Bank job casts doubt over Zalm's future

Gerrit Zalm

The most senior trustee overseeing the work of the International Accounting Standards Board has been accused of facing a conflict of interest after he was recently appointed deputy chairman of Dutch bank Fortis and ABN Amro.

Gerrit Zalm, chairman of the International Accounting Standards Committee ­ the non executive body overseeing the IASB, the key standard setter for business ­ last week accepted the job at Fortis and ABN after it was offered by the Dutch ministry of finance, which is organising the merger.

There is now speculation that Zalm will not be able to continue in his IASC post because of potential conflicts of interests.

One senior UK financial regulator said he thought it was ‘highly likely’ that Zalm would have to step aside while others believe that the two jobs would be difficult to ‘reconcile’.

Nicolas Véron, a research fellow of the Bruegel Institute in Brussels, said: ‘Zalm does not seem to have left a huge mark on the IASB/IASCF so far; and given the role played by Continental European banks in the recent discussions and controversies about fair value, it would be awkward that the chairman of the trustees would simultaneously be head of a large European bank.

‘This would be perceived by most market participants as difficult to reconcile with the IASB’s full independence from specific interests.’

However, the IASC said the bank appointment would not interfere with IASC duties.

IASC operations director Tom Seidenstein, said: ‘It should not affect his ability to under take his duties. However, we will have to assess it once he gets into the job.’

Zalm’s departure would come at a bad time for the IASB, which is under pressure from leading politicians and bankers to reform the use of fair value accounting in the wake of the credit crisis and the huge writedowns reported by many financial institutions.

Last month, Zalm wrote directly to all heads of state at the Washington G20 meeting amid fears that the independence of the international standard setter could be compromised throwing doubt on the future of international standards and the standard setter.