Financial Industry: Conflict of Interest? Goldman Sachs hires former EU chief Barroso

Goldman Sachs (GS.N) has hired former European Commission President Jose Manuel Barroso to be an advisor and non-executive chairman of its international business, the U.S. bank said on Friday, as it grapples with the fallout from Britain’s exit from the European Union.

Barroso served as president of the commission, the EU’s executive arm, from 2004 to 2014 and was prime minister of Portugal from 2002 to 2004, Goldman said in a statement.

Goldman Sachs and other U.S. investment banks are seen as particularly vulnerable to Brexit since they rely on the EU’s “passporting” regime that allows them to offer services across the bloc while basing most of their staff and operations in the UK. Banks have warned that if their British outposts lose their “passports” they will have to move some employees and business units to alternative bases in the EU.

Goldman Sachs International, which Barroso will chair, is headquartered in London and of its roughly 6,000 staff fewer than 1,000 are based outside Britain.

Barroso is credited with helping the euro zone survive the 2009-13 debt crisis by establishing a financial rescue fund, enacting stricter budget rules and tightening financial regulation.

He was also a signatory to the Lisbon Treaty that revamped the bloc’s complex institutions after French and Dutch voters rejected a European constitution.

Barroso will help the firm as it advises clients on dealing with the ensuing “challenging and uncertain economic and market environment,” Goldman Sachs International co-chiefs Michael Sherwood and Richard Gnodde said in the statement.

The question which obviously immediately arises following Mr.Barroso's employment by the US financial giant Goldman Sachs is that of conflict of interest, given the stature former European Commission President Jose Manuel Barroso had in the EU and, consequently, the confidential information available to him about EU member nations classified financial and economic data.  
 
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What's acceptable to US is not always so to EU: Uber, Taskrabbit, other Silicon Valley darlings urge Europe not to screw their business

In a letter addressed to Dutch prime minister Mark Rutte, currently president of the EU, the companies argue that they are "remodelling whole value chains." They are also "challenging more established methods of product and service delivery, and those whose businesses are based on them."

Covering everything from dog sitters to car sharing, art rental and multiple room rental services, the representatives of the "European Collaborative Economy Industry" are concerned that the EU's discussions over the "digital single market" will be used by some to limit the development of the businesses by getting local authorities to impose new restrictions that protect the status quo.

"As innovators, we are challenging more established methods of product and service delivery, and those whose businesses are based on them," the letter argues. "This new way of operating is making better use of resources, allowing more efficient allocation of supply and demand, creating new sources of income, promoting micro-entrepreneurship and flexible working and offering greater market choice and convenience."

Uber has most famously run up against taxi regulations in France and Belgium that have seen it banned, fined, picketed and raided. AirBnB has also faced aggressive lobbying from hotel groups threatened by its ability to flood the market with more accessible and cheaper rooms.

We've not heard of the same tactics being applied in the dog sitting or yacht renting market but the letter is hoping to remind politicians that their job is help consumers through competition and their economies through efficiency rather than be swayed by arguments and lobbying from vested interests.

On the flip side, however, an increasing number of European countries are concerned about the risks that the new sharing economy companies may bring. Traditional taxi drivers go through a long-defined approval process that seeks to guarantee riders' safety: Uber's driver selection process has been repeatedly criticized for being significantly less robust.

Likewise, hotels have to meet and maintain strict licensing requirements that ensure visitors are kept safe. Numerous examples exist of problems with insurance or general safety have appeared with services like AirBnB.

As a result of these concerns, countries have asked the EC to look into things and issues guidance on how to apply current EU law to the new companies. It's these guidelines, and an upcoming meeting of the European Competitiveness Council that the companies are worried about.

"We urge Member States to support these objectives and continue to seek to ensure that local and national laws do not unnecessarily limit the development of the collaborative economy to the detriment of Europeans," it pleads.

AirBnB has written an accompanying blog post to the letter it which it asks the EU to "unite behind an agenda for the collaborative economy that secures sustainable economic growth for Europe."

How far that argument goes against the all-too-real fears of liability and damage to established businesses working under existing laws remains to be seen.

Read more: Uber, Taskrabbit, other Silicon Valley darlings urge Europe not to screw their business • The Register