Companies race against time

President Bush's Wednesday deadline was supposed to clean up corporate America, but it's the Europeans who have been thrown into panic, writes Leo Lewis

Massive confusion ahead of the deadline for senior executives to comply with President Bush's new accountability laws has sent Europe's biggest companies, including BP and Novartis, into a panic-stricken scramble.

In the wake of the WorldCom and Enron scandals, and in a high-profile effort to stamp out corporate dishonesty and fraud, Harvey Pitt, chairman of the US Securities and Exchange Commission, is demanding that 947 blue-chip American companies file sworn statements vouching for the integrity of their financial reports by 4pm, New York time, on Wednesday. Time is fast running out, and as of Friday's market close, only 126 companies had made their representations.

But a parallel law, passed by the President just over 10 days ago, demands that any foreign company with US-registered securities – a stock listing, debt or American depository receipts (ADRs) – also has to produce certificates from its chief executive and chief financial officer attesting to the accuracy of the accounts.

Although many details of the ruling remain bafflingly vague, the punishment for non-compliance is clear: the maximum penalty for a chief executive breaking the law is a $5m (£3.2m) fine and up to 20 years in jail.

Based on ADRs alone, more than 250 European companies will be affected by the ruling, the vast majority coming from the Eurotop 300 index of leading blue chips. So far only ABN Amro and Nestlé are understood to have submitted their certifications.

In the Dow Jones Industrial Average, which tracks the top 30 US stocks, only six companies – ExxonMobil, General Electric, Citigroup, United Technologies, Alcoa and 3M – had set a good example and filed the relevant letters from their chief executives by Friday's close.

With the Wednesday deadline looming, no-shows include McDonald's, Micro-soft, WalMart, IBM, General Motors, Walt Disney and Coca-Cola.

Outside the Dow, Oracle, Goldman Sachs and RJ Reynolds have filed, but Cisco, Merrill Lynch and Philip Morris have yet to do so – and the clock is ticking.

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