Can the City Rise to the Challenge?
to the challenge?
THIS was the week the party ended. With disaster engulfing corporate America, all the blithe assumptions that the stock market boom could go on for ever have been exposed for the folly they always were. The City is left with the mother and father of all hangovers.
Enron, Global Crossing, Tyco, Qwest, the worries over Xerox and the calamity of WorldCom have shattered confidence in the world's most dynamic economy.
Fraud, false accounting and the fact that supposedly sharp-toothed watchdogs all seem to have been asleep in their kennels have wreaked immense damage, not just in the U.S. but across the globe.
And the worst may not be over. Though accountants claim safeguards are in place to prevent such scandals happening here, experts such as Professor Prem Sikka say British regulations are so weak that a WorldCom-scale scandal can't be ruled out.
Against that disturbing background, there is clearly a need for urgent reform in the way the free market is monitored.
That is the only way to restore faith in the system. But compare and contrast the very different ways America and Britain deal with fraud and white-collar crime.
On the other side of the Atlantic, speed and ruthlessness are of the essence. The accountants involved in shredding papers during the Enron collapse, for example, have already been tried and convicted.
The WorldCom crisis is being addressed just as decisively. Appalled that regulators were caught napping, a Congressional committee has carpeted the head of the Securities and Exchange Commission.
Meanwhile, the SEC has filed a lawsuit against WorldCom and is hiring an extra 100 staff to help its investigations. And the Senate has just approved a major new Bill to toughen up auditing procedures.
This is clearly a society determined to learn and do better next time.
If only the same could be said of Britain. …