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25/10/2013

Revolving doors and alcohol policy: a cautionary tale

The latest high profile case of the revolving door in the UK raises issues about the ability of civil servants to properly do their jobs and pursue the public interest.

Charities and NGOs working to reduce alcohol related harm have expressed concern at the announcement of the appointment of a senior civil servant and former British Ambassador to Denmark as the new chief executive of the Scotch Whisky Association (SWA). The SWA, one of the alcohol industry’s most aggressive lobby groups, announced on 16 September 2013 that David Frost, currently Director of Europe Trade and International Affairs at the UK Department of Business, Innovation and Skills (BIS) will take the helm next year.

At BIS, Frost has, according to alcohol charities, been ‘part of a team responsible for the implementation of Minimum Unit Pricing (MUP) in Scotland’. Legislation to implement the MUP in Scotland has been approved by the Scottish Parliament but as Scotland is not a member of the EU independently of the UK, BIS acts as a bridge between the Scottish Government and the European Commission on trade related issues including MUP.

This appointment and its timing raise some serious questions as Dr Peter Rice Chair of Scottish Health Action on Alcohol Problems noted ‘Will he continue to represent the UK government in trade discussions involving alcohol until he takes up his SWA post? When did his relationship with the SWA start and what role has he played in the development of his Department’s policy on minimum unit pricing?’ Dr Evelyn Gillan, chief executive of Alcohol Focus Scotland, described the appointment as an ‘obvious conflict of interest’ and another example of the revolving door between the public and private sector ‘where gamekeeper turns poacher.’

As we have noted before, the Scotch Whisky Association has been at the forefront of the alcohol industry’s battle against MUP, managing to postpone implementation by launching a legal challenge against the legislation, which is regarded by global alcohol producers as a serious threat. It is worth noting that the SWA is dominated by large alcohol producers and does not speak for the entire whisky industry. It is one of a number of ways that corporations seek to have more than one voice in lobbying. Diageo, the global drinks firm, is a dominant interest in SWA by virtue of at least 17 out of 53 members being Diageo subsidiaries. Many other members are clients of the whisky industry.

Frost’s predecessor Gavin Hewitt who is still in post at the SWA also heads the European Spirits Organisation to which he was elected in November 2011. Hewitt’s move from a Scottish based alcohol lobby group to a European one coincided with the fight against MUP moving from Scotland to Europe. Like Frost, Hewitt also had a background in public service including as British Ambassador to Croatia (1994 – 1997), Finland (1997 – 2000) and Belgium (2001 – 2003) before taking up the appointment in 2003. His early career with the Diplomatic Service also involved a spell at the British negotiating team in Brussels for the UK’s accession to the European Community.

Henry Ashworth is a third recent example of the alcohol revolving door. He joined the Portman Group in October 2011 from the Cabinet Office where he was part of the Behavioural Insights Team - the ‘nudge’ unit - where, according to the Portman Group, he ‘was leading health policy… to support better personal decision-making in key areas of public health’. Prior to this Ashworth worked on evaluating alcohol and obesity policy for two years with the Better Regulation Executive, also within the Cabinet Office.

A fourth example of the Whitehall door revolving into the alcohol industry is that of Miles Beale. He became the chief executive of the Wine and Spirit Trade Association in June 2012. His previous job was as Deputy Director of EU Affairs and international agriculture policy within the Department for Environment, Food and Rural Affairs (DEFRA). Before that he was based in the Cabinet Office where he was deputy director for European and global issues.

All these appointments to senior positions as alcohol lobbyists (note: the Portman Group deny being lobbyists) suggest that the industry finds their skills and experience useful. This is one reason why the revolving door is considered a potential problem. The industry is able to pay for what is effectively inside information on how policy works. We are not arguing that there is anything directly corrupt in this relationship or that confidential or proprietary information changes hands. It is clear however that such recruits give the industry an advantage in gaining intelligence, experience and contacts in the policy world.

But there is another reason why this is a problem. These appointments can give rise to suspicions that the public servant may have been biased in their activities in public service in the hope or expectation of securing a lucrative private sector post one day. This concern is particularly acute where the public servant is in a position to materially influence the financial health of the corporation or industry concerned such as by awarding contracts, influencing how or whether a policy proceeds or an agreement is made. We make no suggestion that this has occurred in the case of David Frost.

The Organisation for Economic Co-operation and Development (OECD), not the most radical of international organisations, has much to teach us about how to manage such issues. On the specific period between an official obtaining and taking up a job in the private sector the OECD says that the official should 'where feasible, be excused from current duties that could constitute a conflict of interest'. It is obvious that acting on issues from which your prospective employer may benefit is a serious conflict of interest. Yet there seems no provision in the UK to manage this from the moment that job offers are discussed until exit from public service.

Regarding David Frost, we are not able to say if or what he has been excused from since his first contacts with the SWA in relation to his job offer and the formal announcement or since. Nor can we say in any detail whether he has been involved in activities that pose a conflict of interest. We can, however, report on the issues that he has been involved in which he has also seen fit to tweet about in recent months. Frost is a relative newcomer to Twitter posting his first tweet on 8 December 2012 and tweeting or retweeting 158 times up to 14 October 2013. His work-related tweets mainly refer to international trade negotiations and in particular the Transatlantic Trade and Investment Partnership (TTIP). This is the prospective deal negotiated in secret which will, according to the EU, ‘tackle barriers behind the customs border – such as differences in technical regulations, standards and approval procedures’. In other words free trade will trump laws intended to protect the public. Frost’s tweets suggest he strongly supports TTIP and reveal his close involvement with the negotiations to push it through, travelling to Brussels, Geneva, Washington, Luxembourg, Berlin, Munich amongst other places in 2013. On 11 June he tweeted he was ‘optimistic’ on the deal, on 14 June he had ‘fingers crossed’ and later in the day ‘Great #TTIP deal tonight’.

The deal is of course great news for the whisky industry. As Frost himself noted on 14 June ‘nearly half [of UK food and drink export market] is Scotch whisky (£758m): shows how much room there is to grow further if #TTIP deal’. The whisky industry itself has publically confirmed its support for the deal. The fact that the US already has zero tariffs for whisky does not dull their ardour. The Scotch Whisky Association sees TTIP as having ‘the potential to open up more markets’ for example, in India. David Williamson, at the SWA, told the Scotsman: ‘An agreement with the US could set globally relevant rules and guidelines.’ The SWA confirmed their view at an event organised by the business lobby group CBI Scotland, at which the main speaker was the EU Trade Commissioner Karel De Gucht. Symbolising the exclusive atmosphere, De Gucht’s speech – on the TTIP - was made at the luxury Gleneagles Hotel in Perthshire, Scotland, which, fittingly, is owned by the drinks firm Diageo.

It is hardly surprising given Frost’s gung-ho support for TTIP, his experience of international diplomacy and negotiation and his connections with both industry and government that the industry might see officials such as Frost as a desirable ambassador for their interests.

On 25/26 August, nearly three weeks before his new job was announced, Frost and Gavin Hewitt, his soon to be predecessor at the SWA, exchanged tweets on Scottish football. On 25 September, a week after his new appointment was announced, Frost referred, in a reply to a message from the organiser of World Whisky Day, to his civil service post as his ‘day job’.

Public servants like Frost are supposed to defend the public interest as opposed to the private interests of corporations. The close involvement in a trade deal which will significantly benefit industries such as whisky shows that the problem of conflict of interest is not only a matter of post-employment, but of structural conflicts of interest in the public service. It raises the question of whose interests civil servants defend in practice?

In the UK issues related to the revolving door are not regulated in any meaningful way. Instead there is the Advisory Committee on Business Appointments (ACOBA), which as its name suggests simply advises public servants on cooling-off periods or whether to take particular posts or contacts. It has no mechanism for monitoring compliance and no powers to sanction any breach of its advice. It is widely regarded as not fit for purpose. The most recent official enquiry on the revolving door carried out by the Public Administration Select Committee, recommended in 2012 that ACOBA should be ‘abolished’ and ethics regulation placed on a ‘statutory’ footing.

ACOBA outlines a procedure that those seeking post public employment ‘must’ follow, but sometimes its procedures have been ignored. In one example, in 2007, senior members of the armed forces stopped submitting applications to ACOBA for around two years after apparently receiving legal advice that they were not obliged to seek the committee's advice. The official procedure is that ACOBA deals with applications for guidance on post employment from ministers, special advisers and the most senior civil servants (those at grades SCS3 which is equivalent to ‘Permanent Secretary’ the most senior rank in the civil service). Other applicants in the Senior Civil Service (at SCS2 or SCS1 or in the lower ranks) are dealt with by their home departments. ACOBA has taken to publishing the results of applications made directly to it and says it is attempting to encourage departments to do the same. It has had no success.

Consequently it is not possible to determine what advice was given in the cases of Frost, Hewitt, Beale and Ashworth because their departments do not publish any such data. Given this lack of transparency we can only guess whether departmental guidance in practice is in line with that given by ACOBA itself. ACOBA has become somewhat more transparent in its activities but the restrictions it imposes are often minimal. To take one example, the committee has ‘a general principle’ for the most senior civil servants that, ‘there will be a two year ban’ on them ‘lobbying Government on behalf of their new employer after they leave the Civil Service.’ The cooling-off period can be reduced in some circumstances. Lobbying is defined very narrowly in the guidance as ‘communication with Government (including Ministers, special advisers and officials) with a view to influencing a Government decision or policy’. This restriction is no limitation on lobbying in practice since knowledge, experience and contacts can be handed directly to new employers who can be advised on methods of approach, without requiring direct communication with their former colleagues.

So even if the departmental advice is as ‘strict’ as ACOBA this will be little safeguard against Frost and his colleagues seriously advantaging their new employers from the beginning. The appointments of both Frost and Hewitt were announced some three months before they left the civil service and took up their new posts. It is not clear, however, whether during that period they still have the security and other clearances that would allow them to access information or work on issues of benefit to their future employers. If any such restrictions exist, they are not a matter of public record. This is especially problematic where there is an overlap between roles. According to his own LinkedIn page Miles Beale did not leave his post at DEFRA until September 2012, some three months after starting as an alcohol lobbyist in June.

One key implication is that much clearer advice and regulation of post-employment opportunities is needed. Much more transparency is also required about which offers are taken up and which rules govern them. In addition the issue on conflict of interest is partly about recognising the issue and making it public. But a more significant question that many countries and the European institutions have not yet fully come to terms with is that of managing conflicts of interest to minimise them. That might mean prohibiting certain sorts of post-employment or increasing cooling-off periods or being much more specific about what is allowed and what is not. Along with this must be an effective and transparent way to monitor, evaluate compliance and sanctions for non-compliance.

OECD guidance published in 2010 refers to the need to avoid conflicts of interest if possible and where not possible, to resolve them in favour of the ‘public interest’. In the UK the mere declaration of the conflict is often taken to be enough in Whitehall.

A final point, as we have noted, is that several of the examples above have taken on a role that is at least partially at the EU level. The EU has no locus in managing revolving door processes in member states, just as member states have no locus in overseeing cases of EU officials moving to ‘national’ organisations. Moreover critics charge that although the EU institutions have rules to govern the revolving door, they are ‘weak and are not effectively implemented’.

In a world where the national/EU boundary is porous and ‘national’ organisations blur with transnational corporations and some trade associations like the Scotch Whisky Association, it is time that serious consideration is given to improving both national and EU level monitoring and management of conflict of interest. The alternative is that the credibility of decision-making at the UK and EU levels will suffer and the ability of the drinks industry (amongst others) to undermine the development of public health policies will be heightened.

Source: http://www.alicerap.eu/blog/120-revolving-doors-and-alcohol-policy-a-cautionary-tale.html