27 January 2004

Company Leaders Say Ethics Needed, Not Rules

Co. Leaders Say Ethics Needed, Not Rules:

DAVOS, Switzerland, (Associated Press) -- First Enron in the United States. Now Parmalat in Europe. What to do?

That question pursued corporate and government leaders to their annual meeting in the Swiss Alps. With each new example of corporate trickery, the cry goes up for tougher regulations to police business executives.

'We have an environment in which fraud and malfeasance have destroyed jobs and assets while chief executive pay goes up year after year,' William G. Parrett, chief executive of audit firm Deloitte Touche Tohmatsu, told a panel discussion at the World Economic Forum.

With the bankruptcy of Italian dairy giant Parmalat making headlines amid allegations of fraud and faked balance sheets, corporate governance -- the rules enforcing executives' responsibilities to shareholders - was a major recurring topic at the five-day conference that ended Sunday. It competed for attention with speeches by Presidents Mohammad Khatami of Iran and Pervez Musharraf of Pakistan and other leaders on issues including nuclear weapons, the war in Iraq and the world economy.

Last year, the meeting focused heavily on the collapse of energy trader Enron and new rules imposed by Congress.

This year, there were more voices cautioning that regulation alone can't substitute for strong boards of directors and executives willing to stress personal integrity.

Boards need to be independent and make sure they're hiring people of integrity as chief executive officers, said Robert Diamond, chief executive of Barclays Capital, the investment banking arm of Britain's Barclays.

'The quality of the CEO goes to the heart of the board's responsibilities,' said Diamond.

'I do think rules are important, I do think law is important, and I absolutely endorse a strong regulatory framework."

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