The paper follows discussions with the OECD’s 29 member countries and three other countries – Argentina, Brazil and Chile, that have adopted the guidelines as they stand at present.
But the new text, which is split into ten sections, has been formulated in reaction to the rapid evolution in the structure of multinational enterprises which has given rise to fears regarding its impact on jobs, wages, the environment, taxation and other issues.
The draft text, released under the responsibility of OECD secretary general Donald Johnston, states that: ‘there is sometimes a perception that the operation of multinational enterprises – whose size may be large in relation to host country economies – generate abuses of concentrations of economic or political power or conflicts with national policy objectives and expectations.’
The guidance highlights the benefits of timely disclosure and the application of high quality standards for disclosure, accounting and audit.
The latter will send a warning message to Big Five firms which have been accused in the past of adhering to national accounting practices, particularly in developing countries, rather than trying to adopt best practice throughout their offices.
This was underlined by World Bank vice president Jules Muis as an important factor in the recent economic crashes in East Asia and the bank has been working closely with the OECD to develop improved corporate governance, based on sound accounting practice.
Responses to the draft text are requested by 15 February 2000.
The US is beefing up its corporate governance rules, but where is the UK ?