Europe’s businesses go on attack over US listing requirements

Date: 12/09/02

By Peter Chapman

EU BUSINESSES will be hit by regulatory overkill unless they are spared from a controversial new US law aimed at bolstering flagging investor confidence after the collapse of energy and telecoms giants Enron and WorldCom.

Bosses' union UNICE says the law - known as the Sarbanes-Oxley Act - would impose a long list of extra restrictions on the way EU firms with secondary listings on American stock exchanges are audited.

They say EU firms that have their main listing on European exchanges, such as Frankfurt, Paris or London, already meet tough audit standards and rules governing the conduct of directors on so-called audit committees.

In a letter to Financial Services Commissioner Frits Bolkestein, UNICE secretary-general Philippe de Buck said the burdens on European firms 'go beyond what is needed to achieve the results that are sought'.

Bolkestein has already spoken out against the law in a letter to US counterparts at the Securities and Exchange Commission (SEC).

But De Buck says the Dutch commissioner must step up pressure to win an exemption for EU firms from controversial parts of the law 'instead of having to comply with another layer of burdensome and unnecessary legislation which would hinder their functioning and competitiveness'.

The German business federation has already reacted angrily to the US law that would cover industrial giants such as DaimlerChrysler, Deutsche Bank, Bayer and Siemens.

In a letter to the SEC, the Bundesverband der Deutschen Industrie (BDI) said the US requirement for individual board members - the chief executive officer and chief finance officer - to swear to the accuracy of their company's accounts was totally incompatible with German rules on corporate governance.

In Germany - which has a two-tier management structure - the executive board and not the managing supervisory board is responsible for accounting accuracy.

The US law, adopted in July, was described by one senator as the 'most important securities legislation since the 1930s'.

Under its provisions, company executives found to be lying about their financial statements could be sent to prison for up to 20 years.

Maximum sentences for mail and wire fraud - often used to prosecute white-collar criminals - were increased to 20 years from five years. The law also makes shredding documents in federal investigations a crime and imposes criminal sanctions against firms that punish corporate whistleblowers.

EU businesses will be hit by regulatory overkill unless they are spared from a controversial new US law aimed at bolstering flagging investor confidence after the collapse of energy and telecoms giants Enron and WorldCom. Bosses' union UNICE says the law - known as the Sarbanes-Oxley Act - would impose a long list of extra restrictions on the way EU firms with secondary listings on American stock exchanges are audited.