The EU Ombudsman has called on European Central Bank (ECB) top officials to stop participating in the Group of 30, a secretive international gathering of bankers.
In a set of recommendations published on Wednesday (17 January), Emily O’Reilly said that ECB president Mario Draghi should “suspend his membership for the remaining duration of his term”, which ends in 2019.
She added that “the ECB should seek to ensure that neither the next president of the ECB, nor any other member of ECB decision-making bodies, becomes a member of the G30.”
“It would undoubtedly help reinforce public trust in the ECB,” she argued.
The Ombudsman’s recommendations follow a year-long investigation after Corporate Europe Observatory (CEO), a Brussels-based NGO, filed a complaint in November 2016.
CEO argued that ECB officials involvement in the G30 was incompatible with the institutions’ independence, reputation and integrity.
In 2015, the NGO requested documents from the ECB over the institution’s ethic bodies’ proceedings on the G30.
It then considered that the replies from the ECB showed that “no precautionary measures have been taken” concerning ECB official’s participation in G30 meetings.
The Group of 30 – formally named the Consultative Group on International Economic and Monetary Affairs – is a Washington-based organisation whose members include the heads of major private banks and central banks, as well as academics and international institutions officials.
It organises two closed-door meetings a year, as well as an international banking seminar that is open to external participants.
Members of this exclusive club are chosen by a Board of Trustees, of which only the chairman is known – Jacob A. Frenkel, the Chairman of the JPMorgan Chase International bank.
Draghi has attended four meetings – in 2012, 2013 and twice in 2015 – and one seminar – in 2012 – since he became ECB president, according to the bank’s reply to the Ombudsman’s questions.
After a first complaint by CEO in 2012, O’Reilly’s predecessor Nikiforos Diamandouros said in 2013that Draghi’s participation in the G30 was not “incompatible with the independence, reputation and integrity of the ECB”.
But since that decision, the ECB was tasked with a new mission, the supervision of EU banks, through the Single Supervision Mechanism. This, according to O’Reilly, makes the situation today “different from that of 2012”.
The Ombudsman noted that “crucially, members of the G30 “also include representatives from a number of major banks either directly or indirectly supervised by the ECB”.
She insisted that it was “important to demonstrate to the public that there is a clear separation between the ECB as supervisor and the finance industry which is affected by its decisions”.
ECB rules “cannot fully remove the possible perception by some citizens that regulators and bankers meet in elite clubs behind closed doors and take decisions affecting the lives of millions of people,” she said.
O’Reilly noted that Draghi is not a member of the SSM’s executive body, the supervisory board, and that “there is no evidence that the G30 meetings could have directly influenced or have had an (adverse) impact on the ECB’s supervisory tasks”.
She pointed out however that “those holding public office must not be influenced, or even appear to be influenced, by private relationships”.
As a result, she asked that neither the members of the SSM’s supervisory board nor of the ECB’s executive board become members of the G30.
She also asked that when they attend G30 non-member events, they should disclose the agendas of the meetings and non-confidential summaries of the discussions.
‘Timely and positive decision’
O’Reilly now expects a reply from the ECB by 15 April.
The ECB said on Wednesday that it had “taken note of the Ombudsman’s recommendation and will respond in due course”.
In October, it told the Ombudsman that is considered that Draghi and other officials’ attendance to G30 meetigns was “fully compatible with the independence, reputation and integrity of the ECB and, most importantly, that this does not entail any conflict of interest”.
Corporate Europe Observatory, for its part, said that the Ombudsman’s decision was “timely and very positive”.
“Imbalanced policy consultation at the European Central Bank has made the institution vulnerable to the undue influence of financial industry interests,” the NGO’s Kenneth Haar said in a statement.
He said he hoped that the ECB will implement the recommendations “without hesitation”, and added that “the next step will be to reform the advisory groups of the ECB, which our researcn has shown to be dominated by the financial industry.