AC - Washington. This week, German finance minister, Hans Eichel, and attorney general, Brigitte Zypries, presented a bill for a new statute concerning the auditing of financial statements. The act would introduce a so-called "enforcement procedure" to monitor the auditing of financial statements of German businesses.
Under current law, financial statements of corporations are audited by a CPA and the supervisory board of the corporation. Some cases have illustrated, however, various deficiencies in that process. Thus, to rein in corporate abuse and to restore investor confidence, the new law would create a private organization to ensure the quality of audits. In a first step, the organization would review financial statements of corporations listed on national exchanges, randomly or if an initial investigation suggests wrongdoing. This review is dependent on the consent by the corporation. In the event that an corporation should deny the request for a review by the organization, the Treasury Department may issue an order to compel the audit. In the event that the Treasury Department should question the resulting audit or procedure, it may also directly intervene in the proceedings.
The new organization will be funded through fees collected from nationally listed corporations. The legislation has been drafted in cooperation with German business organizations.
PermalinkAC - Washington. Yesterday, the Munich Court of Appeals decided in Kirch v. Deutsche Bank a controversy arising out of comments by former Deutsche Bank chief Rolf Breuer. Two months before the filing of KirchMedia's petition for bankruptcy Breuer doubted in an interview with Bloomberg TV Kirch Group's creditworthiness. Given the facts, he said, he does not see that the financial markets would provide more funds to the media affiliate, the most important Kirch affiliate. After these statements other banks declined to deal with Kirch.
The court found Breuer to have violated privacy laws, and confidentiality agreements between Kirch and its lender Deutsche Bank, resulting in the bank's liability, because Breuer had made these statements in his capacity as chairman of the board of Deutsche Bank and not as a private person, as Breuer had alleged. The court, however, overruled the decision of the lower court with respect to Breuer's individual liability and found that he is not personally liable to Kirch.
The amount of damages have not yet been determined. Reportedly they could
exceed one billion Euros. An award of this amount would be a blow against
the German bank and support critics of the substantial involvement of banks in
German corporations.
German Reports: