Last month, after years in the works, Directive No 14 (Governing Framework for the Management of the Revolving Door Policy for Public Employees) was finally issued by the Office of the Principal Permanent Secretary. The new rules are an attempt to protect the integrity of both the private and public sector by setting out that – for two years after leaving office - public sector employees in regulatory or inspectorate functions cannot join a private company or NGO with which they had worked during the last five years of their appointment.
While the policy has been broadly welcomed, it has also aroused some degree of controversy due to its omission of certain high positions within the public sector which could lead to lucrative private sector opportunities. Here, Dr George Vital Zammit, a senior lecturer at the University of Malta’s Department of Public Policy, outlines the strengths and weaknesses of the Directive.
1. Why is a revolving door policy essential for the island, and where do you feel the new Directive may be strengthened?
The policy is overdue. Malta being a small country, offers a limited supply of roles that require a niche expertise, and if you add to that not only the knowledge of the sector, but also the implying networking capabilities, it is easy to exploit such skills for commercial advantage if a transition is made from public to private enterprise. Moreover, the absence of such a policy would cast doubt on the integrity of regulatory bodies if revolving doors are allowed, unhindered.
The aim here is to avoid what is referred to as a ‘moral hazard’ or rather, an environment where the spill-over from politics into business (but even vice versa) creates abusive situations of unfair access. People stepping down from high positions are poised to provide privileged access to key industrial sectors, a situation which can lead to regulatory capture. This Directive is a solid effort to address this, in particular the appointment of a Governing Board that will monitor the implementation of the policy. The Directive can be strengthened by including other key sensitive posts in public service.
We need to keep in mind that the legal trajectory of the policy was not straight forward either. Back in 2015, the Court had ruled against any such clauses at law, arguing that it was a restraint of the trade clause, but the Court of Appeals overturned it claiming it was a reasonable condition accepted voluntarily by the employee. So what we have is a framework that aims to put some order and restore trust in public service.
2. The revolving door policy is only applicable to entities or positions with a regulatory or inspectorate function. Do you agree that this should be the case and, if not, why not?
The Directive is a good start. Like any other policy, it will go through its own cycle which will inevitably require constant evaluation. This evaluation will need to determine how the policy is fulfilling its objectives, and where not, establish the causes. It is clear, that the policy is not comprehensive, with public entities such as Malta Enterprise or Wasteserv Malta, not listed in the Annex since they are not Regulatory Bodies - notwithstanding the sensitivity of high positions within such organizations.
We need to keep in mind that the movement of people is two way – from public to private, and from private to public. In the case of the latter, the risk could be even higher, especially if one does not divest him/herself completely from private interests that could pose a conflict. Recent political history in Malta has shown us that movements from the business world into politics have been contaminated by more than suspicious conduct.
There is a consideration which ought to be done if the policy is widely extended. Given the limited labour supply of such expertise, such knowledge would either have to be imported from overseas or be deprived of.
Rather than the parameters of the new policy, what is important is the spirit behind it. People who previously occupied public office, or are moving into it, should behave with integrity and discretion. The actions taken by citizens who make the move to private enterprise, should never be a precursor to doubt and suspicion, or one that erodes trust in public office.
3. Certain posts are not included in the list of roles from which it is now prohibited to transition directly into the private sector. This is despite the fact that such positions have lucrative trade-offs in the private sector. Do you think all public sector positions which may have these lucrative private sector trade-offs should be included in the revolving door policy and, if not, why not?
Yes, eventually for the policy to acquire credibility, it will have to include all such positions with lucrative private sector trade-offs. Officers holding high positions within regulatory bodies are not the only ones that can be involved in such exchanges, and should not be singled out. As I mentioned earlier, I support an incremental approach wherein the Directive will be tweaked and adapted. This, is in line with all the provisions regulating the public sector, provisions which time to time are amended to reflect new realities that emerge.
But the Directive as formulated, still does not address the elephant in the room.
We are here discussing the merits (or lack) of legislation that regulates the engagement of people leaving public employment in key roles. But we need to look at moves by people in politics who make the transition to interest groups or private enterprise. The current Standards in Public Life Act does not cater for revolving doors for Ministers and we all know what influence elected officials exert, especially if they have occupied Ministerial roles. Recent history is replete with politicians that have joined lobby groups, much to the chagrin of the general public, that deemed such moves with suspicion and mistrust.
In March 2020, within a few weeks, Dr Marthese Portelli resigned from Member of Parliament and soon joined the Malta Developers’ Association, an interest and foremost lobby group in Malta. At the international level, when Juan Manuel Barroso, former President of the European Commission (2004-2014) joined Goldman Sachs in July 2016 to become a Brexit adviser, an avalanche of criticism ensued. Goldman Sachs’ role in the Greek debt crisis, and Barroso’s subsequent engagement, was viewed with anger and resentment. Tony Blair, former Prime Minister for Britain (1997-2007), also took full advantage of his role as international leader when he signed a lucrative contract as adviser to JP Morgan. So one can observe here, that by targeting public officers only for revolving doors, we could be missing the woods for the trees.
But the Directive sets new controls that were hitherto absent. I am confident that this is a positive step to mitigate any perception of favouritism towards special interests, even though more will need to be done. Regulating revolving-doors is not about closing doors. Movement of skill and talent between public and private sectors remains an essential component to bring innovation into government and business. It is the unethical leverage, privileged access and insider information, which can lead to unfair competition and the erosion of good governance, that need to be addressed.