'Revolving Doors', Accountability and Transparency

1 post / 0 new
rowmat's picture
rowmat
Status: Gold Member (Offline)
Joined: Nov 15 2008
Posts: 358
'Revolving Doors', Accountability and Transparency

It's large (162 pages) and it's disturbing to say the least, (the 'usual suspects' and more are listed) but anyone who has any interest in the GFC should definately read this document.

Expert Group on Conflict of Interest
5 May 2009
OECD Conference Centre, Paris

'Revolving Doors, Accountability and Transparency - Emerging Regulatory Concerns and Policy Solutions in the Financial Crisis'

Download it here...
http://www.olis.oecd.org/olis/2009doc.nsf/ENGDATCORPLOOK/NT00002B0E/$FILE/JT03263759.PDF

Quote:

SUMMARY

This paper provides background for discussion on the 'revolving door' phenomenon and documents to which extent this phenomenon has occurred in the financial sector. The Expert Group is invited to discuss on how to support the Public Governance Committee's contribution to the OECD's efforts in addressing the global crisis.

Introduction

1.  This report examines the phenomenon of the ‘revolving door’ with particular reference to the financial crisis. It seeks to extend and supplement the analysis in the OECD’s recent report Post-public employment: Good practices for preventing conflict of interest. In addition to examining the element of the ‘revolving door’ involving public servants moving to the private sector, we also examine ‘pre-employment’ that is the element of the revolving door involving people moving from the private sector into the public sector either in government or regulatory agencies.

2.  The emerging and deepening financial crisis has occasioned a rethinking of the role of regulation in securing the public interest across the developed world. There has been a political backlash against the deregulatory impulse of governance that has characterised rule making and oversight in many developed market economies in the past twenty years. The presumption that better regulation inevitably equated with  less regulation is now widely feared to have been a costly fallacy. At the heart of public concerns over distress in the banking and financial services sectors is the question of how the consequences of weak governance and risky and reckless investment decision making will impact on individuals and economies. Coupled with these worries are demands that those responsible are held accountable, do not profit from the
current financial crisis, and that there are rules and processes in place to guard against a repeat of the worst excesses of speculative investment.

3.  The development of rules and procedures to safeguard public interests in the context of a highly complex, and very poorly understood, financial system, is a significant challenge currently facing decision makers and public servants charged with oversight and repair of confidence in banking and finance.  However, there are lessons that can be drawn from regulatory practices around the world. A striking feature of many of the reforms to guard against conflicts of interest and cronyism is that they have been introduced in the wake of crisis and scandal. In this respect, current regulatory debate in relation to banking and finance is of a piece with regulatory reform in relation to lobbying and revolving doors. One lesson that can already be drawn is that the regulatory solutions proposed should be based on sound principles of good governance rather than driven by immediate circumstances. Such ‘knee jerk’ policies rarely stand the test of time or benefit public welfare.

4.  This report will analyse the ’revolving door’ phenomenon in relation to the financial crises at both the individual level (in respect to the appointment of advisors and regulators) and at institutional level (focusing on the bail outs and nationalisations of banks in recent months). The paper will gather data on revolving doors from various developed economies in recent months, and will examine trends and emerging practices to secure the probity of the financial sector and restore confidence in the governance of the banking system. The re-emergence of interventionist states, as a result of the financial crisis, necessitates a review of how public servants and those appointed to guard the public interest in nationalised financial institutions are recruited, tasked and empowered to fulfil their duties. Given that this report is being compiled in a moment of transition and flux much of the data highlighted and assembled is anecdotal and based on secondary sources. We have wherever possible used as much official data as possible, but there is both a lag in the publication of information, and some secrecy and confidentiality surrounding the processes under review.  

5.  The brief for this paper is to focus on the ‘revolving door’ with a specific focus on regulators, in particular in the financial sector.  It will review both existing concerns related to the ’revolving door‘ phenomenon and emerging concerns related to the crises in the financial sector. Moreover, the paper will review frameworks (e.g. rules, procedures, policies) in place for fostering integrity, avoiding conflict of interest and maintaining trust as well as highlight lessons learned in addressing existing and emerging concerns.

6.  The paper is based on the stocktaking of problem areas and good practice framework identified in the OECD report on Post-Public Employment: Good Practices for Preventing Conflict of Interest. The paper will undertake a critical review of types of  concerns, risks to integrity and existing frameworks specifically related to:

•  The movement of former regulators and decision makers to lucrative private sector positions, in particular in the regulated sector; and
•  The appointment of private sector executives and lobbyists to governmental positions, in particular in financial regulators.

7. The primary aim of the paper is to help policy makers and decision makers in OECD countries and beyond to:

•  Understand the extent of the problem caused by ‘revolving door’ in regulators, in particular in the financial sector (e.g. banking, insurance, securities, etc); and 

•  Support informed policy debate on concerns and alternative options for solutions by highlighting
their strengths and weaknesses and supportive conditions in context.

... Read more

Login or Register to post comments