The European Ombudsman, Emily O’Reilly, made a statement on May 11 that the European Banking Authority (EBA) should have disallowed Adam Farkas, its previous Executive Director, from assuming the position of CEO of the Association for Financial Markets in Europe (AFME), which is one of the main lobbyist groups of the financial sector. An investigation into this matter was subsequently launched after receiving complaints made by several MEPs and the Change Finance coalition. The European Ombudsman is an independent authority that examines complaints made against the EU. As such, Emily O’Reilly has found that the EBA should have rejected Adam Farkas’s move from the EBA to the AFME.
The European Parliament was among those that filed a complaint. They advised that the EU’s institutions cut off any communication with Adam Farkas for two years. Emily O’Reilly stated that his job movement created clear conflicts of interest that the EBA failed to address. Although it had put several restrictive measures in place on Mr. Farkas’s activities, they were not able to effectively enforce them, especially when it came to Mr. Farkas’s potential use of the EBA’s confidential data, which he had regular access to when he served for nine years as executive director of the Paris-based group.
For these aforementioned reasons, O’Reilly found that Adam Farkas’s move from the EBA to the AFME was a case of maladministration and that rejecting this job move should have taken place. Moreover, O’Reilly also uncovered a second case of maladministration by the EBA due to it taking ineffective action in revoking Mr. Farkas’s access rights and privileges to the confidential information after he formally resigned from his position as executive director on August 2 of last year. His privileged access to such information was only removed on September 23.
The EBA has since responded and stated that they would take O’Reilly’s findings and recommendations into account, particularly that the EBA set clear guidelines in place to determine when it should disallow certain job moves. Since the Ombudsman’s findings, the EBA has made assurances that the measures they have put in place to reduce the conflict of interest have been appropriate and effective.
However, despite this, the Ombudsman did point to one significant factor that still remains, which concerns Adam Farkas’s knowledge of the proprietary information he previously had access to, which can only be assumed to be considerable.