Lobbying has exploded – but beware of the dangers of heightened public scrutiny
The Covid-19 pandemic has fundamentally changed the way we do business in Ireland.
s businesses of all shapes and sizes were grappling with increased state intervention, sweeping emergency measures, and access to state aid, they necessarily interacted more with the public sector.
The result has been an increased role for government in regulating day-to-day business life, with some commentators pointing to the return of “big government”.
This increase carries disclosure risks to which companies are not normally exposed.
Lobbying is one area where this trend of increased public sector engagement has manifested itself.
The annual lobbying regulation report for the year 2020 was released at the end of June by the state lobbying and ethics oversight body, the Public Service Standards Commission (Sipo).
He confirms that the pandemic has “sparked unprecedented volumes of lobbying in virtually every policy area”, with the number of returns increasing “considerably” during the second and third return periods of 2020 (i.e. from May to August and September to December, respectively).
In total, more than 11,600 lobbying statements were filed on the lobbying registry for 2020 – about 2,000 or 21% more than in 2019 – of which nearly 1,400 made specific reference to the pandemic.
While many of these returns were made by existing pre-Covid lobbyists, 2020 also saw many new lobbyists register for the first time, with the total number of registered lobbyists increasing by 7pc. In short, more of us are applying pressure and we have done so more frequently.
While undoubtedly productive, lobbying poses both regulatory and reputational risks for businesses. The Lobbying Regulation Act 2015 requires lobbyists to file statements about their lobbying activities three times a year (including a “nil” statement where no lobbying has been conducted). Non-compliance is a criminal offense that can lead to fines and, for individuals, prison terms.
There is a reasonably low bar for triggering enforcement, which can apply to any employer with more than 10 full-time employees, or any advocacy organization with at least one full-time employee. It also applies to individuals in certain circumstances.
The legislation covers a wide range of commitments that have become common since the onset of the pandemic, such as pushing for earlier reopening dates, asking for an increase in the number of customers allowed in a local, or asking for more funding.
Sipo had 12 ongoing investigations during the year 2020, as well as several hundred fines and requests for additional information.
The commission’s policy is to actively work with lobbyists to encourage compliance in the first place, rather than shifting violations to enforcement action.
However, its stated position is that it will be less lenient in more serious cases, most often prosecuting when lobbyists lobby without registering as required by law.
Reputational risk is often a bigger concern for many businesses than any penalty or sanction per se.
Lobbying scandals or controversies can be devastating to a company’s reputation.
Despite its positive and important role in the democratic process, there is a predominant view of lobbying as a occult and occult practice.
This public perception of lobbying, along with the increased focus on responsible and accountable businesses, means that there is less and less tolerance for any conduct that does not respect the spirit, as well as the letter, of the rules. lobbying.
Another risk for companies working with the public sector is that sensitive business information ends up in the public domain or in the hands of competitors.
The Freedom of Information (FOI) regime, the scope of which is often misunderstood, applies very broadly. Under this law, any member of the public can request the provision of documents to a public body and, unless there is an applicable exemption, they will generally be entitled to receive what they request.
Supported by the same objective of transparency as the lobbying regime, access to information requests can seize any documents that a company may have given to a public body, as well as the public body’s internal notes on meetings and phone calls with companies and other similar documents.
This is a risk that companies must carefully consider when deciding to engage with state entities. The freedom of information regime recognizes the important public interest in protecting confidential and commercially sensitive information.
However, the exemptions that apply to confidential and commercially sensitive information are complex, interpreted restrictively and not absolute.
A business may not even always be aware of or have the right to be consulted on a request and, in any event, often the application of these exemptions may depend on the circumstances in which the information was originally disclosed to the public body.
These risks are not new. They all existed before the pandemic. What is new, however, is how much more widespread and acute they have become due to the increased public-private interaction precipitated by the public health emergency.