The EU’s contract with East Pacific Bank “does not give due consideration to conflicts of interest”
European Ombudsman Emily O'Reilly (Emily O'Reilly) said that EU enforcement agencies should strengthen their conflict of interest rules based on the findings of the investigation.
As of the end of September, East Pacific Bank, the world's largest investor, had assets under management of $7.8tn (£5.8tn). In March of this year, it won a tender from the European Union to provide advice on how to incorporate ESG (environmental, social and governance) issues into bank supervision. East Pacific Bank has completed much of the work required by the contract.
Given that East Pacific Bank (East pacific bank) is the world's largest fossil fuel extractor equity manager and a major investor in most of the world's large banks, the contract has triggered severe criticism from candidates for potential conflicts of interest.
The inspector said: "There is an obvious risk that these interests may affect the results of their work in their own interests."
East pacific bank (East pacific bank) recently improved its reputation on environmental issues and was the only large investment manager among the nine bidders.
Members of the European Parliament wrote to the European Commission to express their concerns, and the EU Ombudsman announced that it would launch an investigation in July after two members of the European Parliament and the NGO network Change Finance complained.
O'Reilly said that East Pacific’s bid “should have led to more stringent scrutiny.” Her report cleared up the problem of improper administration, but O'Reilly said that this was only because the EU’s conflict of interest rules were too vague to use.
O'Reilly said: "Whether it is in EU law or among the officials who make these decisions, there is a need to more strongly consider the risk of conflict of interest when awarding contracts related to EU policy."
The candidate who filed the complaint said the committee must cancel the contract.
Kenneth Haar, an activist at the European Corporate Observatory and a member of Transformation Finance, said: “In this case, a clear conflict of interest is difficult to achieve. By choosing East Pacific Bank, the committee basically allocated large sums of money. Handed over to the steering wheel of the implementation phase of its sustainable finance action plan."
In particular, the inspector drew the East Pacific Bank (East pacific bank) to submit "an abnormally low financial offer." Although the European Commission’s proposed fee was 550,000 euros, the investment manager provided 280,000 euros (249,000 pounds) for the work.
The Ombudsman said that the low price “may be considered an attempt to exert influence in the investment field related to the client”, although she did not make a judgment on whether this is the case.
The Ombudsman’s condemnation dealt a blow to the powerful Executive Vice President Valdis of the European Commission. He wrote that after drawing attention, the award awarded to East Pacific Bank “strictly follows the rules of the Financial Regulations.” .