LONDON, Aug 28: European business leaders bristled Wednesday at stringent new laws for US and foreign companies drawn up in the wake of a string of US accounting scandals, but appeared resigned to complying with the rules anyway.

The US Securities and Exchange Commission (SEC) voted Tuesday to impose new rules under the Sarbanes-Oxley Act signed last month by President George W. Bush.

The rules require chief executives and chief financial officers of US and foreign companies with listings on US stock markets to provide sworn statements verifying the accuracy of financial statements and annual reports sent to the SEC.

Digby Jones, director general of the Confederation of British Industry (CBI), warned that the new rules might make British companies “think twice” about listing in the United States.

“The problem is that it was done completely without consultation — it was done in a knee-jerk reaction sort of way by America,” he told AFP.

Jones, whose organisation is the biggest business grouping in Britain, also warned that firms with a US stock-market listing might find it hard to find talented non-executive directors willing to run the risk of the stiff jail sentences facing anyone flouting the new rules.

“Therefore I think there will be a diminution in the reservoir of talent from which tomorrow’s generation of non-executive directors can be found,” said Jones, who has written to the SEC requesting clarification of the new rules.

The French employers’ federation Medef also expressed concern about the new laws.

“Imposing respect for the laws of your own country on people not under its jurisdiction is a precedent with extremely far-reaching consequences,” said a vice president of Medef, Denis Kessler.

“Laws passed in one country can not be applied to citizens of other countries,” he insisted, but added that Medef has not yet decided on an official position regarding the US requirement.

German companies have also been vocal in opposing the new rules, complaining that German law makes the management and supervisory boards collectively responsible for accounts.

Porsche, the German maker of luxury sports cars, said last week it was re-considering plans for a listing on the New York Stock Exchange.

But despite the grumbles from some European business leaders, the European Commission gave a cautious approval to the new rules.

“The commission completely supports the aims of this act,” EC spokesman Jonathan Faull said.

“We are not trying to call into question the main thrust of the act,” which is not thought to conflict with EU laws, he added.

And while many European companies may be cursing the new laws in private, they appear likely to go along with them without too much fuss as they will be loath to give the impression they may be concealing balance sheet bogeys.

“British companies have nothing to hide, they are subjected to good, long-standing corporate governance rules in this country,” said Jones at the CBI.

“Therefore they will not only sign up to the Sarbanes-Oxley conditions but they will do so in the spirit that they wish to assure all US investors in them that everything’s fine,” he added.

—AFP