BRUSSELS — Is it kosher to aim to make more than €1 million from a consulting scheme in which a powerful German politician advises banks on financial rules he helped write into EU law? 

That was exactly the plan of Michael Heijmeijer, a Dutch businessman, who reckoned it lay well within the bounds of the rulebook. He envisioned a symbiotic partnership with his long-term associate Markus Ferber, a prominent member of the European Parliament, in which both men would prosper. 

Documents seen by POLITICO reveal a relationship between the men, extending over a decade, that gave Heijmeijer privileged access to high-ranking EU officials and legislative insights into rules that were directly relevant to his business.

The advantage for Ferber, in Heijmeijer’s mind, was an opportunity to sell more than €1 million in consulting services on legislation he helped write, according to emails and board minutes from the businessman’s company. 

Heijmeijer, chief executive of the Switzerland-based company Cfinancials, discussed with his board members the idea of charging five banks each about €250,000 for consulting services on updates to the Markets in Financial Instruments Directive, known as MiFID II — a major overhaul of the European Union’s financial regulations.

“Mr. Ferber asked if cfinancials SA could issue the consulting contract until he sets up his SARL,” Heijmeijer wrote in an email to board members on September 14, 2015, ahead of a Cfinancials board meeting. “We will accommodate his request on the first bank (Santander) but need to make sure we are well shielded against potential lawsuits.”

Ferber was uniquely qualified to act as a consultant. At the time, he was the Parliament’s point person on a major overhaul of the EU's financial regulations. He had accompanied the legislation from its early days in committee deliberations, written amendments that were made into law, and shepherded the package through final negotiations with representatives from the bloc's national governments.

There was, however, a hitch. This apparent conflict of interest set off alarm bells in Cfinancials. In a 2015 email, the company's lawyer, Christophe Wilhelm, expressed concerns about Ferber to Heijmeijer.

“I do wonder whether his intend [sic] to advise and supervise ... is in compliance with the rules governing the relationship that a member of the EU Parliament can have with third parties,” Wilhelm wrote.

'Declare and not care'

Wilhelm needn’t have worried. While the European Parliament stipulates its members “should endeavor to resolve” conflicts of interests, no MEP has ever been financially punished even for documented breaches of the rules. 

Members of the Parliament are paid a gross salary of just under €10,000 a month. They receive another €4,800 in allowances for office expenses, for which they are not required to provide receipts. They’re also allowed to hold second (or third or fourth ...) jobs, with essentially toothless restrictions protecting the Parliament’s work from being influenced by these potential conflicts of interest, according to the anti-corruption advocacy group Transparency International.

“Many tend to ‘declare and not care,’ yet a parliamentarian should prioritize serving the electorate over economic activities," said Katarina Barley, vice president of the Socialist group in the Parliament. "We have a long way to go."

In the wake of the Qatargate cash-for-influence scandal, the Parliament reformed the rules governing conflicts of interest in September, extending the definition to include improper influence involving an MEP’s family members. But other more restrictive measures were voted down. These included a clause prohibiting members from working or consulting for a registered lobby group.

The new rules require an MEP like Ferber who is put in charge of a bill to “submit a declaration indicating whether or not he or she is aware of having a conflict of interest.” But compliance is left to the MEP, and his colleagues retain the right to confirm the position anyway. It also remains unclear to what extent the Parliament's tradition of largely ignoring violations of its conflict of interest rules will come to an end.

“Given the sheer volume of declarations that will now need to be submitted, we fear this could become a box-ticking exercise," said Nick Aiossa, the director of Transparency International EU. “Only time will tell if this leads to the prevention, not just mitigation, of MEPs’ conflicts of interest.”

Ferber’s relationship with Cfinancials went beyond the potential contracts with banks. Even as he served as vice chair of the Parliament’s powerful Economic and Monetary Affairs Committee, the German MEP promoted Cfinancials’ flagship product. This was a service called TIPER that purported to help investors navigate the legislation Ferber had worked on: the updated Markets in Financial Instruments Directive, known as MiFID II. 

As POLITICO previously reported, Ferber marketed TIPER to major asset management companies. He also co-founded a Swiss foundation that promoted TIPER with Heijmeijer, Cfinancials’ CEO.

The documents obtained by POLITICO reveal new details in the relationship between the two men, including how Ferber organized workshops with Cfinancials on Parliament premises, hosting banks and other organizations interested in MiFID II. They also show how he tried to introduce Heijmeijer to powerful figures in the EU’s financial world, such as Verena Ross, then executive director of the European Securities and Markets Authority (ESMA) and Gabriel Bernardino, then chair of the European Insurance and Occupational Pensions Authority.

When POLITICO first asked Ferber about his relationship with Heijmeijer in 2017, the German MEP insisted he had “no financial interest” in his promotion of Cfinancials’ services. According to statements made by Heijmeijer in emails and board minutes, he sought to monetize the relationship. (They do not reveal whether Ferber landed any contracts). 

“Mr. Markus Ferber will review each institution on interpretation, linkage, business context and compliance. This will be reviewed on an annual basis,” Heijmeijer wrote in the September 14, 2015, email.

In response to POLITICO’s reporting in 2017, the European Parliament launched an investigation into Ferber's collaboration with Heijmeijer. It found no violation of its rules.

Ferber’s case was also investigated by the EU’s anti-fraud office, OLAF. Through a freedom of information request, POLITICO obtained a heavily redacted copy of the final report, which concluded that “OLAF did not gather any evidence to prove or disprove the obtaining of any financial gains or other rewards by ▇▇▇▇ in relation to the facts at stake.” 

Ferber, through a lawyer, reiterated that he received no economic benefit from his relationship with Heijmeijer. “Insofar as third parties should have given the impression that our client was offering corresponding consulting services, this was done without any agreement and in particular without any consent or involvement of our client,” Ferber’s lawyer Gero Himmelsbach wrote. “Our client has never sought consulting contracts with banks.”

Ferber belongs to Bavaria’s conservative Christian Social Union and the transnational European People’s Party (EPP). He’s a member of Parliament and of the ECON committee, where he functions as chief whip for the EPP. Last year, he announced he is running for reelection in June’s European Parliament election. 

“Thank you for this great trust,” he wrote in a tweet.

ECON’s chair, Irene Tinagli, did not respond to a request for comment.

‘Common scheme’

The proposal that alarmed Wilhelm, Cfinancials’ lawyer, was laid out in an email from Heijmeijer listing the topics of an upcoming board meeting in September 2015. 

Heijmeijer brushed aside his lawyer’s objections. “Consulting is authorized for EP members under a structure or directly in person,” Heijmeijer wrote to Wilhelm in an email. “A common scheme among EP members.”

At a meeting on September 25, Cfinancials' board members discussed “the relationship with Mr. Markus Ferber and the risk of conflicts of interest” and agreed that Heijmeijer would write “a draft letter to Mr. Ferber to ask for his opinion regarding consulting with the 5 banks and circulates it for approval to the board of directors,” according to minutes from the meeting.

At another board meeting on October 30, Heijmeijer reported that Cfinancials “has a contractual relationship with Mr Ferber,” in which the company would receive a 16 percent cut, or about €40,000, of each contract. 

“Mr. Ferber further confirmed to the company that he had no legal restrictions to enter into such a relationship with cfinancials SA,” the minutes from the meeting read.

The email and the minutes cite the Spanish bank Santander as an example of the type of institution to which Ferber would pitch his services. “Two banks are currently in the pipeline: UNICREDITO, HYPOVEREINSBANK,” the October 30 board minutes read, referring to the Italian bank and its German subsidiary.

That wasn’t enough for Wilhelm, who told POLITICO he had “very deep concerns about this relationship and as it was impossible for me to obtain clear answers from M. Heijmeijer on this issue, I had no choice but to resign from the board of the company on November 2016 and close any ties with Heijmeijer.”

Asked about the emails and board minutes detailing Ferber’s plans, Heijmeijer said he had already provided information “to the authorities at the highest instances” in Brussels, without specifying who they were. “The meeting effectively resolved any misunderstandings, and no further action was taken.”

“There was no consultation of any kind with Mr. Ferber at any time,” he said. Any talk of specific numbers, like a 16 percent cut, “were my own estimates knowing what it takes to keep shareholders' interest.”

“No contract [was] issued, discussed, or signed,” he said.

None of the banks mentioned as possible clients of Ferber or Cfinancials agreed to comment on the record but one manager of a bank approached by the MEP and Heijmeijer agreed to an interview on condition of anonymity.

“Ferber and Heijmeijer appeared and acted as a closed entity in the marketing of their solution,” the manager said. “Two partners with one clear goal: The sale of their solution.”

“Ferber did not hang back in the meeting and never mentioned the possible conflict of interest,” the manager continued, expressing unease about Ferber’s position as a lawmaker. “This is why the bank said no to their offer.”

Business duo

Heijmeijer first reached out to Ferber in June 2012, according to internal Cfinanicals emails.

As one of Parliament’s longest-serving members, the Bavarian made an attractive potential business partner. First elected in 1994, he was a member of the conservative EPP, the chamber’s largest bloc. His position in the ECON committee and as rapporteur for MiFID II gave him a powerful voice as the EU retooled its financial regulations in the wake of the 2009 debt crisis.

Intended to bring transparency to financial markets and protect the investments of ordinary European citizens, MiFID II was the subject of fierce lobbying. Small changes in its wording could mean significant gains or losses for Europe’s financial institutions.

While Ferber later insisted to POLITICO that he only met Heijmeijer after Parliament had voted on its negotiating position for MiFID II in October 2012, an email from Heijmeijer reports a meeting between the two in Strasbourg in mid September that year.

In a note to potential investors composed later, Heijmeijer included an approving quote from Ferber during their meeting: “Michael ... they told me it was impossible and you present me the solution on a silver platter...”

In response to questions from POLITICO, Heijmeijer denied that the relationship dated back to June 2012. Ferber’s lawyer said, “the allegation that our client and Mr. Hejmeijer [sic] have known each other since June 2012 is incorrect.” 

In any case, it wasn’t long before Ferber was opening doors for Cfinancials. In April 2013, Ferber forwarded Heijmeijer an email he had written to Verena Ross, then executive director of the European Securities and Markets Authority (ESMA), the EU’s security regulator. “CFINANCIALS’ services could, in my opinion, be of great use to ESMA,” Ferber wrote Ross, asking that she meet with Heijmeijer.

“Mr. Ferber requested that ESMA (European Securities and Markets Authorities [sic]) to become our client,” Heijmeijer wrote to shareholders five days later. ESMA said that no meeting was set up with Ross or the chairman at the time, Steven Maijoor.

As POLITICO previously reported, Ferber and Heijmeijer co-founded in 2013 a Switzerland-based foundation called PeoplesFinancials. In a letter to asset managers, Ferber described the foundation’s mission: “to empower ordinary people to invest with more security and confidence in capital markets,” adding that this was “made possible by TIPER.”

Heijmeijer also claimed he had influenced the writing of MiFID II, to the benefit of Cfinancials. In a 2014 letter to the company’s shareholders, Heijmeijer said Cfinancials had “produced” technical wording in MiFID II that made it compulsory for companies to use “a specific risk indicator.” “We produce such an indicator and we are the only ones,” he added. (Heijmeijer later told POLITICO he was “showing off to get people’s attention.” Ferber dismissed any notion that Cfinancials had a hand in tweaking MiFID II in its favor.)

Shortly after MiFID II became law in 2014, the duo began approaching banks. After meeting with a regulatory expert at Santander, Ferber invited executives from the bank to a workshop on MiFID II featuring Cfinancials at the Parliament on September 2, 2015. An email the next day from Wilhelm, the company’s lawyer, celebrated the success of the workshop, highlighting serious interest in TIPER from banking giants including Crédit Suisse, UBS, Rabobank, Société Générale and Santander.

Not long after, Heijmeijer sent his email detailing Ferber’s desire to set up consulting contracts via Cfinancials. 

As the relationship continued, Ferber kept the company up to date on regulatory developments regarding MiFID II, sharing correspondence between his committee and the European Commission. He also arranged a 2016 meeting with Heijmeijer and Gabriel Bernardino, then chair of the European Insurance and Occupational Pensions Authority.

Told that this article would detail how Ferber sought to introduce Heijmeijer to top EU officials, Heijmeijer said “The information is not accurate.”

“MiFID II text law was already negotiated by the ECON Committee prior to meeting Mr. Ferber for the first time,” Heijmeijer added. “The final text issued by the Commission is identical to the text negotiated by the ECON Committee. There is no conflict of interest.”

“Our client has not taken any actions together with Mr. Heijmeijer,” said Himmelsbach, Ferber’s lawyer. “Neither did our client advertise ‘services of Cfinancials’ nor did our client — as reported — organize workshops for the financial industry with Mr. Hejmeijer.”

‘Currently no violation’

The relationship between Heijmeijer and Ferber did not go unnoticed. In 2017, the MEP sent a letter to the CEOs of Europe’s largest asset managers making the case for TIPER and inviting them to meet him and Heijmeijer at the Parliament.

News began to spread, causing the Commission to cancel a workshop at the Parliament at which Ferber and Heijmeijer were scheduled to speak. After POLITICO reported on the letter, the anti-corruption NGO Transparency International called for an investigation.

The matter quickly fizzled out. Ferber had only disclosed his connection to PeoplesFinancials after POLITICO wrote about it, but the then Parliament President Antonio Tajani said he wouldn’t face any disciplinary action. “The President has concluded that there is currently no violation of the Code of Conduct,” Tajani’s cabinet chief, Diego Canga Fano, wrote.

In its heavily redacted report OLAF, the EU’s anti-fraud office, declared that there had been a breach in the Parliament’s Code of Conduct regarding the obligation requiring MEPs to declare “any remunerated or unremunerated” memberships, especially as there had been behavior that “reinforced the perception of a potential or existing conflict of interest.” 

Ferber’s later disclosure, OLAF concluded, “cannot exonerate the MEP from earlier omission.” OLAF did not make the report public and did not recommend any action be taken.

Ferber’s declaration from last year still includes his role as a co-founder of PeoplesFinancials. Heijmeijer has since liquidated Cfinancials and started a similar business called Track Securities Inc. in the U.S. state of Delaware. Its website features an endorsement by Ferber.

Aiossa, the director of Transparency International EU, said Ferber’s case illustrated the need for tighter rules governing the work MEPs can perform while in office.

“This kind of continued dodgy ethical behavior by MEPs will result in a further erosion of trust in the Parliament in the run-up to the [European Parliament] elections,” he said. “The culture of impunity among MEPs, that arguably contributed to the Qatargate scandal, needs to be urgently addressed.” 

“MEPs had a concrete opportunity to ban these types of lucrative side gigs for Members,” he said, referring to the Parliament’s updated rules governing conflicts of interest. “No one outside the Parliament finds these kinds of side jobs acceptable for elected representatives to be engaged in.”  

Pervenche Berès, a former MEP who now sits on the ethics committee of the European Central Bank, said she found the way the Parliament had handled the case in 2017 ridiculous. 

“​​I thought the whole procedure was a joke,” she said. When the Qatargate corruption scandal broke, she thought Ferber’s activities would be remembered. “I was more than surprised that nobody would refer to this case,” she said. 

“People have short memories,” she added.