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11 February 2004

Bolkestein speech on Corporate Governance and Supervision after Parmalat

In a speech addressed to the European Parliament, Commissioner Bolkestein noted that whilst the facts are not yet fully clear, the Parmalat case is deeply worrying. 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,, he said.

“My first point which is missing from your Resolution,” the Commissoner continued, ”is this: the financial services industry had better get its act together, and do so fast. We already have a range of policies in hand which will go some way to improving matters in the future.

“In March I will be proposing to the Commission a revised Company Law Directive on the Statutory Audit function. It will strengthen controls over the audit profession in the EU. With independent oversight; strengthened inspection; stronger ethical and educational principles; high quality audit standards.

“As a result of Parmalat, it is likely also to include :

  • Full group auditor responsibility for consolidated accounts of a group of companies.
  • Obligatory independent audit committees for listed companies.
  • Stricter auditor rotation requirements.
  • Strengthened sanctions.

    “I am also accelerating work in 3 other areas in the Corporate Governance/Company Law areas to have proposals ready, where possible, later this year. They are :

  • The role of non-executive directors;
  • Directors' responsibility for company accounts;
  • Full disclosure in the company accounts of offshore Special Purpose Vehicles, including why the company uses these offshore structures and much stricter verification by the group auditor of their content.

    “We are also working hard on the issues of conflicts of interest of financial analysts and looking again at credit rating agencies. Here the Katiforis Report is of great help.

    Full speech

    © European Commission

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