Corruption overflow in the policy-making environment

This post is dedicated to Lawrence Lessig as a tribute to his decision on 17 June 2007 to switch his focus from the intellectual rights environment struggles to the fight against corruption in decision-making. I am sole responsible for the contents of the post.

This is an unusually long post, even by the standards of this blog. I urge you to read it to the end, the interesting stuff is spread all along.

On Monday 7 July 2008, two committees of the European Parliament are going to vote on proposed amendments to the telecomm packet regulation, in what is but a provisional step of a skirmish in a much bigger struggle on the regulatory environment for intellectual rights and freedoms. This is a good time to take a step back and look at another much bigger problem.

A French presidency of the European Union has just started. The last one was in the first semester of 2000. One of the events of the presidency in the cultural domain (see page 20 in linked document) was organised by Valéry Fréland, then working in a directorate of the Ministry of Foreign Affairs and Sylvie Forbin. She was then General Director of Eureka Audiovisual, an intergovernmental programme funding industry actions in the domain of audiovisual media, after a career as a diplomat, including within the French Permanent Representation to the EU. There is not much to report about this event. However, 8 years later, the same two characters participate into what has now become the worst illustration of how specific interests can corrupt decision making. Not by buying it (though we will see below that money plays a role). But by eroding all borders between policy that is made to serve specific interests and the search for public interest. This is much worse, as for-profit corruption only undermines some parts of governance, while decision-making corruption undermines democracy itself.

At the centre of this story of corruption lies one company, but please, don’t think it is a unique case (others will be quoted below): it is just the most impudent and shameless one. This company is Vivendi (formerly Vivendi-Universal). Our story takes off in the Spring 2002 but it roots are older. In 1999, Janelly Fourtou is elected as Member of the European Parliament (then UDF/F/EPP). Her husband is Jean-René Fourtou, a key figure in the French industrial gotha where the CEOs of the largest companies are co-opted in France. At the time, he is the CEO of Aventis, the company resulting from the merger of Rhone-Poulenc and Hoechst. Mr. Fourtou leads the transition of Aventis away from pure chemistry towards pharmaceutics and GMOs (through its subsidiary Aventis Crop, later sold to Bayer). It lobbies agressively for patents (including gene sequence patents). In the Spring of 2002, Jean-René Fourtou quits Aventis. A few months later he becomes President and CEO of Vivendi-Universal (VU in the rest of this text), where he is nominated to clear the mess left by its predecessor, Jean-Marie Messier.

Also in 2002 VU acquired Sylvie Forbin as chief lobbyist (direction of institutional affairs is the classical title). There are indications that she already worked for VU in September 2001. The practice of recruiting high level civil servants as lobbyists is not a monopoly of VU. Microsoft has a remarkable track-record in this respect: in 2002 it recruited the Internet and Trade Policy Adviser (italics parts corrected on 8 and 22 July 2008) in the European Commission Delegation to the US to become Government Affairs Manager. Still in 2002, Microsoft also recruited Detlef Eckert, then head of the policy unit of DG Information Society, to make him Director responsible for the implementation of the Trustworthy Computing (TWC) initiative for Europe, Middle East and Africa (EMEA). Critics have translated Trustworthy Computing to actually mean Treacherous Computing. Detlef Eckert left the Commission on personal leave, and came back in 2006 as Senior Advisor to the Director General “Information Society and Media” of the European Commission.

Between his departure from Aventis and his arrival at VU, Jean-René Fourtou and his wife invest together large assets (probably originating from his departure bonuses) into a foundation hosted by the Fondation de l’Institut de France. They keep the raw property of the funds, leaving the usufruct to the foundation. This is a classical and legal mechanism that permits to fund a foundation while lowering one’s tax on wealth (such a tax exists in France). The foundation supports cultural exchanges between France and Morocco, where the Fourtou family has a house. In October 2002, Mr. and Ms. Fourtou instruct the foundation to arbitrate (sell) all its assets and buy 1.1 million convertible options issued at this time by VU, for a total amount of 15 million euros. In early 2003, Ms. Janelly Fourtou succeeds in being designated as rapporteur on the first IPR enforcement directive (since then adopted as 2004/48/CE), whose provisions are of a major interest for VU (in reality, the JURI committee of the Parliament discussed of the choice of the rapporteur as early as October 2002, on the basis of information on the future deposit of the text). The directive is adopted in April 2004 after some debatable tricks. The European Commission had decided (after fierce internal debate) to exclude non-commercial infringements from the scope of the directive defined in article 2.1. Ms. Fourtou proposed a compromise where she would reinclude non-commercial infringements against the deletion of patents from the scope. She reincluded patents in the scope at the last minute, so at the end we got both goodies. During the same period, Ms. Fourtou also tables some of the worse amendments to the software patents directive, later rejected by the Parliament.

In August 2004, The VU holding is granted by the French government the world consolidated benefit statute. This statute, whose granting is discretionary, opens for VU the possibility of a reimbuserment of tax credits for an amount of 3800 millions euros in exchange for neglectible counterparts. In practice, VU was reimbursed a little more than 500 million euros for each of the 2 next fiscal years (I don’t know for later years). Mr. Fourtou later precised that the negotiations towards obtaining the statute were initiatied only in Summer of 2003, an important point since if he had been informed in October 2002 of the possible granting of the statute, he could be charged for insider trading when buying the raw property of 15 millions euros worth of VU options (20 millions if one counts a further 5 millions acquired one of the couple’s sons). An enquiry was opened by the French financial market authority, that concluded there was no such insider trading.

Still in 2004, Mr. Fourtou, made President of the International Chamber of Commerce, launches a global lobbying inititiative: BASCAP for Business Action to Stop Counterfeiting And Piracy. He invites ICC members in 80 countries to lobby by all means to obtain stronger regulation at all levels from nations to international treaties. This initiative led to the ACTA trade agreement proposal. In May 2004, Ms. Fourtou is re-elected to the European Parliament, and her declaration of financial interests is still empty of any mention.

In November 2005, when they become convertible, the VU options bought by the Fourtou family are worth 20 millions more than 3 years before. Have they been converted? Did Mr. and Ms. Fourtou keep the raw property of the options or the product of their conversion? The answers to these questions do not seem to have been reported. But November 2005 sees also the last details of the DADVSI French law transposing the EUCD (2001/29/CE) directive being finalised. Sylvie Forbin, sitting in a committee of the French High Council on Copyright (CSPLA) tables what will remained known as the Vivendi-Universal amendment. It creates the possibility to impose DRMs on software providers. The legal specialists of CSPLA do some legal beautification on the text, removing its most obviously illegal aspects, and CSPLA proposes the amendment to the governement. As public outrage roars, the governement decides not to include the amendment in the law proposal. MPs of the governmental majority table it during the parliamentary debates. The minister of Culture promises not to support it … and then supports it during the debates. The amendment is now part of French law. Ms. Forbin has done her work[1].

It is then for Ms. Fourtou to act again. When the first IPR enforcement directive (2004/48/CE) was adopted, the provisions regarding criminal sanctions for IPR infringement were not included, but a hook was inserted for future work on the matter. These provisions were part of the Commission proposal, just as they are part of the ACTA draft commercial agreement, Mr. Fourtou lobbying’s baby. They went well further than the limited provisions included in TRIPS, and included goodies such as criminal sanctions for abetting or inciting to infringement of IP. Frustrated of the non-inclusion of compulsory minimum criminal sanctions in the 2004/48/CE directive, the IPR lobbies kept pushing for a new text. In July 2005, the Commission had issued directive and Council Decision proposals. Ms. Fourtou again volunteers and gets designated in 2006 as rapporteur for the Council decision part. An uncertainty on the legal basis for the texts in relation with the European Court of Justice case law led the Commission to provisionnally repeal its proposals and spared us a new blow to democracy. Let’s wait to see if we are truly spared it. A new proposal will soon be issued by the Commission, and in case it does not grant to the majors what they dream of, there is still the ACTA commercial agreement proposal to do “better”.

Now it becomes better and better. In September 2007, the new French minister for Culture and Communication, Christine Albanel, acting on orders from President Sarkozy, designates Denis Olivennes, President and CEO of FNAC, operator of one of the for-pay authorized download platforms, to head a committee in charge of reaching agreement between right holders, technology providers and ISPs on how to fight “piracy”. Denis Olivennes has a reputation of having sympathy for the left, and is the author of “La gratuité c’est le vol” (Free of charge is stealing). The committee agrees (provisionnally) on a proposal for a three-strike approach, which will be later turned into the present “Creation and Internet” law proposal. As such a proposal is in obvious contradiction with both the French and the European legal frameworks for privacy, technology neutrality, and non-liability of providers, it becomes essential to be able to remove these obstacles in the European legislation (which imposes itself to the French one).

Things don’t start well for the majors and their allies in some collecting societies. The European Parliament adopts in April 2008 an amendment that rejects the final step of three-strikes approaches (banning from the Internet) as contrary to fundamental rights. It is not that Ms. Fourtou and Ms. Forbin have disappeared. Ms. Forbin has toured MEPs on the eve of the vote. Just after it, Ms. Fourtou and 2 other MEPs who have recently left the French center-right to join President Sarkozy’s UMP party issue a press release denouncing a “very strong lobby of internet users associations” as cause to this anomalous vote. See below for more on the “everything is a lobby” argument to justify corruption of policy-making. The interests in cause will not be destabilized for long. A month later on radio, Pascal Rogard, head of the movie rights collecting society threatens Guy Bono, one of the authors of the amendment: “You have taken us by surprise, but now, be confident that you will hear from us” (my translation).

At some unknown (to me) point, Sylvie Forbin turned to be even more of an asset for Vivendi: she is the wife of Pierre Sellal (link to for pay access contents), Permanent Representative of France to the European Union. The “Perm Reps” are the real “masters” of the European Union. For what concerns the European Council, most of actual decisions on the fate of the European Commission policy proposals are made in their committees (COREPER), the Council of Ministers then formally adopting them. In the French Permanent Representation, Valéry Fréland (see above) is now conseiller for culture and audiovisual matters, a post that Sylvie Forbin occupied many years ago. He will turn to be an unusually active lobbyist for the -not yet formulated by the Commission- proposals for a European level three-strike approach. He visits MEPs, including the authors of the Rocard-Bono-Fjellner multi-party amendment. At this stage, the IP lobbies define a new strategy: let’s make things so complicate that nobody will understand them. They sprinkle Newspeak amendments here and there in the revision proposals for 5 directives constituting the telecom packet (the fundamental regulation of telecommunications in Europe). Newspeak in the sense that their effect is opposite to what they purport to aim at for an innocent reader. Here we are today. Civil society groups exhaust themselves in debunking texts that are so intricate that it takes 6 indirections in other texts to vaguely figure out what they mean. We will lose our time if we don’t clear the policy making corruption mess.

In order to have a chance at it, we must realize that their is a fundamental difference between:

  • influence of policy orientation by advocates of particular visions of the general interest, and
  • corruption of policy-making by private or organisational interests

Trying to influence policy by arguments on where the public good lies is core to democracy. Yes, even the civil society organisations have to stand clear on any possible conflict of interest, including the simple interest of their own survival. But the misdemeanours and improperties that have been described above are a more specific danger. They undermine the standing of the democratic idea itself. We should expose them repeatedly, any time we are faced with one of their authors.

We should consider them in all parties. Ms. Anne Hidalgo worked in Human Resource Management at the predecessor of Vivendi (Compagnie Général des Eaux) in 1996-97 when that company had already massively diversified its activity in the field of media. Whether for this reason or not [italics parts added on 7 July after I was pointed to the fact that the presentation induced the reader to belive there was causality, when there is no proof of it], she has since strong links with the movie production interests, and has firmly held by her responsibilities in the author rights group of the Socialist Party and as its National Secretary for culture. After the surprise vote of an amendment legalising P2P exchanges in the French Parliament on 20 December 2005, she headed the counter-strikes (against global licensing) directed at the socialists. She is rumored to be a promising politician. She would have even better chances if her party removed her from any responsibility connected to the production of the fundamental regulatory framework for creative activities and access to culture. In 2003, Microsoft recruited Thaima Samman, former parliamentary assistant of one of the leaders of the socialist party, as chief lobbyist for France. The socialists should have understood that she was recruited not only because of her undebatable lobbying talents (she was also chief lobbyist in France for the tobacco firm Phillip Morris), but precisely because of her links with them. What should have they done? Simply refused to have her represent Microsoft in any meeting or debate they organised.

Addendum a few hours later: in an environment where it is predominantly large moneyed interests that are heard, it is natural for public interest groups to search for sympathetic views in industry. Even more so when some industry players’ activities positively contribute to their vision of the public interest. However, there is a risk attached to this search. The risk of becoming part of one policy-making corruption for the sake of fighting another one. Often, public interest groups conduct a form of diplomacy with industry, and there is agreement to push for some points in the public agenda. This is OK, but only if the public interest groups make clear that they do not relinquish their views on the points of dissent and make it clear publicly. We are happy that most of Europe’s ICT-related industry does not want filtering mandates for the Internet. Great, but we have to make clear that we do not find OK to agree with them in China. ISPs do not want to be forced to conduct guerillas against their customers. We don’t want them either, but we also disagree on some ISPs discriminating against P2P traffic in terms of quality of service. We do not want to abstain from calling for a flat-rate base contribution by Internet user to the funding and reward of expression and creation distributed on the internet with freedom of non-market exchange between individuals, even though this maybe not be the preferred approach of some industry players who are otherwise sympathetic to our cause. How much public interest groups are influenced by their industry contacts or alliances must remain an object of public scrutiny. And what about people like me who own a (small) company and at the same time are policy advocates. Just the same. I may tell who wants to listen how hard I try to avoid my visions of public interest be influenced by the specific interests of my company. But it will always remain an item to be judged by others. One often hears that free software and free culture groups always fight on details, always criticise each other. But this internal exigence, this permanent debate about where to go and how is their greatest asset.

[1] The committees of CSPLA include some civil society representatives. However, its reports did not reflect their views in this case. The CSPLA later tried to recover some public standing by taking a more open view on issues where collision with its large private interests representatives was less immediate, such as the voluntary sharing of on-line contents. It could be why CSPLA was sided in terms of elaboration of the next law (see below).

This post is also available in: French

No Comments

Leave a Reply

Your email is never shared.Required fields are marked *