Asia vulnerable to U.S.-style accounting fiascos despite reforms
Asia vulnerable to U.S.-style accounting fiascos despite reforms
Martin Abbugao, Agence France-Presse, Singapore
The slew of scandals rocking corporate America should prompt Asia
to review its own accounting and auditing standards, regional
analysts say, cautioning against gloating at the apparent
reversal of fortunes.
As Asia emerges stronger after its 1997-98 financial crisis,
it sits in the box seat as the United States takes stock of the
debacles jarring some of its most revered companies.
"What a difference five years does make," said Thomas Dawson,
chief spokesman of the International Monetary Fund (IMF), whose
painful medicine during the Asian crisis sparked much criticism.
"It's now the U.S. and the industrialized countries that are
going through a time of soul-searching and adjustment while East
Asia appears to be back on track," he told a recent forum in
Singapore.
Economists, however, warn that despite Asia implementing
urgently needed reforms following the 1997 meltdown, it remained
vulnerable to problems similar to those which brought down U.S.
energy giant Enron Corp. and telecom company WorldCom, among
others.
Enron collapsed and WorldCom is fighting bankruptcy after
irregularities in their books involving billions of dollars were
exposed, raising questions over the quality of U.S. auditing and
accounting standards.
The irony is not lost on some commentators who say the U.S.
has lost the moral high ground to lecture Asia on business
ethics.
But Srinivasa Madhur, an economist with the Asian Development
Bank (ADB), said corporate America's woes should prompt Asia to
take a closer look at its own vulnerabilities.
"If a mature economy like the US, with all the regulatory
framework in place, could face this sudden corporate governance
issues I would be very concerned. We do not know what we will
unearth in this part of the world," he told AFP.
"I have no reason to rejoice ... This is a time when we should
look at our own house in a much more introspective manner."
Economist Michael Backman, who has written extensively on the
stranglehold of families on Asian businesses, said an Asian-style
Enron debacle could be in the wings.
"We had one Enron in the United States, but how many potential
Enrons are here in East Asia? Maybe 5,000 ... 10,000?" he told
AFP.
Tunku Abdul Aziz, a former Malaysian central banker and now
vice chairman of the global anti-corruption group Transparency
International, said Asia must get a grip on the problem with
sound accounting standards that are rigidly enforced.
"The main challenge for Asian companies is really to make sure
that they are up to internationally accepted standards because in
a globalized economy, they will just have put their houses in
order," he said.
Jemal-ud-din Kassum, World Bank vice president for East Asia
and the Pacific region, said the Enron debacle showed that poor
business ethics was not an issue only for developing countries.
"In fact it remains a big issue in all market economies," he
told an anti-corruption forum in Singapore.
Economists see America's problems as much narrower than those
of Asia in 1997-1998, limited to accounting and auditing
irregularities.