Lobbying Comes of Age in Europe PDF Print E-mail
EU Politics
Wall Street Journal (frontpage)
February 10 2005

Berlin Scandals Highlight An Absence of Regulations; Fancy Addresses for Parties

By MATTHEW KARNITSCHNIG

circulated by Corporate Europe Observatory.

BERLIN - A continuing dustup over corporate payments to German politicians has spotlighted a rapid shift in Europe's business landscape: companies' embrace of aggressive lobbying in the absence of rules to rein them in. European integration and the pressures of globalization have made lobbying more prevalent across the Continent in recent years.. As in Germany, there is a lack of regulation to make the practice more transparent.

The initial public reaction here has been striking: In recent weeks, senior politicians from Germany's biggest two parties resigned following disclosures that they received tens of thousands of euros from corporate benefactors. Although the payments weren't illegal-the politicians had business-related obligations-public outrage over the practice has raised questions about the methods that companies employ to influence legislation.

The controversy here has only made matters worse. Rather than try to dispel perceptions of misbehavior with more openness, many companies responded to the bad publicity by further obscuring their lobbying efforts.

"The regulations we've had up to now aren't adequate," says J?rgen Pitzer, president of the Society of German Public Relations. "Everyone who enters into the lobby should have to declare his interests, just like banking analysts."

Erik Wesselius, an analyst with Corporate Europe Observatory, a watchdog group, estimates the number of lobbyists in Brussels, the European Union capital, at around 15,000. But lax disclosure requirements make the number difficult to pin down, he said. Mr. Wesselius's organization is pushing for more-stringent, U.S.-style rules that would require lobbyists to disclose who they are working for, how much they are being paid, and the names of officials they have contacted.

Germany has seen some of the biggest changes, as the shift of the country's capital city and the restructuring of German business have combined to fundamentally alter the way its politicians and businesspeople interact.

"A major factor for the change is the symbolic significance of Berlin as the new capital, the center of German politics," says Thomas Leif, editor of The Silent Power, a collection of essays on lobbying n Germany. "There's also been a realization among the companies that they can achieve quite a lot through lobbying."

For decades, corporate lobbying in Bonn - the former German capital - was directed by major industry associations, established as part of Germany's post-war consensus model to represent the collective interests of business. The system also included a web of cross-shareholdings between the country's major companies. The interdependence that resulted concentrated power in the hands of a few influential executives who lobbied government leaders directly. Such contacts were general1y informal and kept out of the public eye.

More recently, those ties have frayed as the country has sought to make its economy more competitive and to attract foreign investment. Many companies also have decided the associations can be ill suited to deal with their particular needs. Companies that concentrate on foreign markets, for example, often have different requirements than those focused on Germany. That reality, Mr. Pitzer says, often paralyzes the associations, which include a broad swath of members in any given industry. "The associations have lost a considerable degree of influence," he says.
As a result, companies are acting more independently and dealing directly with the government on issues that concern them.

The change is evident in downtown Berlin. The streets of the city's government district are lined with the often lavish representative offices of major German and foreign companies. While some had operations in Bonn as well, few had anything near the scale of their Berlin digs.

Bertelsmann AG invested millions to rebuild a 19th century landmark on Berlin's most storied boulevard, Unter den Linden. The three-story neoclassical building, modelled on Berlin's former police headquarters, opened at the end of 2003. It houses the media titan's lobbying operation and includes conference rooms, a bar and lounge, and offices. The company uses it for parties, as well as for more private meetings between top executives, shareholders and politicians.

Other companies, such as Deutsche Telekom AG, DaimlerChrysler AG and software concern SAP AG, also have prominent offices here. The city has been a magnet for a number of foreign companies as well, including Vodafone PLC and Coca-Cola Co.

"We're extremely well networked here," says Kai Falk, the head of public affairs for Coca-Cola in Berlin. "For us, the proximity to decision makers is very important."

Mr. Falk says Coca-Cola has no interest in hiding its contacts with politicians. Yet, the widespread belief in Germany that lobbying involves illicit payments and influence peddling has meant that many companies take pains to keep their political activities under wraps. Few are willing to speak about their lobbying.

Indeed, the recent disclosures of payments to politicians mark just the latest in a string of scandals involving companies, politicians and lobbyists. The controversy has led to calls for tighter controls. Some say that while the scandals will lead to tighter controls on politicians, they also might push lobbying deeper underground.

"I think we'll see lobbyists working more discreetly, away from the public eye," Mr. Leif says.

- Mary Jacoby in Brussels contributed to this article.

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