By Anna McLauchlin - 20th January 2004
EU legislation will not prevent another Parmalat-style scandal hitting Europe, Frits Bolkestein has warned.
“When all is said and done it is very difficult to stop people behaving in a criminal fashion,” he said on Tuesday.
Speaking as Europe's finance ministers held the first Ecofin meeting since the auditing scandal broke at the Italian diary giant, Bolkestein stressed that Europe should not rush into passing new laws which could compound the problem.
“The commissions view remains that hasty and ill-considered legislation could add to rather than solve regulatory problems highlighted by high-profile cases such as Enron and Parmalat,” he told journalists.
Meanwhile the internal market commissioner insists that Brussels is on the right track with a raft of proposals in the pipeline which should help to limit the possibility.
The commission will continue to improve its auditing and corporate governance rules with the action plan it began in May last year, Bolkestein reiterated,
And he urged national governments to implement recently adopted legislation on market abuse and company transparency into domestic law as soon as possible.
The revisions on auditing will affect the European ‘Company Law Directive’ – a text that has been amended seven times previously.
In particular, the EU executive will set down a rule that a single auditor take charge of accounting that encompasses the finances of a set of businesses within a company group.
Italy and Spain, like the US, allow the liability of group accounting to be shared between multiple auditors.
But the commission wants the two to fall into line with the other 13 in the EU club by taking on the ‘single auditor’ principle, and so ward off chances of further auditing illegality.
The legal proposal will also make sure all companies listed on the stock market have independent audit committees, and encourage oversight bodies to co-operate at both European and international level.
And the commission will propose to strengthen sanctions where there are cases of malpractice.
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