EUROPEAN UNION RESPONSE

European Union Response to the Current Finance Sandals

European Union Response to the Current Finance Sandals

Introduction

In 2001 and 2002, Enron, WorldCom, and several other major U.S. corporations collapsed after evidence of accounting fraud emerged at each company. By the time lawmakers and regulators had finished dealing with the fallout from these scandals and with the Sarbanes-Oxley Act of 20022 and other reforms, a new crisis emerged with the distressed sale of the largest subprime lender, Countrywide Financial, and the subsequent collapses of Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, and AIG. This paper discusses the Corporate Governance Standards enacted after the Palmart Scandal in European Union.

Discussion

Parmalat Scandal

Parmalat was a success story, driven by the dynamics of neoliberal globalization. It was a small family firm distribution of pasteurized milk established near Parma in 1960; it has grown thanks to the skill of its founder, Calisto Tanzi, and generous grants from the European Union. In 1974, it multiplied and created subsidiaries companies relay territories with tax facilities (Isle of Man, Netherlands, Luxembourg, Austria, Malta) and in tax havens (Cayman Islands, British Virgin Islands, Netherlands Antilles). In 1990, the company entered the stock market, establishing itself as the seventh private group in Italy and topping the global market long-life milk (Barroso et al., 2011, pp. 351-367). This colossus organisation, employed approximately 37,000 employees in more than thirty countries and its turnover amounted in 2002 to 7.6 billion Euros, a sum greater than the gross national product of countries such as Paraguay, Bolivia, Angola or Senegal. The Parmalat crash was the biggest scandal of bankruptcy fraud and market manipulation perpetrated by a private company in Europe. It was only discovered at the end of 2003, although subsequently it has been shown that the financial difficulties of the company were already detectable in the early nineties (Morariu et al., 2009, pp. 290-295; Gould, J. 2012, Retrieved from http://in.reuters.com).

Response of EU to WorldCom Scam

In 2002, a small team of internal auditors of WorldCom, led by Cynthia Cooper, who usually had to work at night in secret, were investigated and found that 3.8 billion dollars in fraud. Soon after, the company, the committee audit and the board, were reported and acted quickly, dismissing Sullivan, Myers resigned by his side and Arthur Andersen (auditing firm) withdrew its audit opinion for 2001.

The June 25, 2002 WorldCom admits to inflating earnings figure of $ 3,800 million on 26 June of the same year the Committee of Security and Exchange of securities fraud charges presented WorldCom and July 21, 2002. WorldCom, burdened with a debt of 30,000 million, sought bankruptcy protection, the largest corporate bankruptcy case in history. In two reports signed by William McLucas (study Wilmer, Cutler & Pickering), sent on July 10, 2001 by Ebbers to COO (Ronald Beaumont), supports complex maneuvers to alter accounting entries and involves vice president in charge of finance ( McGuire and John Michael Higgins). This report proves that Ebbers was aware of the irregularities made ??systematically refused for ...