Brussels to target offshore sites in finantial regulation sqeeze

February, 12 2004

Brussels will target offshore centers in a tightening of corporate governance after the E 4bn ($ 5.2 bn) Parmalat accounting scandal in Italy. In a series of industry-wide proposals that could affect the maritime sector, the European Commission will force companies to disclose their activities in jurisdictions where supervision is light. Frits Bolkestein, commissioner in charge of the internal market, taxation and customs, said: " The apparent size of the Parmalat fraud is staggering. The apparent complicity of a number of people from distinguished, liberal professions together with the failures of regulatory control - equally so". Addressing the European Parliament in Strasbourg, he warned: "Scandal upon scandal will cumulatively weaken financial markets like the corrosive drip of a leaking fuel tank. Many sensible investors will put out." The commission's latest salvo on corporate governance will tighten the squeeze on offshore financial sectors, which have come under intense scrutiny amid concerns about money laundering and terrorism. In December, the Organization of Economic Co-operation and Development issued a discussion document as part of public consultation on fighting terrorism in shipping by improving transparency of beneficial ownership. Mr Bolkestein told MEPs yesterday that the financial services industry had "better get its act together, and do so fast". Brussel's top financial regulator continued: "We need some real industry leadership to stand up and take charge: to clear out the crooks, expose their unscrupulous practices and curb excessive greed. If industry leaders are not prepared to do this, then regulators will have to do much more than perhaps they or we would like". Mr Bolkestein said that new EU laws against money laundering should contain provisions to boost financial supervision in the offshore centers, but gave no more detrails.

Lloyd's List
By Roger Hailey