Ethics and governance in the European Financial centers

The Public Company Accounting Oversight Board (PCAOB) a few days ago voted to issue for public comment a proposed policy statement that identifies the factors relevant to “full reliance” by the Board on the inspections systems of its non-U.S. counterparts that are sufficiently rigorous to meet the level of protection for investors that is required by the Sarbanes-Oxley Act of 2002.

Comments are requested by March 4, 2008. I gonna comment on poorly rigorous behaviours based on public and official sources that are the visible part of the iceberg.

Reliance would be based on the level of independence and rigor demonstrated by those entities.

Five broad principles would allow the assessment:

1. Adequacy and integrity of the oversight system – The Board would weigh whether the non-U.S. system effectively works in the public interest to protect investors by seeking to improve audit quality.
2. Independent operation of the oversight system: The Board would weigh whether the entity and the system within which it operates are free from interference or undue influence by the audit practitioners and/or audit firms under the entity’s supervision.
3. Independence of the system’s source of funding: The Board would weigh whether the non-U.S. system has the ability to obtain and deploy the financial resources necessary to carry out its mandate without interference or undue influence by the audit practitioners and/or audit firms under its supervision.
4. transparency of the system: The Board would weigh the extent to which the entity is accountable for the discharge of its duties through a transparent framework. The Board would review whether the entity publicly discloses information on its structure, governance, policies and operations.
5. System’s historical performance: The Board would weigh whether the non-U.S. oversight entity or the system within which it operates has a record of adequate disciplinary proceedings and appropriate sanctions

Big four entities in the small European financial centers may be upset.


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The European Commission has the day before yesterday adopted a Communication inviting Member States to carry out a general review of their anti-abuse rules in the direct tax area, in light of the principles flowing from relevant ECJ case law, – and to explore possible coordinated solutions in this field. In order to prevent tax abuse, Member States have implemented anti-abuse rules with the aim of preventing economic operators from eroding the tax base in their territory by diverting their income to other countries. Member States' existing anti-abuse rules often do not properly take into consideration the freedoms of the Treaty and are therefore increasingly challenged. In the framework of an EU-coordinated approach in direct taxation (IP/06/1827), the Commission is willing to assist Member States in bringing their anti-abuse rules in line with EC law requirements and to explore the scope for constructive and coordinated responses to the challenges faced by Member States.


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Mr Drago KOS, President of the Group of States against Corruption, on the occasion of the International Anti-corruption Day provided a statement where he underlines that there is evidence that high levels of corruption still permeate society and public institutions in some of GRECO members. It is disturbing to realise that renowned companies have been found to have paid massive bribes to win or retain business.

This mixed picture clearly compels the GRECO to remain vigilant, to vigorously support compliance with high standards of integrity, and to fight impunity where it occurs.

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