WRITTEN QUESTION E-3055/03 by Margrietus van den Berg (PSE) to the Commission. Accounting scandals and corporate governance.
Date: 2003-10-17
Institutions: European Parliament, Provisional data
Subjects: action programme, business activity, business ethics, business policy, corporate governance, management accounting, multinational enterprise, subsidiary

27.3.2004

EN

Official Journal of the European Union

C 78 E/215

(2004/C 78 E/0220)

WRITTEN QUESTION E-3055/03

by Margrietus van den Berg (PSE) to the Commission

Subject: Accounting scandals and corporate governance

(17 October 2003)

Following cases in the United States, instances of accounting scandals involving multinational undertakings
have now also come to light in Europe. Over-ambitious boards of directors have focused on expansion, to
the detriment of stability, with the result that multinational undertakings can keep their heads above water
only if the economic climate is favourable. The economic tide has now turned and these undertakings are
facing problems: subsidiaries and shareholdings are being sold off and in some cases profits are being
artificially inflated. These developments are having serious consequences, with the brunt of the problems
being borne by pension funds, employees and customers, and trust in the economy is being further
undermined. Rising unemployment and poor economic prospects are adding to the concerns regarding
firms and workers who are the innocent victims of the misplaced optimism and irresponsible ambitions of
major undertakings.

One example of this problem in the Netherlands is the accounting scandal involving Ahold, into which
two judicial
inquiries have now been launched. The last two years’ profits of Ahold subsidiaries in
Argentina and the United States were deliberately inflated and Ahold suppressed side letters from the
accountants Deloitte & Touche. Now the Netherlands subsidiary Albert Heijn and its dozens of employees
seem set to become the victims of Ahold’s mismanagement, despite the fact that Albert Heijn is a healthy
firm which has nothing whatsoever to do with its holding company’s practices abroad.

1. What view does the Commission take of this case, which is but one example among many involving
multinational undertakings?

2. What action does the Commission plan to take to combat mismanagement, in the light of its action
plan on improving corporate governance?

How does the Commission plan to protect innocent subsidiaries and employees against the effects of

3.
mismanagement, once again in the light of its action plan on improving corporate governance?

Answer given by Mr Bolkestein on behalf of the Commission

(25 November 2003)

1.
Cases like Ahold have no doubt contributed to a loss of confidence of investors in capital markets to
the detriment of the European economy, all its stakeholders and investors. It confirms the importance of
Commission initiatives aiming at restoring the confidence of the capital markets in the contents of the
financial information published by companies, in the people who prepare financial statements and in the
professionals who audit those financial statements.

The following initiatives have been taken by the Commission in order to contribute to restoring

2.
confidence, particularly in the areas of financial reporting and corporate governance:

(cid:1) The introduction of a requirement for all listed Community companies to prepare their consolidated
accounts in accordance with the International Accounting Standards (IAS) as of 2005 (Regulation (EC)
No 1606/2002 of 19 July 2002 (1));

(cid:1) The publication of a Communication in May 2003 (2) on modernising company law and enhancing
corporate governance in the Union, with an indication of specific proposals to be made in the short
term on subjects such as the collective responsibility of board members for financial and key non-
financial statements;

(cid:1) The publication of a Communication in May 2003 (3) on priorities in the area of statutory audit, with
the indication of an amendment in the short term of the Eighth Company Law Directive of 12 May
1984 (4) in order to introduce into this Directive requirements aiming at an improvement of audit
quality throughout the Union, such as proper public oversight, external quality control, and the use of
one set of auditing standards (International Auditing Standards).

C 78 E/216

Official Journal of the European Union

EN

27.3.2004

Subsidiaries of a group are not always the innocent victim of the group’s behaviour, on the contrary,
3.
they may also be the direct cause of problems for the group as whole. In order to get a better insight into
intra-group relations, the company law Action Plan mentioned above includes a proposal to be made by
the Commission in the short term concerning an increased disclosure of group structures and relations,
both financial and non financial. Increased transparency might contribute to a quicker assessment of the
situation so that measures can be taken before the problems materialise.

(1) Regulation (EC) No 1606/2002 of the Parliament and of the Council of 19 July 2002 on the application of

international accounting standards, OJ L 243, 11.9.2002.

(2) COM(2003) 284 final.
(3) OJ C 236, 2.10.2003.
(4) Eighth Council Directive 84/253/EEC of 10 April 1984 based on Article 54 (3) (g) of the Treaty on the approval of

persons responsible for carrying out the statutory audits of accounting documents, OJ L 126, 12.5.1984.

(2004/C 78 E/0221)

WRITTEN QUESTION E-3058/03

by Gabriele Stauner (PPE-DE) to the Commission

(17 October 2003)

Subject: Contradictions and inconsistencies in Commission and OLAF statements about the Datashop case

In my Written Question E-2205/03 (1), I asked why the Commission had still asked OLAF to continue with
its investigations into the Planistat/Datashop case in May 2003, although the case had been referred to the
Paris judicial authorities on 19 March 2003 and they had taken over the case.
the
Commission stated that there were two aspects to the Datashop case, an external one, which involved the
activities of Planistat Europe SA, and a second one involving Community officials.

In its answer,

The documents delivered to the Paris Public Prosecutor’s Office on 19 March 2003 concerned solely the
external aspect of the case. According to the answer given by Mrs Schreyer on behalf of the Commission
on 22 September 2003, the internal aspect had not been referred to the French courts. However, on page 7
of
the
the note drawn up by the Director of OLAF on 24 September 2003 for the President of
Commission, I read that ‘the French judicial authorities are in possession of the internal aspects relating to
the doings of Community officials’.

How is this possible, when the note dated 24 September 2003 from the Director of OLAF also says that
‘the report on these internal aspects will be sent to the French judicial authorities very shortly’, i.e. that the
OLAF report on these internal aspects had not yet been sent to the French judicial authorities?

Who then, if not OLAF, informed the French judicial authorities in advance about the internal aspects of
the case?

From the note drawn up by the Director of OLAF, I also gather that the OLAF investigation into the
external aspects of the case was opened only on 18 March 2003 and that the relevant findings were then
forwarded to the Paris Public Prosecutor’s Office just one day later, on 19 March 2003. How can that be?

(1) OJ C 70 E, 20.3.2004, p. 80.

Answer given by Ms Schreyer on behalf of the Commission

(22 December 2003)

The Commission would point out that the European Anti-Fraud Office (OLAF) is in sole charge of the
investigations it conducts and that OLAF informed the Commission that the material it sent to the Paris
Public Prosecutor’s Office on 19 March 2003 concerned a contractor of Directorate-General Eurostat and
therefore an external investigation.