THERE were some angry shareholders at Citigroup’s recent annual meeting. A substantial 29pc of them voted for a resolution criticising the bank.

The resolution was not about executive pay. It was about lobbying. And while you might expect shareholders to be sympathetic to their company’s lobbying, this lot were not.

The motion, which was supported by ISS and Glass Lewis, advisers to institutional investors, demanded that Citi provide a detailed annual report of its lobbying, both direct and indirect, such as through trade associations.

“We want to know exactly where and how shareholders’ money is being spent,” said Bart Naylor, former investigations chief on the US Senate banking committee.

Other shareholders worried about the damage lobbying could cause to Citi’s reputation.

The spur for the resolution was Citi’s role, along with other large banks, in tacking a provision on to a government funding bill that weakened rules on their derivatives trading.

Lobbying is just one way US companies influence their country’s lawmaking. There are also political donations and the ‘revolving door’ — former legislators, officials and political staffers becoming lobbyists.

“It’s appalling, it’s disgusting, it’s wasteful and it opens the possibility of conflicts of interests and corruption,” said Jim Himes, a Democratic congressman, former Goldman Sachs banker and, according to the New York Times, to whom he made those comments in 2013, ‘one of the top recipients of Wall Street donations’. An even more appalling thought is that the US has tougher controls on lobbying than most other democracies.

Lobbying is just one way US companies influence their country’s lawmaking. There

are also political donations and the ‘revolving door’ — former legislators, officials and political staffers becoming lobbyists

In 1995, the US enacted the Lobbying Disclosure Act, which, the Center for Responsive Politics explained, required lobbying groups ‘on a semi-annual basis . . . to report their total spending and list the names of lobbyists they employed, the agencies they contacted and what issues and legislation they tried to influence’.

This was followed in 2007 by the Honest Leadership and Open Government Act, which then-Senator Barack Obama called ‘the most sweeping ethics reform since Watergate’ and which prevents Senators from lobbying their former colleagues for two years after leaving government and House of Representatives members for one year.

Compare that with the UK’s tepid 2014 Lobbying Act, which requires lobbyists to register, but only if they lobby ministers or civil service permanent secretaries.

This means, Transparency International says, that “lobbying of parliamentarians, all but the most senior civil servants . . . and the vast number of public agencies can take place with no public record of the lobbying meetings, the issues that have been lobbied on, or the amount of money that has been spent”.

On leaving office, UK ministers are banned from lobbying the government for two years. But there is nothing to stop ordinary MPs who lose their seats in this week’s general election from taking lobbying jobs next week.

Citi shareholders have opened a new and unexpected front: owners of companies demanding to know what management is up to

And yet, in a Transparency International study of 19 European states, the UK had more effective controls on lobbying than any country except Slovenia and Lithuania. It also has strict election spending limits.

Lobbying is not an unalloyed evil. It is important that governments listen to companies and industry associations before rushing into legislation. Defeated or retiring politicians also need jobs, and movement between private and public sectors strengthens the expertise of both.

What rankles is the disparity between the wealth of corporate lobbyists and the citizens who elect the politicians and pay their wages.

While stronger legislation helps, the US shows it is no panacea; there are ways, it seems, around any restriction. The Center for Responsive Politics says that ex-members of Congress can still lobby federal agencies. And if they spend less than 20pc of their time lobbying, they do not have to register and can lobby anyone.

Do we have to accept that lobbying is like sludge in a horror movie, oozing under any door?

No. An active citizenry can demand more information. A vigilant press can too; senior UK politicians have been exposed for grasping at lobbying opportunities. And Citi shareholders have opened a new and unexpected front: owners of companies demanding to know what management is up to.

michael.skapinker@ft.com

Twitter: @Skapinker

Published in Dawn, Economic & Business, May 11th , 2015

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