Danish MEP Karen Melchior of the liberal Renew Europe group owns shares in Apple, Amazon, Google-parent Alphabet, Nintendo, Nokia and Zoom Video Communications.

Meanwhile, Melchior has worked on several pieces of draft EU legislation that will directly affect those companies. Her legislative work includes two EU regulations that will have a significant impact on Big Tech: the Digital Markets Act (DMA) and the Digital Services Act (DSA).

And Czech MEP Marcel Kolaja, of the Greens group, owns shares in IBM. He has worked on the DMA as well. He also made suggestions for several resolutions on artificial intelligence. IBM has identified both issues in the EU lobby register on its ‘list of the main EU initiatives followed by IBM’.

Earlier this month, the biggest EU scandal in recent years erupted when it was revealed that a Greek MEP and an Italian former MEP are suspected of corruption and bribery, in what has become known as Qatargate. The revelations have put a new spotlight on MEP integrity and how ethics rules are applied.

‘We want a parliament in which everyone can trust that decision-making takes place without conflicts of interest,’ says Corporate Europe Observatory campaign coordinator Olivier Hoedeman. He says that both cases of shareholding – by Melchior and Kolaja – pose clear conflicts of interest. Melchior and Kolaja disagree. Neither sees owning shares in companies that can be affected by legislation they work on as a conflict of interest.

‘I understand why you ask questions, but it is not that I am less critical of these companies because I own shares in them,’ says Melchior in a phone interview with Follow the Money. ‘I have actually been very critical and calling for more regulation on digital companies, especially the platforms.’

Both MEPs have listed their share ownership in their declarations of financial interest, available on the European Parliament’s website. Melchior says the fact she is open about which shares she owns, mitigates any potential conflict of interest. ‘It is important to be transparent about it.’ Following the interview, and without being prompted, she provided Follow the Money with her bank’s investment reports concerning the recent transactions of shares.

Why own shares?

Melchior has owned shares for years. The Danish liberal said she would ‘rather invest in companies that I trust,’ than putting her money in an investment fund. ‘I prefer doing things myself.’ That does however not always lead to the desired results: in 2017 she wanted to buy shares in the company behind the social media app Snapchat. Instead, she bought 50 shares in Snap-On Inc, which produces tools for professional use in the transport sector. (She still owns those.)

She says she tries to only own shares in companies that do ‘something positive’, and sold her shares in Siemens in 2019, after she discovered that the German company was active in Israeli occupied territories. Melchior emphasizes that owning shares should not be discredited. ‘Having shares is an important part of our economy. I think it is important that more citizens invest in shares.’

Kolaja acquired his shares in a different way. Before he was elected to the European Parliament as the Czech lead candidate for the Pirate Party, Kolaja was employed as product manager at software company Red Hat. In July 2019, a week after Kolaja assumed office as a MEP, IBM bought Red Hat. As a result, Kolaja received the shares. 

Melchior was also first elected to the European Parliament in 2019. ‘I have considered if I should sell the shares I had at the beginning of the mandate. But then I would have to pay taxes on possible earnings: I would have to pay for selling them. I would then have to figure out where I should put my money in, somewhere else. I wasn't quite sure what would be better.’ She chose to keep the shares.

Melchior also did not opt for transferring the management of her shares to a third party during her mandate as a MEP. ‘Because I did not and do not know how to, nor who as a commercial player to entrust with doing so. Following your questions, I will look into this further regarding future investments with banks and investment funds.’

Conflict of interest

Despite owning shares in technology companies, both MEPs decided to seek roles that would give them influence on draft legislation that will affect those companies – and potentially their stock price. 

Melchior went even further. In July 2020, a year after becoming an MEP, she bought new shares in Apple and Zoom Video. At that time, Melchior was already involved in drafting recommendations to the European Commission on the Digital Services Act (DSA).

Hoedeman: ‘That makes it worse. It was already a wrong choice not to sell the shares she had. But to buy new shares in companies that clearly would be subject to that new legislation she is working on, is a very unwise decision.’

In October 2020, a few months after Melchior had bought Apple shares, she met with a lobbyist from that company to discuss the DSA. She has also held meetings with Google and Youtube – subsidiaries of Alphabet, a company she has bought shares in.

‘If you act on privileged information, that is insider trading, and that’s illegal. But I understand why you ask. I would ask the same’

Melchior denies having received any information that would influence her decisions on keeping or selling the shares. Melchior: ‘If you act on privileged information, that is insider trading, and that’s illegal. But I understand why you ask. I would ask the same.’

MEP Kolaja also denies having received information that could be considered insider information. In March 2021, he had an online meeting with IBM to discuss the Digital Markets Act and the Digital Services Act. ‘The conversation on the DMA and the DSA was very vague and we merely exchanged our views on the legislation, which is absolutely in line with the legislative work of Members of the European Parliament,’ says Kolaja.

Code of conduct

According to the relevant integrity rules for MEPs, a conflict of interest exists ‘where a Member of the European Parliament has a personal interest that could improperly influence the performance of his or her duties as a Member’. 

When a MEP is not sure if there is a conflict of interest, he or she can ask advice from the so-called Advisory Committee on the Conduct of Members. This Committee consists of five MEPs, appointed for a period of 2,5 years.

Kolaja has never requested advice from the Advisory Committee ‘because I never believed that this would be perceived as a conflict of interest’. However, after receiving questions from Follow the Money, he decided to seek advice after all. ‘If the Advisory Committee recommends actions to be taken, I will follow the Committee’s recommendation, as avoiding conflicts of interest is important for me.’

Hoedeman: ‘That is too late, obviously. He should have done that beforehand.’ He wonders how far-reaching the recommendations will be, considering that the committee members may be coming from the same political groups as the MEP asking advice. ‘Such an advisory committee should consist of independent experts in the field of ethics and integrity, and not of random MEPs who have no expertise on this issue.’

And guess who was one of the advisory committee members until the end of 2021? None other than Karen Melchior. But despite being part of the committee which is there to give MEPs guidance on conflicts of interests, she did not seek the Committee’s advice about her own situation. Melchior: ‘I didn’t presume there was any conflict with the code of conduct.’

However, after having read a draft version of this article, Melchior tells Follow the Money she will ‘consult with the Advisory Committee regarding advice on owning or trading in shares personally or via a third party’.

The code of conduct requires MEPs to publish a declaration on their financial interests, shortly after assuming office. The form they are required to fill out does not have a specific box to list shares, and the few MEPs who report them, do so under ‘any other financial interests which might influence the performance of the Member’s duties’. 

A third MEP, Nils Torvalds from Finland (Renew Europe), also declared stocks, but without going into specifics: ‘small shares in Finnish companies’. When asked by Follow the Money, an assistant says that the shares are in ‘the 5-6 largest Finnish companies’. He was unable to clarify which companies, but added that the share value is between 5,000 and 10,000 euro per company. Torvalds’ assistant says his boss received oral confirmation from the advisory committee that there was no conflict of interest.

Voluntarily and non-committal

Melchior and Kolaja regard declaring shares as something voluntary. Melchior: ‘Since informing about stocks was voluntary, I didn’t think of seeking further advice on something that was voluntarily supplied.’ 

The declarations on financial interest are public, but Hoedeman thinks this is insufficient to mitigate the risk of conflicts of interest. He would like MEPs to be required to mention any potential conflicts of interests before votes and debates in the European Parliament.

According to the Code of Conduct, MEPs are required to report any changes to their financial interests at the end of the month the change occurred

A change in the declaration may only be noticed by someone who happened to check an MEP’s personal page on the European Parliament website. According to the Code of Conduct, MEPs are required to report any changes to their financial interests at the end of the month the change occurred.

Kolaja amended his declaration in July 2020. It is unclear when he acquired his shares, but at that time it had already been a year ago that IBM had bought his former employer Red Hat.

Melchior bought her Apple and Zoom shares in July 2020, but only submitted an amended declaration in March 2021.

She was a lot quicker to react when Follow the Money took notice of her stock ownership. Two days after the interview, before this article was published, Melchior announced via social media that she welcomed ‘any conversation and questions about potential undue influence on politicians’ and published a blogpost titled ‘Are Shares in Companies Undue Influence?’ In that post, she explained why she has acquired and continued to buy shares. However, she failed to mention why her shareholding is problematic: her role as a MEP in Big Tech regulation.