Allianz Chief Speaks Out on Accounting Standards

October 17, 2002

Allianz CEO Henning Schulte-Noelle outlined the range of activities necessary to establish worldwide measurements and regulations for effective corporate governance in a speech Wednesday night in Frankfurt at a dinner sponsored by Dow Jones.

He strongly defended German and European accounting practices, indicating that the recent scandals in the U.S. involving accounting standards showed that the American system was far from ideal.

His remarks, carried on the company’s Web Site, www.allianz.com, called for the development of “universally applicable corporate governance standards.” He noted that following a wide-ranging review of corporate governance practices, Germany had adopted a “Corporate Governance Code,” that requires public companies to state whether they have complied with its regulations, particularly on disclosure and transparency. “Any deviations from the Code will have to be highlighted and explained.”

Schulte-Noelle warned, however, that “More red-tape is not the answer – it is more likely to stifle the entrepreneurial spirit than restore investors’ confidence. We cannot rely on the law-givers to provide private enterprise with the template for best practice. We must be wary of seeing the unchecked expansion of regulation as a solution for all our current problems.”

He stated that it was now “up to executives, investors, professional communicators as well as other participants in this process such as analysts and even journalists – to see the current situation as an opportunity to create a new gold standard that will draw on the best that the world has to offer.”

He concluded that the most important factor in good corporate governance depends on the people running the companies. “A culture of ethical behavior and transparency must be lived by each and every manager and director out to the furthest corners of even the most decentralised organisation. It’s people not processes that make the difference and while oversight by itself is good, trust and oversight is even better”.

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