| Author (Person) | Chapman, Peter |
|---|---|
| Series Title | European Voice |
| Series Details | Vol.10, No.5, 12.2.04 |
| Publication Date | 12/02/2004 |
| Content Type | News |
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By Peter Chapman Date: 12/02/04 FRITS Bolkestein, the internal market commissioner, has issued an ultimatum to the EU's financial services sector: "Clear out the crooks." In a hard-hitting statement to MEPs yesterday (11 February), the Dutchman blamed the sector, from auditors to lawyers, for abetting corporate failures. He urged action in order to avoid a regulatory backlash from Brussels and member states. "The financial services industry had better get its act together, and do so fast. We need some real industry leadership to stand up and take charge: to clear out the crooks, expose their unscrupulous practices and curb excessive greed. "If industry leaders are not prepared to do this, then regulators will have to do much more than perhaps they or we would like. "If that is the result," he told MEPs, "then industry leaders can't whinge about regulation from Brussels. They will have brought it upon themselves." If no one steps in to stop the European rot, he warned, "scandal upon scandal will cumulatively weaken financial markets like the corrosive drip of a leaking fuel tank". "Many sensible investors will pull out. European growth will be affected because the cost of capital will rise. "So this matters to all of us." Bolkestein admitted that the full facts of the Parmalat affair have yet to emerge. But he said he had seen enough to point an accusing finger at the financial services fraternity. "The apparent size of this fraud is staggering and the apparent complicity of a number of people from distinguished, liberal professions together with the failures of regulatory control - equally so." The Italian milk giant plunged into insolvency in December after details emerged of a web of fraud masterminded by former chairman and founder Calisto Tanzi - who has admitted funnelling €500 million out of the company into other family firms. A report by PricewaterhouseCoopers said irregular money transfers out of Parmalat totalled €2.5 billion in 1999-2003. Prosecutors have been trying to establish how much banks that helped Parmalat sell some €8 billion in bonds since 1995 knew about the precarious state of its finances. The list of those being investigated in connection with the scandal already includes auditor Grant Thornton's former Italy unit and Deloitte & Touche's division in the country. Despite his industry warning, Bolkestein, eyeing a second term as commissioner, said the EU executive plans to launch several new proposals aimed at tightening up oversight of financial markets, adding to a long list of measures already approved or close to adoption. He said a key measure would be a proposal to strengthen controls over the audit profession. See article, page 26 Report of a speech given by Frits Bolkestein, European Commissioner for the Internal Market, Taxation and Customs, at a plenary session of the European Parliament, Strasbourg, 11 February 2004. The focus of Mr Bolkestein's speech was corporate governance and the supervision of financial services after the Parmalat case. |
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| Subject Categories | Business and Industry, Law |
