Bolkestein vows tougher auditing after Parmalat

Date: 22/01/04

FRITS Bolkestein, the internal market commissioner, has confirmed plans to propose tougher auditing in the European Union in the wake of the investigation into an alleged €10 billion "black hole" in the accounts of Italian milk giant Parmalat.

The Dutchman also called for Italy to examine the way its financial supervisory structures work, suggesting that they had failed in the case of Parmalat. However, Bolkestein insisted there would be no knee-jerk reaction from the Commission, pointing out the auditing proposals were already part of the executive's long-term work programme.

"The Commission's 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 said. Bolkestein's proposal would include putting the responsibility of a company's consolidated accounts under the auspices of a single audit firm. Parmalat had two accounting firms working on different parts of its books - a practice critics say makes it difficult to get a true overall picture.

Pedro Solbes, the commissioner for economic and monetary affairs, said investor and consumer confidence in the EU is unlikely to be shaken by the events in Italy. "Even if it [Parmalat] is a very important case, it affects a precise enterprise, so I don't expect this kind of spill-over effect on confidence," he said this week at a meeting of EU finance ministers.

Earlier, Italian regulators insisted they were not to blame after failing - along with analysts and ratings agencies - to spot the crisis at Parmalat.