UNITED NATIONS, July 1: IMF Managing Director Horst Koehler said on Monday the Enron and WorldCom scandals showed the international community had to worry as much about economic risks in wealthy nations as in poor countries.

The collapse of energy trader Enron Corp. and the accounting scandal at US long-distance operator WorldCom Inc. “have made it clearer than ever that there is a need to give as much attention to risks and vulnerabilities arising in the advanced countries, as we do to problems in emerging markets and developing countries,” he said.

In a speech to the UN Social and Economic Council, Koehler also said he was confident the global economy would gain strength in the second half of the year although “there are still questions about the strength and durability of the recovery.”

Threatening a strong recovery, in particular, were corporate earnings and investment in the United States, financial market fragility and “regional political tensions,” Koehler said, in an apparent reference to South Asia and the Middle East.

To help promote a strong recovery, he called for “vigilance and a shift from short-term considerations to tackling decisively the underlying economic and financial imbalances in the global economy.”

Europe had the potential to achieve 3 per cent annual growth if it undertook more ambitious structural reforms while Japan would grow at a rate more commensurate with its size and potential if it sped its disposal of nonperforming loans, deregulated key industries and restructured its banking and corporate sectors, Koehler said.

Koehler said he welcomed the broad debate and various legislative activities opened in the United States following the revelations about WorldCom and Enron.

“But I also think that the international community as a whole should review issues related to accounting, disclosure and corporate governance,” Koehler said.

WorldCom faces bankruptcy after being charged with fraud for improperly booking $3.85 billion in ordinary expenses, a move that allowed it to post a $1.38 billion profit last year instead of a loss.

Enron collapsed after investors lost confidence in the firm following a string of disclosures about off-balance sheet transactions that drained billions of dollars from the company’s coffers.—Reuters