The Enron scandal cast its shadow over the first day of the World Economic Forum in New York yesterday, with corporate leaders expressing concern about implications for business worldwide of the collapse of the giant Houston energy trader.
However, the mood of more than 1,000 international executives gathering in the Waldorf Astoria Hotel was more upbeat on US economic growth than at last year's conference in Davos, Switzerland, held in an atmosphere of approaching recession.
The forum moved to the US as a "gesture of solidarity with New York". Some 20 heads of state - with the exception of President George W Bush - and hundreds of international figures are also attending what is the first big global forum since September 11th.
"The Enron debacle created a crisis within the entire US capital markets," Mr Samuel DiPiazza, global chief executive officer of PricewaterhouseCoopers (PwC) - the world's second largest accounting firm - told The Irish Times. "Our profession is right in the middle of it and this extraordinary event requires an extraordinary response."
Mr DiPiazza said the US capital markets were among the most vibrant because of their integrity. To prevent a perception of conflict of interest, his firm planned to spin off its consulting arm, PwC Consulting, which provided 30 per cent of global revenues, he said.
Many forum participants complained that the much-vaunted transparency of the American business model was undermined by the alleged collusion of accountancy firm Arthur Andersen in hiding Enron's difficulties, which resulted in huge losses for investors when the company went bankrupt in December.
A PwC survey of 1,161 CEOs from 33 countries produced at the forum shows that the sometimes violent anti-globalisation protests outside the annual forum in recent years may be having an effect. Many protest groups are picketing the five-day event.
Most CEOs expressed deep concerns about the growing gap between rich and poor countries, and 70 per cent said corporate social responsibility was "vital" to profitability, according to the survey. The corporate titans also said they were worried about "environmental responsibilities" and the social impact of corporate strategies and investment.
The survey, carried out in the autumn, revealed that the September 11th attacks on the US reverberated through boardrooms across the world. Nearly half the CEOs created or revised corporate disaster or recovery plans or imposed travel restrictions, and 43 per cent revised downwards their financial forecasts.
Four out of 10 focused on two probabilities, the vulnerability of global supply chains and continuing stagnation. More than a third feared the attacks would strengthen the anti-globalisation movement. Economists at the forum generally voiced optimism about the US economy, though there were some disagreements.
Ms Gail Fosler, chief economist at the Conference Board, which measures US economic indices, stated bluntly: "The US recession is over. The trough was in November. This has been one of the mildest recessions on record."
However, Mr Stephen Roach, chief economist of Morgan Stanley, USA, said: "The recession is not over. We will have a doubledip in the spring. The fundamental state of the US economy is crummy. Americans have no savings and a lot of debt. It will be a shaky recovery at best. And the US can't do the heavy lifting now. The world is going to have to figure out how to do its own heavy lifting in growth and reform," he said.
Mr Jacob Frenkel, president of Merrill Lynch International, UK, responded: "The US economy has very strong fundamentals. The economy will grow 1.5 per cent in 2002 and 2.6 per cent in the fourth quarter. Europe is on the way to recovery but it is less flexible, and recovery will be slower."
