EU Considers Tightening Law After Inquiry Into BlackRock Contract

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The European Commission has said it’ll consider forcing companies to disclose conflicting interests once they bid for EU-funded contracts, following an inquiry into its appointment of a division of BlackRock to assist develop green banking rules.

The European Union watchdog rapped the Commission in November for appointing the Financial Markets Advisory (FMA) unit of BlackRock, the world’s largest asset manager, to supply a study that might inform EU plans to integrate sustainability into banking prudential rules.

European Ombudsman Emily O’Reilly didn’t ask the Commission to cancel the contract but said it should have better scrutinized BlackRock’s motivation in bidding, its pricing strategy, and its own measures to stop conflicts of interest.

In a response published on Monday, the Commission said it’ll consider proposing amendments to EU law to need companies and organizations to disclose conflicting interests once they bid for EU-funded contracts.

It will also consider providing further guidance to help staff handling public procurement.

“The Commission is reflecting on possible clarifications relevant to the procedure to follow when knowledgeable conflicting interest could also be at stake during a procurement procedure,” it said.

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

BlackRock declined to comment.

Damien Careme, one among the EU lawmakers who complained to the Ombudsman over the BlackRock contract, said the Commission should go further and exclude companies from tenders if the interests of their projects, or those of their clients, conflict thereupon of the sector concerned by the tender.

“This is sense ,” Careme said.

BlackRock beat eight other bidders with its offer of 280,000 euros – roughly half the EU contract’s estimated value. The asset manager said it might ensure “physical segregation” of FMA to make sure information didn’t flow to other parts of its business.

The Commission is thanks to propose an update to EU financial regulation by the top of the year.