Ethics and governance in the European Financial centers

I would like to bring a new lighting on the Fortis and Dexia stories.

I went to the audit reports of Fortis and Dexia in Luxembourg.

The REPORT OF THE REVISEUR D’ENTREPRISES is based on a European template that is customised in Luxembourg
The template does not take into account what is to be done in case of material misstatement. Neither material misstatements and false and unfair view of financial statements are imagined in the template nor reserves.

In many reports the template is only actually copied/pasted.

Example : the opinion

Template

In our opinion, the financial statements [annual accounts] give a true and fair view of the financial position of [name of
the audited entity] as of [date], and of its financial performance and its cash flows for the year then ended [or “for the period from (date) to (date)“] in accordance with International Financial Reporting Standards [as adopted by the European Union].

Fortis report

In our opinion, the consolidated financial statements give a true and fair view of the financial position of Fortis Bank Luxembourg S.A. as of 31 December 2007, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Dexia report

In our opinion, the consolidated accounts give a true and fair view of the Group’s net worth and financial position as of December 31, 2007 and of its results and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union, and with the legal and regulatory requirements applicable on quoted companies in Belgium. Without amending our unqualified opinion, we nevertheless draw the attention to the note 6 to the consolidated financial statements describing some legal disputes with regard to the share leasing in the Netherlands, the final outcome of which is uncertain at this moment.
ADDITIONAL REMARK
The company’s Board of Directors is responsible for the preparation and content of the management report on the consolidated accounts.
Our responsibility is to include in our report the following additional remark, which does not have any effect on our opinion on the consolidated accounts:
• the management report deals with the information required by the law and is consistent with the consolidated accounts.
However, we are not in a position to express an opinion on the description of the principal risks and uncertainties facing the companies included in the consolidation, the state of their affairs, their forecast development or the significant influence of certain events on their future development. Nevertheless, we can confirm that the information provided is not in obvious contradiction with the information we have acquired in the context of our appointment; without prejudice to certain formal aspects of minor importance, the accounting records are maintained in accordance with the legal and regulatory requirements applicable in Belgium;
• we are unaware of any transactions undertaken or decisions taken in breach of the company’s statutes or the Companies’ Code such as we would be obliged to report to you. The appropriation of results proposed to the general meeting is in accordance with the relevant requirements of the law and the company’s articles of association;
• in accordance with article 523 of the Companies’ Code, we are also required to report to you on the capital impacts of the decisions of the Board of Directors of March 1, 2007 relating to the remuneration of the representative director and the president of the Board of Directors, in which regard we have been informed of a confl ict of interest. The information pertaining to these decisions is included in the management
report within the section relating to the remuneration of the Board of Directors and the Management Committee. We are of the opinion that this disclosure is adequate to inform the shareholders about the capital impacts for the company of these decisions.

The opinion in Dexia’s audit report is more aware of risks. The reviseurs d’entreprises (PwC and Mazars & Guérard) were cautious enough.
The opinion in Fortis’s report is a copy/paste of the audit report template

Early 2008 no auditor should have only copied/pasted the template.

This is one of the reason why market confidence collapsed.