Prague, 28 June 2002 (RFE/RL) -- Following disclosures that another major U.S. corporation systematically falsified its books, Western commentary continues today to discuss the scope and dangers of public companies' accounting fraud.
THE BOSTON GLOBE:
"The Boston Globe" calls editorially for government intervention with investment community cooperation: "WorldCom should never have been allowed to fiddle with its books for 15 months without Wall Street questioning its essential value to investors. Now that its own audit has revealed this trickery, the investment community and the government need to agree on tough new rules to reassure investors that they will receive accurate information about company successes and failings alike."
The editorial concludes: "Investors, domestic or foreign, take risks when they put their money into U.S. companies. But they are entitled to accurate information about their choices. At the very least, Congress should pass the accounting oversight bill approved by the Senate Banking Committee this month. For the sake of long-term economic growth, the government must make sure investors get both the good news and the bad as soon as it happens."
THE WALL STREET JOURNAL EUROPE:
The "Wall Street Journal Europe" publishes a commentary today by Princeton University economist Burton G. Makiel, who takes the opposite tack. He says, "The market can police itself."
Makiel writes: "The stock market is reacting to accounting scandals of unprecedented magnitude. First came Enron, then Tyco, Global Crossing, and Adelphia. Now WorldCom has jointed the list."
The writer says: "There is no way one can legislate accounting standards and there is no way to fix generally accepted accounting principles so that full transparency is assured. But perhaps the most useful thing we can do is to accept the suggestion of Treasury Secretary Paul O'Neill that CEOs should personally vouch for the veracity and fairness of their company's financial statements."
The commentary says: "In the final analysis, the immediate punishment doled out by the market itself will be the most powerful deterrent to future corporate wrongdoing. And eventually the stock market will react to the increase in economic activity instead of the growth in corporate scandals."
THE DAILY TELEGRAPH:
"The Daily Telegraph" looks across the sea to declare in an editorial, "The WorldCom scandal reveals a crisis in capitalism."
The editorial describes the reluctance of the British National Health Service (NHS) to talk openly about fraud in the NHS. The newspaper says this dramatizes a significant difference: "The WorldCom scandal has been very public, involving high-profile interviewers with law enforcers. The NHS, in contrast, is reluctant to discuss the matter at all unless the correct 'line' is going to be taken."
The editorial concludes: "Not untypically, in capitalism, the fraud has been quite quickly exposed and publicized and the fraudulent organization has collapsed. As usual, in a state operation, fraud is little talked of, continues, and may be getting bigger."
THE NEW YORK TIMES:
"The New York Times" editorializes that the parade of companies behaving badly seems endless. "The simple nature yet breathtaking scale of WorldCom's deceit raises anew all the Enron questions about the failure of market guardians to prevent it. Was anyone on the board of directors even remotely suspicious? Why didn't the auditing firm, Arthur Andersen, realize that the company was booking false profits? Did high-profile WorldCom boosters on Wall Street give the company's phony numbers a pass because they were eager to win WorldCom's banking business?"
The editorial says: "Anxious investors are left to wonder what other financial scandals lie around the corner. America's status as the world's ultimate safe haven for investors is looking shaky. The huge inflow of foreign capital -- [$400 billion a year] -- has been a key factor in the country's recent prosperity. Two-fifths of all Treasury bonds are in foreign hands. An erosion of confidence in the United States could accelerate the dollar's recent decline and dry up needed credit. Capital flight is a danger we usually associate with countries like Argentina, but a few more WorldComs and the comparison may seem apt."
FRANKFURTER ALLGEMEINE ZEITUNG:
German commentator Klaus-Dieter Frankenberger questions in the "Frankfurter Allgemeine Zeitung" the elevation of Russia at the G-8 summit in Canada to full membership in the club of "major industrialized nations." The elevation, he writes, "has something contrived about it."
The writer says: "Certainly, Russia is a superpower in terms of energy, but its share of the world economy is small and the role in international financial organizations marginal. It has yet to join the World Trade Organization -- a reward that is, however, soon likely to be conferred."
He continues: "There are a number of countries far more closely woven into the global division of labor without having been elevated to the summit. What economic role will Russia really be willing and able to play when there are other matters at stake besides turning nuclear military capacities -- or the threat contained in their existence, ready for the scrap heap though they may be -- and geopolitical backing to its political advantage? It cannot be very great. But this appears to interest neither U.S. President George W. Bush, who wants to keep Russia sweet and is prepared to pay for the privilege, nor the Europeans."
THE GUARDIAN:
The British daily "The Guardian" editorializes approvingly about what it calls "Russia's formal accession to the Group of Eight."
The newspaper says: "It follows closely on Russia's defense agreements with NATO and the United States. It is in all likelihood a prelude to Russian membership of the World Trade Organization, a development that [Russian President Vladimir] Putin, as he made clear at a Kremlin press conference earlier this week, regards as key to his country's modernization and prosperity.
"This conference was itself symbolic of Mr. Putin's personal commitment to change, at home and abroad. He spoke with great assurance for over two hours to 700 journalists on issues ranging from relations with China to pensions, housing, and corrupt traffic cops. He even admitted making mistakes in Chechnya. What a contrast with Soviet times."
THE NEW YORK TIMES:
"The New York Times" writer Nicholas D. Kristoff says that the G-8 summit has displayed U.S. President George W. Bush's penchant for seeing complex issues in simplistic terms. "With European and Asian leaders wincing, gulping, and disagreeing, President Bush has been blithely peddling stark, uncompromising moral clarity at the summit. Particularly on the topic of Yasser Arafat, the other leaders seem to think Mr. Bush is nuts, although the polite ones, like [British Prime Minister] Tony Blair, redefine what Mr. Bush says to make it coherent and then agree with the revised version."
The writer continues: "If Mr. Bush is content to shake his fist and win thunderous ovations, moral clarity is enough. But if he wishes to oust [Iraqi leader] Saddam Hussein, maintain peace in the Middle East, calm tempers in the Indian subcontinent, manage the rise of China, and avoid war with North Korea, he must add some practicality to his principles."
THE BOSTON GLOBE:
Two commentaries -- published respectively in "The Boston Globe" and "The Wall Street Journal Europe" -- deal with a key issue of the G-8 summit: NEPAD, or the New Partnership for African Development, a sort of Marshall Plan for the continent.
Makau Mutua, professor of law and director of the Human Rights Center at the State University of New York at Buffalo, writes in the "Globe" that "the idea has caught fire."
"Though an admirable initiative, the partnership must be treated with cautious optimism. Africa's problems are complex and deeply rooted, and no magic bullet will solve them overnight. In an era of rapid globalization, the gulf between Africa and the rest of the world continues to grow at an alarming pace."
THE WALL STREET JOURNAL EUROPE:
In the "WSJE," Bernie de Haldevang, chief executive of the African Trade Insurance Agency, comments: "When the G-8 leaders met yesterday in Kananaskis, Alberta, they stressed that something needs to be done about poverty in Africa. That's hardly surprising, since the plight of the continent has featured on every economic summit agenda since the first at Rambouillet, France, 27 years ago. But what Africa needs most is not aid, but investment."
The commentary says: "The G-8 leaders need to encourage more African nations to join so that the continent as a whole can benefit. And they need to tell their own business leaders to revise their perceptions of trading with Africa."
THE WASHINGTON POST:
Dominating commentary in the U.S. press today is discussion of court rulings involving separation of church and state. The U.S. Supreme Court yesterday affirmed the constitutionality of Ohio's use of vouchers in Cleveland that allows parents to enroll their children in private -- including religious -- schools at public expense.
"The Washington Post" says in an editorial: "The failure of many public school systems around the country to offer any semblance of an education to millions of children is not a matter of serious dispute. Wealthy and middle-class people have an out: private schools or a move to a jurisdiction with better public schools. The poor often have no option."
The editorial says: "In affirming yesterday the constitutionality of Ohio's use of vouchers in Cleveland -- one of the country's most dramatically failed school systems -- the Supreme Court's conservative majority rightly created wiggle room for states, localities, and potentially even Congress to try carefully designed voucher programs."
THE NEW YORK TIMES:
"The New York Times" differs categorically. "It was a bad decision on constitutional grounds, and a bad one for American education. In theory, Cleveland's voucher program allows children to use state stipends to go to any school they want. In practice, the choice it offers them is between a failing public school system and the city's parochial schools. This is not a choice that the Constitution intended public tax money to underwrite."
THE WALL STREET JOURNAL EUROPE:
"The Wall Street Journal Europe" writes approvingly of the Supreme Court's call. "The U.S. Supreme Court yesterday struck the greatest blow for equal public education since Brown v. Board of Education in 1954. In the process it also stripped away the last constitutional and moral fig leaf from those who want to keep minority kids trapped in failing public schools."
The editorial continues: "Americans of means already have [a] choice. If they live in the cities, they send their kids to private schools or move to suburbs where the public schools still aim for achievement. Vouchers are a way of giving poor kids that same opportunity, and if religious schools provide it, so be it."
It concludes: "Yesterday's Supreme Court decision didn't solve the urgent problem of failing urban public schools. That is now the duty of politicians, who we hope will take a cue from the...case. But it removes one of the last excuses liberals, unions, and the bureaucracy have used for refusing even to try."
THE WASHINGTON POST:
Syndicated columnist George W. Will, published in "The Washington Post" and other newspapers, writes: "Cleveland's choice program was created after Ohio's government declared the city's schools to be in an 'academic emergency.' Well, yes. The school district flunked 27 -- of 27 -- standards for student performance. These are schools that no affluent liberal of the sort crusading against school choice would let his or her children even walk past, let alone into."
Will continues: "The opposition to school choice for the poor is the starkest immorality in contemporary politics. It is the defense of the strong -- teachers unions -- and comfortable -- the middle class, content with its public schools and fretful that school choice might diminish their schools' resources and admit poor children to their schools -- against the weak and suffering -- inner-city children. Happily, yesterday, socially disadvantaged children had their best day in court since the Brown v. Board of Education in 1954."
THE WALL STREET JOURNAL EUROPE:
"The Wall Street Journal Europe" publishes a commentary by John H. Fund, a columnist for an online journal. "Minority voters are the most supportive of private options in education, but most won't vote for candidates on that basis, limiting the appeal of the issue to conservative politicians. Meanwhile, many suburban voters remain ignorant of school choice, complacently believing their local schools are wonderful or falsely fearing the changes that school choice could bring.
"But targeted school choice programs should nevertheless flourish. Today, almost every state uses public funds to send special-education students to private schools if the public schools can't address their needs. A dozen states will, at the request of principals, transfer disruptive students to private schools with strict disciplinary programs. Expanding those programs could be popular, and could force public schools to improve their own performance to compete."
THE BOSTON GLOBE:
"The Boston Globe" calls editorially for government intervention with investment community cooperation: "WorldCom should never have been allowed to fiddle with its books for 15 months without Wall Street questioning its essential value to investors. Now that its own audit has revealed this trickery, the investment community and the government need to agree on tough new rules to reassure investors that they will receive accurate information about company successes and failings alike."
The editorial concludes: "Investors, domestic or foreign, take risks when they put their money into U.S. companies. But they are entitled to accurate information about their choices. At the very least, Congress should pass the accounting oversight bill approved by the Senate Banking Committee this month. For the sake of long-term economic growth, the government must make sure investors get both the good news and the bad as soon as it happens."
THE WALL STREET JOURNAL EUROPE:
The "Wall Street Journal Europe" publishes a commentary today by Princeton University economist Burton G. Makiel, who takes the opposite tack. He says, "The market can police itself."
Makiel writes: "The stock market is reacting to accounting scandals of unprecedented magnitude. First came Enron, then Tyco, Global Crossing, and Adelphia. Now WorldCom has jointed the list."
The writer says: "There is no way one can legislate accounting standards and there is no way to fix generally accepted accounting principles so that full transparency is assured. But perhaps the most useful thing we can do is to accept the suggestion of Treasury Secretary Paul O'Neill that CEOs should personally vouch for the veracity and fairness of their company's financial statements."
The commentary says: "In the final analysis, the immediate punishment doled out by the market itself will be the most powerful deterrent to future corporate wrongdoing. And eventually the stock market will react to the increase in economic activity instead of the growth in corporate scandals."
THE DAILY TELEGRAPH:
"The Daily Telegraph" looks across the sea to declare in an editorial, "The WorldCom scandal reveals a crisis in capitalism."
The editorial describes the reluctance of the British National Health Service (NHS) to talk openly about fraud in the NHS. The newspaper says this dramatizes a significant difference: "The WorldCom scandal has been very public, involving high-profile interviewers with law enforcers. The NHS, in contrast, is reluctant to discuss the matter at all unless the correct 'line' is going to be taken."
The editorial concludes: "Not untypically, in capitalism, the fraud has been quite quickly exposed and publicized and the fraudulent organization has collapsed. As usual, in a state operation, fraud is little talked of, continues, and may be getting bigger."
THE NEW YORK TIMES:
"The New York Times" editorializes that the parade of companies behaving badly seems endless. "The simple nature yet breathtaking scale of WorldCom's deceit raises anew all the Enron questions about the failure of market guardians to prevent it. Was anyone on the board of directors even remotely suspicious? Why didn't the auditing firm, Arthur Andersen, realize that the company was booking false profits? Did high-profile WorldCom boosters on Wall Street give the company's phony numbers a pass because they were eager to win WorldCom's banking business?"
The editorial says: "Anxious investors are left to wonder what other financial scandals lie around the corner. America's status as the world's ultimate safe haven for investors is looking shaky. The huge inflow of foreign capital -- [$400 billion a year] -- has been a key factor in the country's recent prosperity. Two-fifths of all Treasury bonds are in foreign hands. An erosion of confidence in the United States could accelerate the dollar's recent decline and dry up needed credit. Capital flight is a danger we usually associate with countries like Argentina, but a few more WorldComs and the comparison may seem apt."
FRANKFURTER ALLGEMEINE ZEITUNG:
German commentator Klaus-Dieter Frankenberger questions in the "Frankfurter Allgemeine Zeitung" the elevation of Russia at the G-8 summit in Canada to full membership in the club of "major industrialized nations." The elevation, he writes, "has something contrived about it."
The writer says: "Certainly, Russia is a superpower in terms of energy, but its share of the world economy is small and the role in international financial organizations marginal. It has yet to join the World Trade Organization -- a reward that is, however, soon likely to be conferred."
He continues: "There are a number of countries far more closely woven into the global division of labor without having been elevated to the summit. What economic role will Russia really be willing and able to play when there are other matters at stake besides turning nuclear military capacities -- or the threat contained in their existence, ready for the scrap heap though they may be -- and geopolitical backing to its political advantage? It cannot be very great. But this appears to interest neither U.S. President George W. Bush, who wants to keep Russia sweet and is prepared to pay for the privilege, nor the Europeans."
THE GUARDIAN:
The British daily "The Guardian" editorializes approvingly about what it calls "Russia's formal accession to the Group of Eight."
The newspaper says: "It follows closely on Russia's defense agreements with NATO and the United States. It is in all likelihood a prelude to Russian membership of the World Trade Organization, a development that [Russian President Vladimir] Putin, as he made clear at a Kremlin press conference earlier this week, regards as key to his country's modernization and prosperity.
"This conference was itself symbolic of Mr. Putin's personal commitment to change, at home and abroad. He spoke with great assurance for over two hours to 700 journalists on issues ranging from relations with China to pensions, housing, and corrupt traffic cops. He even admitted making mistakes in Chechnya. What a contrast with Soviet times."
THE NEW YORK TIMES:
"The New York Times" writer Nicholas D. Kristoff says that the G-8 summit has displayed U.S. President George W. Bush's penchant for seeing complex issues in simplistic terms. "With European and Asian leaders wincing, gulping, and disagreeing, President Bush has been blithely peddling stark, uncompromising moral clarity at the summit. Particularly on the topic of Yasser Arafat, the other leaders seem to think Mr. Bush is nuts, although the polite ones, like [British Prime Minister] Tony Blair, redefine what Mr. Bush says to make it coherent and then agree with the revised version."
The writer continues: "If Mr. Bush is content to shake his fist and win thunderous ovations, moral clarity is enough. But if he wishes to oust [Iraqi leader] Saddam Hussein, maintain peace in the Middle East, calm tempers in the Indian subcontinent, manage the rise of China, and avoid war with North Korea, he must add some practicality to his principles."
THE BOSTON GLOBE:
Two commentaries -- published respectively in "The Boston Globe" and "The Wall Street Journal Europe" -- deal with a key issue of the G-8 summit: NEPAD, or the New Partnership for African Development, a sort of Marshall Plan for the continent.
Makau Mutua, professor of law and director of the Human Rights Center at the State University of New York at Buffalo, writes in the "Globe" that "the idea has caught fire."
"Though an admirable initiative, the partnership must be treated with cautious optimism. Africa's problems are complex and deeply rooted, and no magic bullet will solve them overnight. In an era of rapid globalization, the gulf between Africa and the rest of the world continues to grow at an alarming pace."
THE WALL STREET JOURNAL EUROPE:
In the "WSJE," Bernie de Haldevang, chief executive of the African Trade Insurance Agency, comments: "When the G-8 leaders met yesterday in Kananaskis, Alberta, they stressed that something needs to be done about poverty in Africa. That's hardly surprising, since the plight of the continent has featured on every economic summit agenda since the first at Rambouillet, France, 27 years ago. But what Africa needs most is not aid, but investment."
The commentary says: "The G-8 leaders need to encourage more African nations to join so that the continent as a whole can benefit. And they need to tell their own business leaders to revise their perceptions of trading with Africa."
THE WASHINGTON POST:
Dominating commentary in the U.S. press today is discussion of court rulings involving separation of church and state. The U.S. Supreme Court yesterday affirmed the constitutionality of Ohio's use of vouchers in Cleveland that allows parents to enroll their children in private -- including religious -- schools at public expense.
"The Washington Post" says in an editorial: "The failure of many public school systems around the country to offer any semblance of an education to millions of children is not a matter of serious dispute. Wealthy and middle-class people have an out: private schools or a move to a jurisdiction with better public schools. The poor often have no option."
The editorial says: "In affirming yesterday the constitutionality of Ohio's use of vouchers in Cleveland -- one of the country's most dramatically failed school systems -- the Supreme Court's conservative majority rightly created wiggle room for states, localities, and potentially even Congress to try carefully designed voucher programs."
THE NEW YORK TIMES:
"The New York Times" differs categorically. "It was a bad decision on constitutional grounds, and a bad one for American education. In theory, Cleveland's voucher program allows children to use state stipends to go to any school they want. In practice, the choice it offers them is between a failing public school system and the city's parochial schools. This is not a choice that the Constitution intended public tax money to underwrite."
THE WALL STREET JOURNAL EUROPE:
"The Wall Street Journal Europe" writes approvingly of the Supreme Court's call. "The U.S. Supreme Court yesterday struck the greatest blow for equal public education since Brown v. Board of Education in 1954. In the process it also stripped away the last constitutional and moral fig leaf from those who want to keep minority kids trapped in failing public schools."
The editorial continues: "Americans of means already have [a] choice. If they live in the cities, they send their kids to private schools or move to suburbs where the public schools still aim for achievement. Vouchers are a way of giving poor kids that same opportunity, and if religious schools provide it, so be it."
It concludes: "Yesterday's Supreme Court decision didn't solve the urgent problem of failing urban public schools. That is now the duty of politicians, who we hope will take a cue from the...case. But it removes one of the last excuses liberals, unions, and the bureaucracy have used for refusing even to try."
THE WASHINGTON POST:
Syndicated columnist George W. Will, published in "The Washington Post" and other newspapers, writes: "Cleveland's choice program was created after Ohio's government declared the city's schools to be in an 'academic emergency.' Well, yes. The school district flunked 27 -- of 27 -- standards for student performance. These are schools that no affluent liberal of the sort crusading against school choice would let his or her children even walk past, let alone into."
Will continues: "The opposition to school choice for the poor is the starkest immorality in contemporary politics. It is the defense of the strong -- teachers unions -- and comfortable -- the middle class, content with its public schools and fretful that school choice might diminish their schools' resources and admit poor children to their schools -- against the weak and suffering -- inner-city children. Happily, yesterday, socially disadvantaged children had their best day in court since the Brown v. Board of Education in 1954."
THE WALL STREET JOURNAL EUROPE:
"The Wall Street Journal Europe" publishes a commentary by John H. Fund, a columnist for an online journal. "Minority voters are the most supportive of private options in education, but most won't vote for candidates on that basis, limiting the appeal of the issue to conservative politicians. Meanwhile, many suburban voters remain ignorant of school choice, complacently believing their local schools are wonderful or falsely fearing the changes that school choice could bring.
"But targeted school choice programs should nevertheless flourish. Today, almost every state uses public funds to send special-education students to private schools if the public schools can't address their needs. A dozen states will, at the request of principals, transfer disruptive students to private schools with strict disciplinary programs. Expanding those programs could be popular, and could force public schools to improve their own performance to compete."