European Union (EU) Ombudsman Emily O’Reilly decided on Monday 6 July to open an investigation into a contract concluded by the European Commission with the American company BlackRock, which is the world’s largest financial institution powerful in the world – it has some 6,300 billion dollars (5,500 billion euros) in assets, a third of which in Europe.
In charge of monitoring the functioning of the EU, Emily O’Reilly had, since April, received a complaint from MEPs worried that this overpowered fund, which is notably a shareholder or author of audit missions for banks, is entrusted with a mission relating specifically to banking supervision. And more precisely on the incorporation into it of “environmental, social and governance factors”.
The suspicion of elected officials was reinforced by the fact that BlackRock had won this market by entering an offer at a cost much lower than that of its eight competitors. What fuels the idea that “It is not the gain on the service that interests the company, but the fact of participating, upstream, in defining the criteria for its future investments”, as noted by French MEP Pascal Durand of the Renew Europe group and initiator of a written question to the Commission.
“Blatant conflict of interest”
In mid-June, Valdis Dombrovskis, executive vice-president of the Commission, in charge of financial stability, replied to this inquiry, co-signed by 84 MEPs. According to him, the contract was established on the basis of the best value for money. And the Latvian official said there was nothing to question BlackRock’s ability to “Provide the service offered”. The Commission, he continued, therefore did not “No valid reason” to cancel the adjudication procedure but “Will remain vigilant”. And the final report will be made public, said Dombrovskis.
“It is not enough, it does not raise concerns about the flagrant conflict of interest”, said MEP Damien Carême of the Greens group. For him, impossible to believe in the “Physical segregation” between BlackRock’s research services and those responsible for its investments, as the Commission promised.
In May, the collective of journalists Investigative Europe added to the confusion by noting that Mr. Dombrovskis, at the origin of a pan-European product of individual retirement, a new category of retirement savings for employees of the public and the private sector, had entrusted to the American company the management of the savings of the participants involved in a test phase.
For Pascal Durand, the questions raised by these cases question both the effective application of the Green Deal for the financial sector and the role of an extra-European player in the political guidelines defined in Brussels.