WorldCom: action needed, says Brown

THE RUN of Wall Street financial scandals, including Enron and WorldCom, means that more action needs to be taken in Britain to stop corporate giants from cooking the books, Chancellor Gordon Brown declared. He refused to be drawn on whether British investors were safe from a WorldCom-type scandal happening here, but said: 'More has got to be done, obviously, as a result of what we learn.'

Brown pointed to the post-Enron review set up by the Department of Trade and Industry and Treasury officials into British auditing practices and the international Financial Stability Forum as evidence the Government was trying to bring in foolproof financial controls.

The DTI review is set to give an interim report in the next month, which is sure to examine closely whether auditors should be allowed to carry out non-audit work for their clients.

The Financial Stability Forum has been working with US investigators to ascertain what lessons can be learned from the Enron scandal. As details of WorldCom become known in the coming weeks, the investigations are bound to be widened into how auditors can have failed to spot the telecoms group's booking of day-to-day spending as capital expenditure.

While the regulatory frameworks in place in Britain should be able to deal with accounting irregularities, more needed to be done, Brown said. 'We will not be complacent and we will always be cautious in the decisions we make.'

However, speaking before his Mansion House speech to the City tonight, he gave few details of possible measures to stop a WorldCom happening in Britain. But he added: 'It is precisely because questions have been raised about auditing standards...that we have set up these reviews.'