ECB Rebuked by EU Ombudsman for Draghi's Role in G-30 Club

(Bloomberg) -- Mario Draghi’s attendance at meetings of the Group of 30, a behind-closed-doors gathering of the world’s financial elite, constitutes maladministration and should stop, according to the European Union ombudsman.

The European Central Bank president has failed to demonstrate that participating in the forum of executives, academics and policy makers serves the public interest, Emily O’Reilly, the EU citizens’ advocate, said in a statement on Wednesday. Her recommendation follows a yearlong inquiry and applies to all future heads of the ECB and other members of its decision-making bodies.

“The ECB president’s membership of the G-30 could give rise to a public perception that the independence of the ECB could be compromised. For the ECB to allow this perception to arise over several years constitutes maladministration on its part.”

While the Ombudsman has no power to enforce its recommendations, its work has led to changes at the ECB before. When it asked for clarification in 2015 after Executive Board member Benoit Coeure disclosed market-sensitive information to a investors at a closed-door event, the central bank tightened its rules for meetings with investors.

An ECB spokesman said the institution had taken note of the report and will respond to the Ombudsman in due course. It has until April 15 to do so.

The latest inquiry was prompted by a complaint by Corporate Europe Observatory, which sparked a similar investigation in 2012 and 2013. While the earlier probe found that the ECB’s involvement in the G-30 was reasonable, the new inquiry concluded that the situation has changed as the central bank has since become the euro-area banking supervisor.

“The implied closeness of the relationship through membership -- particularly between a supervising bank and those it supervises -- is not compatible with the independence obligation of an institution such as the ECB for which independence is the hallmark of its operations.”

In her five-point recommendation, O’Reilly said the ECB could still participate in some G-30 activities to maintain its dialog with market participants if certain conditions are met. She recommended that such events should be subject to the same transparency measures as other meetings between officials and banking industry.

“This includes the disclosure of the agendas of meetings and non-confidential summaries of the discussions,” she said.

O’Reilly also called on the ECB to amend its rules to ensure Executive Board members are always accompanied by a staff member at all meetings -- rather than only ‘in principle’, ‘in bilateral meetings’ and ‘where practical’ -- and said explicit rules should also be adopted for the supervisory board.

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