Germans Mull Over Anti-Fraud Measures

The German government is weighing measures to give financial services regulators more powers to combat accounting fraud, a Finance Ministry spokeswoman said Sunday.

The moves are designed to prevent scandals such as those involving WorldCom Inc. and other U.S. corporate giants.

Finance Minister Hans Eichel will announce a range of possible measures to shore up investor confidence in a speech to the Frankfurt Stock Exchange on Tuesday, ministry spokeswoman Elke Pedack said, confirming a report in the Der Spiegel news weekly.

The proposals would give the Federal Institute for Federal Services Supervision a key role in checking on the accuracy of companies’ financial statements, she said. She gave no other details.

According to Der Spiegel, the institute is to be upgraded into a German version of the U.S. Securities and Exchange Commission, which watches over Wall Street firms.

Eichel’s plans would give regulators the power to send auditors to sift through the accounts of companies suspected of making inaccurate financial statements, the magazine wrote in an article to be published today.

Firms also could be ordered to ditch external auditors not seen as independent, the magazine said.

The U.S. government responded to the accounting scandals at telecommunications firm WorldCom and energy trader Enron Corp. with tighter regulations that oblige top executives of companies listed on the stock markets to vouch for the accuracy of their firms’ accounts. Offenders could face up to 20 years in prison.

The SEC last week rejected an appeal from German firms listed on the New York Stock Exchange for an exemption from that requirement.

German officials and the European Commission argue that the U.S. has no right to impose the rules on foreign companies. German firms say the regulations also could create legal conflicts.