On Tuesday, Adam Farkas, the executive director of the European Banking Authority (EBA) resigned from his post to head Association for Financial Markets in Europe (AFME). Farkas’s exit from EBA to head one of the organisations he used to supervise as part of his role drew criticism from advocacy groups against the practice of ‘revolving doors’ hiring. The movement of senior officials from public jobs to private or vice versa is called revolving doors, which can potentially lead to leakage of highly important and sensitive information.
Considering the amount of information Farkas could transfer on regulatory processes, the EBA’s Board of Supervisors (BoS) conducted a detailed review of the potential conflict of interest emerging from his shift to the trade body for banks in February 2020. In compliance with regulator’s rules, BoS decided to move Farkas away from EBA’s policy and supervisory work and limit his role to operational matters until 31 October 2019. Later his role would be reallocated till his last serving day in the organisation i.e. 30 January 2020.
Farkas would be succeeding Simon Lewis at AFME as its news chief executive officer. In his new position, he has been barred from directly lobbying or advocating for EBA for two years after leaving the organisation. Also, BoS applied a condition that Farkas could not advise his new employer or otherwise contribute to matters directly linked to the work he carried out during his last three years at EBA for 18 months in his future job.
Sven Giegold, a lawmaker for the Greens in the European Parliament, told Bloomberg that Farkas’ move would cause ‘massive damage to the EBA’s reputation’. EBA also faced the criticism over frequent exits of senior managements personnel to ‘companies they once oversaw or lobby firms that represent them’. Farkas has been associated with the banking regulator since 2011 when he was first appointed as EBA’s first executive director.