Britain’s ‘revolving door’ culture is relatively unregulated – but is change on the horizon? | Hogan Lovells

The term “revolving door” refers to the transfer of individuals from positions in the public service to positions in the private or voluntary sector, and vice versa. This is fundamentally a good thing because of the shared understanding it brings and the positive impact it has on public policies. It is, however, important that there are appropriate checks and balances to ensure fairness, and that a commercial advantage is not unfairly given to those who abuse information or public access.

In the UK, the revolving door is primarily governed by the Business Appointment Rules for Civil Servants. The rules currently require government ministers, special advisers and certain other officials to speak to the Business Appointments Advisory Board (“ACOBA”) before moving to the private sector. When company appointment rules apply, they do so up to two years after leaving the public service, depending on seniority. Typically, there is a two-year ban on lobbying the government on behalf of a new employer after leaving the public service. This means that the former public official should not engage in communications of any kind with the government (including ministers, special advisers and officials) with a view to influencing a government decision, policy or the award of a contract in relation to their own interests or the interests of the organization for which they are employed, or for whom they are under contract or with whom they hold office. This definition excludes contacts which are not intended to influence the government, for example purely social gatherings at a time when no decision or policy is at stake.

Government ministers, special advisers, and officials at permanent secretary or equivalent level must apply to ACOBA under the rules, but a more junior official will only be required to do so in the event of a conflict of interest. special interests. In this context, the Independent Committee on Standards in Public Life (the “Committee”) concluded that some ministries have taken a “sloppy“Approach to the application of the rules and it is likely that”predator“Companies are targeting more junior officials.¹ In addition, the rules currently do not contain any sanctions and ACOBA’s contribution is purely advisory. As the Committee noted, “[i]Instead of any formal sanction, transparency has become the main mechanism by which the rules are respected by ACOBA”.²

Are there any significant legal restrictions on the revolving door? Not really. Under the UK Bribery Act (“UKBA”), it is illegal to promise a financial benefit in exchange for the improper performance of a relevant function or activity. The UKBA could therefore apply in theory. But UK prosecutors have so far shown no interest in investigating the abuse of the revolving door. Other avenues of criminal liability – such as the common law offense of misconduct in public office – are anachronistic and confusing and have not been used in this context.

The United States has historically taken a harsher line on the revolving door. Federal law prohibits former public servants for life from communicating with or appearing in front of an agency or court about a matter in which they have substantial involvement. leave the public service. The US Foreign Corrupt Practices Act (“FCPA”) has also been more actively enforced in this area than the UKBA. The SEC and the DoJ have reached resolutions with several large companies regarding questionable hiring practices. The FCPA violations have included “relational hires” or “referral hires” at the request of government officials in exchange for government work.

On November 1, 2021, the Committee released its final report on the “Standards Matter 2 review”, recommending sweeping changes to the revolving door rules. The Committee’s report noted “widespread discontent”On the effectiveness of UK business appointment rules.³ In particular, she criticized the current emphasis on the direct regulatory, political or commercial relationship between a candidate and a hiring company, which neglects the possibility for a civil servant to initiate a policy favorable to an entire sector with a view to employment. In this one.⁴ The Committee also strongly criticized the absence of significant sanctions, which has the consequence that “ACOBA is not a regulator or a watchdog”.⁵ The report made a number of strong recommendations:

• Company appointment rules should prohibit appointments for two years where the candidate has had significant and direct responsibility for policy, regulation or the award of contracts relevant to the hiring company.⁶
• Company appointment rules should be changed to allow ACOBA and government departments to ban lobbying for up to five years.⁷ The Committee’s specific concern is not the former civil servant catching up with a former colleague in the bars at Westminster, but former civil servants using contacts made in government to provide privileged access or information to a private sector company in exchange of financial reward. In this context, inside information can remain valuable for more than two years; whether a longer ban is justified will depend on the nature of the post held by a government candidate. The ban on lobbying should include a ban on all working for lobbying firms, that is, working for public relations firms whose main objective is to influence public policy and the law.⁸
• The government should make compliance with the appointment rules of companies a binding contractual obligation for ministers, civil servants and special advisers, and define what the consequences of a breach of contract may be. Possible sanction options may include requesting an injunction prohibiting the exercise of a certain professional mandate, or recovering part of the pension or severance pay of an office holder.⁹
• ACOBA should assume a formal regulatory function. The decisions of the Committee should be directly binding on the candidates, rather than a recommendation to the relevant minister, prime minister or permanent secretary.^ten
• ACOBA should have the power to initiate investigations into potential violations of company appointment rules and be granted additional resources if necessary. The Cabinet Office should decide on sanctions or corrective measures in the event of a violation.¹¹

The Committee’s recommendations would mark a radical departure from the current approach. While there is unlikely to be the political will to implement all of the Committee’s proposals, modest reforms may occur, such as making ACOBA decisions binding on applicants. And whether or not the UK legal framework is changed, it is still prudent for companies to adopt a best practice approach to recruiting, requiring applicants to disclose any employment or past connection with the public sector, including due to the wide territorial scope of the FCPA. In light of recent cases where officials have broken company appointment rules, it is all the more important for companies to ensure that potential employees proactively engage with ACOBA, are properly open and transparent about their future role and accept no appointment. until authorization has been received.

The revolving door is unlikely to close anytime soon, but it still makes sense to be at the forefront when it comes to both controlling new hires and making sure they follow through. the rules.