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After scandals, G8 seeks wider accounting rules

Leaders of the Group of Eight (G8) world powers yesterday restated pledges to crack down on financial crime and called for globally recognised accounting standards to prevent more corporate scandals in their backyards.

But in the first batch of what promises to be a drip-feed of statements on specific issues from the annual summit of leading industrial nations, the G8 leaders for the most part reaffirmed already existing initiatives to clean up the way financial markets work.

The G8 comprises the United States, Britain, Russia, France, Italy, Germany, Japan and Canada.

The statement on “promoting a responsible market economy” referred to bankers, analysts and rating agencies, but without mentioning any discussion of extra regulation that delegates say is on hold till later this year.

“Integrity, quality and accessibility are the cornerstones of reliable financial information. We call on all information providers – first and foremost companies and their auditors, as well as financial analysts, investment banks and rating agencies – to abide by these principles,” the statement said.

Companies should be accountable to shareholders, it stressed.

“Recognising the need for financial stability, we commit to promoting high-quality, internationally recognised accounting standards that are capable of consistent application, interpretation and enforcement, especially for listed companies,” it said.

Once considered too arcane for top-level summitry, corporate governance rules have forced their way on to the international agenda following a rash of accounting scandals beginning with the collapse of energy trader Enron Corp in the United States.

But so far the G8 has steered away from significant co-ordinated action while waiting for reports from bodies like the US Securities and Exchange Commission.

The G8 also promised efforts to fight corruption – calling it an obstacle to economic and social development – as well as the “mismanagement of public revenue and expenditure”.

On another note, US President George W. Bush is reported to have told other G8 leaders that he would prefer a stronger US dollar, but it was not up to him.

“As far as the value of the US dollar is concerned, Bush said he was not the one who decides. It is (US Federal Reserve chairman Alan) Greenspan,” a Canadian official told reporters after a session on the economy at the G8 summit.

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