Frankfurt — The EU’s ethics watchdog is quizzing the president of the European Central Bank (ECB), Mario Draghi, over his and the ECB’s involvement in an exclusive forum with bankers and fund managers.
In a letter to Draghi that was published on Friday, European Ombud Emily O’Reilly said the meetings of the Group of 30 (G-30), where central bankers, economists and financiers talk behind closed doors, are "not transparent", and questioned the ECB president’s membership of the club.
"Where ECB members attend meetings organised by the Group of 30, they must abide by treaty transparency requirements," O’Reilly said in the letter. "However, Group of 30 meetings are not transparent."
O’Reilly, who watches for ethics lapses at European institutions and can make nonbinding recommendations, asked the ECB whether it would consider publishing agendas and summaries of those meetings.
Draghi has until September to reply to the letter in writing.
The new inquiry was triggered by a complaint by activist group Corporate Europe Observatory, which says proximity between ECB officials and the G-30 is incompatible with Frankfurt’s role as the eurozone’s top banking watchdog, taken up in 2014.
The G-30 includes the chairpersons of several commercial banks, such as JPMorgan’s Jacob A Frenkel and UBS’s Axel Weber. Both firms have units in the eurozone that are directly supervised by the ECB.
A similar complaint was rejected by the ombudsman of the time in 2012.
But O’Reilly decided the ECB’s new supervisory duties warranted a fresh enquiry.
A spokesperson for the ECB said: "We are co-operating with the ombud, as we did with the previous inquiry." "The group in question here is very diverse ... (and) we see it as a relevant forum to engage with, always remembering that we have a range of rules and instruments in place to avoid apparent or potential conflicts of interest," he added. In the letter, O’Reilly asked why Draghi’s membership in the G-30 was in the public interest and whether it could really be considered personal given that he was replaced by his deputy, Vitor Constancio, on one occasion.
"It may be argued, therefore, that the ECB’s involvement in the G-30 is rather of an institutional nature," the ombud said in the letter, dated July 4.
She also questioned whether the ECB found it appropriate that the chair of its own ethics committee, Jean-Claude Trichet, who may be called to assess the bank’s role in the G-30, was also the honorary chairperson of the same group.
Ties between the ECB and financial sector firms have been in the spotlight since 2015, when executive board member Benoit Coeure discussed the bank’s money-printing plans at a private event with hedge funds.
This led to O’Reilly appealing to Draghi to scrap such meetings ahead of setting policy — a recommendation that the ECB adopted.
Draghi has been a member of the G-30 since 2006, when he was still the governor of the Bank of Italy. He sits alongside Bank of England governor Mark Carney and the Bank of Japan’s Haruhiko Kuroda, as well as Nobel prize winner Paul Krugman.
ECB vice-president Vitor Constancio and Sabine Lautenschlaeger, who represents the ECB’s supervisory arm on the board, have also spoken at G-30 meetings. Their speeches were published on the ECB’s website.
ECB senior supervisor Julie Dickson contributed to a G-30 paper on banking conduct, albeit only as an external observer.