NCBs are an essential component of the European System of Central Banks (ESCB; see art. 282(1) TFEU), and the Maastricht and Amsterdam Treaties led to revisions to all of their statutes. As a result, they qualify as implementing legislation and have significant bearing on how the EU treaties are interpreted. It’s very clear from reading NCB laws that status among the banks’ governing bodies is anticipated to extend beyond the axiologically neutral feeling of competence or eminence to include honesty and integrity. Some statutes (Denmark, Germany, Netherlands, Portugal, Slovenia, Sweden) do not address the qualifications of governors; nonetheless, the majority stipulate that individuals of exceptional moral character are the only ones eligible to hold positions on NCB governing boards.
Let us have a look at these laws found in various countries and we start with our country’s:
In Article 9 (3), we read ‘no person shall be appointed a director who […] under the law of any country has been […] convicted of a crime affecting public trust or of theft or of fraud.’
The Bulgarian statute, art. 11(3) states that ‘members of the Governing Council shall be elected and appointed only among persons of the highest integrity.’
In Article 7, Czech Republic we find that only a citizen ‘who is of integriy’ and ‘who has not been lawfully convicted of a criminal offence’ is appointable.
Estonia, Article 4(2) we read the Board is composed of persons ‘whose reputation must be unblemished.’
A person cannot be appointed as Governor if ‘convicted of an offence’ (Ireland, section 19);
Persons who are the object of a ‘conviction for a criminal offence’ cannot be appointed as Councillors (Greece, art. 14);
The Director ‘shall be selected among persons […] who meet the requirements of integrity’. Candidates ‘cannot have sustained a conviction, even one still subject to appeal’ (Italy, art. 16);
Bank commissioners ‘shall have a clean criminal record’ (Hungary, art. 79);
‘A member of the board must be a natural person who is […] of good repute [i.e.] has not been convicted by a final judgment of a deliberate crime’ (Slovakia, art. 7).
Legislation in Belgium, Spain, France, Croatia, Cyprus, Lithuania, Luxembourg, Austria, Poland, Romania, Finland, and the UK that does not specifically include integrity as a prerequisite for employment sometimes includes provisions for termination in the event of grave misbehaviour while in office. The aforementioned indicates that member nations have adopted the belief that major misbehaviour, particularly a criminal conviction, is incompatible with holding a prominent position at a central bank through their subsequent actions. Therefore, reading the criterion of “recognised standing” in art. 283(2) TFEU in a limited, axiologically neutral manner would seem incongruous. Since the ECB and NCBs are both a part of the same European banking system, if integrity is expected of those leading NCBs, then the same should be expected, at the very least, of the president of the ECB.
Additionally, I contend that the ECB’s own later instruments would not be consistent with the restrictive reading of “recognised standing.” The ECB passed Decision 2015/433 on the formation of an Ethics Committee and its Procedures in 2015. This reaffirms that “the ECB must strictly adhere to state-of-the-art ethics rules in order to safeguard the ECB’s integrity and avoid reputational risks, given the increased level of public awareness and scrutiny.” Furthermore, it states that “the ethics norms for members of [governing] organisations […] shall be appropriate to the addressees’ different responsibilities,” implying that those in positions of highest authority should adhere to the strongest moral guidelines.
‘as an institution of the EU, the ECB is required to serve the public interest and ensure the highest standards of integrity […] Adherence to these principles is a key element of the ECB’s credibility and […] a key prerequisite for safeguarding the reputation of the ECB’.
The Code of Conduct includes certain post-employment regulations even though its main focus is on officials’ honesty in performing their duties. For ECB officials to be exempt from any ethical requirements at the time of recruitment while still being held to the highest ethical standards both during and after their term of service would be inconsistent. High-ranking officials are required by the Code of Conduct to “lead by example and inspire employees […] to uphold [the highest ethical standards].” because it is believed that upholding these values is “essential to securing the trust of European citizens.” It is difficult to understand how someone who was found guilty of a significant fraud case could encourage others to act honourably and increase public confidence in EU institutions.
All things considered, it is quite difficult to defend the idea that the concept of “recognised standing” under art. 283 TFEU is devoid of ethical meaning. According to the accurate interpretation of this clause, it calls for, at the very least, a high standard of professionalism and honesty, both of which seem improbable in the case of someone found guilty of criminal negligence. This interpretation states that Lagarde’s nomination would violate the EU Treaties and be subject to judicial scrutiny and annulment if it were to be approved following consultation with the European Parliament. And yet, she was still appointed.
I’ve heard that there may be a difference between crimes of negligence, which are more about competence than integrity, and crimes of intention, which obviously speak to a person’s integrity. Readers are welcome to debate this, but let me just summarise by saying that, even if the argument makes sense in theory, it is essentially irrelevant because, if my understanding is right, art. 283(2) TFEU calls for both competence and integrity. It will also be necessary to examine other issues individually, such as who would have the legal standing (pun intended) to contest Lagarde’s nomination before the European Court of Justice.
When asked if she would be interested in leading the ECB last year, Lagarde is alleged to have responded, “No, no, no, no, no.” Any rational advisor would have informed the European Council members when they were originally considering Lagarde for the position, “No, no, no, no, no.” Yes, Lagarde seems competent in comparison to some of the other appointees. She is a woman, no doubt about it, with certain attributes. However, Lagarde’s judicial background puts her firmly in the shadowy group of male politicians who have prospered for decades in spite of being accused and found guilty of wrongdoing.
Although this female fiscal ‘rock star’ of international finance and convicted felon has done well to climb a greasy and often dishonourable career pole, this in no way implies that she is a person to be revered. While there should be gender parity, we all agree that political integrity is better.
Why Christine Lagarde’s appointment as President of the European Central Bank is illegal (5)
NCBs are an essential component of the European System of Central Banks (ESCB; see art. 282(1) TFEU), and the Maastricht and Amsterdam Treaties led to revisions to all of their statutes. As a result, they qualify as implementing legislation and have significant bearing on how the EU treaties are interpreted. It’s very clear from reading NCB laws that status among the banks’ governing bodies is anticipated to extend beyond the axiologically neutral feeling of competence or eminence to include honesty and integrity. Some statutes (Denmark, Germany, Netherlands, Portugal, Slovenia, Sweden) do not address the qualifications of governors; nonetheless, the majority stipulate that individuals of exceptional moral character are the only ones eligible to hold positions on NCB governing boards.
Let us have a look at these laws found in various countries and we start with our country’s:
In Article 9 (3), we read ‘no person shall be appointed a director who […] under the law of any country has been […] convicted of a crime affecting public trust or of theft or of fraud.’
The Bulgarian statute, art. 11(3) states that ‘members of the Governing Council shall be elected and appointed only among persons of the highest integrity.’
In Article 7, Czech Republic we find that only a citizen ‘who is of integriy’ and ‘who has not been lawfully convicted of a criminal offence’ is appointable.
Estonia, Article 4(2) we read the Board is composed of persons ‘whose reputation must be unblemished.’
A person cannot be appointed as Governor if ‘convicted of an offence’ (Ireland, section 19);
Persons who are the object of a ‘conviction for a criminal offence’ cannot be appointed as Councillors (Greece, art. 14);
The Director ‘shall be selected among persons […] who meet the requirements of integrity’. Candidates ‘cannot have sustained a conviction, even one still subject to appeal’ (Italy, art. 16);
Bank commissioners ‘shall have a clean criminal record’ (Hungary, art. 79);
‘A member of the board must be a natural person who is […] of good repute [i.e.] has not been convicted by a final judgment of a deliberate crime’ (Slovakia, art. 7).
Legislation in Belgium, Spain, France, Croatia, Cyprus, Lithuania, Luxembourg, Austria, Poland, Romania, Finland, and the UK that does not specifically include integrity as a prerequisite for employment sometimes includes provisions for termination in the event of grave misbehaviour while in office. The aforementioned indicates that member nations have adopted the belief that major misbehaviour, particularly a criminal conviction, is incompatible with holding a prominent position at a central bank through their subsequent actions. Therefore, reading the criterion of “recognised standing” in art. 283(2) TFEU in a limited, axiologically neutral manner would seem incongruous. Since the ECB and NCBs are both a part of the same European banking system, if integrity is expected of those leading NCBs, then the same should be expected, at the very least, of the president of the ECB.
Additionally, I contend that the ECB’s own later instruments would not be consistent with the restrictive reading of “recognised standing.” The ECB passed Decision 2015/433 on the formation of an Ethics Committee and its Procedures in 2015. This reaffirms that “the ECB must strictly adhere to state-of-the-art ethics rules in order to safeguard the ECB’s integrity and avoid reputational risks, given the increased level of public awareness and scrutiny.” Furthermore, it states that “the ethics norms for members of [governing] organisations […] shall be appropriate to the addressees’ different responsibilities,” implying that those in positions of highest authority should adhere to the strongest moral guidelines.
Such can be confirmed in the European Central Bank’s Code of Conduct for High-Level Officials, which affirms that:
Although this female fiscal ‘rock star’ of international finance and convicted felon has done well to climb a greasy and often dishonourable career pole, this in no way implies that she is a person to be revered. While there should be gender parity, we all agree that political integrity is better.