Enron Casts Shadow Over Globalisation
By MIRO CERNETIG

NEW YORK -- Forget the bomb squads roaming Park Avenue, the potential riots
from anti-globalization protesters and the police armed with submachine
guns guarding what some are calling "Davos on the Hudson." What's bothering
the 3,000 businesses and political leaders brainstorming in the plush
confines of the Waldorf-Astoria is the fallout from Enron Corp., the
biggest bankruptcy filing in U.S. business history.

Gathered in Manhattan for the World Economic Forum, this is a
$25,000-(U.S.)-a-head salon for business and political titans to chew over
the world's challenges. Many of the delegates are expressing fear, however,
that revelations of late-night paper shredding in Houston and suspicious
accounting practices are a serous blow to the stock markets they are
relying on to end a near-global economic downturn. "The Enron debacle
creates a crisis within the entire capital market," said Samuel DiPiazza
Jr., who yesterday was named the global CEO of PricewaterhouseCoopers. "Our
profession is right in the middle of that."

With many market watchers predicting that more companies will falter under
billions of dollars in debt not properly cited on their books, Mr. DiPiazza
said business leaders have realized that transparency in accounting is one
of the major challenges facing Corporate America. "I absolutely believe
it's on the minds of the CEOs walking these halls," he said.

To deal with the public perception that accounting firms may have too
incestuous a relationship with the clients they are supposed to be
auditing, Mr. DiPiazza said PricewaterhouseCoopers believes it is crucial
to separate its auditing arm from its lucrative consultancy work. "We
believe the perception of conflict is something we must deal with," he
said. "It will not make us better accountants. But if it helps change the
public perception, we think it's positive." In a sense, the Enron scandal
has gone global, the business leaders say. The world economy is relying on
the U.S. economy to put an end to a recession felt around the globe, and if
Enron is only the tip of the iceberg of similar bookkeeping tactics, it
could slow down a Wall Street recovery. Gail Fosler, chief economist of the
U.S. Conference Board, said the Enron implosion, following the collapse of
stocks of companies such as Xerox Corp. and Lucent Technologies Inc.,
definitely has
the world's investors wondering where the bad news will stop. "I wouldn't
call it the Enron contagion, but it does undergird the sense of risk
aversion that was already in play," she said, adding that the scandal has
also hurt other companies seeking to take on debt to survive hard times. "I
would even say Kmart was a victim of Enron," she said, adding that there
was a broad tightening of credit when the energy giant entered Chapter 11
bankruptcy protection. "This is in some way an impediment to global
liquidity."

For the first time in 31 years, the World Economic Forum is being held
outside of Davos, a sleepy village in the Swiss Alps. It's an attempt by
organizers to help New York recover from the Sept. 11 terrorist attack on
the World Trade Center and throw leaders a Big Apple party: Tonight they
will get to hear Paul Simon, Bono and Peter Gabriel in the Grand Ballroom
of the Waldorf-Astoria. But the cozy nature of the conference has been
altered by the move to Manhattan. Security is at an all-time high, with
thousands of police and secret service agents in the hallways of the hotel,
which is off-limits to all but registered delegates. That makes the chances
of buttonholing those in attendance, from the likes of Microsoft Corp.'s
Bill Gates to an artist like Bono -- something that was possible in Davos
-- next to impossible.

A survey of 1,161 CEOs from around the world, however, many of whom are in
the boardrooms of the Waldorf-Astoria, has found that the obliteration of
the World Trade Center has deflated the buoyant mood that usually marked
the Davos summits. "Nearly 60 per cent [of CEOs] focus on two
probabilities," said the PricewaterhouseCoopers survey. "Continuing
stagnation in the global economy and the vulnerability of global supply
chains."

The survey found that since the Sept. 11 attacks, about half of the world's
corporate leaders have laid off workers, outsourced non-core businesses and
imposed travel restrictions (although not necessarily their $300-and-up
rooms at the Waldorf-Astoria). The survey found that the CEOs regarded
these cutbacks as long term, although they believed that budgets for
research and development would be restored. Perhaps most interesting,
though, is that globalization protesters, who promise major demonstrations
tomorrow, appear to be getting
the attention of a large number of business leaders. One-third of the CEOs
surveyed said they believe the "anti-globalization movement" is a threat to
their business. Another third agreed that globalization is likely to
increase the gap between rich and poor countries, precisely what the
protesters will be chanting in the days ahead when they begin protests on
the other side of the concrete barriers around the Waldorf-Astoria.