Opinion Editorials, December 2003, www.aljazeerah.info
Human Price of the Israeli Occupation of Palestine
Israeli daily aggression on the Palestinian people
Mission and meaning of Al-Jazeerah
Cities, localities, and tourist attractions
|
Parmalat Scandal
Arab News 25 December 2003
When multinational companies such as Italy’s Parmalat crash into the financial buffers, the consequences are first felt by the employees around the world.
The 36,400 employees of the crippled Italian-based dairy group deserve every sympathy. It is also right that the Italian government is looking to see if the company can be helped to survive and many jobs saved. The request that EU anti-competition rules be suspended so that premier Silvio Berlusconi’s government can bail out Parmalat has produced mutterings of outrage from other member states. Nevertheless this is largely hypocritical.
France and Germany and even the avowedly free-market UK have at various times insisted that the application of free competition rules be waived to protect their own national firms. But where Berlusconi and his administration are entirely wrong has been in the way that they have changed the law in Italy in such a way as to encourage the very sort of wrong-doing that appears to have taken place at Parmalat. The effect of this change is that if the senior management at the firm were seeking to cover up a major loss by pretending there were $5 billion in an offshore subsidiary, they are no longer committing an offence under accounting legislation watered down by the Berlusconi.
Italy has accounting regulations as tough as any other European jurisdiction — auditors for instance are rotated meaning that no one accountancy firm should be in the position to form a corrupt long-term relationship like Andersen’s formed with their client Enron. The problem lies partly in the way in which these rules are enforced and partly in the relaxed view toward the weak role of independent directors on Italian company boards. These people are supposed to stand back from the top management and observe the company’s affairs dispassionately. It is a tough job, especially if executive directors are setting out to deceive as seems to be the case at Parmalat. It is however an essential job, not just for the protection of shareholders, whom the non-executive directors represent, but also for the thousands of employees.
That Parmalat’s non-executive directors failed to spot wrong-doing on such a gigantic scale probably has a lot to do with the business climate in Italy at the moment, the tone for which has been set by a prime minister who is content to use his parliamentary majority to drive through laws which will protect his own business interests from prosecution. If the leader of the country can behave with such signal disregard for probity and standards, why should any other businessman seek to hold to once accepted norms of proper corporate behavior? Governments don’t simply make laws; they also set tones. The Parmalat scandal thus reflects the cynical, cavalier tone set by the Berlusconi government.
 |
| Earth, a planet hungry for peace |
 |
| The Israeli apartheid (security) wall around Palestinian population centers (Ran Cohen, pmc, 5/24/03). |
 |
| The Israeli apartheid (security) wall around Palestinian population centers in the West Bank, like a Python. (Alquds,10/25/03). |
 |