Topic Guide: Undue Influence

Approaches to regulate and limit corporate influence on decision-making critically depend on the level of institutional weakness of a country. In fragile states where the effective enforcement of the rule of law remains problematic, strengthening and/or reforming key institutions such as the political party system, the public administration and the judiciary may be necessary to reduce the risk of state capture[1]. More immediate measures, however, can be adopted in both developing and established democracies to mitigate the risk of undue influence of private interests on public policy. These can include:

Regulations on lobbying

There should exist appropriate legislation limiting the scope and increasing the transparency of lobbying activities, including by establishing mandatory lobbying registers and by requiring members of the parliament and other decision-makers to report on their meetings with interest groups[2]. Moreover, oversight of lobbying activities by a dedicated body capable of imposing adequately stringent verification mechanisms and effective sanctions for non-compliance is essential.

Regulations on the movement of individuals between the administration and the private sector (Revolving door)

Incompatibility rules and rules determining a time period whereby a former public official or member of the government is prohibited from accepting positions in the private sector that relate to his former duties while in public office (cooling off periods).

Regulations on conflicts of interest

Rules on conflicts of interest may take a number forms, including laws, codes of conduct or internal rules and management guidelines. They are instrumental to enhance transparency and accountability in decision-making as they oblige officials and members of the government to regularly disclose potential conflicting interests, making it easier for an oversight body, the media or civil society to check whether his/her decision was motivated by private reasons.

Regulations on political finance

Political finance is often used by interest groups as a mechanism to influence or capture the decision-making process. Therefore, rules restricting donations to political parties and individual candidates and more generally the importance of money in politics also help to prevent undue influence. Also, increased transparency by requiring political parties to disclose donations and expenditures and strong oversight mechanisms are necessary so that interests groups and political parties do not circumvent the law and receive illegal contributions.

Rules on private sector competition

Increased competition in the private sector leads also to increased competition for political influence, making it harder for powerful interest groups to capture decision-making. Measures to increase competition include: the removal of key monopolies and entry barriers; the removal of anti-competitive advantages; improvements in the investment climate; and the strengthening of anti-monopoly agencies. In addition, the private sector also plays a role to ensure more integrity and transparency in its relationship with the government. As such, strong corporate governance, including public disclosure of share ownership and cross-holding, rules on the appointment of outsiders to the board of directors, penalties for insider trading, and overall a strong enforcement of ethical standards, also helps to prevent undue influence.

Rules on transparent decision-making and access to information

To prevent undue influence, decision-making processes should be transparent and open to the public. Citizen’s participation should thus be encouraged by, for example, making mandatory open hearings on policies or establishing electronic systems for public consultations. Moreover, public disclosure of parliamentary votes as well as rules facilitating public access to information also contribute to more transparency and accountability in the process and help to identify suspicious relationships between interest groups and members of the government.

Civil society and media oversight

Civil society organisations and the media can play an important role in monitoring interest groups’ political engagement, for instance by tracking lobbying activities, checking incompatibilities and conflicts of interest declarations and monitoring campaign finance, among others.