Bush warning for US companies

President George Bush warned corporate America not to "fudge the numbers" yesterday after fears of another US accounting scandal, this time involving the copier group Xerox, sent shudders through world equity markets once more.

Addressing a Republican fund-raising event in Maryland, President Bush said he was not worried about the underlying strength of the economy. But he conceded that people were concerned over whether the balance sheets of big US companies were true, because of the scandal at WorldCom, which admitted this week that it had booked $3.8bn (£2.5bn) in fictitious profits.

"Corporate America has got to understand there's a higher calling than trying to fudge the numbers, try to kind of slip a billion here or a billion there and hope nobody notices," he said.

The President's comments came as Xerox confirmed that it would restate $2bn (£1.33bn) of revenues from past years. In New York, Xerox shares plunged by a third in pre-market trading amid fears that the amount it would have to restate could be nearer $6bn (£3.9bn).

They later recovered some of their losses to stand 15 per cent lower after Xerox said the restatement of revenues would be the same as it had agreed in April as part of a settlement of fraud charges brought by the Securities and Exchange Commission. Xerox said it was reversing $6.4bn (£4.2bn) of revenues from equipment sales offset by $5.1bn (£3.3bn) of revenues from other sources.

In late trading, Wall Street was up by more than 60 points, while equity markets across Europe also rallied. In London the FTSE 100 Index of leading shares closed 2.5 per cent higher at 4656.4.

The main City watchdog, the Financial Services Authority, announced a further relaxation in the solvency rules governing big insurance companies.The new rules mean they have to test their portfolios against a 15 per cent fall in share values if equities have fallen 10 per cent in the previous three months.

WorldCom said 450 of the 17,000 job cuts it is making would be in Europe. It would not spell out the number in Britain.