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Why do European companies bother to hire ex-politicians?

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THIS month Gerhard Schröder starts a new job. Shareholders in Rosneft, a Russian energy giant with a market value of nearly $60bn, are set to appoint Germany’s ex-chancellor as a board director on September 29th. Russia’s government, Rosneft’s majority-owner, nominated Mr Schröder, who is pals with Vladimir Putin. Despite Western sanctions imposed on the firm after Russia’s invasion of Ukraine in 2014, Mr Schröder’s move is no surprise. He has worked for years with Gazprom, another energy arm of the Russian state, to promote a gas pipeline to western Europe.

His ties to Russia win him few friends at home. His successor as Germany’s leader, Angela Merkel, calls his behaviour “not OK”. She also vows to reject offers of “any posts in industry once I am no longer chancellor”. Other politicians are happier to follow Mr Schröder’s example. It emerged last month that a former German president, Christian Wulff (pictured), is also employed by a foreign company. He advises a German arm of a Turkish high-street fashion firm, Yargici, topping up the salary of €236,000 ($282,030) which he gets for being an ex-president. François Fillon, an ex-prime minister of France, became a partner at Tikehau Capital, an asset manager, on September 1st.

Cases such as these spread public unease about the revolving door between business and politics and the civil service. The French call it pantouflage. In January a report by Transparency International, an anti-corruption group, assessed the careers of 512 EU politicians who left office in recent years. It found that over half of retired EU commissioners, and 30% of ex-members of the European Parliament, took jobs with companies or with organisations registered on an EU lobby register. Firms such as ArcelorMittal, an Indian-owned steelmaker based in Luxembourg, Uber, an American ride-hailing firm, and Volkswagen, Germany’s scandal-prone car giant, have all hired ex-commissioners.

In Britain, too, ex-politicians routinely land sinecures advising funds and banks: Tony Blair is with JPMorgan Chase; his predecessor as prime minister, John Major, advises Credit Suisse; George Osborne, a former chancellor, this year joined up with BlackRock, an American investment firm.

Though the firms involved emphasise that they have high ethical standards, activists worry. “Conflicts of interest cannot be ruled out,” said the authors of the Transparency International report. The appointment of José Manuel Barroso, an ex-president of the commission, as chairman of Goldman Sachs International, provoked particularly loud public complaints in July last year. Campaigners say an 18-month ban on politicians taking such jobs should last much longer.

Given such attention, do employers gain by hiring the once-powerful? Drawing a line from recruitment to the subsequent performance of a company is tricky. Ex-politicians offer expertise, contacts and—presumably—quiet influence among former colleagues. Tikehau Capital has specified that it plans to use Mr Fillon’s international experience and knowledge of economic issues. Cynics argue that the real targets of such hiring decisions are not ex-politicians, but those still in office. The point of recruitment could be to send a signal to younger politicians that they, too, could land such a job one day, if they play their cards right.

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Julio Marchi ©

Publisher / Editor at BS News & Media Services
A free thinker, not labelled as anything, not associated with any party, not part of any group or engaged with any religion... A simple guy tired of the nowadays bullshit who decided to promote more serious debates about what is really happening hoping to bring back intelligence to the superficial and shallow news & headlines that unfortunately took over the existing media scene.
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