issue to contradict the optimistic discourse originating from the Bank’s governor regarding financial sector risks. Following are illustrative excerpts from the text: We, who examine in situ the situation of the entities subject to Bank of Spain monitoring and supervision—including valuation societies—have first hand knowledge of the delicate situation of the Spanish housing market, and we also understand the implications that [it could] have for the overall economy and for the financial sector, namely a disorganised correction of its evident imbalances [...] [...] as a result of the abnormal development of the Spanish housing market over the last six years, the level of accumulated risk in the national financial system far exceeds the description given in the Governor’s aforementioned discourse. [...] Since the increase of traditional liability—bank deposits—has proven unable to balance the accelerated lending growth, Spanish entities have been forces to seek additional liquidity sources, and they have done so by approaching the euro zone’s financial markets, taking advantage of the possibilities that this unique currency offers [...] the number of families that will encounter serious difficulties when making good on their financial commitments will grow 16 at an alarming rate [...].

This letter, which was not published until the end of 2011, raises many questions. The main one, which bears special meaning for this case, is who and what was determining the public discourse of the Bank’s governor and why he and the Minister of Economy and Finance disregarded the inspectors’ recommendations. Before exiting office, the governor of the Bank of Spain, Jaime Caruana, privately warned Pedro Solbes of the severity of the situation, or so his cohorts told El País journalist Íñigo de Barrón, author of the book El hundimiento de la banca: Crónica de cómo gestores, supervisores y políticos provocaron la mayor crisis en la historia del

Banco de España, Memoria de la supervisión bancaria en España 2006 y 2012.

See: http://estaticos.elmundo.es/documentos/2011/02/21/inspectores.pdf

sistema financiero español. However, these warnings are not recorded in any document. Nevertheless, there is record of the warnings that Caruana issued to the savings banks in 2001, at the beginning of his term, most notably that they should distance themselves as much as possible from political power if they wanted to manage their business effectively. However, when he exited office, his farewell speech conveyed more tranquillity than concern. After Caruana, Miguel Ángel Fernández Ordóñez took office as the next governor of the Bank of Spain. He was coming from a position in the government, and therefore lacked sufficient guarantees of independence. According to the former inspector of the Bank of Spain, the Bank’s upper echelon and the Zapatero administration believed the crisis would be short, and this determined their management and communication strategies. In that regard, De Barrón wrote: "In July of 2008, Pedro Solbes stressed the fact that no Spanish entity was at risk and that he did not believe that Spain would experience a situation like the one other countries were dealing with. [...] By then, Ordoñez was already aware of the problems faced by CCM [Caja Castilla-La Mancha (Castille-La Manche Savings Bank)] and other entities with increased exposure to the housing market, such as the CAM [Caja de Ahorros de Mediterráneo (Mediterranean Savings Bank)], Bancaja, Caixa Galicia, and Caixa Catalunya. And he said nothing".

In September of that year, at the acquiescence of Ordoñez, Solbes once again stated: “We are convinced that the Spanish system is not at risk”.18 And this is precisely what Zapatero affirmed that same month in New York, to the international community: “Spain may just have the most solid financial system in the world”.19 Undoubtedly, Zapatero’s interest in denying Spain’s precarious situation benefitted all of the autonomous community presidents, regardless of whether their political allegiance was to the PSOE (Partido Socialista Obrero Español (Spanish Socialist Workers’ Party)) or the PP (Partido Popular (Popular Party)). The Spanish political map in 2009 and 2010 was equally divided between the PSOE and the PP, with eight autonomous communities governed by the latter and another eight by the former. The power of the so-called “autonomous community barons”, coupled with that of the central government, explains – according to Bank of Spain inspectors – the silence amongst the Bank’s upper echelon with regard to the evident rapid deterioration of the situation of the entities. More specifically, “the private interests of the governors and those of high-ranking executives, and the scarce interest in facing the PP and the PSOE, as well as the autonomous community barons that controlled the savings banks... explains the silence and lack of measures”.20 The first outcome of the lack of supervision: The fall of Caja Castilla-La Mancha Until March 2009, Caja Castilla-La Mancha (CCM) was ranked the twelfth largest savings bank in Spain, with 19 billion euros in shares. Thanks to the growth sustained Iñigo de Barrón, El hundimiento de la banca: Crónica de cómo gestores, supervisores y políticos provocaron la mayor crisis en la historia del sistema financiero español (Madrid: Catarata, 2012).

"Solbes asegura que los ahorros de los españoles no corren peligro", Diario de Navarra/EFE, 1 October 2008.

"Zapatero en Nueva York: 'Queremos ser un buen amigo de EE UU'", El País/EFE, 24 September 2008.

I. de Barrón, El hundimiento de la banca, 2012.

in the housing sector, CCM managers – much like all of the other savings banks – issued loans to real estate developers and charged high commissions. They used their earnings to finance large-scale regional projects, at the behest of the politicians that were protecting the entity (such as the failed Ciudad Real airport, which, despite significant investment, never actually began operating). In the following excerpt, we can see the pressure that regional politics exerted on the Bank of Spain in the case of the CCM and how it extended to other cases: [...] High-level Administrators, who know the Bank of Spain and its governor inside and out, explain that the CCM represents a missed historic opportunity to redirect the crisis. In their opinion, if the supervisor had acted severely, the resistance shown down the road by other savings banks would have vanished. The idea was to sell the savings bank’s shares to other competitors and put the organisations that compose the board (city halls, autonomous communities, associations, etc.) on hold. The CCM was the perfect occasion to convey that he who makes his bed must also lie in it. [...] However, instead of being firm, only the Bank of Spain’s soft legalism was shown, perhaps because it was the first savings bank and because it was controlled by the PSOE (Spain’s ruling party at the time). Following this weak reaction, the managers of the other savings banks felt strong and firmly in place, particularly if they the autonomous community protected them against Ordoñez [...].21

In light of the CCM crisis, the government rapidly approved Royal Decree/Act 2/2011 to reinforce the financial system, with which it addressed the process of recapitalising the entities. For the first time, almost four years into the crisis, the government recognised the need to inject capital into the entities with public or private funds. This measure acknowledged a lack of capital in the economy totalling some 15 billion euros (far below what was really needed). According to Aristóbulo de Juan, Francisco Uría and Iñigo de Barrón in Anatomía de una crisis: cómo la mala gestión y la injerencia política cambiaron la vida de todos y 22 provocaron el rescate financiero: [...] the Autonomous Communities were granted the power to determine the composition of the Assemblies, to nominate advisors and managers, and to decide possible integrations of savings banks. Additionally, and most importantly, they had true control over lending policy. In fact, after a certain volume, the transactions needed to be formally approved by the Autonomous Communities. [...] when a decision is made to finance an airport or major convention centres, a financial analysis does not often prevail. A political decision is imposed upon the financial entity [...].

While anti-crisis royal decrees were being drafted, savings bank advisors and local politicians from the autonomous communities often met with the central government, according to a national member of parliament, who spoke on the condition of anonymity: “There is no record of any of these meetings, but they took place frequently”. In that regard, and according to the experts consulted, there is no doubt that the pressure that the autonomous communities exerted to restructure the sector, according to the interests of the party in office in each of these regions, turned the royal decrees into mere plaster that could not appropriately cover the wounds suffered 21

I. de Barrón, ibid.

A. de Juan, F. Uría and I. de Barrón, Anatomía de una crisis: como la mala gestión y la injerencia política cambiaron la vida de todos y provocaron el rescate financiero (Barcelona: Deusto, 2013).

by the savings banks. Gaspar Ariño, the Administrative Law chair, underscores the fundamental cause of the lack of precision and resolution of these decrees: the power of the autonomous community barons, which slowed down any real reform of the savings banks. In his 23 book La necesaria reforma de la Ley de Cajas de Ahorros de 2009, the author assures us that neither the PP nor the PSOE “faced the true savings bank power: the autonomous community barons”. At the state level, the PP and the PSOE also represented the sum total of the of those responsible at the autonomous community level, and at that time, they were interested in maintaining power in their territories, even at the cost of economic rationality and the possibility of implementing major changes in the savings banks’ organisation system. Although we have no record of how this pressure was actually exerted, we do have examples of how, on occasion, the political party’s interest prevailed over the general interest. The cases of Novagalicia Banco and Caixa Catalunya could serve as examples of this point. As De Barrón explains, both savings banks were created at the request of the Presidents of their respective autonomous communities, Alberto Núñez Feijóo and José Montilla, despite the plethora of reports predicting that both projects would be unfeasible. The former received 3.6 billion euros from the Restructuring Fund (FROB according to the Spanish acronym) and the latter, 2.9 billion. Nevertheless, both entities found themselves in dire straits and were nationalised. Brussels forced them to be sold: Caixa Catalunya (Catalunya Banc) was bought by BBVA, a transaction that cost the public purse more than 11.5 billion euros. As for Novagalicia Banco, it was acquired in June 2014 by Banco Etcheverría a 24 subsidiary of the Venezuelan Banesco. In June 2012, with the new administration in place and in order to address the banking crisis, the European Stability Mechanism (ESM) granted Spain a line of credit of up to 100 billion euros with a 1.5% interest rate over 15 years; only 41.4 billion euros were ultimately received. The terms and conditions of this loan were recorded in the famous Memorandum of Understanding on Financial-Sector Policy Conditionality 25 of 20 July 2012, drafted by the Eurogroup. A significant portion of these funds has been used to rescue the savings banks.26 In conclusion, this case had a grim economic outcome for taxpayers. Over time, it has been possible to conclude that it could have been avoided with better regulation and oversight and less political influence on the part of certain public representatives who put easy or inadequate financing routes before economic rationality for the political parties and for mega projects with clear client tendencies. Is this a case of political lobbying with undue influence? Or is it merely an example of political negotiation in which highly debated political interests prevail over economic ones? These questions are hard to answer. The outcome for

G. Ariño, La necesaria reforma de la Ley de Cajas de Ahorros de 2009 (Madrid: Civitas, 2010).

Iñigo de Barrón, "El Estado pierde unos 11.500 millones al vender Catalunya Banc al BBVA", El País, 21 July 2014.

See BOE: www.boe.es/diario_boe/txt.php?id=BOE-A-2012-14946.

See graphic and article in "Así es el nuevo mapa bancario español después de 5 años de reformas", Expansión, 21 August 2014.

the general interest has been disastrous, but none of the typically proposed measures for lobbying regulation could have prevented it. Most likely, greater transparency and accountability for public activity would have been beneficial, as would better systems for protecting the independence of regulatory bodies. This should be the main lesson learned from this case.

Lobbying can also be classified into three categories, according to its cause: (i) Economic: activities conducted by representatives of interest groups for economic purposes to promote the interests of businesses or corporations. (ii) Professional: work performed by business associations and unions, professional corporations, and the chambers of commerce. (iii) Public interest: the task of advocacy or political influence in favour of causes such as human rights, good governance, the environment, etc. carried out by a wide variety of NGOs.27 For our research, all three types are considered “lobbying”, even when the cases we have dealt with focus on the first category (economic). It is important to note that the category of professional lobbying is constitutionally protected under the corporatist model of many continental European countries, such as Spain.

TYPOLOGY OF RISKS The risks of corruption or bad practice associated to lobbying are found within all phases of the process of drafting public policies and taking public decisions.28 Some examples of lobbying practices and activities that could be linked to corruption or unethical practices are:

•

Illegal financing of political parties to obtain regulatory benefits once the funded parties are in office

•

Revolving doors (the practice of individuals moving between positions in the public and private sectors)

•

Regulatory and technical capture (for example, by means of controlling expert groups, funding biased research and investigations to promote business options, or financing professional meetings and conferences in exchange for widespread support of the financers’ interests)

•

Rules and regulations that voluntarily create gaps or loopholes to avoid the true controls (diluting regulation)

•

Rules and regulations that weaken the restrictions to the point of converting certain laws into a true example of window dressing (debilitating restrictions)

R. Chari, J. Hogan, G. Murphy, Regulating Lobbying: A Global Comparison (Manchester: Manchester University Press, 2010).

With regard to the policy process, see for example J. Subirats, P. Knoepfel, C. Larrue, F. Varone, Análisis y gestión de políticas públicas (Barcelona: Ariel, 2008).

•

Weakening of the controls and application of law during the regulatory phase (weakened enforcement)

•

Slowing up the application of sanctions by pressuring the decision-makers (weakened penalties)

•

Drafting wrong terms of reference for a public contract to ensure that a candidate obtains it, etc.

In all of these cases, the regulator or the those responsible for the policy implementation abuse their power to favour specific private interests, thereby harming the general interest or at the very least failing to consider it. This does not necessarily imply that there is any illegal activity going on, although the cases may be seen as ethically unacceptable, if you consider ethics in the public sector as tied to the quest for common good and within the context of respect for human rights. There may also be “state capture,” although so strong an influence – according to the 29 technical definition – was not found in Spain. In short, the examples reflect an unequal playing field in the decision-making arena. Lastly, lobbying can be described as an ascending staircase, where the first steps represent the subtlest forms of interest groups or agents exerting influence over public decisions, and the upper steps represent direct influence. The less perceptible variants appear natural, as part of the logical workings of the institutions. On the upper steps, however, direct influence develops over public representatives and individuals in charge, and at the top of the staircase, it may include the less legitimate and, at times, illegal forms. For example, in healthcare, the less visible influences are particularly significant, as a statement by the PR representative of a major pharmaceutical corporation shows: One characteristic of the industry is the quality and quantity of information and resources it has. A multinational of a certain size has detailed and specific information on all of the processes that interest it (both scientific as well as those related to the ability to conduct research, understanding of comparative international processes, how the administration and key individuals operate, etc.), which far exceeds the information that the administrations have. This information grants the industry an incredible ability to anticipate what will happen next. By comparison, the administrations have few resources and their information is disorganised, of poor quality, and almost absurd. Under these conditions, the capacity for indirect influence in high, because the scientific, intellectual, formative, formative, and other sphere are all dominated, and as a result, direct influence is only exerted in cases where it is absolutely necessary. The need to directly influence decision-making is determined by a lack of a level playing field, as well as of clear, predictable regulation. Therefore, when necessary, maximum-intensity pressure is exerted at all government levels that can be reached.

According to this individual, the major pharmaceutical companies would be in favour of more stable and transparent regulation (specifically in reference to the processes by which pharmaceuticals are publicly funded, prices are set, and – over the past few years – healthcare centres purchase them), but he recognises that the absence of sufficient regulation does not prevent them from effectively managing the situation.

J. Hellman, G. Jones y D. Kaufmann, Seize the State, Seize the Day: State Capture, Corruption, and Influence in Transition (Washington DC: The World Bank, 2000).

Case 2. Public health: Actors and influence strategies Health spending represents 9.3% of GDP in Spain, which is about average for an OECD country.30 Due to its significant weight in the economy and its social scope, it is a sector where lobbying is particularly prevalent. Usually health policy is understood as healthcare services for the population. However, health policies go beyond healthcare management and reaction to disease, as stated in the preamble to the General Public Health Act (Act 31/2011): the healthcare apparatus is not the primary factor that determines our level of health; rather, it is social and economic conditions which do so, and these largely depend on government action that affects the healthcare services sector. We refer first to the so-called public health policies aimed at preventing disease and promoting health. Their implementation in Spain accounts for a meagre 0.5% of GDP,31 but they regulate or affect the relevant economic sectors. Among these policies are actions geared towards: healthy eating by avoiding toxic additives or foods that can be hazardous to our health; preventing smoking through special taxes32 or preventing exposure to second-hand smoke; preventing excessive alcohol consumption through taxes or blocking all minors from alcohol advertising; protecting people from chemical and physical risks by regulating the use of plastics in food packaging and the level of exposure to harmful radiation. Second, public policies from other sectors also have a noticeable impact on public health, such as labour or education policies. All of them are lobbying targets. The actors involved in health politics are many and varied. Among the parties or actors that exert influence are the following: the public sector itself, the industry of goods and services, scientific societies and professional organisations, and the media: –

At times, the coincidence of interests between a government area and economic operators is such that the influence exerted by this administration over other government sectors is similar to lobbying on behalf of these private operators. According to some high-level officials, the actions taken by some ministerial departments – such as agriculture or industry – on some decisions seem to respond more to specific interests of the sector they regulate than the general interest. In this sense, the analysis of influence should consider the different interest coalitions formed around each policy, where at times the public sector and society are simultaneously on both sides of the fence, with conflicting interests.

–

Pharmaceutical, health technology, and healthcare service provider companies are a key part of the process of shaping decisions that affect healthcare. Some companies from other sectors have also been highlighted at

OECD, “Health at a Glance 2013: OECD Indicators”. www.oecd.org/els/health-systems/Health-at-a-Glance-2013.pdf.

Ibid.

While the focus of this study is not the economic dimension of the tax system, we can mention that special taxes on tobacco accounted for an income to the State of 6.4 billion euros in 2013 (see Informe Anual de Recaudación Tributaria 2013, AEAT).

the international level as entities that determine health, due to the harmful effects of their products and their influence on how public decisions are outlined. Most notable among them are tobacco companies, sugary drink and food industry companies, and alcoholic drink manufacturers.33 –

Healthcare professionals, particularly doctors, make daily decisions regarding the public spending that covers the better part of healthcare costs, and this turns them into a frequent influence target. Their professional and scientific organisations interact with companies and public administrations. However, in addition to their role as necessary intermediaries with regard to prescriptions and indications, healthcare consumption, etc., professionals can introduce their own group interests that are presented as social interests.

–

Within civil society, other agents like patient associations – whose presence is valued by healthcare administration participatory bodies – have acquired the ability to influence. Other organisations intervene less frequently, and when they do, it is generally in defence of health and wellness or public health, such as antismoking organisations. Lastly, while this is not yet very common in Spain, some companies may create or sponsor alleged civil society organisations that use the guise of interest in defending social values to protect their own business interests. Along these lines, patient groups or scientific associations have been founded and backed by the industry.

–

Business and union organisations intervene in democratic participatory agencies geared toward healthcare politics, although in these visible roles they tend to be less active as lobby groups.

–

In the realm of mass media, the healthcare sector has a variety of specialised media, generally well financed by the relevant companies that intend to drive the scientific, educational, and political healthcare agenda. The general media derives its ability to influence from the fact that it is widespread, but other interested parties – whose power is bolstered by the growing dependence on funding that is tied to advertising – can also exert influence.

The interaction amongst all of these parties forms a public policy that has a certain welfare bias, given the greater weight of pharmaceutical/industrial lobbyists over preventive ones. Thus, the public healthcare agenda is partial towards treating illnesses and promoting technology that benefits certain industrial sectors and other essential actions are overlooked: public funding of alternatives that cost less than interventions in patented products; preventive policies; the inclusion of health as a cross-cutting topic in all other policies. One of the most important lobbying activities has to do with drug authorisation. The authorisation of drugs and certain healthcare products is, in part, adopted at the European level, and in this case the European regulator is the target institution for

It may be worth noting that the areas that contribute more to the business revenues in the industrial sector are, in the first place, extractive industries, energy, water and waste (30.8%), followed by food, beverages and tobacco (18.0%). The chemical and pharmaceutical industry accounts for 9.4%. See INE, España en cifras 2014 (Madrid: Instituto Nacional de Estadística, 2014), 41–42.

lobbying and other actions. At the national level, healthcare authorities have the power to determine what medicines are publicly funded for healthcare services, establish the prices, determining the use of health technology, and administrating healthcare services by deciding whether or not to purchase the services from companies and provide them publicly. In Spain, the Ministry of Health is responsible for the authorisation, public funding and fixing the price of medicines. The role of the autonomous communities is to purchase the medicines and healthcare products through the regional health departments or from healthcare centre management. In particular, pharmaceutical companies play a key role in health policy in all steps 35 and through a variety of channels: •

They prepare the informational agenda by organising most of the events that will be held and determining the content through media financing and communication strategies.

•

They determine the research and training agenda by indicating priorities that serve the conveniences of the industry and not the health of the population, and they influence the results of the research itself and of the products derived from it (recommendations, protocols, clinical guidelines).

•

They directly influence decision-makers both through lobbying in parliament and by accessing high-level officials and decision-makers at all levels.

•

They indirectly influence decision-makers through environment and through the use of groups involved.

the

information

Thanks to key informants, we know that company managers, organisation executives, or external specialists in this kind of action exert direct influence. They contact highlevel officials, including the top healthcare leaders. Also, companies use indirect influence that can involve health professionals; scientific associations; patient groups; high-level officials in charge of decision-making; former high-level officials hired by the industries; officials or technicians who influence treatment guidelines; political parties that influence high-level officials or the parliament (in cases where agreements are necessary, some parties exert direct pressure to obtain direct benefits from specific companies); specialised media (that can even use on occasion personal attacks to defame decision-makers whose actions do not align with those of the sector of certain businesses). It is important to note that in the case of public health policies, it is difficult to monitor the effects of lobbying, since it generally seeks political inaction – that is to say, a lack of regulation or minimal regulation – and this effect is facilitated by the trend towards indifference in some sectors of public administration. Lastly, a recent report illustrates numerous cases of corrupt practices in the healthcare sector, some of which are 36 related to undue influence, in all European countries including Spain. Corporate Europe Observatory (CEO), Brussels The EU Quarter (Brussels: CEO, 2011). http://corporateeurope.org/sites/default/files/publications/ceolobbylow.pdf.

Ildefonso Hernández Aguado, "Calidad de Gobierno y políticas de salud", Encuentros Multidisciplinares vol.41, 2012, 20–28.

European Commission – Directorate-General Home Affairs, Study on Corruption in the Healthcare Sector (Luxembourg: Publications Office of the European Union, 2013).

Case 3. Dispute around the varicella vaccine The case of the varicella (chickenpox) vaccine is a good example of an attempt by pharmaceutical companies to influence drug policies. The Spanish National Health System opted to add the vaccine to its official schedule for adolescents who had not had the disease as children. The vaccine had been approved by the European Medicines Agency for children and adults, but its use in Spain is subject to the technical file of the AEMPS (Spanish Agency for Medicines and Medical Devices), which indicates that it will be applied according to Spanish health authorities' recommendation, that is, in 12-year-old adolescents who have not yet had the disease and in the at-risk population. The manufacturer did not agree with the decision taken by the health authorities and took various steps to ensure that sales would increase as much as possible 37 in pharmacies and that the vaccine would be administered to small children. Unlike what happened in most European countries, which received the same vaccine recommendations as Spain and where only several thousand units have been administered, the Spanish company managed to secure a market victory. Thus, while among the 820,000 babies born in France over one year, 58,000 doses were administered, and in the UK, with 805,000 new-borns, 17,000 doses, in Spain, where 405,000 babies were born, 360,000 doses were used. This major consumption in younger children observed in the private arena â&#x20AC;&#x201C; with utter disregard for the official recommendations â&#x20AC;&#x201C; poses a risk for public health. Chickenpox is usually a mild disease when suffered in childhood, and it offers anyone who has had it indefinite immunity to it. However, while the vaccine has proven to be quite effective, it calls this level of indefinite protection into question. According to the World Health Organisation (WHO), disorganised vaccination with different degrees of coverage through the country can delay the disease until adulthood, at which point it could become severe. In light of this risk to the populationâ&#x20AC;&#x2122;s general health, and for health equity, the AEMPS decided to withdraw the vaccine from the market and limit its use to hospitals for at-risk groups and official vaccination programmes. Considering that its commercial rights were being violated, the company opted to file an appeal against the Agency, to date without success. But many paediatricians recommended the vaccine and families resorted to imported vaccines from neighbouring countries or ordering it from an autonomous community that did 38 have it in its pharmacies. The argument has opposed, on the one hand, health authorities and public health scientific associations and on the other, paediatrics, vaccinology and preventive medicine scientific societies. In June 2014, the Ministry and the Directors of Public Health in the autonomous communities, who all form the Public Health Commission, agreed to restrict administration of the vaccine to hospitals, in the whole country. This would put an end to the debate that has It is important to specify that when a drug is not publicly funded in Spain, a maximum price is not established, and it may be sold to pharmacies at the price that the corresponding operators set. In the UK, the economic evaluation conducted on the introduction of the vaccine led to health authorities imposing such conditions on the manufacturer, that the company declined to market it.

As of November 2014, only Navarre and the two autonomous cities, Ceuta and Melilla, consider using the vaccine in young children, for which reason its sale in pharmacies is authorised in these territories.

surrounded its use over the past few years.39 In the specific case of the chickenpox vaccine, the Spanish Paediatrics Association played a relevant role. Its Vaccine Evaluation Council has potentially conflicting interests that are closely related to the companies that produce the vaccine, and its members have collaborated – to a greater or lesser extent – with vaccine manufacturers, e.g. through subsidised educational activities, funded research, and 40 participation in industry evaluation councils. As for the interests stated by its members, the independence and impartiality of the Vaccine Evaluation Council is not guaranteed. In short, the manufacturer in its attempt to influence took advantage of two elements: first, the fact that in Spain, a vaccine has no established price when funded publicly (and in this case, it was quite high); second, the fact that some medical associations helped promote the vaccine, which led to its market success. However, for a problem that poses a public health risk, it is interesting to note the absence of the health authorities throughout this case. Neither the state nor the health authorities in the autonomous communities issued any public health notices or took any accountability-related actions. Nor did they establish any mechanisms to guarantee regulatory compliance, prevent inappropriate use of the vaccine – in disagreement with the official technical file – or prevent the drug from being promoted, pursuant to Royal Decree 1345/2007, which regulates the procedure for authorising, registering and dispensing of industrially manufactured medications for human use. The case of the chickenpox vaccine illustrates a number of the weak points of the institutions or how they operate. For example, the absence of a solvent health agency with a renowned scientific capacity granted by the health authority, which could have conducted a proper evaluation that would have likely been respected by all of the parties at stake, particularly the scientific associations. Another is the lack of regulations regarding conflicts of interest, independence, and impartiality in organisations that intend to make public health recommendations. Finally, this case reminds us that Spain is a country where “often, rules and regulations are not applied. There are so many contradictory, unrealistic regulations 41 that later on, no one enforces them, which only leads to further frustration”. As Ricard Meneu notes, “it’s not so much a matter of new laws as it is of making sure that current laws are followed and enforced. This does not prevent them from being perfected, although the emphasis on the relevance of compliance and supervision— 42 as opposed to mere promulgation—should always remain in place”.

The company in turn withdrew the appeal against the AEMPS. See J.L. Barbería, "Inyección farmacéutica", El País, 9 November 2014.

David Moreno Pérez et al. in Representation of the Vaccine Evaluation Committee of the Spanish Paediatrics Association, 2013, Calendario de vacunaciones de la Asociación Española de Pediatría: recomendaciones 2014, Anales de Pediatría vol. 80, no. 1, 55.e1-55.e37.

Lorenzo Martín-Retortillo, Jornadas sobre ética pública, Madrid: Ministerio de Administraciones Públicas (Madrid: Instituto Nacional de Administración Pública, 1997), 45.

Ricard Meneu, "Evaluación del buen gobierno sanitario. Algunas reflexiones para su mejora", in: Ortún V (Dir) El buen gobierno sanitario (Madrid: Springer Healthcare Communications, 2009), 24.

Nevertheless, the healthcare playing field is level at times and the result is regulations aimed at preventing illness and managing to have a positive impact, without resorting to healthcare measures. A good example of this argument is the enacting of the anti-tobacco law.

Case 4. The adoption of anti-tobacco legislation: A case of good practice The tobacco industry is the paradigm of a sector that has influenced public policy, and which has even managed to infringe upon ethical principles to defend their own interests43. Even though the hazards of smoking have been well known since the midtwentieth century, public health organisations have faced serious difficulties in implementing effective prevention policies, given tobacco companies’ high level of influence and the magnitude of the resources they have used to delay this implementation. In Spain, an ambitious "Passive Smoke" Prevention Act was promulgated (Act 28/2005) that took effect in January 2006. The law prohibited smoking in all closed public areas, including the workplace. However, it made an exception for small bar and restaurant establishments (less than 100 square meters), which represent the majority, and the owners were allowed to choose whether or not to allow smoking. In larger establishments, smoking and non-smoking sections were created, This law also included several other measures, such as restricting the sale of tobacco or advertisement bans. The partial prohibition (partial due to the exceptions in some bars and restaurants and a few other locations) gave way to the so-called Spanish nonsmoker protection model, which promoted the idea of respecting the freedom of decision and contributing to a more tolerant and democratic society. However, the Spanish public health community considered that the 2005 legislation, while being progress, continued to expose the population to a high level of secondhand smoke, particularly bar and restaurant-goers. Therefore, they began to take steps to exert influence through their scientific organisations and through a lobby group created in 1995 to bring together the Spanish anti-smoking movement – the National Committee for Tobacco Prevention. The promoters of a change in legislation to protect public health had to counter a labyrinth of well established interests, including tobacco companies, the tourism and hospitality industry, the vending machines, distribution companies and others. These sectors have organisations that defend their interests, for example the Tobacco Business Association.44 Hence, some organisations underscored the risk that a new law could hold if implemented, during the crisis, on a sector with such a significant

Economically, the tobacco industry represented, in 2013, 6.465 million euros funds for the state through taxes (see Annual Revenue Report 2013, AEAT). About influence strategies and ethical behaviour of the pharmaceutical industry, see for example: Elder, Cortes and Sarria, "Marco legislativo y estrategia de la industria tabaquera en relación a la publicidad del tabaco en España", Revista Española de Salud Pública v.74 n.5–6, 2000; WHO, Tobacco Industry Interference with Tobacco Control (Geneva: WHO Press, 2008).

A mapping of these organisations and their relevance can be found at L. Granero, "¿Quién se opone a la prevención? Un mapa de los actores pro tabaco en España", Gaceta Sanitaria vol.18, no.5, 2004, 374–379.

economic weight in Spain, that is: bars and restaurants. In 2009, Trinidad Jiménez (PSOE) became Minister of Health, and at that time was leaning towards modifying the current law in order to better protect against secondhand smoke. The Minister of Health opted for the following strategy, which would lead 45 to the current legislation (Act 42/2010): speaking with representatives of all parliamentary groups, particularly who most favoured new legislation and held the greatest influence (there was a division in almost all groups) to achieve the greatest parliamentary consensus possible; ensuring that the law would be submitted to parliament by the greatest number of parliamentary groups possible and not by the government itself; focusing the policy on the scientific grounding and, to the extent possible, ensuring that it did not become a partisan matter; speaking with the media and getting them to include questions on the act in their periodic surveys; voicing the opinion of scientific organisations and inviting them to press conferences; and seeking agreements with representatives from the restaurant/food-industry activity, which did indeed happen in some cases. The Ministry received direct pressure from the tobacco companies, the distributors and the restaurant/food-industry sector. The then 46 President of Spain stated, nevertheless, that he was not directly pressured. The groups in favour of new legislation channelled part of their actions through a particular body, the Observatory for Tobacco Prevention, which was created by the 2005 law. In this organisation are representative scientific associations, civil society organisations, unions, business organisations, and the public administration. Due to its nature and composition, the Observatory gave priority to scientific evidence, and its internal debates were based on the scientific backing of the decisions. Thus, it analysed studies contributed by scientific associations, the results of which underscored the significant health benefits of the anti-smoking legislation, as well as 47 its positive or neutral effect on the economy. These results impacted on the media, and without a Spanish public health agency or similar institution that would assume the leadership on the matter, the Observatory and the scientific associations, along with the National Committee for Tobacco Prevention, became the authorised voice. Due to its work and its position as a body connected to the Ministry of Health, the Observatory became a semi-official body with a reputation for technical efficiency in anti-smoking matters. Why on this occasion did public interest win (understanding public interest as public health defended in this case by the government)? Although it is difficult to know which was most important, there is no doubt that having key politicians on the reform-side opened a window of opportunity. Over time, the tobacco prevention coalition's perseverance in its anti-smoking campaign managed to gain social influence – public

Act 42/2010 of 30 December, which modified Act 28/2005 of 26 December, on health measures to smoking and regulate the sale, supply, consumption and advertising of tobacco products, BOE (Official Gazette) no.318, 31 December 2010. www.boe.es/boe/dias/2010/12/31/pdfs/BOE-A-2010-20138.pdf.

Ildefonso Hernández Aguado, "The tobacco ban in Spain: How it happened, a vision from inside the government", Journal of Epidemiology and Community Health vol.67, no.7, 2013, 542–543.

Manel Nebot, Esteve Fernández and the Spanish Epidemiology Association Working Group, Evaluación del impacto de la ley del tabaco (Barcelona: Grupo de Trabajo en Epidemiología de la SEE, Ministerio de Sanidad y Política Social, 2009). www.seepidemiologia.es/monografia.pdf. See also M. Nebot and E. Fernández, "Spain: Beyond the ‘Spanish model’ to a total ban", Tobacco Control 2011 vol.20, 2011, 6–7.

opinion was favourable, which implied essential action leverage – and consolidate the coalition itself, both through the National Committee for Tobacco Prevention as well as through synergetic steps taken by the most active scientific associations. Another important point is the availability of a balanced, democratic, participatory organism, the Observatory for Tobacco Prevention, which kept in check the influence imbalances that occur in the absence of channels that facilitate the participation of the least powerful. Corporations have all of their influence mechanisms greased, and they are lobbying experts. Meanwhile, other civil society organisations have far fewer resources and experience. Additionally, the fact that the government facilitates the scientific leadership of the groups at the head of the anti-smoking campaign helped these organisations get closer to the role that the independent technical agencies play 48 in public health politics. Scientific independence played a major role, since unlike on other occasions tobacco companies could not find relevant scientific studies to support their claims. This is a key point, since science is often distorted in a way that 49 goes against the health and wellbeing of the people. As we noted for the case of the chickenpox vaccine, we could deduce that it is necessary to have agencies with sufficient independence and technical/scientific merit to serve as the institution that supports public health policies. As the scientific public health associations had recommended, the original General Public Health Act included the initial idea of creating an independent Public Health National Agency. This idea never came to fruition, due to internal governmental and administrative obstacles, which seem to demonstrate a resistance 50 to establishing quality organisms that serve as a technical counter power. Parliamentary action should be highlighted in this case, particularly because it was possible for parliamentary groups to drive the initiative, and they became the target for all types of influence. In that regard, it is important to remember that no regulation requires that the parties at stake, or anyone submitting reports or studies to the parliament, to declare their interests. Lastly, the involvement of the media by the Ministry of Health is worth noting, as the Ministry favoured the exchange of ideas and transparency of public action. This is especially relevant, since a common corporate strategy is to influence public opinion regarding the definition of health problems, thus managing to have them considered as the result of individual lack of responsibility. In this way, the approach taken will differ from the one applied to health problems that occur as a result of infectious diseases, environmental toxins, or natural disasters. For decades, the tobacco industry has dedicated substantial resources to defining public opinion and the opinion of public decision-makers in order to make smoking and its consequences seem like a matter of personal, free choice. Mariano-Florentino Cuéllar, "The Tobin Project. Coalitions, Autonomy and Regulatory Bargains in Public Health Law", in Daniel Carpenter and David Moss (eds.), Preventing Regulatory Capture: Special Interest Influence and How to Limit it (Cambridge: Cambridge University Press, 2013), 326–362.

David Michaels, Doubt is Their Product: How Industry's Assault on Science Threatens Your Health (London: Oxford University Press, 2008).

Ildefonso Hernández Aguado, "Las enfermedades infecciosas y la nueva Ley General de Salud Pública", in Rafael Nájera Morrondo R (ed.), Erradicación y control de las enfermedades producidas por virus (Madrid: Fundación Ramón Areces, 2012), 527–552.

In this case, we are dealing with an example of how by levelling the playing field, the anticipated results can change and prevention policies are introduced into the government agenda.

THE SITUATION OF LOBBYING IN SPAIN POLITICAL AND ECONOMIC CONTEXT Spain began to form a nation-state toward the end of the fifteenth century/beginning of the sixteenth century. At the beginning of the nineteenth century, the War of Independence against Napoleon gave rise to the concept of a modern Spanish nation-state and in 1812 51 the Spanish National Legislative Assembly (Courts of Cadiz) promulgated the first constitution. It was precisely the concept of the Spanish nation, with its efforts toward governmental centralisation and cultural unification that favoured the rise of the Basque and Catalonian nationalist movements at the end of the nineteenth century. Spain could be an example of a pseudo-federalist “holding together” country, established to prevent certain regions from breaking away from the national unit. Contemporary Spain can be defined as a highly decentralised state, with 17 autonomous communities and two enclaves in North Africa (Ceuta and Melilla), and 8,111 municipalities (of which 85% have less than 5,000 inhabitants). Spain has also been an EU member since 1986 and adopted the euro as its currency in 2002. The NGO Freedom House

recognises that Spain:

•

Is an electoral democracy through free political competition and fair access to government positions

•

Has the right to freedom of the press

•

Guarantees freedom of religion by means of constitutional and legal protection

•

Has a government that does not restrict academic freedom

•

Guarantees the right to assembly by means of constitutional and legal protection

•

Allows workers to freely organise, affiliate with the unions of their choosing, and 56 exercise their right to strike

The Constitution of 1812 established the principles of universal suffrage (men), national sovereignty, constitutional monarchy, and freedom of the press. The Constitution supported agrarian reform and free enterprise, for which it was later considered one of the pillars of European liberalism.

See: www.freedomhouse.org.

Spain has more than 100 newspapers that cover a wide range of perspectives and investigate high-level corruption.

Catholicism is the dominant religion in Spain and enjoys privileges that other religions do not, such as taxpayer funding.

A freedom supported and protected by the government.

•

Through the Constitution, guarantees an independent judicial branch

•

Values gender equality, with an emphasis on the legal protection of women against rape, sexual assault in the workplace, and gender violence

Concerning regulation of lobbying and its institutional treatment, it is important to highlight the decentralised nature of the Spanish political system. While the most important decisions are taken at the central level, the vast majority of policy-making, regulatory developments and implementation take place at the regional and local levels. In short, lobbying focuses not only on the central government, but also on the regional governments of the autonomous communities. Furthermore, the Europeanisation of politics is evident, since more than 70% of the laws passed in Spain are a consequence of the transposition of European directives and recommendations. This explains why lobbying of the big Spanish companies is largely done at the European level. Paradoxically, it is possible to know the amount of funds devoted to lobbying by Spanish companies in the EU, due to European regulation, but this information is not available within Spain on account of the lack of national legislation. For example, we can determine how much money Telefónica spends on lobbying the European institutions, but not Spanish ones. Concerning international legislation, Spain has adopted the main international anticorruption instruments: OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions – Ratified on 4 January 2000 Council of Europe Criminal Law Convention on Corruption – Ratified on 28 April 2010 United Nations Convention against Corruption (UNCAC) – Ratified on 9 June 2006

A different issue is the fulfilment of the obligations contracted under these commitments, as affirmed in both OECD and UN reports. According to the Constitution, the Spanish state is democratic and promotes social wellbeing and equality. It must also respect the rule of law – that is, essentially, to ensure the division of powers and supremacy of the law, that the executive power is subject to horizontal accountability (by means of the Ombudsman, state auditing organisms etc.), and that its political administration is based on meritocratic civil service. All of the institutions support a system of substantially acceptable integrity, but they are not enough, as Transparency International Spain has already stated in an evaluation of the national integrity framework,58 and as corruption surveys show us. One of the loopholes is, precisely, the absence of a proper lobbying regulation.

Around 15% of the labour force is unionised.

However, there has been a certain degree of concern over how the legal system operates, including the impact of media pressure on delicate topics like immigration and Basque-related terrorism.

Manuel Villoria (Dir.), El Marco Institucional de Integridad en España: Situación Actual y Recomendaciones (Valencia: Transparencia Internacional-Tirant lo Blanch, 2012).

To understand lobbying, it is important to note the crucial role played by political parties. To date, the two main parties (the centre/left Spanish Socialist Workers’ Party (PSOE) 59 and the conservative Popular Party (PP)) have not agreed upon any comprehensive reforms that are truly relevant, and the fight against corruption has not been a key element of their political strategy. Thus, regulation of lobbying is still pending an agreement between these two parties, currently discussed within the framework of the reform of the Rules of Parliament. Political parties were the organisations driving the so-called democratic transition process following the dictatorship, in a context of weak participation by citizens. They co-opted members of neighbourhood associations and social clubs and initiated a relevant social and economic transformation of the country that for many years has been considered rather positive. Political parties have undoubtedly consolidated as powerful actors that have defined public policy and power relations to such an extent that today they are difficult to separate from the state.60 At the same time, public institutions tried to develop a civil society through subsidies and institutionalisation measures that yielded mixed effects. Ø

Until the recent European elections in May 2014, the Spanish political system was based on two major parties that garnered nearly 80% of the valid vote, and 61 thus lobbying tended to concentrate on these two entities.

However, it is difficult to achieve an absolute majority in the Chambers and, on a number of occasions, a certain consensus has been sought so that other centrist parties become crucial for the system, even though their percentage of votes and seats is relatively low. This is the case for Convergència i Unió (Convergence and Union (CiU)), a two-party centre-right Catalonian nationalist coalition that has been a group that lobbyists have most targeted since the beginning of the Spanish democracy, and which a number of sources say has been the most receptive to the demands coming from a variety of Spanish lobby groups. Thus, for the most important issues, the preferred lobby targets are the leaders of the two major political parties – as well as parties that can swing the balance one way or the other by creating a parliamentary majority (particularly CiU). When one of the two main parties achieves an absolute majority in government, interest groups change their strategy. It becomes more effective to lobby the executive rather than the legislative branch, although parliamentary lobbying is a useful tool for ensuring that regulations are drafted properly and agenda items are consolidated. In the case of a relative majority, the emergence of third parties makes legislative lobbying a decisive factor, since targeting a party like CiU, for example, can lead to the drafting of regulations that lobbyists would find useful. A smart lobbying strategy would aim to meet with the upper echelon of the most relevant parties, with key members of the executive branch, and with the presidents of the parliamentary groups that belong to these three or four main parties.

The main national political parties are the Spanish Socialist Workers’ Party and the Popular Party, which since 1990, together hold nearly 80% of the vote. In 2014, they held 85% of the seats in the Congress of Deputies. The remaining political parties (approximately 15% of the seats in 2014) have a predominantly regional agenda or a concrete nationalist affiliation (with the exception of Progress and Democracy Union), and they promote state decentralisation: Pluralistic Left, Convergence and Union, Basque Nationalist Party, Republican Left of Catalonia, Galician Nationalist Block, Canarian Coalition, Geroa Bai, Asturias Forum, Amaiur and Navarrese People's Union. Congress of Deputies: www.congreso.es.

This aspect is one that makes Spain different from the United States, where the parties are weaker and scarcely receive public assistance, which explains their financial dependence on the private sector. In the US, private funds are used to pay for the astronomically high electoral campaigns and, therefore, the political representatives are, individually, very receptive to influence.

In the May 2014 European elections, the two primary parties combined did not attain even 50% of the votes.

Lastly, it is important to note that while the Nordic corporatist model may not be a perfect fit for Spain, among the Spanish democracy’s key institutional characteristics, unions and employers have played an important role in the annual negotiations with the government on the country’s macroeconomic framework, at least until 2012. In that regard, the Constitutional Court 62 Sentence 68/2007 of 28 March is famous for having declared unconstitutional, null and void, the Royal Decree/Act 5/2002 of 24 May – on urgent measures aimed at reforming the unemployment protection system, which caused the general strike of 20 June 2002. In this sentence, the Constitutional Tribunal highlights the value of social dialogue as follows:63 It shouldn’t be necessary to remind anyone here of the unquestionable significance of social dialogue in our social democratic Rule of Law [...] and of the importance of participation of union and business organisations in the drafting of laws that could impact their economic and social interests and to the defence of which they contribute tremendously.

Similarly, Sentence 281/2005 of 7 November helps us to better understand the role of the unions. The Constitutional Court takes it one step further and demands strong unions as the backbone of the constitutional construction of the labour relations model: […] unions, just like business associations, are constitutionally-relevant entities that the Constitution protects directly and [...] therefore, unions should be encouraged to play the role attributed to them in a democratic regime, in benefit not only of the workers’ interests but also of 64 public interest, which needs strong unions with sufficient means for action.

This ties back to Article 9.2 of the Constitution, which imposes public authorities with the obligation to “promote conditions where the freedom and equality of all individuals and groups of which [society] is composed are real and in place”. This obligation goes beyond the limited concept of formal equality and advocates for a meaning of the principle of equality that matches the definition in Article 1, which establishes Spain as a democratic and social state under the rule of law.65 Ø

Essentially, Spanish democracy according to the Constitution demands that unions and employers’ associations play a central role in the negotiation of social and economic laws, guaranteeing the presence of these parties in a variety of advisory and experts committees. This affects and certainly reduces the weight and role of “other” lobbyists in certain areas.

Lastly, it is important to remember that many rules regulate the participation of civil society in decision-making; see the earmarking of a portion of the money collected from the income tax (IRPF, according to the Spanish acronym) for social purposes (this money is subsequently managed by a variety of NGOs); the law on volunteering; and the regulation of non-profit organisations, professional associations, chambers of commerce, foundations, etc. Since the 1990s, an asymmetrical model has taken root. The activity of several interest groups has been institutionalised, varying greatly depending on what they do. As a matter of fact, some groups have found institutional ways of interacting and exerting influence on public decisionTribunal Constitucional. Sentencia 68/2007, de 28 de marzo de 2007. http://hj.tribunalconstitucional.es/HJ/es/Resolucion/Show/6035 (Legal basis 11).

Mari Luz Rodríguez, “Imperativos económicos frente a derechos fundamentales, un nuevo paradigma de relaciones laborales”, Revista de derecho social, no.65, 2014, 41–68.

Tribunal Constitucional. Sentencia 281/2005, 7 November 2005. http://hj.tribunalconstitucional.es/HJ/es/Resolucion/Show/5541 (Legal basis 6). The underlining is by the author.

Tribunal Constitucional, Sentencia 3/1983, 25 January 1983. http://hj.tribunalconstitucional.es/HJ/es/Resolucion/Show/131.

makers on a daily basis; many regulations grant groups special access to committees, councils, or forums that influence sectorial regulations, although the most opaque influence can be exerted by representatives of specific companies or highly sectorial interest groups. Therefore, due to Spain’s legislative framework, lobbying takes place through a dual reality. On the one hand, there are models that are institutionalised to a greater or lesser extent, which incorporate different representation and participation criteria, which in turn create networks of interaction amongst interest groups and governments in different sectors through diverse institutional bodies (e.g. the Women’s Council, the Youth Council, the Economic and Social Council, the Environmental Evaluation Council, the Consumers and Users Council, etc.). In all of these organisations participation of the parties at stake is foreseen and, as a result, the most representative employers and unions are guaranteed their influence, as are the relevant associations in the decision-making arena. On the other hand, there is a degree of informality in which hundreds of professional lobbyists, companies, and diverse interest groups try to influence the executive and legislative branches, in a world without rules to regulate their access, provide information on their contacts, delineate the ethical limits of their work, or even ensure a simple record of meetings. Ø

How, then, is public interest built in Spain? What would a level playing field, with balanced regulations, look like? The system distinguishes between those who take part – according to the constitutional framework – to define general interests (the unions, employers and, of course, political representatives), and those who defend legitimate – but private – interests.

It is not the same thing for the Minister of Industry to meet with a CEOE (employers' association) and with the unions, as it is for him to meet with the automobile industry association or with representatives of Renault, for instance. In the first scenario the Minister is mandated by the Constitution to do so, while in the second, the meeting is part of the normal activity to understand the interests and needs of the sector, but it is not constitutionally established.

REGULATORY CONTEXT Historical development The Spanish constitutional debates represent the first attempt to create a legal framework for parliamentary lobby groups. More specifically, a dissenting vote submitted by the party Alianza Popular (Popular Alliance)66 introduced Article 77, which regulates the right to petition before the chambers. In addition to the two points of which the article consists, the original proposal contained two more, which aimed to establish an institutional action channel for lobby groups and their regulation:67

Alianza Popular [Popular Alliance (AP)] was a Spanish political party, founded in 1977 by Manuel Fraga along with other former Francoist ministers. It was the major opposition party in the 1980s, as the leading conservative right-wing party in Spain. It was re-founded as the Partido Popular [Popular Party (PP)] in 1989.

See Diario de Sesiones del Congreso de los Diputados, 13 July 1978: www.congreso.es/public_oficiales/L0/CONG/DS/C_1978_109.PDF.

"3. The Commission may receive delegations of legitimate interest groups at public sessions only. 4. An organic law shall establish a monitoring and registration system for interest groups." When this proposal was submitted to the Commission for Institutional Matters in Congress, these last two points were rejected by a vote of 15 against, two in favour and 16 abstentions. The same thing happened with the dissenting vote by the Popular Alliance Parliamentary Group, which was defended by its president, Mr Fraga, and was turned down at the Congress plenary session on 13 July 1978, with 212 votes against, 11 in favour, and three abstentions. The Constitution was approved in 1978, but it was 15 years before any new attempt to legislate lobby groups was made. These attempts came in the form of two non-legislative bills: the first was submitted in 1990 by the Popular Party (PP) parliamentary group, concerning the regulation of offices that manage private interests in conflict with public interests. It was unanimously approved – 284 out of 284 votes submitted – with the Socialist Group amendment.68 Later on, the party and parliamentary group CDS (Centro Democrático y Social)69 submitted a non-legislative bill (parliamentary resolution) to the Congress, urging the government to create laws to govern parliamentary lobby groups, and it was admitted for processing on 2 February 1993.70 Surprisingly – thanks, perhaps, to the anti-corruption environment and in contrast with the results of the first constitutional proposal by Popular Alliance’s – the non-legislative bill was approved by a large majority of the votes. This parliamentary resolution was developed under the following terms: it began by affirming the action of the social groups before the public authorities, defending their existence as "representatives of civil society dynamism, in an increasingly complex State that can intervene in the majority of human activity", in order to then establish its limits "insofar as the principles that regulate democratic society are concerned, thereby harmonising its interests and the rules for participating in our democratic system" (Articles. 9.2, 23.1 and 77 of the Spanish Constitution). After assessing the work these groups do to exchange information, the argument was to recognise a need for this exchange to be transparent and public, thereby identifying the social drivers and determining the behavioural guidelines and the way in which these information-based relationships should be established. It claimed that it is necessary to draw a line between this activity and criminal influence peddling, in order to determine the individual interests and how they can be integrated into the general interest. Also, the purpose was to prevent the public defence of these interests from colliding with the general principle of representation by the deputies and senators. The arguments ultimately called for regulations regarding Article 105 of the Constitution to be developed. The parliamentary resolution called for a paper to be drafted by the Congress Regulatory Commission, to discuss the setting-up of a public register of interest groups and its rules of See Proposiciones no de Ley ante el Pleno, Boletín Oficial de las Cortes Generales, 12 February 1990: www.congreso.es/public_oficiales/L4/CONG/BOCG/D/D_023.PDF.

CDS was a progressive, social liberal political party in Spain, which was founded in 1982 by former prime minister Adolfo Suárez and dissolved in 2006.

See Proposiciones no de Ley ante el Pleno, Boletín Oficial de las Cortes Generales, Congreso de los Diputados, 4 February 1993, 4. www.congreso.es/public_oficiales/L4/CONG/BOCG/D/D_375.PDF.

operation. It also called upon the government to submit a regulatory bill on the public register and its rules and regulations, in addition to formulating a legal code of conduct. However, despite having been approved by the vast majority, the resolution was abandoned, and it was not rescued later on, even when it was possible for the groups that had once so fiercely defended it. In 2013, given the opacity shrouding lobbying and the immense capacity for influence that some lobby groups have, Spanish premier Mariano Rajoy promised in his 20 February 2013 speech for the “State of the Nation Debate” that this matter would be regulated. More specifically, he stated: "A reform where I believe it would be helpful to also include parliamentary regulation or interest organisations (the so-called “lobby groups”), with measures that clarify what activities they may conduct and what their limits ought to be."

With this statement stressing a regulation in parliament, the president confirmed that the Transparency Act would not address the matter of lobbying, which had been a demand of all the parliamentary groups, except for the majority one. For example, Josep Antoni Durán i Lleida, former CiU spokesman had defended it as follows: "We have to take advantage of the transparency act to address the laws governing all administrations, parties, associations, unions, and entities that receive public funding. We should take advantage of it [...)]to regulate the so-called lobby groups as a fundamental right of representatives of civil society and companies to transfer their interests, gather information, defend their situation or request changes to regulations that affect them."71

UPyD (the political party Unión Progreso y Democracia (Progress and Democracy Union)) spokeswoman, Rosa Díez, had also showed an interest in using the Transparency Act to regulate lobbying. However, the proposal did not succeed. Ø

The Transparency Act was passed in December 2013 and did not include any regulation of lobbying; in fact, it did not even mention the topic.

At the beginning of 2014, after the “Debate on the State of the Nation” of 25 and 26 February, the Congress plenary approved two resolutions brought forth by the CiU Parliamentary Group and agreed upon with the Popular Party Group. Among them is lobbying regulation, in point number 5 concerning "Democratic Regeneration": "In terms of regulatory reform in the Congress of Deputies it is necessary to foster greater immediacy, proximity, and effectiveness when it comes to monitoring Parliament. Regulation should also be considered for the so-called lobby groups. It should be aimed at channelling all activities geared toward influencing the creation of policies and the decision-making process, thereby guaranteeing transparency when exercising the right of civil society and business representatives to access institutions, as well as ensuring that whatever code of conduct that may be approved is followed."

This agreement was also signed by the Association of Institutional Relations Professionals (APRI according to the Spanish acronym) and by the Transparency Forum (Foro por la Transparencia);72 associations representing professional lobbyists in Spain and which demand 71

See "La regulación del lobby en el debate sobre el estado de la nación", www.forotransparencia.com, 20 February 2013.

Foro por la Transparencia was established by the consulting firms: AFI, Cremades&Calvo Sotelo, PricewaterhouseCoopers, Roca Junyent, Solchaga-Recio&Asociados, CyC, and Llorente & Cuenca.

that this matter be regulated. According to APRI, the register would include some 500 individuals, from various associations, employers, unions, and NGOs. It is clear that according to the various political groups, the Congress of Deputies must reform its regulations/rules of procedure, in place since 1982, in order to bring the institution closer to citizens and to ease the stressful parliamentary life. After months in hibernation, the debate on how to improve parliamentary rules and regulations was re-launched on 12 February 2014 at a meeting of the Congress Regulatory Commission, where the good intentions of all political authorities were stated, to the extent that this time there would be no red lines. However, there are differing opinions on which elements should be reformed. At the time of closing this report, the project of creating a lobby register in Congress through the reform of its rules of procedure was still on-going. However, differences persist with regard to the aspects that ought to be reformed and the parliamentary groups are negotiating the details, behind closed doors. Current legislation on lobbying Thus, from a legal perspective, there is practically no regulation of lobbying in Spain. Article 9.2 of the Spanish Constitution states that: "It is the responsibility of public authorities to promote the conditions that support the freedom and equality of people and groups of which it is composed, so that these are real and effective; they must remove all obstacles that impede or are an obstacle to this endeavour, and facilitate the participation of all citizens in political, economic, cultural, and social life."

This general rule does not say anything about lobbying, but it does allow for the creation of groups that facilitate the participation of interested parties in decision-making and public regulation. Article 7, which regulates the constitutional task of helping to define the general interest of unions and employers; Article 23, which regulates the fundamental right to participation; and Article 103.3, which guarantees that public officials be impartial in their work are also references. Lastly, as we will later see, norms governing conflicts of interest and incompatibilities, codes of ethics for high-level officials and civil servants, and regulations regarding transparency, access to information, and good governance are all regulatory elements that in some way, from the public arena perspective, monitor the activity of influence. Aside from this, the only form of indirect regulation of lobby groups in Spain is ordinary criminal law: the Criminal Code regulates influence peddling in Article 428, 429, and 430 of Chapter VI of Title XIX.73 The intent of these articles is to establish influence peddling as a crime. It is established as illegal, both for public officials and private citizens, to offer to exert influence by taking advantage of a position’s role, or of the hierarchical structure in place, or of mere personal relationships. Article 429 refers to individuals who take advantage of any situation where they use a personal relationship with a public official or authority to secure a resolution that may reap direct or indirect economic benefits for the subject himself or for whoever is funding him. Article 430 criminalises the action by which public officials and private citizens offer to exert influence by taking advantage of a position’s role, the hierarchical structure in place, or a simple personal relationship in exchange for a reward or the promise thereof. Ø

What makes lobbying different from influence peddling? They key is that lobbying is exercised by professionals that try to exert influence, but not by taking advantage of their hierarchy over a public official or authority or through

Penal Code, Title XIX: Crimes against the public administration; Chapter V criminalizes bribery; Chapter VI, influence peddling.

their personal relationships. Lobbying implies a certain level playing field, whereas influence peddling conveys just the opposite: it is an abuse of power aimed at reaping benefits. Following are two highly illustrative sentences that can serve as examples of influence peddling. The first is sentence No. 354, from the first section of the Castellon Provincial Court, Abbreviated Proceedings No. 30/2011, the so-called Fabra Case. In 1999, a businessman, Vicente Vilar, and his wife, owned and operated the Naranjax Group companies, which manufacture, synthesise, and commercialise plant protection products. Once the Directive 91/414/CEE on the sale of phytosanitary products took effect, there was a considerable delay in Spain in the granting of authorisations for these products. For this reason, and given the close relationships between these entrepreneurs and the president of the Deputation of Castellon,74 Carlos Fabra, it was proposed that Fabra use the contacts he had obtained as president of the Castellon Delegation and the province’s Popular Party to take an interest in the processing status of these permits on one of his many visits to Madrid. Other officials and parliamentary groups had also previously been contacted by Mr Vilar, among them Miguel V. Prim, senator during the 1992–1996 and 1996–2000 terms and deputy during the 2000–2004 term and of the same political party as the Castellon district. The objective was to use his role in the legislative branch and the fact that he was an expert in agriculture and plant protection products to gather information from political and administrative authorities and to take the appropriate legal actions to obtain the authorisations. Most of the products were approved rather quickly, although it is difficult to prove that it was the result of pressure exerted by these political representatives and that the approvals actually offered certain privileges beyond what other entrepreneurs might typically receive. Additionally, it was demonstrated that in December 1999 that Fabra and Vilar’s wives founded Artemis 2000 SL, the share capital of which was split evenly between the two women, and Vicente Vilar was named as the administrator. The association, which outwardly appeared to be geared toward marketing plant protection products, actually lacked any type of activity or employees. On 28 April 2000, Carlos Fabra – along with his wife and two of his children – founded Carmacás SL, of which he was the sole administrator. He also held 90% of the shares. The company’s mission was to provide “labour counselling services and workplace risk prevention training”. Mr Fabra used this company to bill large fees to a variety of companies, including ones operated by Mr Vilar, with the corresponding VAT, for “labour/legal work and reports”. More specifically, he billed Naranjax SL for 100,000 euros and Artemis 2000 SL sums of 80,000 euros in the year 2000. All of this revenue evaded the tax authority. Despite these facts, and that the public prosecutor classified these transactions as influence peddling, Mr Fabra was only charged with a tax offence, not with influence peddling. Jurisprudence considers that in order to charge someone with the latter, the mere appearance of it is not enough. Rather, "the criminal activity must be performed by an individual in a certain position of power, and the influence must be on a large enough scale, so that the advantageous position of the person exerting it can guarantee that it will be effective". Additionally, it is necessary that "predominance and moral strength be exerted over a passive 75 subject, in a way that his or her resolution or action is due to the pressure applied".

The provincial deputations are the governments of provinces. The province is the second-level territorial and administrative division of Spain, after the autonomous community. It is composed by the aggregations of municipalities. There are 17 autonomous communities and 50 provinces.

Spanish Supreme Court, Sentencia 480/2004, de 7 de abril (ruling 480/2004, of 7 April.)

The same arguments were more recently used by the Supreme Court to refuse to admit an appeal that accused the Navaresse regional Minister of Economy and the president of this autonomous community of an influence peddling offence. In this case, the situation was characterised by the pressure that the regional minister applied on the tax director of the government of Navarre, which led to the latter’s resignation. The regional minister requested the Inspection Plan from the tax director to verify if it would affect clients of her tax consultancy. She tried to influence the subsequent results of the inspections when they affected companies or taxpayers that were also her clients. Once again, the legal authority, in this case the Supreme Court, considered that this was not a case of influence peddling since there was no evidence that sufficient pressure had been applied and, furthermore, that it was in relation to a procedure, not a final resolution.

SOCIAL CONTEXT In light of these sentences and the general feeling of impunity with which corrupt politicians act in Spain, the perception that Spaniards have of politics and politicians is not surprising. Ø

The current situation of disaffection and corruption perception has brought the debate on lobbying and its regulation back to the public sphere.

Spanish society’s uncomfortable and, overall, critical relationship with politics has been on a worrisome downward spiral over the last few years. For the majority of the population, political parties and institutions have become a source of mistrust, reproach, and disapproval. The financial crisis that hit in 2007/2008 from which Spain is not expected to emerge in the near future, has probably worsened the negative attitudes towards how democracy works in the country (Figure 1), and towards the political system and its institutional players and performance. At the same time, this situation has revealed the existing serious institutional deficiencies and the perverse relationship between the public and private spheres in Spain.77

Appeal 20110/2014 of the Second Chamber of the Supreme Court. Speaker: Juan Saavedra Ruiz.

M. Villoria, "Bon govern, qualitat democràtica i transparència als governs locals: un estat de la questiò", Diputaciò de Barcelona, 9 April 2014. www.diba.cat/documents/16388484/20832750/manuel+villoria.pdf/fe79c4e5-62c0-4ef5-a28dbb6b00633e65.

Figure 1: Evolution of satisfaction with how democracy works in Spain and Europe, 2004â&#x20AC;&#x201C;2013*

*Total of those who are very and somewhat satisfied. Source: Own elaboration based on data from several Eurobarometers.

An alarming percentage of the population perceive a perverse connection between money and politics, and business corruption.78 According to the 2014 Special Eurobarometer on corruption, 77% of Spaniards believe that corruption is a part of the countryâ&#x20AC;&#x2122;s business culture (the European average is 67%); 84% believe that bribery and connections are the easiest was to obtain public services (the European average is 73%); and 67% believe that the only way to succeed in business is through political connections (the European average is 59%).79 According to the Flash Eurobarometer which targeted European companies in 2014 (Table 1), Spain tops the charts as the European country where the largest percentage of businesses and companies believe that corruption is widespread in the hiring process: 83% at the national level and 90% at the regional and local level (the European average is 56% and 60%, respectively). Along with their Greek and Italian counterparts, Spanish companies hold the European record for perceived corruption: 97% (the EU average is 75%). The poor practices that were observed by Spanish companies are: favouring friends and family when conducting business, nepotism and clientelism in administration, and opaque political party financing.80 Table 1. Business attitudes towards corruption Questions

% Spain (agree)

% Europe (agree)

The only way to succeed in business is to make use of political connections

52%

47%

European Commission, EU Anti-corruption Report - Annex Spain, 2014.

European Commission, Special Eurobarometer 397 on "Corruption", February 2014 (Brussels: European Commission, 2014).

European Commission, Flash Eurobarometer 374, 2014.

Bribery and abuse of power are widespread in politics

88%

70%

Favouritism and corruption harm competitiveness of the country’s companies

93%

73%

Source: Flash Eurobarometer 374

All of this reflects the multiple bribery and influence peddling scandals that have consistently made the headlines in the news over the past 10 years.81 But there is, as well, a common diffuse awareness that some large corporations and interest groups unjustly influence political decision-making, even if it is not classified as influence peddling, per se.82 Examples include party funding or using “revolving doors” and even threatening divestment to stop necessary regulatory changes. As the following two cases will show, it is not hard to prove that the major Spanish energy companies exert undue influence (Cases 5 and 6).

Case 5. The influence of energy companies Energy is a strategic sector for most countries, given its economic and business relevance, as well as its social and geopolitical importance. According to the National Energy Commission (CNE), in 2012 the Spanish energy sector accounted for 3.6% of 83 GDP, 1.4% of total employment, and nearly a quarter of all imported goods. However, beyond this data, what characterises the energy sector is its key contribution to helping grease the wheels of the entire productive system. Therefore, since the twentieth century, the energy sector has been of the most monitored and/or regulated. Until just 20 years ago, when it was deregulated, it was practically stateowned. Since then, the sector has undergone a major transformation, leaving behind the monopolies and oligopolies that were considered normal in the hydrocarbon fuel, 84 electricity and gas industries. The first step in the energy reform process of the 1990s was the 1992 Oil Sector Act. It was later followed by Act 54/1997 on the electricity sector, and Act 34/1998 on the hydrocarbon fuel sector, whereby the European directives on deregulation of these sectors were applied. During the subsequent administrations, a variety of regulatory modifications were made, which gave rise to new institutions, rules, and decisionmaking mechanisms. In this way, Spain has followed the regulatory pace set by

Patria de Lancer Julnes and Manuel Villoria, "Understanding and addressing citizens’ perceptions of corruption: The case of Spain", International Review of Public Administration vol.19, no.1, 2014, 23–43.

A recent research on the relation between political and business elites on the local level in Spain is reported in the article: N. Khalil, J. Molins and C. Navarro, "Las relaciones entre élites políticas y empresariales a nivel local. Una aproximación al caso de España", X Congress AECPA. Murcia, 7–9 September 2011. In the sample used of mayors of municipalities with 10,000 to 100,000 inhabitants, the majority of them recognise that "economic groups pressure with a strong persuasion power".

J.C. Jiménez, El sector energético (Madrid: Comisión Nacional de la Energía, April 2013).

FUNCAS, "El sector energético español", Papeles de Economía Española no.134, 2012.

Brussels in terms of liberalisation.

The EU energy policy is based on four main objectives , which were determined in the Treaty of Lisbon: i) ensuring that the energy market works; ii) guaranteeing the safety of the EU’s energy supply; iii) fostering energy efficiency and reducing energy waste, as well as developing new and renewable forms of energy; and iv) promoting interconnection within energy networks. However, the vulnerability the Spanish energy sector – 73% of its supply comes 87 from foreign sources, whereas the European average is close to 53% – makes it harder to regulate properly, in view of attaining these objectives. Thus, numerous unpredictable and disjointed rules and regulations have been passed by successive administrations with the result of placing plasters over an ever-growing regulatory wound. In that regard, when communicating with the government, the industry has traditionally opted for a direct dialogue with senior political decision-makers. To that end, it has employed a strategy of contracting former high-level government officials in the hopes of smoothing out its relations with the government and securing legal stability. Certainly, some of these senior officials had come from the energy sector and sought to return to it, given their expertise in the subject. However, the mechanism of “revolving doors”, although sometimes unavoidable for a number of reasons including the lack of sufficient training to the specialised public officials, always generates risks for the general interest. The energy sector’s complex characteristics justify, in part, the high level of regulatory activity. In that regard, it is important to note that electricity is, at once, a good and a service. Another relevant characteristic is that it produces a significant amount of environmental pollution. Lastly, the electrical system requires a series of major grid infrastructures and complex operative coordination to guarantee that electricity is transported from generation points to consumers.88 In sum, the mix of technologies used to generate electricity represents an important part of a country’s energy policy and therefore, according to Professor Joaquim Vergés, "we cannot 89 leave it all up to how the market plays out". An important problem with the Spanish system is the so-called tariff deficit. This controversial figure is based essentially on the gap between the recognised costs of

Ibid.

Balázs Mellár (European Parliament), Fact Sheets on the EU, "Energy policy: general principles" (04/2014). See: http://www.europarl.europa.eu/aboutparliament/en/displayFtu.html?ftuId=FTU_5.7.1.html

Eurostat News Release. 25/2014, 17 February 2014. http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/8-17022014AP/EN/8-17022014-AP-EN.PDF.

Regarding the importance of different forms of energy production, official data show that the primary energy sources most consumed in Spain are oil and its derivatives (45.1% of total) and natural gas (22.4%). The rest is made up of renewable energies (11.7%), nuclear (11.6%) and coal (around 10%). In terms of final energy consumption, oil products account for more than half of the total (51%). This is followed by electricity (25.2%), gas (14.8%), renewable energy (7.2%) and coal (1.5%). See: Libro de la Energía 2011 (Madrid: Ministry of Industry, 2011).

Joaquim Vergés, "Mercado eléctrico, regulación y alternativas tecnológicas", BEG: Research Group in Business Economy and Governments (Barcelona: Universitat Autònoma de Barcelona, Department of Business Economy, 2009).

regulated activities, and the revenues from tariffs charged to consumers . Power companies financed the deficit until 2010, as long-term debt of the state, until it was handed to financial institutions. It is noteworthy that there is not a matching criterion between the different agents on when and how the debt will be repaid to the leading companies in the sector. As a result the price of electricity in Spain is one of the highest in the European Union, which affects families and the competitiveness of Spanish industry. Indeed the existence of the tariff deficit has led to explore different ways to tackle it. One of them has been to keep raising consumer rates. Another, to curb the use of more expensive, although less polluting, renewable energy technologies. Another way has also been reducing regulated costs, such as the costs of transportation and distribution. For some authors, "widespread over-compensation" occurs in the sector, "which must be trimmed to allow lower prices to improve business competitiveness and families economy".91 The return on assets of the five largest electricity companies in Spain was 4.1% in 2010, while the corresponding European corporations stood at: 3.3% RWE, 2.6% EON, 2.2% EDF, 2% GDF-Suez, 1.9% ENEL. The profitability of these companies comes essentially "of their activities in Spain". This performance may explain why among the Spanish electric top five, "three have become foreign-owned and the other two have benefitted from a significant investment of Spanish 92 construction companies". In addition to the deficit, we must also consider Spain’s current installed overcapacity to produce energy, the consequence of which is that over the next decade, no new electrical power stations of any kind will be needed. In fact, since the sector was deregulated, the five main Spanish electric companies have installed 67 combined cycle power plants that use natural gas, with an over 13 billion euros investment; at 93 present, less than a half of them are needed. Thus, on 27 January 2012, just one month after becoming Minister of Industry, Energy 94 95 and Tourism, José Manuel Soria announced a Royal Decree that would temporarily suspend bonuses for new special facilities, among which were wind, solar thermal, photovoltaic and biomass energy. This measure, which several media commentators deemed Solomonic, was justified based on "the economic situation and that of the electricity system, which is weighed down by a high tariff deficit". In that Electricity total costs are composed of regulated costs (to cover transport, distribution, public subsidies to renewable energies such as wind and solar energy, subsidies to coal, extra-peninsular costs, nuclear moratorium, the payment of the tariff deficit, etc.) and unregulated or market costs (power stations and their fuel). The final price for consumers is made up of the access tariff (which covers regulated costs) and a variable sum (to cover the electricity generation, that is unregulated costs). The deficit exists since the beginning of the decade 2000 and has been growing, particularly since 2007. Until 2010, the deficit was taken over by the main electricity companies (as a debt of the State). In 2010, the fund FADE was created in order to place electricity debt in financial institutions. Currently the tariff deficit impacts only in regulated costs.

Martín Gallego, "La electricidad, clave de la política energética", Temas para el Debate 236, July 2014, 21–24.

M. Gallego, “Electricidad renovable y política energética”, Nuevatribuna.es, 17 August 2014.

M. Gallego, "La electricidad, clave de la política energética", Temas para el Debate 236, July 2014, 21–24.

Ministry of the Presidency, in reference to the Council of Ministers of 27 January 2012. http://www.lamoncloa.gob.es/consejodeministros/referencias/Paginas/2012/refc20120127.aspx.

Royal Decree Act 1/2012, 27 January 2012.

regard, the tariff deficit at the time was around 28 billion euros. The measure seemed to take the renewable energy sector by surprise since, according to various 97 media, it had not been consulted, while appearing to satisfy electricity companies; the president of the Spanish Electricity Industry Association (UNESA), called the 98 reform “brave”. Influence on laws: The bills for the Electricity Sector Act and the Royal Decree on self-consumption The preamble of Royal Decree 1/2012 noted that the “distributed generation model” 99 gained track. Therefore, the Ministry of Industry presented the creation of "smallscale facilities through energy self-consumption” as “a real alternative”.100 The government opened the door to a new paradigm in the energy market: the possibility for consumers to use photovoltaic or small wind turbines to partially disconnect themselves from the electricity sector’s largest companies. The system would enable consumers to produce their own electricity, contribute any excess generated back to the grid and deduct it from their electricity bill, all while maintaining the right to draw from the grid when they did not generate enough power. This way, the government was aligned with the 2009 and 2012 European directives on promoting renewable energy and energy efficiency. In terms of competition, self-consumption is “a source of competitive pressure for the rest of conventional supplies, and it helps make competition in this sector more 101 effective”. For regulatory agencies, self-consumption has other significant advantages: it supports energy independence, provides greater security for local 102 supplies, and reduces electricity transmission losses. Nevertheless, the promotion of this type of energy production, if it became extended in Spain, would be a setback for electricity companies, as their income would be reduced while their costs would change very little, since they would need to continue to provide a certain amount of support to the self-producers/consumers. Within this context, in May 2012 the first reactions were published in the media, 103 capturing the industry’s position. The electricity companies emphasised that if selfconsumption was encouraged, fewer consumers would be forced to bear the system costs, which is why they supported an efficient tariff model “that accurately reflects the relation between costs and tariff to prevent other consumers from subsidising self96

"El déficit de tarifa eléctrica superó los 28.000 millones de euros hasta 2012, según la CNE", RTVE/Agencies, 19 April 2013.

A. M. Vélez, "Soria fulmina las primas a futuras plantas renovables", Público, 28 January 2012; L. López and R. Esteller, "Industria plantea poner primas a la carta para las renovables", The Economist, 30 January 2012.

L. López and R. Esteller, "Entrevista a Eduardo Montes, presidente de UNESA", The Economist, 15 May 2012.

The International Energy Agency defines “distributed generation” as an energy source that is connected to a low voltage distribution grid and runs on technologies like motors, mini and microturbines, fuel cells, and photovoltaic solar energy. Guía básica de la Generación Distribuida 2007, Community of Madrid, Fundación de la Energía.

"Industria confía en el autoconsumo como la "alternativa real" para la fotovoltaica tras retirar las primas", Energiadiario.com, 30 January 2012.

100

101

Report 103/2013 on the Electricity Sector Act Draft Bill. National Competition Commission (CNC), 9 September 2013, 15.

102

CNC Report 103/2013, 15, and CNE Report 19/2013, 4 September 2013, 13.

L. López and R. Esteller, "El autoconsumo también debe pagar el coste de las redes, según las eléctricas", The Economist, 21 May 2012.

103

104

consumers”. Some of the sector’s companies fought to establish a back-up toll on self-consumers to avoid uncontrolled growth and compensate the electricity 105 companies for the fall in demand. As for the Spanish Photovoltaic Union (UNEF), at the end of 2012 it submitted a proposal to develop and encourage self106 consumption. One year after the tenth legislature took office, the Ministry of Industry, Energy and Tourism received proposals from the two main parties interested in developing a Royal Decree on self-consumption; the traditional electricity sector and the photovoltaic solar energy sector. A war broke out between electricity and renewable energy companies in the form of a series of accusations as to who was responsible for the crushing tariff deficit. In February 2013, the National Renewable Energy Producers and Investors Association (Anpier) demanded that the government explain the system costs to citizens, emphasising that “perhaps there is a real interest in not being transparent in this regard and that the situation should be simplified by making 107 the switch to solar energy”. Major companies with a strong presence in the renewable energy sector announced they would withdraw their investment in solar 108 energy in Spain, blaming the government for the severe cutbacks. In light of the uncertainty regarding the publication of the Royal Decree that would regulate self-consumption, the photovoltaic sector launched a worldwide media 109 campaign in June 2013 in order to highlight the uncertain legal situation in Spain. One month later, the Energy Secretary of State submitted two legal texts to the independent regulatory agencies (the National Energy Commission, CNE, and the National Competition Commission, CNC, which are part of the current National Markets and Competition Commission, CNMV) in order for them to draft the required activity report. The first was the Electricity Sector Draft Bill and, two days later, the 110 proposal for a Royal Decree on self-consumption. The Energy Secretary of State requested the reports urgently, coinciding with the Spanish summer holidays. Royal Decree proposal on self-consumption The text defines the back-up toll111 as “a payment made to support the entire electrical 112 system so as to make self-consumption possible”. The proposal establishes that modifications and updates to the back-up toll will be applied to all consumers under the various self-consumption supply forms. It also forces consumers under this

104

Ibid.

G. Sáenz de Miera (Íberdrola Regulatory Prospectus Director), “Análisis del autoconsumo en el marco del sector eléctrico español”, Seminar on Self-Consumption and Net Balance in the Community of Madrid, 12 April 2012.

105

106

L. López and R. Esteller, "La solar propone cupos para desarrollar el autoconsumo", The Economist, 18 December 2012.

107

A. Brualla, "Guerra abierta entre Unesa y las renovables por los últimos recortes", The Economist, 10 February 2013.

108

C. Pizá, "Abengoa cancela toda inversión solar en España y carga contra el Gobierno", The Economist, 25 February 2013.

D. Toledo, "La fotovoltaica lanza una campaña internacional para denunciar la inseguridad jurídica en España", El Confidencial, 12 June 2013.

109

Royal Decree proposal that establishes regulation of the administrative, technical, and economic conditions of the electric energy supply types with self-consumption and self-consumption production, 18 July 2013.

110

111

G. Sáenz de Miera, “Análisis del autoconsumo en el marco del sector eléctrico español”, 2012, Ibid.

112

Royal Decree Proposal on Self-Consumption, Article 16.

modality to register with a self-consumption registry, and anyone who fails to do so 113 will be committing a serious violation. The National Energy Commission (CNE) published its perceptive report on 4 114 September 2013. Its first comment was as follows: “It is our opinion that the urgent procedure by which the proposal has been made, which coincides with the Electricity Sector Draft Bill and an assortment of other royal decrees and orders, does not guarantee the effective participation of the various parties involved”. The CNE understands that the compensation mechanism is due to the short-term economic sustainability of the system, but considers it as “discriminatory with respect to the rest of consumers who, if they can reduce their consumption in the event that energy efficiency measures are adopted [...] would not pay this toll for the energy they might save”. Additionally, it identifies certain inconsistencies between the Royal Decree proposal and the Energy Draft Bill. Another issue that the CNE highlights is that the proposal does not detail “the benefits associated with distributed production and self-consumption, such as reducing energy losses within the grid, which would increase the system’s overall efficiency, and other social benefits that are more difficult to quantify, such as lowering net investment in the system [...], decreasing energy dependency, and diminishing the environmental impact of electricity”. At the time this research concluded (November 2014), the Royal Decree on selfconsumption regulation had not yet been approved by the Council of Ministers. Electricity Sector Draft Bill Article 9 of the Bill defines self-consumption as “the consumption of electrical energy derived from power stations connected to a consumer grid internally or through a 115 direct electrical line linked to consumers”. The text also established that “facilities that are connected to the system should help cover the costs and services of the electric system, under the same terms and conditions as the energy consumed by other subjects in the system”. As with the mandatory report on the Royal Decree proposal, the CNE emphasised in its conclusions that “the timeframe granted to report on the draft bill is insufficient, given its regulatory importance and its relation to other regulatory proposals that were also submitted during the same period. The lack of time is particularly relevant when 116 analysing the various allegations”. As for the CNC, the commission was highly critical of the anticipated measures contained in the Bill and underscored that the proposed back-up toll “is not limited to self-consumption facilities that put energy back into the grid; rather, it is required even

A sanction of up to a maximum of 60 million euros for failing to register for self-consumption. Act 24/2013 of 27 December, on the Electricity Sector. (Article 64.43 and Article 67.1a).

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Report 19/2013 on the Royal Decree proposal establishing the regulation of the administrative, technical, and economic conditions of the electric energy supply modalities, with self-consumption and self-consumption production (Madrid: National Energy Commission, 4 September 2013).

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The self-consumption modalities can be classified into three categories: i) supply with self-consumption; ii) production with self-consumption; and iii) production with self-consumption by a consumer connected through a direct production facilities line.

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Report 16/2013 on the Electricity Sector Draft Bill (Madrid: National Energy Commission, 31 July 2013).

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in the case of private consumers who are not producers”. In that regard, the report advised that, regardless of the system, it must not be discriminatory or “unnecessarily or disproportionately restrict self-consumption electrical energy production”. It also noted the benefits of developing self-consumption in Spain as a strategy that – at the micro-level – helps reduce a high dependence on foreign energy. The CNC also emphasised that penalising self-consumption means penalising a specific technology: photovoltaic solar power. Thus, the CNC requested that Article 9 of the Bill be reconsidered. More specifically, it advised against any unnecessary obstacles to the development of self-consumption. However, the government ignored these recommendations. An analysis of the parliamentary procedures related to the Electricity Sector Bill reveals a connection between the amendments submitted to Article 9 and the previously-identified interests of the power companies. On 20 September 2013, the Council of Ministers approved the Electricity Bill of Law to be sent to the Courts. The approved text differed slightly from the original Bill and firmly established the back-up toll for self-consumption consumers of all types. After the Bill was published in the Official Gazette of the Spanish General Courts, on 4 October, a period of one month was opened to submit amendments. A total of 23 amendments were received to the aforementioned Article 9, from all of 118 the parliamentary groups, except the majority group (the People Party’s Group). Many of them argued that the back-up toll reduced incentives for selfconsumption. However the Bill was approved by the Commission for Industry, Energy and Tourism in Congress (with full legislative powers) on 21 November and no modifications were made to Article 9. The legislative process continued in the Senate, where a new deadline was issued to submit amendments, although it was shorter than the one granted by Congress. This time, 16 amendments were received, one of which was from the People Party’s Group, requesting that a reference be added to the registry in section 4 of the aforementioned article: “[...] following a hearing for the Autonomous Communities and Cities of Ceuta and Melilla [...]”, thereby justifying the participation of the autonomous communities in this arena, due to powers acquired in the past. After three months of parliamentary processing and with just this one single change to Article 9, the Congress of Deputies passed the Bill on 26 December 2013. Conclusions In light of these expectedly conflicting interests, some believe that the president has regulated the activity of self-consumption in order to de-incentivise it, following the demands expressed by electricity companies and in blatant opposition to the 119 regulation promoted in countries like Germany. The lack of response to arguments

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Report on the Electricity Sector Draft Bill (IPN 103/2013) (Madrid: National Competition Commission, 9 September 2013).

Electricity Sector Bill of Law. Amendments and index of amendments to the article. Official Gazette of the Spanish General Courts. Congress of Deputies. Series A, No. 65-2, 7 November 2013, 342.

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R. Espada, "Autoconsumo, balance neto, Alemania, California", Energías renovables, 23 May 2012. www.energiasrenovables.com/articulo/autoconsumo-balance-neto-alemania-california.

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in favour of self-consumption, and the numerous allegations and amendments submitted while the Electricity Sector Bill of Law was being processed, as well as the notable short-term focus of the government measures, all seem to indicate that the president’s decision was more political than technical. Furthermore, not all of the parties that have an interest in developing this regulation were given equal attention or floor time. At the very least, this indicates that the processes followed are not perceived as sufficiently clear or transparent; or as processes that give opportunities for participation of the often-contradictory interests of companies, employers' associations, social organisations, and the public. With more transparency, these impressions could probably be counteracted with solid arguments from the executive, but given the opacity the appearance of bias is undeniable. As a conclusion, what actors exert influence and what problems have been identified in the system? We identify, among others, the following interest groups or lobbies: –

Electricity sector (UNESA) and nuclear sector (Foro Nuclear): There is a certain degree of opacity on the non-regulated costs, in particular those of nuclear power plants. These costs do not have an impact on the tariff deficit, but they do on the final consumer rate. On the contrary, regulated costs are published in the Official Gazette (BOE), although they might not be completely accessible for nonexperts.

–

Renewable energies' sector (APPA, AEE (wind), Protermosolar (solar), Anpier): Today we can conclude that the bet on renewable energy was conducted in Spain with poor planning and a lack of control mechanisms. Specifically with regard to solar photovoltaic energy, the administrative permission to install solar panels was the responsibility of the autonomous communities, which became lobbying targets, while the public subsidies for these facilities were fixed by the central government. Thus, the indicative governmental target for solar panels quickly exceeded 1000%. Wind energy did not present much of a problem and the objective was met, the production of wind energy being cheaper than solar energy.

–

Big industry (AEGE): About 40 large industrial companies are grouped in the Association of Great Power Consumers (AEGE), which benefit in Spain from the lower electricity rate.

–

Domestic coal sector (Carbunión): Since 2010, the national coal association receives state support to pay the excess cost compared to natural gas plants.

The main risk identified is the opacity in the decision-making process, and to a certain extent, the lack of consideration of all of the interested parties in the development of the relevant regulations. In that regard, the absence of lobbying regulation has perhaps caused a one-sided regulation to develop, where some voices – the traditional electricity sector, industrial electricity consumers, etc. – are heard more loudly than others. The resulting measures contradict the European directives on

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V. Martínez, "Amplían el expediente contra el impuesto al sol por discriminatorio", El Mundo, 6 March 2014.

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renewable energy and energy efficiency.

The threat of divestment as an instrument of pressure is clearly seen in the case of the Garoña nuclear energy plant.

Case 6. Closing the Garoña nuclear facility

The Santa María de Garoña nuclear facility (Burgos, Castile and Leon) opened in 1971 and, after 41 years in service, it is the plant that has operated the longest in Spain. In 2012, Garoña produced approximately 3,900 GWh, the equivalent of 6.3% of the national nuclear power production and approximately 1.5% of all electricity produced in the country. At the end of 2012, the station had 300 employees, and its 122 economic impact in the area accounted for more than 1,220 jobs in 2011. It belongs to the company Nuclenor, 50% owned by each of Spain’s two leading electric companies, Iberdrola and Endesa. In July of 2009, during Zapatero’s second term and facing increasing pressure from ecological groups and left-wing political parties, the Minister of Industry, Miguel Sebastián, announced that the facility would close in 2013. The government argued that the power plant’s production was irrelevant and was hindering the development of 123 renewable energy. This decision was “capricious and thoroughly ideological” for the president of the 124 regional government of Castile and Leon, Juan Vicente Herrera. Moreover, the 125 decision contradicted the recommendations of the Nuclear Security Council, which supported a 10-year extension of the facility’s useful life, and a reindustrialisation plan was lacking for the area. The day after the announcement, Order ITC/1785/2009, of 3 July, was published in the Official State Gazette, establishing the definitive date to cease operations at the Santa María de Garoña Nuclear Facility as of 6 July 2013 and authorising its exploitation until the said date. Nuclenor, the plant’s owner, rejected the measure and two days later announced in a press release that it would file an appeal. In the November 2011 general elections, that were supposed to take place in 2012, but which the government had moved up, there was a change of party in office and new hopes for the nuclear sector: the winner People’s Party (PP) had a different take on atomic energy. The president’s intentions were made clear just seven months later,

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Directive 2012/27/EU of the European Parliament and Council, 25 October 2012, on energy efficiency. Preamble clause 37.

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Analistas Financieros Internacionales (AFI) Study for Nuclenor, May 2012.

R. Méndez, "Zapatero blindará por ley el cierre de Garoña en 2013 por si gana Rajoy", El País, 4 July 2009. The date chosen, 2013, marks the second year after the 40 anticipated years of “useful life” and six less than the number requested by the company (2019), and one year after the general elections of 2012, where it was anticipated that the PSOE would lose.

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"Altura de miras para Garoña", The Economist, 17 December 2012.

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Nuclear Security Council Order on renewing the license, 8 June 2009.

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with the publication of a Ministerial Decree that, in part, annulled the prior one. The new regulation established that the company could request renewal of the authorisation from the Ministry of Industry, Energy, and Tourism before 6 September 2012 to operate the plant for a new period of no longer than six years. However, once the established date arrived, Nuclenor did not attempt to renew the authorisation that it had been fighting for over the previous few years. The company announced that it would not continue to operate Garoña on account of regulatory uncertainty. This refusal generated additional tensions for the negotiations with the government on the Bill of Law of Energy Sustainability Fiscal Measures, brought to the table in September 2012. The reason behind this tension and the threat of definitive closure – despite assistance from the new administration – had to do with the fact that this law involved the establishment of three new taxes: one on electricity production, one on the production of spent nuclear 127 fuel, and one on the storage of spent nuclear fuel. Clearly, Nuclenor’s refusal to request a renewal displeased the government, which was counting on the nuclear plant to lower the costs of electricity. The Parliamentary People’s Group in the Senate submitted an amendment to the processing of the text of the Act in the upper chamber of parliament aimed at increasing the fiscal burden on 128 spent nuclear fuel production and storage. To avoid paying this tax increase, effective 1 January 2013, Nuclenor announced that it was to cease activity for good at Garoña on 16 December 2012, six months prior to the authorised end date. In its announcement, the company clarified that the definitive closure could be reverted if, “once the law is promulgated, the tax conditions vary substantially from the bill of law 129 that is actually being processed”. Such was the situation in December 2012 when a new Energy Secretary of State took office. The arrival of Alberto Nadal would change the entire direction on the negotiations. In May 2013, less than two months before the Garoña license would expire (on 6 July 2013) Nuclenor urgently requested the Ministry of Industry to partially revoke the Ministerial Decree of 29 June 2012, asking for a one-year extension for the facility, which would remain “on hold” until the company could make the necessary reforms to put it back into operation with full safety guarantees. The Ministry then requested the Nuclear Security Council to analyse the facility’s continuity under these conditions for one year more. At the end of May, the regulatory agency issued a favourable opinion regarding the license renewal for one additional year under its current “on-hold” status, giving it the government go-ahead. While the Environmental Tax Law was being processed in Congress, in 2013, the People’s Group submitted an amendment to reduce the tax burden on radioactive waste management. This measure was well received by Nuclenor, although it specified that much work remained to be done

Order IET/1453/2012, 29 June, which partially revoked Order ITC/1785/2009, 3 July, which establishes the definitive date on which the Santa María de Garoña nuclear facility would cease operations as 6 July 2013 and authorises exploitation thereof until said date (Official State Gazette no.158, 3 July 2012).

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Bill of law on fiscal measures aimed at energy sustainability. Official Bulletin of the General Courts, Congress of Deputies. Series A. No. 25-1, 28 September 2012, 2.

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"Garoña espera a que el Gobierno diga la última palabra para plantearse reabrir", La Vanguardia/Agencies, 17 December 2012.

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R. Daniel, "¡Ya es oficial! La central de Garoña se apagará este domingo para siempre", The Economist, 15 December 2012.

before it could reopen.

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Another step that the government has recently taken is its approval on 21 February 2014 of the modification to the Nuclear and Radioactive Facility Regulation, which enabled Garoña to apply for a license renewal before 6 July 2014, as the electric companies had requested. On 8 March, a Royal Decree on nuclear waste was published in the Official State Gazette, which was also well received within the sector. On 28 May 2014, Nuclenor requested a license to extend the useful life of the Garoña power plant until 2031, at which point the facility would have been in operation for 60 years. Thus, the electric companies would have won out over the government, thereby demonstrating that they were counting on Garoña being a key element in the 131 government’s nuclear wager. The lack of transparency in the decision-making processes in the energy sector is clear, both in the public as well as the private sphere. A decision-making process that had great interest and significant impact on citizens, resulted in a very opaque process and the image of electric companies took a real hit.

INTENSITY AND SCALE OF LOBBYING IN SPAIN Given that there is no register of lobby groups in Spain, we can start by assessing Spanish lobbying outside the country. In 1997 in Europe, the Senior Council of the Chambers of Commerce was the first Spanish lobby group to establish an office in Brussels. Later, in 2006, after the first register of lobby groups was created for European institutions, some 40 Spanish businesses and government agencies registered (inter alia, Altadis, Arcelor and the Andalusian Regional Government). That number has slowly but steadily continued to rise: in 2012, not even 100 were registered. Several years ago it was 239; today, among the 6,501 organisations that appear in the register, 369 are domiciled in Spain. Of these, 185 are classified as professional lobby groups, professional associations and unions; 79 NGOs; 43 universities or think-tanks; 20 representatives of national agencies and four law firms. Their scope of action ranges from financial or environmental matters to research and technology or energy, and there are many more minor topics as well. The most well known organisations are companies like Abertis, Acciona, Endesa and Iberdrola, but there are also a number of professional associations too, from ship owners and cattle ranchers to filmmakers, beekeepers and Christian attorneys. Spanish lobbying has also evolved in the United States, albeit to a lesser extent. While the tradition of lobbying in defence of Spanish interests dates back to the 1940s, where both the Francoist dictatorship, which used agents like José María Aladrén, and the Republican government in exile tried to use lobbying to defend their interests, it was in 1972 that the Spanish Senior Council of the Chambers of Commerce began to operate in the United States. Since then, the figures have risen slowly. In 1996, there were 10 Spanish businesses with L. López and R. Esteller, "El Gobierno mejora las condiciones fiscales a la nuclear para la continuidad de Garoña", The Economist, 20 September 2013.

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M. Vilaseró, "Garoña pedirá la reapertura para volver a funcionar antes de un año", El Periódico, 20 May 2014.

interests stated before the US Congress, almost all of which were represented by American lobbyists, with a marked presence in regional entities. Today, there are close to 50 registered Spanish companies, and while many are from the energy sector, the diversity of interests defended by the businesses represented is astounding. Ø

Despite current difficulties in conducting a detailed analysis, lobbying is, indeed, a common practice in Spain, both within the legislative as well as the executive branch, and it even, at times, plays a decisive role in drafting the final legislation.

This is evident in a variety of legislative debates, such as the one on Organic Law 4/2000 on the rights and freedoms of foreigners in Spain and their social integration, or Organic Law 15/1999 on the protection of personal information, in which law-makers’ openness to the opinions of certain groups is clear. Beyond these two concrete cases in which lobby groups made the news, today, lobby groups have become true parties – in many cases protagonists – within the political system. Based on his political experience, Juan Francés, author of ¡Que vienen los lobbies!, affirms that the influence these “interest groups” have on the development of laws is greater than one might think. Francés has stated in interviews that deputies are the first to acknowledge this reality, and that over the last decade, this practice has become so acute that no law is passed without first becoming the subject of lobby groups. In that regard, practices include submitting an article drafted wholly by a lobby group. According to Francés, lobbyists base their efficacy on their ability – depending on the political circumstances – to get one party or another to support or reject a law. The effectiveness of interest groups lies in making use of strategies that increase their operative influence ability, such as addressing all parliamentary groups; on occasion, 200 amendments are proposed for a bill of law, of which 150 are repeats, although different parties have submitted them. An example of the opacity of lobbying in Spain, as well as of imbalanced and fragmented attempts to influence political decisions, is the process of modifying the Intellectual Property Act (Case 7). This is a case that demonstrates how opacity only leads to more opacity, which is negative for democracy.

Case 7. The Intellectual Property Act On 22 March 2013, the Minister of Education, Culture, and Sports, José Ignacio Wert, publicly presented the Draft Bill to modify the Intellectual Property Act. The Ministry submitted this Bill for public consultation between 22 March and 17 April 2013, a relatively short period of time for parties that were not fully prepared to conduct an indepth analysis of the regulation, although it made the process quite simple: an email address for people to send their statements. Pursuant to the law, Spanish state consulting institutions, such as the State Council and the National Competition Commission (CNC), also issued an opinion regarding 132 the Draft Bill at the Ministry’s request. However, as is often the case, the

At the time it issued its report, the CNC was transitioning toward the constitution of the new regulatory agency, the National Market and Competition Commission (CNMC).

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statements and allegations were not published on the webpage of the Ministry from which the policy had arisen, which made it difficult to determine the different positions of the groups interested in the regulation. The opinions of the consulting agencies 133 were also not made public. Nearly a year passed from the time that the State Council and the CNMC issued their rulings and the period to submit statements expired. More specifically, 10 months of uncertainty ensued, during which the parties with interests in this policy met with the Ministry itself, the Telecommunications and Information Society Secretary of State (Ministry of Industry), the Ministry of Economy and Competitiveness, the vicepresident, and the Communications Secretary of State. No public information is available on these meetings: the procedure used to develop the modifications was also not made public, nor was a democratic process of consulting and participation followed. On 14 February 2014 the Council of Ministers approved a partial reform of the Intellectual Property Act after incorporating the Ministry’s latest modifications. The most relevant of these modifications was the inclusion of Article 32.2, which states: "No authorisation is needed for electronic service providers to make public the aggregation of the contents of insignificant fragments that are disclosed in periodic publications or on websites that are regularly updated, for information or entertainment purposes or to generate a public opinion, notwithstanding the right of the editor or, where appropriate, other entitled individuals, to receive fair compensation. This right is inalienable and shall be made effective through the intellectual property rights management entities. In any case, the process by which third parties make images, photographic works or even photographs released in periodic publications or on websites that are periodically updated available to the public shall be subject to authorisation".

On 14 February, the Bill was submitted to the Congress of Deputies. The parliamentary phase ensued for months, specifically in the Congress Culture Commission. A debate 134 and vote in plenary took place on 10 April; on 10 June the amendment period was extended for the fourteenth time. The Intellectual Property Act was finally approved on 4 November, with amendments but maintaining Article 32.2.135 Nevertheless, different sources during the previous months had suggested that Article 32.2, being the subject of disagreement, could be eliminated, and a new article number 129 – which would even surpass its predecessor in terms of guaranteeing favourable objectives for media editors – would replace it, taking into account the 136 Svensson Ruling of the European Union’s Court of Justice.

During the interview phase, the author of this paper learned of some of the proposals. However, as they are not public, the author has preferred not to reference them.

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Amendments submitted by the following parliamentary groups: Mixed; Progress and Democracy Union; United Left; Green Catalonia Initiative; Alternative United Left; CHA: Pluralistic Left; Socialists; and a request by the Progress and Democracy Union Parliamentary Group for the plenary session to recall the bill; both endeavours were unsuccessful.

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Law 21/2014, 4 November, which modifies Law on Intellectual Property and Law 1/2000, 7 January, on Civil Trials.

The concept of influencing the amendment process is determined by the Svensson Ruling issued by the EU Court of Justice, which goes against the idea of paying a tax to use certain content. This ruling was issued on 13 February 2014, one day before the Council of Ministers approved the Bill. See: http://estaticos.elmundo.es/documentos/2014/02/13/sentencia_TJUE.pdf.

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Another relevant element in this process was the approval by the CNMC board, on 21 137 May 2014, of a report related exclusively to Article 32.2. The CNMC took the 138 initiative to draft this report, in exercise of its powers, and it was not a part of the consulting process that any state or parliamentary agency may request. The report ostensibly favours the interests of one of the parties to the process – news aggregators – using their own arguments. It is surprising that the CNMC approved its own initiative during the parliamentary procedure for Article 32.2 alone, that this report contradicted the government’s stance on the matter and, therefore, that of press editors represented by AEDE, and that it favoured Google and the organisations members of Coalición Prointernet. The final draft of Article 32.2 favours media editors, represented by the Spanish Newspaper Editors Association (AEDE). This organisation groups all of the main printed periodic publication media, including groups such as Planeta, Vocento, Grupo Prisa, Grupo Zeta and Unidad Editorial, among others. At the other end of the spectrum are those who are wronged in this process, according to the parties at stake, including the platform known as Coalición Prointernet that includes Google, the Open Knowledge Foundation (OKFN Spain), and other organisations. In conclusion, the introduction of Article 32.2 in the Intellectual Property Act Bill, in the opinion of one of the stakeholders – the Coalición Prointernet – was not the result of consultations and participation of all of the sectors affected by the measure. This would lead us to think that the executive is taking decisions in a nonparticipatory way, thus contrary to the principles of democracy. In this case, the lack of an open consultation process prior to the inclusion of Article 32.2, which has resulted in a great impact still to be measured in the digital media industry, could be qualified as opposite to the democratic principles of participatory decision-making.

In terms of lobby groups that are active or which have a strong ability to influence others, the companies integrated under the IBEX 35 Index – that is, the 35 largest companies on the stock exchange in Spain – are usually highlighted. However, they are not the only parties at stake. Other types of lobby groups include non-profits or organisations with more socially oriented interests that, depending on the political context, may have success in exerting pressure. Among the leading companies, those from the financial sector – some of which are part of the IBEX 35 – are underscored for their influential power. Large lobby groups that back banks and financial institutions offer “revolving door” opportunities at the national and international level, within the public sphere responsible for regulation and private business interest. In that regard, 139 Juan Hernández Vigueras notes that lobby groups like the International Institute of Finance (IIF), the largest big banks’ lobby group in the world, not only played an active role with regard Proposal regarding the modification of Article 32.2 of the bill of law modifying the combined text of the Intellectual Property Act, CNMC, 16 May 2014.

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According to conversations held with the CNMC, the report was drafted by virtue of Article 5.1 of Act 3/2013, which grants the CNMC the power to: “Promote and conduct studies and research on competition, as well as general reports on economic sectors”.

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139 E.

Clemente, "Juan Hernández Vigueras: "Los 'lobbies' financieros tienen más poder que los gobiernos", La Voz de Galicia, 11 November 2013.

to negotiating the Greek debt in the interest of French and German banks, but also intervened in the Spanish banking crisis through direct contact with the highest ranking officials between 2010 and 2012. It thereby influenced the savings bank dialogue and helped give rise to the “bad bank”.140

Case 8. The Bankia case141 In mid-2010, Rodrigo Rato, the then president of Caja Madrid, requested a 4.465 billion euro loan from the Organised Banking Restructuring Fund (FROB) to restructure his entity and to successfully undertake the process of merging the savings banks as part of the government’s process of restructuring the Spanish financial system. The purpose of this merger was to create an entity large enough to absorb the individual losses of each participating savings bank. The Bank of Spain’s Executive Board concluded that the loan requested would help restructure Caja Madrid and cover future losses, so it gave the green light to issue the amount and 142 proceed with the merger, which formed BFA-Bankia. Nevertheless, after discovering the real numbers submitted by Bank of Spain inspectors in a report drafted several years later, the lack of substantiation upon which the conclusions and recommendations of the aforementioned Central Bank Executive Board were based has been made quite clear, as has the fact that the loan should never have been authorised in the first place. The data included in the inspectors’ report are discouraging, since they anticipate losses for the lending agency of nearly 5 billion euros over the next two years. However, the official forecasts that the Bank’s Executive Board used anticipated losses of 3 billion euros. The difference lies in the fact that the inspectors calculated that Caja Madrid’s debt could reach 4.983 billion, of which 3.020 billion corresponded to the “most problematic” loans, but the Bank of Spain only referred back to the second figure – a more conservative one – making no mention of the more pessimistic one. Months after the savings bank merger, in keeping with the Basel II international banking regulation accords, the Zapatero administration approved a plan forcing the banks to create a capital reserve to have on hand. In order to gather the necessary capital, BFA-Bankia went public. Thus, on 20 July 2011, 55% of Bankia was offered up on the stock exchange, which yielded 3.092 billion euros. However, the volume of toxic shares originating from construction and investment in land threw off all predictions, and in 2011, Bankia suffered losses of 3.318 million euros, the second largest in the history of Spanish banking entities. As a result, Bankia’s president, Rodrigo Rato, stepped down on 7 May 2012.

The so-called “bad bank” in Spain is the Management Association for Shares Originating from Bank Restructuring (Sareb, according to the Spanish acronym). Sareb was created in 2012 by the governmental decree of law to manage certain classes of shares that could harm the feasibility of nationalised financial entities or the restructuring process. Its ultimate goal was to mend the Spanish banking system.

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141

To understand the context, see case 1 on the savings bank situation.

The Banco Financiero y de Ahorros (BFA) and its listed subsidiary, Bankia, are the result of a fusion of seven savings banks: Caja Madrid, Bancaja, La Caja de Canarias, Caja Ávila, Caixa Laietana, Caja Segovia and Caja Rioja.

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Two days later, Bankia was nationalised. The state kept 45% of the shares and undertook a restructuring process. On 28 May, the Board of Directors requested an injection of 19 billion euros of public funds, a figure that far surpassed all predictions and which turned it into the largest financial bailout in Spanish history and one of Europe’s largest. Bankia’s Board then stepped down en masse. A total of 22.424 143 billion euros of public money was ultimately injected into Bankia. According to the Bank of Spain’s internal inspectors, the Bank had a “whole slue of sanctions and measures at its fingertips that were aimed at intervening with or substituting its administrations” so as to control entities that took on too much risk, but its “passiveness” prevented it from halting inappropriate credit 144 growth in cases like Bankia and others. In that regard, at the beginning of 2013, the Bank of Spain’s Association of Inspectors submitted a document to the entity’s highest 145 officials, now led by Luis Linde. The document was titled “Mejoras en los procesos de supervisión del Banco de España” and denounced irregularities. It stated that, “between the inspection report and the decision making of the Bank of Spain’s Executive Board, there are too many filters whose only purpose is to influence the inspection’s conclusions, such that the Executive Board does not actually even have access to the said report”. For this reason, “an organisation has been created within the Bank of Spain that has weakened the inspectors’ function and/or technical autonomy and which damages the effective development of their job as monitors”.

The report notes that, “the industry’s influence [...] has affected the current oversight [...] Corrective measures are not applied as rigorously to deficiencies observed by the 146 inspectors”. This situation is even more significant if we consider that the lack of strict monitoring was one of the main factors that led to the bailout of the Spanish financial system, with an injection of 100 billion euros of European funds to restructure and organise the country’s banking outlook. In the Bankia case, we can see how the financial lobby exerted undue influence on many occasions, thereby contributing to the disastrous outcome. It would appear that at first, Spain’s big banks exerted influence in order to prevent their serious economic imbalances from being revealed and that later, when the situation became unsustainable, Spanish banks and the international financial system exercised influence to force out the entity’s president, Rato, and proceed with the bailout. During the initial phase of the process, the strategy of choice was to conceal what was really going on. As economic journalist Íñigo de Barrón stated in an interview for this study: “The big banks were also not interested in having anyone find out about the real situation, because it would cost them a lot of money. Their balance sheets would also be seriously affected, because they were also exposed to the housing market. Everyone awaited economic recovery”. In short, the Bank of Spain’s strategy of

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E. Segovia, "El FROB da por perdidos 10.000 millones del rescate de BFA-Bankia", El Confidencial, 26 March 2013.

A. Bolaños, "Los inspectores del Banco de España culparon a Caruana de los problemas de la banca con el 'ladrillo'", El País, 21 February 2011.

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D. Basteiro, "Luis María Linde, nuevo gobernador del Banco de España”, Huffington Post, 7 June 2012.

146

I. de Barrón, "Los inspectores acusan al Banco de España de alterar sus conclusiones", El País, 7 January 2013.

hiding out was influenced by the interest of the big banks. During the final phase, as revealed by de Barrón in an article published on the front page of the newspaper El País in May 2014, the pressure exerted from the United States on the Rajoy administration was a key element of the intervention in Bankia. This pressure added to that of the Spanish banks themselves. In the cited article, a banking executive who asked not to be named noted that, “Bankia ended up becoming an unresolved problem for the financial sector and, by extension, the entire Spanish economy. During the first half of 2012, it was a hot topic in the European and American financial worlds”. More specifically, Timothy Geithner, then US Secretary of the Treasury, was pressuring Spanish Minister De Guindos. Financial tensions during the first half of 2012 began to worry big Spanish banks as well, which had been negatively affected by the increased risk premium and lack of confidence in Spain in the rest of the world. This led to the two meetings held on the weekend of 4 May 2012 between the Minister of Economy, Bankia President Rodrigo Rato, and Emilio Botín, Francisco González, and Isidro Fainé, presidents of Santander, BBVA and CaixaBank, respectively. In these meetings, Rato was allegedly told that he needed to step down. According to Andrés Herzog, Secretary General of the UPyD party in Congress and author of a complaint against Bankia, this meeting is a good example of how the big banks pressured the government. Herzog states that the only one who responded clearly was González, who confirmed that indeed, Rato was invited to resign, but the other parties involved maintain that this is false. A few months later, Rodrigo Rato was hired as advisor for Banco Santander, on the bank’s International Advisory Council. This is an incomprehensible case of revolving doors, Rato being part of the economic elite that drove the process and participated in the secrecy and pressure exerted over the Bank of Spain from the start to prevent it from taking drastic measures.

Over the last few years, the Spanish business sector has progressively understood the importance of lobbying as a political tool for participating in legislative and administrative decision-making, promoting the stability of the regulatory framework in which companies operate, and competing with others under equal conditions. As lobbying becomes more and more commonplace, partly due to outside influence and political initiatives aimed at regulating it, an increasing number of companies and organisations are considering lobbying institutions and how best to do so. The reality is that lobbying is a widespread practice today, although it is mostly done informally or behind the scenes, given the absence of regulation on the matter. This study has identified notable lobbying presence in the energy, health and nutrition, financial, telecommunications and constructions sectors, among others. “Lobby groups” have the opportunity to open a dialogue with all levels of power, although their influence depends on the lobby campaign’s strategic objective, contacts, and the ability to exert pressure. For example, for a law that a specific ministry is drafting, a lobby group can contact the minister, secretary of state, director general, deputy director or even the administrative director. All of these contacts help lobbyists achieve their objectives and, depending on the interlocutor’s profile, they can shape their messages in more technical or political way. Likewise, this happens at the legislative level, where the power of influence is extended to the various parliamentary groups and deputies.

Ø

Lobbying is not focused solely on the legislative sector. In fact, it is usually the regional and national governments that are the targets of this practice.

Therefore, when submitting a proposal to regulate this field, it is important to remember that the influence that these groups exert is not confined to the legislative branch; it also extends to the executive. A good indicator of how much this sector has grown in Spain would be the consolidation of the Institutional Relations Professionals Association (APRI), as an organisation that defends lobbyists’ interests, or of the Forum for Transparency, which gathers important companies in the consultancy sector. Another indicator is the increase in educational opportunities in the form of specific courses at a wide variety of universities. In any case, more and more companies hire professionals in charge of lobbying, and the number of firms specialised in lobby and intermediation services is steadily growing. In terms of revenue, it is estimated that lobby groups in Europe rake in 1 billion euros annually, primarily in Europe’s capital, Brussels. In Spain, since there is no regulation, it is difficult to know the exact figures. When analysing forms of lobbying, where informality still prevails, the Telecommunications Secretary of State, Víctor Calvo-Sotelo stated that there are fewer and fewer companies going to the ministries and asking “what about my interests?”147 According to Elena HerreroBeaumont, the conception of how businesses explain their interests has changed; now they defend their positions for instance in terms of creating jobs or enhancing competitiveness. Ø

In that regard, lobbying is a specialised way for civil society to participate in politics, considering that politicians cannot possibly know everything that there is to know about the matters they legislate and regulate on. To prevent corruption, it is important to identify the sector from which a specific proposal originates and why it defends it.

However, in practice, influence peddling by businesspeople and politicians is, at once, a topic of great interest and concern. Undue influence has generally been associated with public procurement in cases with explicit evidence of corruption. One of the most recent and well known is the “Gürtel case”, which identifies a group of businesses that were obtaining contracts illegally. The “Gürtel operation” has, to date, cost the jobs of three mayors, one city councillor, one Community of Madrid advisor, one deputy, one City Hall director general, two advisors, the People’s Party treasurer, Luis Bárcenas, and at the end of November 2014, the Minister of Health, Ana Mato. All of them were connected to the PP.148 The case had reached the Audiencia Nacional (National High Court) through Judge Garzón, who opened an investigation on account of a suspected corruption scheme operating in Madrid, Valencia, and the Costa del Sol. The prosecuted were accused of money laundering, tax fraud, bribery, and influence peddling. None of them were professional lobbyists, and their activities cannot be considered as lobbying, but bribery and undue influence. However, in light of the lack of regulation of this area, it is not possible to clearly differentiate between lobbying with legal means and corrupt activities.

Lobby Transparente Blog: http://lobby.blogs.ie.edu/2014/02/victor-calvo-sotelo-se-ha-cambiado-la-concepcion-de-como-lasempresas-explican-sus-intereses-en-los-ministerios-2.html.

147

"Operación Gürtel, cronología de la investigación por corrupción", 20minutos.es, 11 March 2011. www.20minutos.es/noticia/455013/0/gurtel/cronologia/corrupcion/#xtor=AD-15&xts=467263.

148

Among the above-listed accusations are the gifts that the president of Orange Market made to high-level public officials in Valencia, such as suits for the regional president, Francisco Camps, valued at 12,782 euros, which might have facilitated the concession of contracts to this company. The courts did not admit this accusation and Francisco Camps was absolved. Again, we must recall that this activity cannot qualify as lobbying, but as attempted bribery. Hence the importance of regulating and clarifying that lobbying means influencing in a way that abides by the legislation and ethical rules of the professional sector or activity.

CULTURAL UNDERSTANDING OF LOBBYING Lobbying does not have a good reputation in Spain, and this is due, in part, to its diffuse ties to political corruption. According to the General Council of the Judiciary (CGPJ, the body governing the judiciary), there are 1,661 open corruption cases in Spain. However, to date, few of these cases are linked to undue influence exerted by businesspeople on politicians, which some mistakenly catalogue as a form of lobbying. The biggest scandals include the acceptance of gifts by high-level officials and influence peddling in public resolutions, punishable by law (Table 2).

Table 2. Number of criminal violations, according to the main criminal corruption categories Type of corruption

2008

2009

2010

2011

2012

Total

294

CORRUPTION IN SPORTS

CORRUPTION IN INTERNATIONAL ECONOMIC TRANSACTIONS

CORRUPTION AMONGST PRIVATE CITIZENS

442

368

329

241

218

1598

ILLEGAL EXACTIONS AND FRAUD

113

EMBEZZLEMENT

165

231

BREACH OF TRUST IN URBAN PLANNING AND THE HOUSING MARKET

INFLUENCE PEDDLING

625

530

540

445

427

2567

BRIBERY

LAND MANAGEMENT PLANNING CRIMES

ABUSE OF/PROHIBITED ACTIVITIES

AND

URBAN

BUSINESS

BREACH OF TRUST

Overall total Source: Ministry of the Interior

At a time when political corruption is a cause of great concern amongst the population, it is hard to trust what is going on behind the scenes with lobby activities, as they are shrouded in opacity. Many often mistakenly believe that cronyism, favours or support are all part of lobbying. Thus, individuals like Iñaki Urdangarín (brother-in-law of the current king, involved in a corruption case that has had a major media impact) or even Luis Bárcenas (former PP treasurer who declared that he received opaque money for the party and delivered cash-stuffed envelopes to the party leaders, including the current president of Spain) have been called “lobbyists”, even though these cases have little to do with the activities to which lobbyists dedicate themselves. In short, society does not look favourably on any concept associated with the term “lobby”. Although the need for regulation and its advantages seem clear in the political arena, the data show certain contradictions. In that regard, some stances on the possibility of regulating lobbying in Spain have been included in a survey conducted by Burson-Marsteller 149 and Cariotipo MH5, and launched in September 2013. Thus, although 34% of the politicians interviewed believe that it would be useful to have a mandatory register of lobbyists, these data are 20 percentage points below the European average and far below the opinion of community 150 institution decision-makers (70%), where some regulation is already in place. Furthermore, 41% of political decision-makers are neutral as to the usefulness of a register in Spain, and 20% consider that it would not be useful at all. In any case, according to 93% of Spanish politicians, lobbying is not sufficiently regulated in the country, although 44% are optimistic that it will be within the next three years. Ø

The lack of regulation can explain why 46% of the Spanish politicians surveyed consider opacity as the most negative aspect of lobbying, as opposed to 26% of their European counterparts.

A significant percentage of the deputies interviewed have detected an increase in lobbying in Spain, which calls for greater professionalisation and oversight. As proof that lobbying is alive and well in Spain, 56% of the politicians interviewed stated that they have spoken with lobbyists and that they did so because it is their obligation to lend an ear to anyone who asks for their attention. Despite its negative image, 86% concluded that lobbying helps develop policies. On account of the opacity and mystery surrounding lobbying, only 5% of those surveyed in Spain are concerned about the excessive weight that lobbying could give to the economic elite in decision-making (this statistic is five times less than the European average) even though, as previously noted, any expert would underscore the importance of lobbying. When asked about lobbying’s most positive aspect, the response is participation: 59% of those surveyed in Spain state that the participation of social and economic agents, as well as citizens, in politics is good (the European average is 37%). However, only 12% of politicians affirm that the most positive aspect of lobbying is the possibility of raising an issue to the national level (as opposed to a 20% European average).

Burson-Marsteller y Cariotipo Mh5, “Report El lobby en el nuevo marco regulatorio: la opinión de los decisores políticos en un momento de cambio” (Brussels: Burson-Marsteller y Cariotipo Mh5, September 2013). Also see the general report BursonMarsteller, A Guide to Effective Lobbying in Europe (Brussels: Burson-Marsteller, 2013). http://lobbyingsurvey.eu.

149

See the graph published by Diario Expansión, 24 September 2013: www.expansion.com/2013/09/24/empresas/energia/1380059712.html.

150

Lastly, at the sub-national level, in the survey on perceptions and attitudes regarding corruption 151 – conducted by the Catalonian Antifraud Office in 2012 – 94% of those surveyed considered the existence of interest groups that influence public decision-making to be something positive. Similarly, 92.2% of those surveyed believed that legal regulation of these groups’ activity is very or somewhat necessary. This survey shows an especially positive opinion of the role of interest groups in Catalonia.

Access to information, accountability and political financing In terms of complementary regulations that could contribute to a comprehensive lobby regulation, it is important to first consider transparency regulations. In December 2013, the Transparency, Access to Public Information and Good Governance Act was passed (Transparency Act),152 guaranteeing the right of access to information, although not as a fundamental right. Acknowledging this right is a positive step forward in the war on corruption, but the procedure for ensuring it is rather convoluted, and it is not yet known how it will be applied, given the absence of legislation on the matter. In theory, any citizen may request to review any file in the public administrative archives, without needing to specify any reason, but in practice, exercising this right involves so much red tape that it can be diluted over time. The application of “negative silence” and the general criteria for denying information – such as national security, the environment, etc. – are especially problematic when the agency in charge of overseeing the application of the law is not sufficiently independent. In any case, the Act represents significant progress. The Transparency Act also contains a chapter devoted to active disclosure, which is important for lobbying, as it establishes, among other public administrative responsibilities, the obligation to publish online “any annual and multiannual plans and programmes for which concrete objectives are set, as well as activities, means, and timeframe anticipated to achieve said objectives”. It also stipulates that the government must publish the relevant legal information (Article 7), more specifically, “draft bills, legislative decree bills of law, and regulatory bills whose initiative corresponds to them” and “the reports that make up the regulatory text draft files”. This legal mandate means that: •

Public administrations must make available online to the public, documents created when drafting regulations that contain information on oral proceedings, for example, or any public information or even prior public consultations, as well as the outcome of said proceedings.

•

Public entities must publish, among other things, their budget, personnel, salaries, expenses, contracts, public aids and grants. This obligation affects the legislative branch as well as the political parties, unions, and private entities that receive public subsidies of a certain sum.

•

Local elected representatives and high-level officials must publish their declaration of assets and interests.

Catalonia Antifraud Office and the Opinion Studies Centre, “La corrupció a Catalunya: percepcions i actituds ciutadanes, Baròmetre”, 2012. www.antifrau.cat/images/stories/documentos/enquestabarometre/2012/Informe.pdf.

151

Act 19/2013, 9 December, on transparency, access to public information, and good governance, will take effect in December 2014 for the national government and in December 2015 for the local and regional governments.

152

Together, these data can help map out lobbying related activities and improve monitoring of public-sector parties that are in touch with lobbyists. The parliament is only partially affected by the Transparency Act, essentially in relation to activities that are subject to administrative regulation. However, the national and regional parliaments are already going beyond the law and are beginning to disclose significant information on their websites, particularly over the past two years. In that regard, Transparency International Spain’s creation of the Parliamentary Transparency Index (IPAR) constitutes an incentive to improve, as we can see in the results and in the debates that have arisen in relation to the index amongst members of the chambers regarding electronic democracy and transparency.153 While drafting its own Transparency, Access to Public Information, and Good Governance Bill, the Catalonian parliament recently created a space for citizen participation called “Escó 136” (seat 136). This mechanism essentially consists of a specific section on the legislative chamber’s corporate website, where the proposed text is made available to the public, and any individual or institution that has registered can make comments or suggestions regarding the initiative. These contributions are visible to anyone who visits the website and may even be rated and answered by parliamentary group representatives. Catalonia’s parliament has devoted extensive space to other regulatory initiatives like the Non-referendum Public Consultation Act, the Accessibility Act, the Public Legislative Initiative Modification Act, and many others, to the point that currently, there are a total of eight open debates. In the national parliament, the work of the commissions is rather opaque, although in practice, it is far more transparent than the regulations request. Thus, the Congress’ Internal Rules establish that, in their work in commissions, deputies do not need to provide information to any social groups, aside from to the media, and only in cases where it is deemed helpful. The regulation establishes the following: Article 64: 1. Commission sessions shall not be public. However, duly-accredited social media representatives may attend, except when the meetings are confidential. 2. Commission sessions, including those devoted to research/investigation, shall be confidential when members so agree by absolute majority, upon the initiative of the respective desk, the government, two parliamentary groups, or one fifth of the components thereof. 3. The Deputies’ Statute for Members sessions and work shall always remain confidential. 4. The Research/Investigation Commission sessions where their work agenda or Plenary session decisions are determined, or internal deliberation sessions, or meetings on the papers drafted from within shall not be public. Any information, reports, or documents provided to these Commissions to carry out their duties shall also remain confidential [...]

Nevertheless, in practice, the results and amendment proposals agreed-upon to modify the law are, indeed, published. Internal papers drafted that are confidential in nature are revised at commission meetings, where, although the meeting is not open to the public, the media are allowed to attend. Additionally, many meetings are broadcast live and pre-recorded versions can also be viewed on Congress’ webpage. All interventions are recorded and published The most notable characteristic in the first edition of the IPAR was the rapid rate of improvement, overall, of the parliaments during the evaluation period. Only one of the six transparency areas evaluated, Economic/Financial Transparency, received a failing average score (49.2). Three other areas just barely receiving a passing mark: Hiring (51.2), Indicators for the New Transparency Act (58.6), and Relations with Citizens and Society (63.2). For two of the areas, the average was slightly better: Information on Parliament (73.2) and Information on Parliamentary Activity and Operation (81.4).

153

online. The same is true of when external experts make declarations at the commissions. In that regard, the legislative process is actually relatively transparent, bolstered by the presence of parties from a broad ideological spectrum that publicise their stances on the regulations under development. However, the complexity of the process is another story altogether. In any case, since the Congress Internal Rules do not provide a channel that guarantees lobbyists sufficient access to information, it appears that some reform is needed in this area. The proposal submitted by APRI includes an article that refers to the right to information and participation of lobbyists who are duly accredited and have the prior authorisation of the corresponding deputy or senator, in order to access information directly. However, the article is rather generic and does not explain the areas of application, or the ways in which access will be granted to said information. Political parties’ financing is an extremely important topic in terms of lobbying regulation. There is little private financing of electoral campaigns in Spain: less than 20% of the parties’ total revenue. Anonymous donations to political parties were prohibited in 2007, but prior to that date, they accounted for millions of euros annually, although being anonymous it was not possible to link them to any particular lobby group. According to the Court of Auditors (Tribunal de Cuentas), between 1987 and 2007, Spanish political parties received 100,293,543 euros in anonymous donations. The approval of Organic Law 8/2007 on political party finance represented the first regulation of the financing received by these institutions, upon which the Spanish democratic system is based. Article 5 of this law banned the practice of anonymous donations. From 2015 onwards, as a result of Organic Law 5/2012 on political party finance and of the Transparency Act, parties will have to make their annual accounts available online in a way that is clear and reusable. This obligation is extended to the parties’ think-tanks and foundations, which are also obliged to make their balance sheet and profit and loss statement public, preferably via their webpage, in a way that is free of charge and easy for citizens to access. In any case, it is important to specify two aspects that, in practice, could effectively shape the reform’s intended transparency: 1. First, the parties’ obligation to make their books public will only take effect “once the Court of Auditors has issued the corresponding audit report for a specific tax year”. This may lead to a time lag between each incompatible point and transparency, taking into 154 account how quickly the value of information expires. 2. The regulation only requires parties to publish their balance sheet and profit and loss statements on their website, but donations and the donors’ identity are listed in the explanatory memorandum for the annual accounts, and parties are not expressly 155 required to publish this. However, if there were full compliance with the law and the spirit of transparency, citizens could conduct rigorous oversight of these organisations’ sources of financing and verify whether government action particularly favours those who generously fund it.

The Court of Auditors’ last report was issued on 27 June 2013, on party accounting for the 2008 tax year. The report was received by the corresponding Commission in the Courts on 15 October 2013 and was not published in the Official State Gazette (BOE) until 11 February 2014.

154

The Organic Bill of Law on the Oversight of Political Party Economic/Financial Activity is currently being processed by Congress. If approved, this bill could temper the negative effects mentioned previously.

155

There are three major problems with the current party funding legislation with regard to lobbying. First and foremost is debt cancellation by financial entities, a practice that is quite commonplace and which has represented an evident risk of capture of the parties in decisions that affect the financial entities. Between 2009 and 2011, parties accrued debts to lending agencies of more than 700 million euros, which implies a heavy burden for some.156 This link between financial debt and political parties is an undeniable problem for taking impartial decisions related to the banks. As a result of the approval of Organic Law 5/2012 on political party finance, a maximum debt cancellation of 100,000 euros per year has been established. A good point of the 2012 law, along with the Transparency Act, is that we will be able to determine the loan amounts granted, the type of lending agency, and the debt cancellation for each tax year, since this information will be published on the parties’ websites, where citizens can view it easily and free of charge. The second problem has to do with the possibility that companies that contract with public administrations can provide funds to the political parties through their related foundations and associations. This is a major risk that will likely be addressed in the Bill on the oversight of political parties’ economic/financial activity.157 Nevertheless, there is still no limit to the donations that political party foundations can receive, which significantly increases the likelihood of capture or undue influence. The third and final problem is that to date, there has not been any sanction imposed to political parties for failing to comply with the regulations. For example, although the Court of Auditors reports for 2009, 2010 and 2011 mention significant breaches by the parties, such as receiving funding from companies that contract with public administrations, no investigation has been opened on the matter.

Case 9. Party funding and infrastructures Most of the companies that appear as illegal donors in the People’s Party “B accounts” had obtained substantial business through contracts with PP-led public administrations. This is reflected in the report of the Spanish Police’s Fiscal and Economic Crime Unit (UDEF), on the analysis of public procurement and contracts with PP administrations between 2004 and 2009, by businesspeople charged in the Bárcenas case, as compared to the total number of public contracts obtained, regardless of the colour of the administration that granted them. The report highlights that for a quarter of the 16 companies investigated, the contracts signed with PP authorities represented more than 50% of the revenue they received from the administration. In two of the cases, more than eight in 10 euros of the funds that commercial entities brought in came from governments headed by the People’s Party.

Accounts Audit Report (Informe de Fiscalización de Cuentas) for political parties’ accounting statements, tax years 2009, 2010 and 2011, Spanish Court of Auditors.

156

See: "Normas de control y fiscalización para impulsar la Regeneración Democrática en partidos e instituciones". www.lamoncloa.gob.es/consejodeministros/paginas/enlaces/210214-regeneraciondemocratica.aspx/.

157

In light of the major corruption scandals, the government has expressed a political desire to fight it through a series of “democratic regeneration” measures, including a new Criminal Code reform that would, at once, revise the types of embezzlement, prevarication, bribery and influence peddling and punish illicit financing of political parties. This reform is part of a regulatory package that is divided into three blocks: one, as previously mentioned, is related to the regulation of parties’ economic/financial activity; another focuses on improving regulation of the roles and exercise of public posts; and a third is devoted to procedural and penal measures for combatting corruption.

SELF-REGULATION OF LOBBY GROUPS/LOBBYISTS Although it cannot be considered a proper register, since its inception in 2007 APRI has taken on the task of registering lobbyists, joining them together in a guild, and representing professionals who want to be part of the association.158 This register, which excludes lobbyists at the local level, is not public and does not help to make their activities any more transparent. APRI has developed a Code of Ethics that is similar to the one that lobbyists in the European Commission are obliged to sign. The Code must be signed by all public relations professionals who wish to take part in the organisation, and the association itself is responsible to a certain extent for coordinating and supervising adherence to its Code. However, since it is a private organisation, formal complaints cannot be filed against it, nor can it be officially investigated, especially as the Code does not include sanctions for possible violations. According to information on the APRI website, the Code of Ethics that its members sign establishes the following rules and regulations: •

Identify yourself by name or with the name of the entity for which you are providing services.

•

Do not falsify information or data submitted to the register in order to obtain accreditation.

•

State the interest you are defending and, where appropriate, the name of the companies or organisations you represent.

•

Guarantee – to the extent possible and to the best of your knowledge – that the information contributed is neutral, complete, up-to-date, and honest.

•

Do not obtain or try to obtain information or decisions in a dishonest manner.

•

Do not encourage deputies, senators, or public officials to disobey the regulations applied to them in their professional roles.

•

Respect all laws applicable to public office conflicts of interest.

To become a member of APRI, professionals have to work exclusively in institutional relations and abide by a series of conduct principles.

158

OVERSIGHT: THE ROLE OF THE MEDIA AND CIVIL SOCIETY Civil society’s role in monitoring undue lobbying influence is still weak, although there is an increasing number of incentives that promote transparency and accountability. While the right to access public information is starting to be made effective, the Transparency Act takes effect regarding proactive disclosure and access to information in December 2014159 and the Spanish model of open government is still in its early stages, citizens are voluntarily using the Internet to publish their proposals for better regulation. A practical example of the visibility of online citizen participation is the #SenadoTransparente [Transparent Senate] campaign,160 in which a variety of organisations like Access Info Europe, Fundación Ciudadana Civio, Proyecto Avizor/CIECODE, OKFN Spain, OpenKratio, and the group “Qué hacen los diputados” [What do deputies do?] are urging citizens to demand that senators improve the Transparency Act as it goes through the Senate’s legislative process. They submitted a petition on the Change.org platform that could be signed by citizens interested in the initiative, and they invited citizens and senators to meet. A variety of platform members from civil society did the same thing with different parties like the PSC, PSOE, IU, CiU and the PP. One week after the campaign began, a meeting with Entesa senator, Carles Martín, was streamed online, in which Victoria Anderica, an Access Info Europe161 representative, explained the points that the organisations believe should be included in the Transparency Act. As a result, among its amendments to the Act, the Entesa group included the publication of “internal reports and memoranda”. Civil society is starting to create oversight tools. An example of a citizen initiative that is related to parliament is Project Avizor, created in 2012 by CIECODE/Fundación Salvador Soler to monitor and evaluate parliamentary activity to fight against poverty. Having noted that most of the information on parliamentary activity is not public or accessible to citizens, Project Avizor seeks to promote transparency and citizen oversight of the work of deputies. Another example of a monitoring tool was presented in April 2014, also by CIECODE and titled “¿Qué pasó con eso…que aprobó el Congreso?” [What Happened to What Congress 162 Approved?]. This tool enables citizens and/or civil society to follow up on legislative activities and analyse the government’s compliance with Congress-approved political initiatives. It also offers opportunities to learn more about the type of initiative, the area to which it pertains, the deputy submitting it, the parliamentary groups’ stance, the ministries involved, the commission in which it was debated, and the compliance process. This tool is so comprehensive that even deputies and ministries themselves could use it to monitor legislative activity.

159

With regard to proactive disclosure, an institutional website was launched on 10 December 2014: www.transparencia.gob.es.

Blog: “Qué Hacen los Diputados”: http://blog.quehacenlosdiputados.net/senadotransparente-una-iniciativa-para-mejorar-laley-de-transparencia-a-su-paso-por-el-senado/.

160

The organisation Access Info Europe and Fundación Civio launched in 2012 an Internet platform to submit information requests to Spanish public institutions: www.tuderechoasaber.es.

161

162

Fundación Un Mundo Salvador Soler/CIECODE: www.unmundosalvadorsoler.org/ciecode/avizor/quepasocon/index.html.

With regard to lobby transparency, Fundación Ciudadana Civio launched the project "Quién manda" [Who’s in charge?],163 which seeks to draw “a map of public-private power relationships in Spain”, with three objectives: throw light on these links, have lobbying regulated and have senior officials publish their complete work agendas. In the framework of this project, Civio evaluates the publication of agendas by the deputies and ranks political parties based on their level of transparency.164 Transparency International Spain has produced transparency assessments and indexes for Spanish national and regional parliaments, as well as local and regional governments. These tools can be used by other organisations to make comparisons or conduct their own research, such as on the reliability of the information that public entities provide. In any case, civil society monitoring of lobbying and wrongful practices is still weak, given the opacity of these practices and the need to conduct true legal or journalistic investigations to obtain sufficient information. Therefore, there are examples in the media of this kind of research, even when almost all of the cases are tied to political corruption. Media led corruption investigations have declined over the last few years, and the focus of the media has shifted more to offering information from police and judicial sources than generating the information themselves. There are a number of reasons for this. Unfortunately, the Spanish media landscape is undergoing a major oligopolisation process. According to Professor Zallo,165 only the economic elite can overcome the entry barrier of significant investment to produce mass communications. Additionally, the weight of ownership structures over the editorial boards continues to increase, so that information that might pose a risk to the news outlet is not allowed. Another important factor is the interdependence between the media and the foremost political parties in the European Mediterranean area. Thus, some are talking about a media system taken over by political and economic powers.166 Lastly, we can mention the financialisation of the media as a result of the debts and bail out that the banks have done with some media groups.167 The three directors of Spain’s top three newspapers have had to step down in the past year, and in all three cases, their dismissal can only be explained through motives related to political and economic pressure.168 Given this scenario, we could say that investigative journalism is about to meet its end in Spain, or, at the very least, that it is currently undergoing a very difficult period, with exceptions such as when an outlet uses journalistic investigations politically to attack politicians from the party that it does not support. An example of the opaque link between politics and broadcasters is the Digital Terrestrial Television licensing case. As we will see, this is a scenario where the media seemed to pressure some easily “pressurable” politicians into granting them licenses (Case 12).

163

See: http://quienmanda.es/.

164

See: http://quienmanda.es/posts/las-agendas-de-los-diputados.

165

Ramón Zallo, "Medios de comunicación, internet y cambio democrático", Temas para el Debate, 234, May 2014, 28–30.

166

Bernardo Díaz Nosty, "Medios y poder - El viejo círculo vicioso", Temas para el Debate, 234, May 2014, 22–24.

Nuria Almirón, "Banca y medios de comunicación en la sociedad de la información: el caso de los paraísos fiscales en El País", Revista ZER no.18, 2005, 123–142.

167

Ruth A. De Frutos, "La anomalía española: aspectos diferenciales en el sistema de medios de la Unión Europea", Temas para el Debate, 234, May 2014, 37–39.

168

LOBBY REGULATION: TRANSPARENCY, INTEGRITY, AND EQUALITY OF ACCESS As stated, there are no specific regulations on lobbying in Spain, although there are some for institutionalised interest groups. There is no register of lobbyists, lobbyists are not required to report on their activities, there are no agencies to monitor and oversee lobbying and there is no legal or institutional support for following the “legislative footprint” of rules and regulations.169 A comprehensive analysis of the situation leads us to believe that transparency, integrity, and equality of access face many risks, and that the barriers protecting against these risks are weak, particularly when considering that the Transparency Act has not yet entered into effect and the right to access information is still an abstract concept.

IMPROVING TRANSPARENCY The Transparency Act does not contain any special provisions on lobbying.170 In addition, the Transparency Act does not require elected politicians and senior officials to make their agendas public, although they must publish “the resolutions on the authorisation or acknowledgement of compatibility that affect public employees as well as any that authorise private activity related to the removal of high-level officials or individuals in similar posts from the National Administration, according to local or regional regulation”. This information could help monitor the work that public officials do, outside their public role, for private lobbies, as well as revolving doors. The exercise of the right to access information will be quite helpful in this regard, when the Transparency Act takes effect. According to the law, in response to citizen requests for information, public institutions must respect the following administrative process: the government has one month from the moment the citizen requests the information to resolve the matter (Article 20.1). In the event of a refusal or implied rejection, there is an optional claims process (Article 20.5 and 24) that must be submitted in the period of one month to the Transparency and Good Governance Council, which will once again be understood as rejected if a response is not received within three months (Article 24.4). If the rejection continues, the citizen must resort to the judicial administrative process and pay the corresponding legal fees. A “legislative footprint” refers to the possibility that citizens have, thanks to tools such as disclosure of the agendas and meetings, to know who has influenced in the drafting of regulations.

169

The suggested lobby regulation that the government is currently considering, considers access to information as one of the key elements for promoting enrolment in a lobby register, which would be on a voluntary basis.

170

Ø

Citizens may request information on meetings held between public administrations and lobbyists and the outcome thereof, as well as any reports or documents generated during the course of the meeting.

The question remains whether they will be able to obtain this information in a reasonable time, or if citizens will not be able to get past one of the regulation’s existing limitations. For example, Article 14.1k of the Act establishes a limitation on the right to access in “guaranteeing the confidentiality or privacy required for the decision-making process”. It may happen that this exception be frequently invoked as a way to deny access to information that public administrations have in their possession. As previously mentioned, the Act will also be applied to parliament in terms of active disclosure and the right to access information, although only in relation to its “activities that are subject to administrative law” (Article 2.1f), and the data required to be included on institutional websites are rather limited. As a result, the very activities of the legislative processes and government oversight that correspond to parliament are excluded. Luckily, parliaments in the autonomous communities and even at the national level are going beyond the law and offering more and more information on their webpages. According to the expert 171 and head of development for Congress’ website, Miguel Ángel Gonzalo, we can see how some deputies are beginning to proactively make their agendas public through online social networking and media tools. Gonzalo states that there are currently more than 200 deputies with a social network presence, and they take advantage of these tools to break down barriers and communicate with citizens. In this sense, some examples, among others, are: Burgos Senator Ander Gil, who uses the hashtag #AnderAgenda to report on his meetings or activities; A Coruña MP, Juan de Dios Ruano, who posts to his Facebook page nearly every single day to provide a detailed description of the activities and meetings in which he is participating, and is open to feedback; Murcia MP María González Veracruz who includes a Google Calendar on her personal page172 that shows the activities and meetings planned, and these can be viewed by the week or the month; MP Odón Elorza’s website that includes his agenda, a blog, photos, commitments and other documents he has subscribed in relation to his political activity, all of 173 this connected with his Twitter and Facebook accounts; and MP Laia Ortiz who also has a blog and publishes her work agenda, as does her party in an accessible format.174 Likewise the Spanish premier exercises this voluntary practice: he publishes his daily work 175 agenda on La Moncloa’s official webpage. The chairman of the National Markets and 176 Competition Commission (CNMC) publishes his agenda on the CNMC’s official website. The weekly agenda of the various commissions is published on the Congress of Deputies’ 177 website, including the topics that will be addressed, the plenary session calendar,

171

See: www.miguelgonzalo.org/.

172

See: www.mariagonzalezveracruz.com/mi-agenda-publica/.

173

See: www.odonelorza.com/listanodos.php?queidioma=1&quetipo=3.

174

See: www.iniciativa.cat/icv/sections/agenda.

175

See: www.lamoncloa.gob.es/Presidente.

176

See: www.cnmc.es/es-es/cnmc/actividadinstitucional/agendadelpresidente.aspx.

177

See: www.congreso.es/.

documents on matters that are being processed in the plenary sessions and Permanent Council, legislative initiatives in the amendment period, and votes. Insofar as the so-called “legislative footprint” is concerned, there is no regulation that offers sufficient oversight. The proposed lobby regulation submitted by the government establishes the need to incorporate an analysis statement on the legislative footprint or traceability that is available to the public. Thus, Congress’ website would report, from the get-go, on the legislative process and successive updates. However, it is only a proposal. Currently, the Congress’ website enables partial follow-up, but there is much room for improvement, since not all of the information is published and it is not done so in a timely fashion. For example, bills of law can be consulted, but modifications thereto cannot be. It is possible to see which MPs are on each of the commissions, amendment periods, bills of law, initiatives, and deputies’ interventions on the commissions in the daily debate transcripts, and there is an audio-visual archive or the order of the day and pre-recorded transmissions, among other relevant information that is of great citizen interest. However, there is no clear legislative footprint that would make it possible to monitor and evaluate a bill as it moves from a proposal, through the amendment period, and to the final adoption of the legislation. One final point of interest is the Transparency Act requirement to publish certain legal information on institutional websites. Thus, public administrations must publish “draft bills and legislative decree bills of law whose initiative corresponds to them, when rulings are requested from the corresponding consulting agencies. In the event that there is no mandatory publication ruling, it shall be done at the time it is approved” (Article 7). Ø

Since the better organised interest groups can certainly access the drafts and communicate their opinions before any public hearing, there is now an urgent need to level the democratic playing field and strengthen political equality through the means of active disclosure. Although it would not significantly alter the rules, it would be an improvement if citizens could get to know the draft bills before they become regulations.

It would also be good to have published the regulatory bills of law, as well as the summaries and reports that make up the regulations’ working files. At the autonomous community level, it is worth mentioning the Transparency, Access to Public Information and Good Governance Bill that is currently being discussed in the Catalonian parliament, since it has several novel aspects as compared to the national legislation. The regulation is oriented towards obliging all individuals and organisations to register as an interest group – regardless of their legal status or structure – if they perform activities subject to the area of application, on behalf of other individuals or organisations. All platforms, networks and other forms of collective action must be registered if they constitute a de facto source of organised influence, even if they lack legal personality. Insofar as the definition of “lobbying” is concerned, the Catalonian initiative limits the target area of application. More specifically, Article 47.3 establishes that: … [t]he Register’s area of application includes all activities conducted for the purpose of directly or indirectly influencing the process of drafting or applying policies and decision-making, regardless of the channel or medium used. In any case, these activities include contact with authorities and public officials, deputies, civil servants, and institution personnel, as well as

contributions and voluntary participation in official consultations on legislative and regulatory proposals, legal acts, and other consultations.

And according to Article 48: [â&#x20AC;Ś] are excluded from this all activities related to legal or professional counselling services directly associated with defending interests affected by administrative procedures, aimed at informing a client about a general legal situation, conciliation or mediation-related activities conducted within the law, or counselling services performed for informational purposes in exercise of rights or initiatives established by the legal system.

In terms of publicising these acts, the Catalonian Bill envisages the mandate to all registered lobbyists to report on their activities, the clients they work for, and the payments they receive (Article 50.2). It is also foreseen that the registry will publish all actions undertaken by interest groups, their meetings with public officials, memoranda, reports, and other contributions made in relation to the topics at hand. Lastly, it envisages making it an obligation for all registered lobbyists to guarantee that the information provided is complete, correct, and trustworthy (Article 50.1 b). Sanctions are included for cases of non-compliance. As for the code of conduct, Article 51 of the proposal describes the minimum requirements, and Article 52 calls for sanctions for non-compliance, consisting of temporary registry suspension or even cancellation (both measures imply the refusal to grant access to the offices and services of the relevant public agencies and institutions). Moreover, it enables any person who suspects a breach of the obligations established under the law or of the code of conduct to file a complaint. Registry managers will be responsible for processing and investigating these complaints, with the guarantee of a hearing for the victim.

PROMOTING INTEGRITY In relation to integrity standards, Spain has applied extensive regulation, although compliance has not always been stellar.

Post-public employment cooling-off period The primary focus here is on post-public employment regulations. The law does not allow government members (of the executive branch) to work for or provide services to associations or businesses that are directly related to the responsibilities and powers of the public position previously held, during the two years after the public employment. The purpose of the law is to prevent high-level officials from offering â&#x20AC;&#x153;publicâ&#x20AC;? favours for which the companies or associations can subsequently repay them. To safeguard compliance with this regulation, there is a Conflict of Interests Office to which high-level officials must report in advance on activities they intends to conduct so that, within the month, it can issue a verdict on whether or not this activity is compatible and inform both the interested party as well as the company or association. According to the Transparency Act, if the resolution is favourable, it should be published. The Conflict of Interests Office is based within the Ministry of Finance and public administrations. In the event that a high-level official decides to join a private company and this position would be incompatible due to a conflict of interests, disciplinary procedures are undertaken. For secretaries of state, the sanction must be imposed by the Council of Ministers.

The company in which the individual will act as a director or employee may also be sanctioned. These regulations have been expanded to cover mayors and local government members, although no entity oversees compliance, except in Catalonia, where the Catalonian Anti-fraud Office178 takes charge of that matter. In any case, it is not clear that the parties affected by the regulations (in the executive branch) are prevented from working in companies that offer lobbying or intermediation services, particularly if they did not have a direct relationship with these businesses during the time they held a public post. The law would only involve companies that they regulated or on which they took decisions. Even though there is a law governing this, it is a common practice for members of parliament, high-level government officials, and members of the executive branch to move from the public to the private sector. Understandably, it is a practice that is not looked upon kindly, given the corruption scandals in which current and former government officials have been involved. In the report published in January 2014 by the Council of Europe's Group of States against Corruption (GRECO), special reference is made to corruption cases in Spain as a result of former members of the executive branch transitioning to the business world, 179 “which represents a serious threat to the credibility of public institutions”. The report mentions specific cases in which well-known politicians join large business group councils, most commonly in sectors that are regulated and the business of which largely depends on public administration. Some examples of this phenomenon known as “revolving doors” are: former president of Spain, Felipe González, who became a Gas Natural Fenosa 180 independent board member; former president of Spain, José María Aznar, whom Endesa hired as an external advisor and who has served as a board member in five other multinational 181 corporations, including as the Spanish president of KPMG; Pedro Solbes and Elena Salgado, who went to work for Enel and Endesa’s Chilean subsidiary, respectively (both former vice-presidents of Spain under the Zapatero administration); and Rodrigo Rato, who was vicepresident under Aznar and who went on to serve as an advisor to Telefónica, Banco Santander and La Caixa. 182

Recently, Banco Santander hired former Economic Secretary of State, José Manual Campa, former Minister Elena Salgado’s “number two”, as the director of investor and analyst relations. Mr Campa served as Economic Secretary of State and Minister of Economy and Finance between 2009 and 2011 during the Zapatero administration. Overall, amongst the boards of

The Catalonian Anti-fraud Office, an agency assigned to the Catalonian parliament that is fully independent from public administrations, has been legally charged with preventing and investigating any irregular use derived from conducts that entail conflicts of interest or the use – for private benefit – of information resulting from the roles of public sector senior officials and personnel. Its scope extended particularly to the Catalonian public sector. Its articles of incorporation also guarantee all citizens, authorities, or public officials the availability of a secure external channel for filing complaints against cases of corruption, fraud, or any other behaviour that goes against the principles of objectivity, efficacy, and total submission to the law.

178

"El Consejo de Europa crítica las puertas giratorias por las que los políticos fichan por grandes empresas", Voz Populi, 15 January 2014.

179

180 "Felipe

González será consejero de Gas Natural otro año más por 126.500 euros", El Confidencial, 11 April 2014.

J. Rodríguez, "Aznar: La reinvención de un presidente", El País Especial, 2014. http://elpais.com/especiales/2014/aznar-lareinvencion-de-un-presidente/.

181

182

"Banco Santander ficha al exsecretario de Estado de Economía José Manuel Campa", Eldiario.es/Agencias”, 11 April 2014.

companies listed in the top tier of Spain’s stock exchange, IBEX 35, nearly 40 board members 183 have a notable political past, according to information published in ABC. Unfortunately, no post-employment cooling-off regulations exist for the legislative or the judicial branches.

Case 10. Revolving doors in the energy and food sectors In politics, the revolving door concept is understood as when staff from public sector positions move to jobs in a private company, and vice versa. The organisation ALTEREU, which advocates for Brussels to regulate lobbying, defines revolving doors as “the easy passage between public and private sector positions related to the previously-held job”. It also highlights that “there is a clear problem of a conflict of interests, on account of the know-how and influence that these former public officials provide”.184 In 2010, Transparency International published a working document warning of the risks inherent in the on-going shifts of professionals between public and private spheres and the need to regulate this practice.185 According to the Revolving Door Working Group, society faces many risks if not properly dealing with this issue.186 The report identifies reasons why the administration should pay more attention to this phenomenon, including: •

It undermines confidence in the integrity of public policies. This situation has dire consequences, such as a loss of public confidence in public authorities and a considerable decline in citizen participation in public affairs.

•

Ex-public officials have privileges such as easier access to government, to the detriment of other sectors/interests.

•

The regulatory labyrinth that governs public employee ethics and possible conflicts of interest is hard to interpret and, in many cases, is ineffective.

The energy sector It is no surprise that the practice of revolving doors is most intense in sectors subject to strict regulation (such as the financial or energy): these industries – particularly the energy sector – are dominated by powerful, formerly public companies that are highly dependent upon public regulation and which seek closeness with different governments. Therefore, it is logical that these companies would consider the incorporation of relevant political profiles into their ranks as positive. Over the last few years, the sector that has incorporated the greatest number of former

183

E. Montañés, "¿Cuántos sueldos puede cobrar un político?", ABC, 9 December 2013.

Executive Summary in Spanish of the report "Block the Revolving Door: Why we need to stop EU officials becoming lobbyists", ALTER-EU. November 2011. www.alter-eu.org/sites/default/files/documents/executive_summary_es_final.pdf.

184

185

Transparency International, Regulating the Revolving Door, Working Paper #6/2010.

Revolving Door Working Group, "A matter of trust: How the revolving door undermines public confidence in government and what to do about it", October 2005.

186

politicians on its boards or as advisors is the energy sector. Of the country’s last three presidents, two have advised the country’s leading energy companies. Endesa hired former president of Spain, José María Aznar, as an external advisor in 2011, and his predecessor, Felipe González served since 2010 as an independent advisor to Gas Natural. The presence of former state and regional ministers and senior officials as electricity company advisors is also significant. Some cases showing this practice’s high level of permeability have received more media exposure, due to the political relevance of the individuals involved: one of them is that of Elena Salgado, who, just four months after stepping down as Spain’s vice-president and Minister of Economy and Finance, was hired as an advisor for Endesa’s Chilean subsidiary.187 Another example is Pedro Solbes, also former vice-president and Minister of Economy and Finance, who was hired as an advisor by the Italian ENEL two years after leaving office.188 José Folgado, a former Energy Secretary of State (under the Minister) during the seventh legislature and former mayor of the municipality of Tres Cantos, stepped down from this position to become president of Red Eléctrica.189 The food industry There are quite a few revolving door cases in the pharmacy division of the Ministry of Health concerning both senior officials (general directors) – who, in theory, are protected under Act 5/2006, which regulates conflicts of interest amongst members of government and high-level public officials in the national administration – and high-level civil servants (assistants to the general director or lower down the chain, which implies non-senior positions) that are not covered in the abovementioned law. A different although related area offers an example of revolving doors that could potentially place good governance in the food industry at risk. In March 2012, the government appointed as the new executive director of the Spanish Food Safety and Nutrition Agency (AESAN), the head of scientific and regulatory affairs for Coca-Cola España, who was also a member of the Spanish Beverage Association.190 This Agency subsequently integrated the National Institute of Consumer Affairs and is currently known as the Spanish Consumer, Food Safety and Nutrition Agency (AECOSAN). This entity’s main objectives include: planning, coordinating and developing strategies and actions that foster information, education and health in the area of nutrition and, in particular, in obesity prevention. As a result, all of its actions or lack thereof affect the companies whose products have been implicated in the origin of obesity, such as the makers of sugary drinks. As part of its efforts to prevent obesity, AECOSAN had to develop the regulations corresponding to Act 17/2011 on food safety and nutrition. For example, a regulation on what foods and drinks with a high saturated fat, trans fat, sugar or salt content would be prohibited in elementary schools and educational centres. It was also charged with,

187

S. Carcar, "Endesa ficha a Salgado como consejera para su distribuidora en Chile", El País, 5 March 2012.

"La eléctrica italiana Enel premia a Solbes con un puesto en su consejo", Redacción/Agencias, La Vanguardia, 1 April 2011; S. Carcar, "El exministro Solbes ficha como consejero del grupo italiano Enel", El País, 1 April 2011.

188

189

"José Folgado, ex secretario de estado de economía, nuevo presidente de Red Eléctrica de España", EFE, 8 March 2012.

190

See Royal Decree 572/2012.

within a certain period of time from the date the said Act took effect, signing coregulatory agreements to establish codes of conduct to regulate food and beverage advertising targeting children under 15 and to establish the means to made the codes effective. For these reasons, the European Food Safety Authority (EFSA) asked191 the AECOSAN director to abstain for two years from any decisions related to refreshments at meetings of the European Agency’s advisory committee.192 Likewise, the person who until then had served as the general director of the Ministry of Health’s National Health and Pharmacy System basic service portfolio, soon after took on a position within the company that was the same, or similar, as the one the new AECOSAN director had left open.193 The scientific media have called attention to the risks of incorporating individuals into nutrition politics positions of power who are former employees of the industry directly affected by this Agency’s regulation and by government actions. In this case, the conflict of interest is obvious, regardless of the relevant legal issues,194 and this appointment leads to doubts about whether the industries affected by the regulation are actually setting nutrition policies that protect people’s health over the interests of the companies.195

Incompatibilities As for parliamentary conflicts of interest, according to the law that regulates incompatibilities amongst deputies and senators, during their term members of parliament may not take on any other position, profession, or public or private activity, unless they request it to the MP Statute Commission; these requests are only rarely granted. However, MPs are often granted authorisation to work outside parliament. Thus, according to May 2012 statements on activities 196 that deputies conducted in the private arena, 76 of them had been authorised to complete work outside their legislative activities. Ø

191

In March 2010, deputies’ statements on activities that had previously been confidential were made public for the first time. Subsequently it was decided to make declarations of assets transparent as well, so that today, the representatives’ assets and income can be consulted, in addition to their salary.

R. Méndez, "La UE teme conflictos de intereses en la agencia alimentaria española", El País, 4 November 2012.

The conflicts of interest declaration of the director of AECOSAN is available on the website of EFSA, and it confirms what was said relating to her origin and assignment. The same piece of news in El País (R. Méndez, 2012)) which reported the petition of EFSA to have the director refrain from voting, informed about another potential case of revolving doors: the appointment of an ex-secretary of agriculture as Director General of the National Beverage Association.

192

J. de Lorenzo, "Coca-Cola y Sanidad mantienen una relación promiscua con trasvase de altos cargos que trabajan en obesidad infantil", La Celosía, 1 July 2012. www.lacelosia.com; and María R. Sahuquillo, "El Gobierno destituye a la directora de Farmacia a 48 horas del nuevo copago", El País, 29 June 2012.

193

M.A. Royo-Bordonada, "¿Pueden contribuir las industrias alimentaria y de la publicidad a prevenir la obesidad infantil y promover hábitos saludables?", Gaceta Sanitaria vol. 27, no.6, 2013, 563. www.gacetasanitaria.org/es/pueden-contribuir-lasindustrias-alimentaria/articulo/S021391111300040X/.

194

195

M. Bes-Rastrollo y M. Ruiz-Canela, "Regulation and the Food Industry", Lancet vol.381, no.9881, 2013, 1902.

196

Javier Otero, "Ciento cuarenta y siete diputados con otro trabajo", Tiempo, no.1555, 2012, 30–31.

Additionally, the declaration of activities helped verify that 71 deputies were also serving as mayors or council members. They are supposed choose between one of the two salaries, and most opt to keep the deputy salary. However, this does not prevent them from receiving payment for expenses or reimbursement for attending events as mayors or council members. In total, between private jobs and public positions, 147 deputies are engaged in other activities outside parliament. Regarding members of the executive and senior officials, who cannot serve in any other position, as well as elected politicians at the local level, it is hard to know if they are conducting other activities, and there has been no investigation on the matter, since not even the Conflict of Interests Office has the authority to conduct investigations on regulatory compliance. Ø

There are notorious cases of non-compliance that have not been sanctioned. In that regard, a number of studies show that the Conflict of Interests Office is not thoroughly independent, it is not well budgeted, and it does not have sufficient monitoring, investigation or sanctioning powers.197

In February 2014, the government submitted a Bill of law to regulate the positions of 198 high-level officials in the national administration, to which members of government and senior officials, deputy secretaries and the like, secretary generals, government delegates in the autonomous communities, and government delegates in public law entities, inter alia, would be subject.199 Title II of the Bill aims to regulate the conflicts of interest and incompatibilities scheme to which anyone acting as a high-level official would be subject. Among the most notable aspects is the establishment of an early warning system to detect possible conflicts (Article 12). In this case, as the agency specialising in this field, the Conflict of Interests Office would be in charge of notifying senior officials of the matters or topics from which they must abstain during the relevant decision-making process. Similarly, the Bill envisages the approval and application of internal procedures to prevent conflicts of interest, and should any be detected, they would encourage that official to abstain from participating. Exclusive dedication to the position continues to be the general rule (Article 13), and exceptions will only be made in certain cases where there is compatibility with certain public or private activities. The regulation also expressly declares the incompatibility between receiving payment as a member of government or a secretary of state and member of the general courts. The regulation on post-public employment cooling-off periods is improved, since it bans not only working in companies with which the individual has had a relationship while in office, but also in any that belong to the same business group, and the ban is extended to include organisations of all type (not just companies and associations but also, allegedly, foundations). Regulation is also strengthened with respect to the limitations of share percentages, such that holding more than 10% of the shares of a company that receives public administration subsidies will also be considered incompatible. Moreover, an obligation is established for senior officials to declare their activities in the Activity Register, within a period of three months (Article 16), in addition to their statement of assets and rights (Article 17).

See, for example, Transparency International’s study on Spain’s National Integrity System, El marco de integridad institucional en España (Madrid: Transparency International Spain, 2012).

197

198

See: www.congreso.es/public_oficiales/L10/CONG/BOCG/A/BOCG-10-A-83-1.PDF.

Except those appointed by the Council of Ministers for the temporary exercise of any function or public representation and not having at that time a senior official status.

199

Concerning civil servants who do not hold high-level positions, the regulations on conflicts of interest are rather strict. As for local public employees, the current regulations are established in Act 53/1984, Royal Decree 598/1985, and Act 7/2007 on the basic public employee bylaws; articles 52 and 54 thereof contain the Code of Conduct. Act 53/1984 on the incompatibilities of public administration staff has the following objectives: •

Guarantee the independence and impartiality of public employment, thereby preventing conflicts of interest

•

Attempt to establish economic incompatibility, in conjunction with the principle of efficacy it is easier to do one job well than three

•

Attempt to use this regulation to implement a division of labour

The general principles and regulations established by the Act are related to the incompatibility between different public sector positions, following the convenience of: A) Devoting oneself to a single public sector job. B) Preventing economic incompatibility (earning a single salary, including pensions). As for incompatibilities with a private position, the general norm is that of partial economic incompatibility. That is to say, that it only applies generally to individuals in positions with high specific component/income or a similar concept. In any case, for both public and private sector jobs, the main rule is to promote and defend impartiality and independence (serving in positions that would hinder or undermine these goals is not allowed). Therefore, conducting private sector activities or doing so by replacement, even those of a professional nature, is prohibited if they are directly related to activities performed by the ministry, agency, or entity where the individual works. What exactly, then, would a direct relationship look like? It refers to: −

Matters in which an individual is currently or has in the past two years participated as a public sector employee or in which he or she might partake in the future. For example, professional activities with individuals involved in public affairs that the public official also handles (attorneys, doctors, etc.).

−

Matters submitted to the Ministry (or City Hall, in this case) for report, a decision, financial assistance or oversight, even if these are not matters the individual handles personally.

−

Membership on a board of directors, management board or company governing bodies, when their activity is directly related to that of the department or agency.

−

Holding a position or more than 10% of the shares in concessionaires of all kinds, contractors in the fields of construction, services or supplies or with the participation or backing of the public sector.

Unfortunately, there are no clear regulations to prevent revolving doors involving public sector employees in positions with great responsibilities and privileged information, such as state attorneys and tax inspectors. The outcome can be quite damaging to public service, as we can see in the following case (Case 11).

Case 11. El Musel Port One of the most worrying and constant activities of lobbying in the public construction work sector has been the illicit financing of political parties. Scandals in recent years related to irregular funding of political parties and electoral campaigns have revealed a persistent problem that has spread throughout all types of public administration and has affected all the political parties on the parliamentary gamut. In these scandals companies benefitting from public contracts, paid illicit commissions to the party or parties at the head of the administration that granted the contracts. The sentence contained in section 17 of the Madrid Provincial Court, which tried a case in 2006 involving the construction of the Madrid–Seville high speed train,200 subsequently confirmed in a Supreme Court ruling,201 which made clear the sophistication that these practices could attain in some cases.202 More recent scandals like the Gürtel case, the Bárcenas case (an offshoot of the previous one) or the Palau case in Catalonia, demonstrate that these practices continue to occur.203 Since these practices and the defects in the system used to fund political parties and elections are quite well known,204 a case is reconstructed here with different characteristics, which although referring to practices that are less well known in public opinion, have a major impact. These are cases of training provided by leading companies in the construction industry for individuals who are currently working or have worked in the past in public administration in senior positions.205 Specifically, the case affects two state attorneys now on voluntary leave of absence who work at a law firm that specialises in port law. The former state attorneys were hired by a group of construction companies as legal advisors for the lawsuit they had against a public entity, the Musel Port of Gijón (Asturias). The companies were claiming payment of 354 million euros in addition to the 624 million already paid for the port expansion, even though the initial project was estimated at 500 million. In 2004, these two state attorneys were the director and assistant director of legal services for the State Ports Public Agency, which reports to the Ministry of Development.206 In 2005, the project of expansion of Gijón’s Musel Port was assigned for nearly 580 million euros to the company Dique Torres, a joint venture composed of some of the

"La Audiencia de Madrid absuelve al ex Ministro socialista García Valverde de supuesta financiación ilegal en el 'caso AVE", La Vanguardia/EFE, 28 June 2006.

200

201

J. M. Lázaro, "El Supremo condena a Aida Álvarez por el 'caso AVE'", El País, 14 November 2008.

Fernando Jiménez, "La incidencia de la corrupción en la democracia", in J. Estefanía (Dir.), Informe sobre la Democracia en España/2007 (Madrid: Fundación Alternativas, 2007).

202

F. Jiménez, "La corrupción en un país sin corrupción sistémica", in J. Estefanía (Dir.), Informe sobre la Democracia en España/2014 (Madrid: Fundación Alternativas, 2014).

203

204

See for instance the GRECO reports of Evaluation Round III.

A recent and similar case relates to engineers working in the railway infrastructure public company, ADIF, who seem to have enjoyed a trip to Aspen, Colorado, funded by a subcontractor for building part of the high speed train passing through Barcelona and having authorised the payment of additional costs for that work. It was the employer that would have brought these facts to the attention of the court. See J. Garcia and R. Carranco, "La fiscalía destapa un caso de corrupción en las obras del AVE a Barcelona", El País, 5 May 2014.

205

206

See: www.puertos.es/.

country’s foremost construction companies, such as Dragados and Fomento de Construcciones y Contratas (FCC), along with other companies like Drace, Sato and Alvargonzález Contratas. The European Commission agreed to co-finance 55% (247.5 million euros) of the project’s subsidisable expenses (450 million euros), under the Structural Funds and Cohesion Fund. On 26 March 2008, the Gijón Port Authority requested a modification to the decision to increase the project costs to 715 million euros. The EU’s General Directorate for Regional Development rejected the request. However, the beneficiary of the community funds, the Gijón Port Authority, approved the modification to the project after receiving a favourable report from the State Counsel. In 2013, the Port Authority settled the port expansion project for a total cost of 624 million euros, 92 million less than the limit admitted for the project modification. However, the settlement of the final project cost was not accepted by the construction company or the European institutions that were co-financing the work. The European Anti-Fraud Office (OLAF) conducted an investigation on the port construction and recommended that the European Community file a claim for the 198 million euros of community funds already granted and to refrain from paying out the remaining 45.5 million.207 The research began in December 2010, following the receipt in March 2009 of a complaint from a Spanish MEP. OLAF’s report criticises the assignment process, questions the prices paid, rebukes Spain’s lack of oversight and denounces the fact that the joint venture that constructed the port obstructed the investigation by refusing to grant access to the project’s accounting legers. More specifically, the report detects “public tendering irregularities”, “serious flaws in the oversight and management systems”, “errors in truck weights”, “suspicions or indications of false information regarding the quantity of material transported”, “stone prices that differed from the agreed-upon ones, including stones provided at no cost”, and the “absence of monitoring by national authorities, particularly in terms of the stone prices and quantities”. OLAF recommended that Spanish authorities require that the funds paid to the joint venture be returned and that they send a report to the Public Prosecutor’s Office in light of a possible crime.208 Since December 2011, the company assigned to the project, the Dique Torres joint venture, has filed claims against the Gijón Port Authority for payment of 350 million additional euros (in addition to the 624 million that were already received) for excess costs that the project would have generated.209 It eventually formalised this complaint before the Gijón Courts on 28 February 2013. The complaint is signed by an attorney from the Cuatrecasas law firm, and among the lawyers that will assist the attorney are the names and signatures of two state attorneys on a voluntary leave of absence. In December of 2011, it was discovered that the construction company had contracted the services of a law firm where the aforementioned state attorneys work. One of them, who as a state attorney had headed the committee that drafted Act 48/2003 on the economic and provision of services regime in ports of general interest, was a member of this law firm since its inception, according to information on the firm’s OLAF final report, February 2014. https://docs.google.com/viewer?url=http://www.foroasturias.es/actualidad/pdf/4079.pdf&chrome=true.

207

208

R. Méndez, "La UE reclama 250 millones por precios inflados en la obra del puerto de Gijón", El País, 12 April 2014.

F. García, "Dos ex directivos de Fomento con Cascos defenderán a Dique Torres contra El Musel", La Nueva España, 31 December 2011.

209

website.210 In the time that he worked as a state attorney, he found himself in an administrative situation that enabled him to make his public work compatible with his private work for the law firm. In 2009, he still appeared as active on the official list of civil servants of which this entity is composed.211 According to current regulations, a certain number of state attorneys (40) are permitted to juggle their public role (by accepting a reduction in terms of salary and commitment) with private activities, with the only limitation that they cannot litigate in court against state administration, though they may do so against other public entities, such as the autonomous communities or city halls. We do not know if at the time it was made public that the Dique Torres joint venture had contracted the services of the law firm, the state attorney was active or if he had already taken a voluntary leave of absence, as appeared in the official list of members for the corresponding body for the year 2012.212 However, he recognised that he began to advise the company when he was still in a situation of public/private compatibility, although he denies having broken any laws or performed any unethical acts. According to a journalist report on the case, this state attorney insisted that: … he did not commit any crimes and that when he signed with the port construction companies there was no lawsuit. He maintains that “there was no lawsuit against the State. There was no formal confrontation”. When the State Counsel learned that one of its members was advising companies that might take action against the State, it recommended that he request a leave of absence, with the argument that his compatibility status was insufficient to do the job. He did this immediately, arguing “This is false. When I was allowed to juggle my public and private roles. I support the joint venture, but I have not signed the complaint. I have acted ethically [...] I have been out of the port system for ten years now”. He argued a nuance, that the Port of Musel does not belong to the Ministry of Development nor the State Ports; rather, it has a separate legal identity. Even if the port must eventually pay the 354 million euros requested [by the State attorney on leave], the money would come from public funds.213

The aforementioned journalistic report reflects some of the problems created by the current laws governing compatibilities and leaves of absence for public officials, insofar as the state attorney corps is concerned. One of these problems has to do with an extension of the phenomenon and with the effect that it has on the way in which the task assigned to this corps is completed: attending to consulting matters and intervening in representation and defence of the state public sector in all jurisdictional orders. Of the 657 members that made up the 2012 team, 55% were not fully committed: nearly 40% (252) were on voluntary leave, 11% (70) were performing special services at other locations, and 6% (40) had been granted authorisation to conduct private sector activities, which involved a reduced workday.214 In addition to the general problem of managing the workforce and the workload, the

210

See: www.lamaabogados.es/la-firma.html.

211

BOE: www.boe.es/diario_boe/txt.php?id=BOE-A-2009-11247.

212

BOE: www.boe.es/diario_boe/txt.php?id=BOE-A-2012-4132.

213

R. Méndez, "Abogados contra el Estado", El País, 23 May 2014.

Resolution of 12 March 2012, of the General State Attorney Office (Abogacía General del Estado), that approves the relation of State Attorneys, referred as of 1 March 2012. Official Gazette BOE N. 73, 26 March 2012, 25585-25599.

214

example of the Musel Port illustrates the deficient regulation of conflicts of interest that affect this type of public official (not limited to the state attorney corps) and which open the door to undue influence and the use of privileged information by certain construction sector lobby groups. Problems have been noted in relation to both the granting of the compatibility status for private activities as well as the regulations governing voluntary leaves of absence. State attorneys operating under the compatibility status are not allowed to litigate against state administration, but in practice, there are few controls in place, despite the fact that this status must be approved by the Conflict of Interests Office. State attorney Elisa del Nuez maintains that “true monitoring is impossible” because “formally, people will comply with the regulations”,215 meaning that they will not directly sign any claims against the state that they may have worked on, but they may get a partner from the firm to do so. As another interviewee recognises, monitoring is scarce: “When someone is caught advising companies against the State, practicality is preferred. Instead of opening a case that will drag on for years and end in a lawsuit, the matter is covered up and the offender is asked to take a leave of absence”.216 Leaves of absence are also not very well regulated. Since the 1984 regulation on public sector incompatibilities, which remains in effect,217 this has been a topic that has continued to create problems. At the time, the pressure was on to regulate the pervasiveness of multi-employment in the public sector,218 but we still need to improve regulation on possible conflicts of interest that could give rise to shifts from the public to the private sector and vice versa.219 As a source that is familiar with the State Attorney Office220 stated, these transitions involving private-sector civil servants are good cause for concern: “This case of revolving doors is more dangerous than that of senior officials. I am not saying that revolving door cases involving politicians are not important, because it is obscene and sets a terrible example, but, in general, a senior official determines the agenda and the capacity for lobbying, making calls and asking for favours. However, a State attorney keeps the Administration’s secrets and knows its weak points”. At this point in time, there are no restrictions on obtaining authorisation for a voluntary leave of absence. Rather, it is a right to which all civil servants have access. According to State Attorney Fernando Irurzun,221 it is an “open door policy”: “an open door for taking a voluntary leave of absence for professional reasons, and an open door to get involved in matters that just the day before had been part of the individual’s role.” He adds that “[a]lthough we may not say so publicly, we all know that for certain privatesector positions, part of the value of being a public official on leave – to varying

215

R. Méndez, "Abogados contra el Estado", El País, 23 May 2014.

216

Ibid.

217

Ley 53/1984, de 26 de diciembre, de incompatibilidades del personal al servicio de las Administraciones Públicas.

Fernando Irurzun Montoro, "Ética y responsabilidad en la Administración Pública", Documentación Administrativa, 2010, N. 286– 287, 79–111.

218

Rajoy's government adopted in 2012 a Royal Decree-Law goes further in this regulation (but still contains many gaps), but is still awaiting regulatory development: RD-L 20/2012 Measures to ensure this budgetary stability and promoting competitiveness.

219

220

R. Méndez, "Abogados contra el Estado", El País, 23 May 2014.

221

F. Irurzun Montoro, "Ética y responsabilidad”, 2010, 109.

degrees – does not originate from the any technical or personal abilities, but rather from the ease with which he or she can associate with the Administration that he or she just abandoned”. Naturally, there are numerous incentives for many civil servants from these areas to take this path. There are practically no barriers, the salary differences are considerable – two to three times larger in the private sector – and there is a lack of a true career path in the public sector. All of these elements combined have caused a large number of senior officials to reach the peak of their careers in a short amount of time. From that point on, they lack challenges that would stimulate their dedication to the public sector. All of these elements make it quite difficult to preserve public interests, in the relationship between public administrations and the private sector. For many large private companies, it is easy to access public employees who are compatible or who are on leave in order to advance their particular interests.

Codes of conduct Despite the Code of Good Governance222 that regulates the behaviour of members of government and senior national administration officials, there is no general code of ethical conduct to govern how civil servants should address or approach interest groups or lobbies, or that specifies how they should behave when the latter contact them. Today, codes are beginning to sprout up throughout sub-national governments, but lobbying is a topic that has not yet received sufficient attention. Article 3 of the Code of Good Governance for members of government and senior officials establishes that they must abstain from any private activity or interest that could represent a possible conflict of interest with their public sector position. Article 9 states that they “must abstain from all forms of business and financial activities that could compromise the Administration’s objectivity in the service of general interests”. 223

In Catalonia, the Code of Good Practice for Senior Officials, adopted by the regional government on 19 November 2013, devotes an entire section to relations with the professional and business worlds, establishing that “public responsibilities should not be exploited to subsequently obtain private-sector advantages after exiting public service”. The Ethics Code of the Public Employment Bylaws, which affects all public employees at all three levels of government, contains the obligation to be impartial and to reject conflicts of interest. Thus, in relation to ethical principles, Article 53 of the bylaws establishes the following: 2. It shall aim to satisfy general citizen interests and shall be based on objective considerations geared toward impartiality and common interest, aside from any other factor that may express personal, family, business, client, or any other interests that may clash with this principle […]

ORDER APU/516/2005, 3 March, which mandates the publications of the Council of Ministers Agreement of 18 February 2005, which approves the Code of Good Governance for members of government and senior general state administration officials (BOE, 7 March 2005).

222

The Code applies to autonomous community president, members of his or her administration, senior officials, directors of public entities and any possible staff.

223

5. They shall abstain from matters in which they have a personal interest, as well as from any private activity or interest that may represent a conflict of interests with their public-sector position. 6. They shall not contract financial obligations or intervene in financial operations, asset-related obligations or legal negotiations with individuals or entities when there may be a conflict of interests with the obligations of their public-sector position. 7. They shall not accept any preferential treatment or any situation that implies unjustified privileges or advantages offered by natural persons or private entities.

Regarding gifts, the rules generally prohibit them even though they do allow for some gifts of nominal value to be accepted. Principle No. 6 of the Code of Good Governance for members of the government and senior general state administration officials establishes that: "Any gifts, favours, or services offered under advantageous conditions that go beyond standard use must be rejected...". In that regard, Article 26.2.b)6 of the Transparency Act forbids this practice: "No gifts that surpass common use shall be accepted..." Additionally, accepting gifts could constitute a crime of bribery or influence peddling. Ø

In practice gifts are quite common, and ethics codes are not really able to limit this practice. There also are not really any democratic controls to monitor it, so oversight will continue to be minimal until a clear limit establishes the maximum monetary value allowed when accepting or offering a gift.

Since there are no public regulations governing lobbying in Spain, or any codes of conduct that have been officially validated by lobbyists (the approval of Catalonia’s Transparency Act remains in the pipeline), we must refer to information on self-regulation.

Declarations of assets and interests The Code of Good Governance for the executive and high-ranking civil servants (2005) does not envisage declarations of assets and interests, but there is a regulation that obliges senior officials to declare their assets: the Conflicts of Interests Regulation Act for members of government and high-level officials. This requirement also exists at the sub-national level in the respective regional regulations regarding senior officials. At the local level, this matter is regulated by a specific local government rule for elected officials and other senior officials. According to Article 18 of Congress’ Internal Regulation, deputies must declare their assets according to the terms envisaged in the Organic Law of the General Electoral System (1985). Later, after the modification was approved for Article 160.2 of the Organic Law of the General Electoral System, which made the deputies’ and senators’ declaration of assets public, an agreement to regulate this matter was requested to the Congress and Senate 224 Desks/Presidia . This information becomes public after it has been published on the electronic site – in a format that cannot be altered by third parties – of the Chamber to which the deputy belongs, as well as in the Official Gazette of the General Courts, once it has been marked by the Presidium of the respective Chamber.

Agreement of the Congress of Deputies Presidium and Senate Presidium, of 19 July 628/000005(S) of 2011, BOCG, 22 July 2011.

224

Ø

Today, deputies’ declarations of assets are submitted at the beginning and end of their parliamentary term, as well as each time the conditions reflected in the declarations change.

Senior government officials are governed by the provisions of the Conflicts of Interest 225 Regulation Act. Article 12 establishes: High-level officials are obligated to submit a declaration of assets to the Registry of Assets and Property Rights for senior officials, under the terms and conditions established by law, that includes the entirety of their assets, rights, and obligations. Their spouses, or anyone with whom they cohabitate in an analogous sentimental relationship, may voluntarily make this declaration, which will be submitted by the senior officials. The declaration of assets must, at the very least, include the following: a) Property obligations, rights and assets; b) Negotiable values or financial assets; c) Share percentages; d) The social objective of the associations of any kind in which the senior officials, their spouses—regardless of the financial marriage rules—anyone with whom they cohabitate in an analogous sentimental relationship, dependent children or persons under guardianship may have an interest; e) Companies owned by others that are the object of the declaration, according to item c), indicating their respective social objectives.

These senior officials are also requested to declare their interests and report on activities performed prior to being appointed and their anticipated activities after exiting the position.

EQUALITY OF ACCESS: LEVELLING THE PLAYING FIELD Participation and consultation in the decision-making process In essence, the current legal framework does not provide operative mechanisms that consider the involvement of citizens, corporations and civil society organisations in the legislative process in a fair way. The Congress of Deputies’ Internal Rules do not establish any procedures or rules that make public debate with interest groups possible during the legislative process. However, in practice, informal meetings are held with interest groups. Some communication channels exist and are used to conduct these meetings, in view of the fact that members of parliament have the freedom to meet with and attend to anyone who contacts them with a topic of interest, but these meetings are always informal, often without any public record. Additionally, interest groups have the custom of writing letters to deputies, senators and parliamentary groups to draw their attention to certain matters. It is not uncommon for them to send expert reports to members of the legislative and executive branches. In the national parliament, Congress and Senate regulations make only a generic reference to the appearances of the government, authorities and public officials, as well as that of “other competent individuals”.226 A similar thing happens at regional parliaments, where appearances at a commission are at the request of the representatives (the groups or a certain number of deputies) and approved by the Commission Desk.227 In some cases, the possibility of inviting Act 5/2006, of 10 April, on regulation of conflicts of interest amongst members of the government and senior general state administration officials.

225

226

Article 44 Congressional Regulation and art. 67 Senate Regulation.

227 As

Castella notes, in the Asturias Parliament, if the presence of two groups or one-fifth of the Commission members is requested, approval from the Desk or the Commission will not be necessary (Article 67.3 and Article 4).

“social agents and organisations that might be interested in the regulation at hand” is formally established (Andalusian Parliament Regulation, Article 112.1), provided “they are representatives of social, public or private groups affected by the regulation”, “individuals or groups of experts or of people interested in the matters being addressed in the Chamber, for the purpose of providing counselling or drafting a report” (Asturian Parliament, Article 67.1), or, in the case of Catalonia, “those who best represent social, economic, union, humanitarian, cultural, and educational matters” of whom reports have been requested during the prescribed amendment period (Article 179.2). Only in exceptional cases may individual people be called forth (Andalusian Article 112.2; Extremaduran Assembly Regulation Article 165), and only with the utmost discretion, and there are no clear rules for making fair and balanced choices in that regard. In any case, the delivery of declarations is common practice in the commissions, where parliamentary groups invite experts. As expected, the experts are chosen according to opaque criteria and are the result of negotiations between the parties. For example, recently, in appearances related to anti-corruption regulation, the People’s Party Group, which holds the majority in Congress, vetoed the appearance of an expert who was proposed by one of the groups, since said expert could damage People’s Party political interests. In this same series of appearances, Transparency International Spain was informed that it was not being summoned because it was "an association and not an expert". Ø

Thus, the Congress of Deputies’ Internal Rules do not establish procedures or regulations that would enable public debate with interest groups during the legislative process of developing laws. However, in practice, informal meetings are held with interest groups, though fair and equal treatment is not guaranteed.

In the executive branch, there are no general standards that guarantee the participation of all interested partied under fair and equal conditions, although the regulations are more welldeveloped in certain sectors, and parties affected by concrete regulations or decisions, or their representatives, must be heard. Regulation-wise, the most important level of legal protection of citizen participation is established in Article 9.2 of the Constitution. This mandates public authorities to promote and facilitate conditions that enable all citizens to participate in political, economic, cultural, and social spheres. Article 23 acknowledges citizens’ right "to participate directly in public affairs or by means of freely-elected representatives". It establishes a democratic political system for managing public affairs. Lastly, Article 129.1 of the Constitution indicates that "the Law shall establish ways for interested parties to participate in the activities of public agencies whose function directly affects their quality of life or wellbeing". In spite of this, there is no general law in the executive branch that protects the right of individuals or interest groups to consultation under fair and equal conditions during the decision-making process. Concerning general rules and regulations, both national and regional legislation envisage "allowing interested parties to voice their opinions through their representatives in the process of drafting rules and regulations". The corresponding file should include a report containing the observations and allegations submitted by the interested parties, for example, during the party’s hearing process or over the course of public information procedures. In the case procedures appropriate has access

of Catalonia, Act 26/2010 on Catalonian legal provisions and public administrative requires (Article 64.5) that this summary include the reasons why – where – the allegations were rejected. By virtue of the transparency regulation, the public to all of this public information through active publishing, as envisaged in the Bill of

law currently being processed in the Catalonian parliament.228 In Navarre, Regional Act 11/2012 on transparency and open government expressly envisages as a citizen right to public participation, “making the final results of the procedure in which they have participated public and reporting on the reasons and considerations on which the decision adopted is based, including information on the public participation process”.229 Also worth mentioning is the participation report established in Canary Islands Act 5/2010, on encouraging citizen participation.230 In the national government, however, Article 22 of Government Act 50/1997 takes a very vague approach toward the government’s legislative initiative and does not provide for a true participatory process (unlike in the case of regulatory bills) or any further information on the matter. The Council of Ministers can agree upon other reports, consultations and rulings “deemed appropriate”, in addition to those that are legally required. Regarding the right to petitions as a form of participation, Article 29 of the Constitution recognises the right of all Spaniards to make “individual and collective written petitions, in the manner and to the effects determined by the Law”. According to the Senate website, this right consists of the “power to contact public authorities to either make them aware of certain facts or to demand an intervention, or both”. In the case of the Senate, as its website states, in order to file a petition, one must include his or her name, nationality, and address. The petition must be delivered in person to the Senate’s General Registry; otherwise it may be submitted by mail. The Congress of Deputies, however, has a Petition Commission that citizens may contact to submit individual or collective petitions. The only information that can be found in this specific section of Congress’ website are statistics: under the current administration, it has received 2,244 petitions, 675 of which have received responses. The People’s Legislative Initiative (ILP, according to the Spanish acronym) is another channel through which citizens can participate in politics by intervening in the decision-making process. This is established in Article 87.3 of the Constitution, and developed by Organic Law 3/84 – modified by Organic Law 4/2006 – which regulates the people’s legislative initiative. The regulation determines that in order for civil society to commence the procedure of getting a law approved, they must gather a minimum of 500,000 verifiable signatures. Through this procedure, a committee that supports the initiative is created and the signatures are gathered (both on the papers approved for this purpose and, following the modification to the law, through the internet as well), all within a period of time that is currently set at nine months, with a possible extension of three additional months. The 2006 reform added the option of allowing an individual designated by the commission promoting the initiative to participate in Congress’ plenary session, in defence of the ILP, if the Chamber Regulations so envisage this possibility (Article 13.2), something that, to date, has yet to be made effective. Of a total of 77 ILPs submitted, only two have been approved, three have been admitted for consideration, 10 which attained the necessary signatures were rejected by the plenary, 26 did not obtain the mandatory number of signatures within the prescribed timeframe, and 29 were rejected on the basis of not fulfilling the established requirements; of the rest, four are currently in the signature-gathering phase, three were withdrawn, and one has gone off course. 228

Article 10d and Article 67.3d.

229

Article 5.2e.

230

Article 18.3.

Ø

At the sub-state level, some transparency laws adopted or which are in the process of being adopted integrate the concept of open government as the very objective of the law, and they encourage citizen participation.

In that regard, it is worth mentioning Regional Act 11/2012 on Navarre transparency and open government, Act 4/2013 on Extremaduran open government, or the Transparency, Access to Public Information, and Good Governance Bill in Catalonia, Title VI of which – on open government – contains a legal precept that stipulates that citizen participation and collaboration instruments and channels must be spread through the Transparency Portal and other dissemination methods that make awareness thereof as pervasive as possible (Article 66.3). This legislative initiative also envisages the order addressed to the administrations with regard to the establishment of citizen participatory and collaborative procedures in developing general plans and programmes and in outlining more relevant public policies. Its effectiveness would be guaranteed through: a) the prior dissemination, sufficiently in advance, of the proposals submitted for consideration; b) the provision of information on these proposals that would be needed to make an appropriate, systematic and intelligent decision; c) the administrations’ duty to take the participatory process into account when making decisions; and d) information provided to citizens on the decisions taken and the reasons that justify them. If there is any level where we can say with certainty that great progress has been made in terms of participation, it is at the local government level, where for some years now – by virtue of its regulatory power and the principle of local autonomy – regulations have been implemented regarding participation and the necessary organic structures have been developed. In any case, Spain’s decision-making system requires some significant reforms for greater transparency and a level playing field, as the case of television licensing makes clear (Case 12).

Case 12. Digital territorial television licensing The risks of opaque, imbalanced lobbying in the audio-visual sector are highly relevant because they affect ideological plurality in a sector that is crucial for democracy. In Spain, licensing or audio-visual services such as Digital Terrestrial Television (TDT, according to the Spanish acronym) is a government responsibility, and since democracy was established, it has been controlled by one of the country’s two largest political parties. It is logical, then, that licensing has never been technical or apolitical. On 16 July 2010, at the initiative of the Ministry of Industry, Tourism and Commerce, the Zapatero government agreed to the following: "The Council of Ministers approved an agreement assigning a digital multiple channel with state coverage to each company licensed to provide TDT services in the State arena: Antena 3, Gestevisión Telecinco, Sogecable, Veo Televisión, NET TV and La Sexta. The digital multiple channel is composed of four digital television channels that can be exploited 24 hours a day. The assignment will be made following a request and only after analogue television broadcasting is discontinued and it is verified that the companies licensed to provide digital

terrestrial television have fulfilled the obligations that they took on in terms of promoting and developing digital terrestrial television."

As a result, when analogue television was discontinued, four channels were provided to each company already operating within the analogue system. The important aspect of this case – where a digital multiple channel with state coverage was assigned to each of the companies licensed to provide digital terrestrial television services within the state arena – lies in the fact that it is an agreement issued by the Council of Ministers, without a prior public call for tenders, which is the norm for European countries. This demonstrates an absence of transparency and fair rules of play in the process, as well as a lack of a consulting and participation period, which therefore makes it easy for the most powerful to reach agreements on their own, in defiance of free competition. In fact, the decision was taken between two parties: the government and the candidate operators – Antena 3, Gestevisión Telecinco, Sogecable, Veo Televisión, NET TV and La Sexta. Other potential competitors were not considered, nor were state agencies like the CNMC or the State Council consulted. Logically, a process that does not take other competitors into account and does not include prior consultation raises many doubts. This biased decision has created legal insecurity, since on 7 October 2010, the commercial enterprise Infraestructuras y Gestión 2002, S.L. lodged an ordinary contentious/administrative appeal against the abovementioned agreement. The Supreme Court partially admitted231 the appeal and declared the Council of Minister’s agreement, which granted a full digital multiple channel, with the ability to broadcast on four conventional channels, to Antena 3, Telecinco, Sogecable, Veo7, Net Televisión y La Sexta, null and void as it did not comply with the law: “The government did not respect the Audio-Visual Act and allocated additional channels without a public tendering process”. The Court also indicated that since the Audio-Visual Act – which envisages a public tendering process for assigning new channels – took effect “we cannot allow the Government to continue developing regulatory forecasts that correspond to a previous regulation, outside the requirements contained in this Act and in blatant defiance thereof”.

Composition of expert groups The composition of expert groups that advise the government on decision-making or the drafting of regulations is not regulated in Spain in a fair and equal manner. However, the health sector is an example of good practice in the composition of expert groups (Case 13).

Case 13. Good practices in the health sector: Expert committees Act 33/2011, the General Public Health Act, establishes some requirements on the composition and functioning of expert groups and research centres, which, from a 231

Supreme Court, Third Chamber for contentious-administrative matters, Section 3, ruling of 27 November 2012, rec. 442/2010.

transparency perspective, are noteworthy. More specifically, it establishes the following: Article 11. â&#x20AC;&#x201C; Health administrations shall require transparency and impartiality of scientific and professional organisations, as well as of the experts with whom they collaborate in public health-related activities, including those associated with research and training, and of individuals and organisations that receive subsidies or with which they obtain contracts, agreements, accords, or any other arrangements. To that end, the composition of committees or groups that evaluate public health actions or make the relevant recommendations, the selection procedures, the statement of interests of the parties at stake, and the associated documents and rulings shall all be made public, except where current regulations impose limitations thereon. The requirements obligating experts and representatives of scientific and professional organisations that make up the committees or groups that evaluate public health actions or make the relevant recommendations to declare conflicts of interest shall be enforced according to the law.

CONCLUSIONS AND RECOMMENDATIONS As we have seen, lobbying essentially goes unregulated (in the strictest sense of the word) in Spain, despite the fact that organised influence has always existed and continues to grow. This opacity and lack of regulation of the system by which public decision-makers are influenced, along with the on-going corruption scandals in the media, has created an imaginary link between lobbying and corruption or lobbying and dishonest practices when in reality, they do not have to be connected. In fact, there have not been any cases so far of professional lobbyists involved in corruption. There have been many reforms passed in recent years aimed at improving public integrity. However, whether or not they are successfully implemented is an entirely different story. In any case, regulations have been approved to govern conflicts of interest and incompatibilities, as well as ethics codes for the government and public officials. Anti-corruption criminal regulations have also been passed, and party funding regulations have been reformed to make them more rigorous and demanding. Furthermore, a Transparency, Access to Information and Good Government Act was approved. All of this has created institutional foundations where it is becoming increasingly necessary to regulate lobbying, so as to end the regulatory cycle and tackle the issue in a comprehensive manner. The implementation of lobby regulations may also be easier, from the legal and cultural perspectives. While it is true that work is still needed in terms of achieving real transparency, accountability, and trust, we believe that lobbying regulation would create positive synergies, if it were developed with coherence, strong requirements and rigour. Nevertheless, no matter what solution is adopted, our particular institutional/political reality should be taken into consideration. It should also address â&#x20AC;&#x201C; without any prejudice â&#x20AC;&#x201C; the legal or organisational changes needed to guarantee the value that is really at stake and to which any model should respond if it hopes to effectively fulfil the purpose for which is was created: this value is none other than transparency. Lobbying has to be made visible, but to what extent? Is it enough to disclose who, when, and with whom? Or is it also necessary to know for what purpose? It seems reasonable to maintain that only if the level of transparency enables us to answer these questions, will the system be an appropriate means to the end; which is to understand public authoritiesâ&#x20AC;&#x2122; decision-making process and the degree of influence that lobby groups hold over it, and ensure access to all parties interested and affected by public decisions. Based on this analysis, Transparency International Spain concludes with the following recommendations:

RECOMMENDATIONS TO BUILD A FRAMEWORK THAT ENSURES TRANSPARENCY, INTEGRITY AND EQUAL ACCESS IN LOBBYING

Registration and Disclosure measures 1. The government must conduct a comprehensive review of lobbying risks in order to inform the introduction of a regulation of lobbying of the executive and legislative branches. The review must clarify the rules of the game and define who will receive special protection − for constitutional reasons − when exerting influence, noting who will have this protection, due to relevance to a specific sector, and who will not. This will guarantee a level playing 232 field as well as transparency of the roles and responsibilities taken on . 2. Both Governments and Parliaments should initiate a broad consultation on introducing a register of lobbyists, involving all stakeholders who would be affected by such a register. Any register that is introduced must a) be mandatory and capture all who lobby professionally (anyone who is seeking to exercise influence including for instance not only professional lobbyists, but also private sector representatives [in-house lobbyists], public affairs consultancies, representatives from NGOs, corporations, industry/professional associations, trade unions, think-tanks, law firms, faith-based organisations and academics) and b) cannot be built exclusively to regulate access to the national legislative branch−it must also regulate lobbying of regional Parliaments and the executive branch. 3. Public representatives and officials should clearly report contacts maintained with regard to every policy or political measure, and publicly inform about their work agenda. Public representatives (deputies and senators and local representatives) should publish their agendas and calendars. 4. All registered lobbyists should furnish periodic public reports on their activities, without prejudice to the information that the public officials with whom they meet should provide. They should clearly establish the public officials involved, their classification and the units where the work, the topic on which they sought to influence, the amounts received for this task, or, if a company is exercising influence on its own behalf, the relevant budget, etc. 5. A lobbying Code of Ethics should be introduced, setting clear ethical standards with regard to communicating with and seeking to influence public officials and representatives. Both lobbyists and those targeted by lobbyists and interest groups should be trained on the Code of Ethics. 6. There should be an independent entity or agency that manages the registration system and monitors and sanctions non-compliance, both in the private as well as the public sector (it can be of new creation or an already existing entity that is reorganized to assume this task).

Joaquim Molins, “El Estado, el interés general y los grupos de interés”, Gestión y Análisis de Políticas Públicas (GAPP) 5-6, 1996, 190-192.

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ANNEX 1: METHODOLOGY Data collection and validation This report is part of a project funded by the European Commission "Lifting the Lid on Lobbying", in which 19 European civil society organizations have assessed the situation of lobbying and its regulation in their respective countries233 . The report An Evaluation of Lobbying in Spain: Analysis and Proposals aims to: •

Evaluate the regulations, policies and practices in Spain

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Analyze the risks and incidents of corruption relating to the lack of control of the practice of lobbying

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Highlight examples of good practice in the country

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Propose recommendations and solutions to policy makers and lobbyists in the private and public sector.

The research was directed by Prof. Manuel Villoria (URJC), edited by Ana Revuelta (TI Spain) and carried out by a team of researchers composed of academics and professionals in the field, during the period from March to July 2014. After an initial presentation of the report in September, a second round of review was undertaken between October and November 2014, with the aim of incorporating feedback received from various organizations and update the text. The researchers appointed and their respective areas are: •

Telecommunications/intellectual property and energy: Esteban Arribas (Universidad de Alcalá de Henares), Carmen Mateo (Cariotipo MH5 and Centro de Estudios de Políticas Públicas y Gobierno de la Universidad de Alcalá) and Jorge Fernández-Rúa (Cariotipo MH5);

•

Public health: Ildefonso Hernández Aguado (Universidad Miguel Hernández (Alicante) and Ciberesp;

•

Financial sector: Elena Herrero-Beaumont (Programme “Lobby & Advocacy” at IE Business School, and Vinces);

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Construction sector: Fernando Jiménez (Universidad de Murcia);

•

Historical and legal analysis: Rafael Rubio (Universidad Complutense de Madrid).

Elena García Guitián (Universidad Autónoma de Madrid) was in charge of the external academic peer review. The study benefitted from the valuable comments of Òscar Roca (Head of the area of legislation and legal affairs, Oficina Antifrau de Catalunya), Bernardo Navazo

The countries participating in the project are Austria, Bulgaria, Cyprus, Czech Republic, Estonia, France, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain and the UK.

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(King's College London), Foro por la Transparencia, María Rosa Rotondo and Esteban Egea (APRI). The research is based on a major set of more than 20 interviews with key players in the field of lobbying, both in the private as well as the public sector. The in-depth interviews made it possible to access information that could only be attained “from inside”. Due to the sensitivity of information, or because they do not recognize themselves yet as lobbyists or they are from the public sector, some of the interviewees asked for confidentiality, and this was granted. Additionally, as the report was being drafted, two meetings were held with experts and professionals regarding interests’ representation, where we debated openly over the most 234 complex topics and situations . Lastly, secondary sources were consulted such as the European Union’s Eurobarometer on corruption, the report that the EU published on corruption in Spain in 2014, as well as reports and surveys by the OECD, the Council of Europe (Greco, Venice Commission), and the Centro de Investigaciones Sociológicas [Sociology Research Centre], among others. The research was primarily qualitative; however a quantitative element was also included in order to evaluate the strength and effectiveness of regulations and self-regulation mechanisms 235 around lobbying and to allow for some comparison across the countries . For this, a set of 65 indicators was established. Each indicator scored on a three point scale, with 0 being the 236 lowest possible score and 2 the highest . To calculate the overall score of the country and the three dimensions "Transparency", "Integrity" and "Equal Access", the results were weighted and percentages established for the 10 sub-dimensions (access to information, lobby registers, monitoring and oversight systems, legislative footprint, pre and post-government employment restrictions, codes of conduct / ethics for members of the public sector, codes of conduct / ethics for lobbyists, mechanisms for consultation and participation in public decision-making, and composition of experts groups and advisory bodies). The average score for each of the three key dimensions (Transparency, Integrity, Equality of access) was then calculated. Finally, the overall score for the country was calculated by averaging the three dimensions. The full questionnaire and the results are included in Annex (see Annexes 2 and 3).

The meetings took place in February and June 2014. The co-researchers of this project took part in them, along external experts such as a representative from the Anti-fraud Office of Catalonia, APRI and the University Autónoma of Madrid.

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A regional report compiling and comparing the national results is foreseen for publication in early 2015.

In a limited number of cases, where no logical intermediary position exists, only a minimum value of 0 and a maximum value of 2 are offered.

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ANNEX 2: QUANTITATIVE RESULTS In quantitative terms, the report shows a negative result as to the status of lobby in Spain. The overall score is 21%. The assessment of lobby in the various aspects or categories shows a score of 10% in transparency, 35% in integrity and 17% in equality of access. The questionnaire of 65 questions seeks to address the following questions: How well is Spain insulated against unfair and opaque lobbying? How strong are mechanisms to ensure transparency, integrity and equality of access to public decision-makers?