London, July 7, 2005 — "To facilitate better corporate governance and more consistent business practices across borders, national regulatory authorities must work more closely," said Deloitte Global CEO William G. Parrett to an audience committed to strengthening global corporate governance. "Let's begin by getting together."

Speaking at the International Corporate Governance Network (ICGN) Annual Conference in London, Mr. Parrett called on national regulators to convene a special summit before the end of the year to initiate a sustainable formal dialogue that can help develop a more uniform global regulatory environment. He suggested the participants at the initial session come from capital markets around the world, including representatives from the G8 and developing markets. Mr. Parrett would like to see the regulators meet at least twice a year.

"In an ideal world, a global regulator would be the answer to greater consistency, but this would be difficult to achieve," said Mr. Parrett. "At a minimum, it would require sovereign states to cede to a global body its right to regulate. 

"That makes it imperative for national regulators to communicate regularly, exchange information, and when appropriate adopt mutual recognition of certain regulatory provisions," he said. "The model is not new — state and federal governments, the European Union and its member states, and others, follow similar processes on laws that are critical to their respective economic and social development.

"Business today is so global in its reach and operates in real time across borders, that I think it's time for this approach."

Mr. Parrett acknowledged prescription is not the answer. "It is clear there is a need for national regulators to jointly develop principles for regulation that can be applied at the national level to meet legitimate extra-territorial needs. To be most beneficial, these principles must avoid conflicts of law and unnecessary hurdles to business competition and growth," he said. "Sarbox is an example of where greater co-operation would have helped people understand the law’s goals and objectives."

Mr. Parrett added, "It is important that globalization proceed according to broad principles, not specific rules, and be appropriate for the needs of developing as well as developed capital markets."

Participants at the ICGN Conference included representatives from business, government and investors from around the world.

During the panel discussion, Mr. Parrett also emphasized that corporate governance is more than rules and regulations. "It relies on people doing the right thing and integrating ethical behavior and good old fashion values and respect within their own businesses. It amounts to what all of us know intuitively as good business practice," he said.  

In addition, Mr. Parrett commented on the recent and significant focus on regulation that punishes executives and others when there is a perceived breakdown in procedures or if they are not doing their jobs. He noted, however, that the vast majority of companies operate with good intentions. In that regard, Mr. Parrett believes that regulators should pay close attention to the unintended consequences of regulatory reform.

Mr. Parrett said, "There is no question that when leaders and others do the wrong thing, they should be punished. But let's not forget that in the main, executives do act honestly and ethically. They need the support of governments and regulators. This will help restore investor confidence."

Citing recent scandals, Mr. Parrett said that when it comes to corporate governance, no single country has a monopoly on best practices. He also noted that the fast-growing economies in Asia face several corporate governance challenges, including:

• How can the objectives of good governance be met when companies have large majority stakeholders — whether they be state or family?
• Given the shortage of certain skills, is it possible to have independent boards of qualified people?
• What is the right governance model in Asia?

In his remarks Mr. Parrett pointed out that there are guiding principles for good governance which should apply irrespective of the cultural and business environment. "These guiding principles can be grouped under two headings: Corporate Culture and Fundamental Values."

According to Mr. Parrett, corporate culture includes: The tone set by corporate leadership; a balanced focus on concerns of all stakeholders, including management, employees and shareholders; and, a balanced focus on short term goals such as quarterly performance and long term objectives such as strategic direction and innovation.

He believes that fundamental values include such factors as: Independence, objectivity, integrity and quality.

"At the end of the day, confidence in capital markets must remain robust. All participants have a role to play — the regulators, business leaders, accountants, other professionals and investors."

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