EU considers tightening law after investigation into BlackRock deal

BRUSSELS, April 19 (Reuters) – The European Commission has said it will consider forcing companies to disclose conflicting interests when bidding for EU-funded contracts after conducting an inquiry into their appointment to a division of BlackRock had to help with the development of green banking rules.

The European Union regulator criticized the Commission in November for having tasked the Financial Markets Advisory (FMA) arm of BlackRock, the world’s largest asset manager, with preparing a study that would inform the EU’s plans to integrate sustainability into banking supervision rules.

European Ombudsman Emily O’Reilly did not ask the Commission to terminate the contract, but said it should have done a better job of examining BlackRock’s bid motivations, pricing strategy and its own conflict-of-interest measures.

In a response published on Monday, the Commission said it would consider proposing changes to EU law to oblige companies and organizations to disclose conflicting interests when bidding for EU-funded contracts.

In addition, the provision of further guidance to support staff involved in public procurement will be considered.

“The Commission is considering possible clarifications relevant to the procedure to be followed when a professional conflict of interest could be at stake in a procurement process,” it said.

The Ombudsman welcomed the EU executive’s response, which he felt reflected its own proposals. The ombudsman will monitor the proposed changes, it said.

BlackRock declined to comment.

Damien Careme, one of the EU lawmakers who complained to the Ombudsman about the BlackRock contract, said the Commission should go further and exclude companies from bids when the interests of their projects or those of their customers conflict with those of the sector in question stand the tender.

“That’s common sense,” Careme said.

BlackRock beat out eight other bidders with its €280,000 bid – around half the estimated value of the EU contract. The asset manager said it will ensure “physical separation” from the FMA to ensure no information leaks into other areas of its business.

The Commission is expected to propose an update of EU financial regulation by the end of the year.

Reporting by Kate Abnett, editing by Paul Simao

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