Bosses face US accounts oath

BOSSES of scores of Britain's biggest companies are to be forced to give sworn statements verifying the accuracy of accounts under a new law to clean up corporate America.

About half the firms in the FTSE 100 index - including BT, British Airways, BP, Vodafone and Unilever - will be hit by the new anti-fraud crackdown because they have shares listed in the US.

Directors face up to 20 years in jail or a $5m (£3.3m fine) if they sign off accounts they know to be inaccurate.

Almost 950 chief executives and finance directors of leading US companies must deliver sworn certificates to the Securities & Exchange Commission by Wednesday. This has sparked unease among investors and close scrutiny of those firms whose bosses have not delivered their certificates.

Under a new law signed by President Bush, the SEC rule is being incorporated into wide-ranging legislation that means bosses at British firms with shares publicly traded in America will have to take the same oath. The Sarbanes-Oxley Act has been rushed through in the wake of the Enron and WorldCom accounting scandals.

The act, which comes into effect on August 29, has sparked friction in Anglo-American relations. The Financial Services Authority, the Department of Trade and Industry and even the Prime Minister's office are urgently seeking clarification from their US counterparts.

Peter Wyman, president of the Institute of Chartered Accountants, said 'I am seriously concerned. A director of a company registered on a US exchange is now liable for criminal action and that could be for a technical infringement of US regulations.'

Wyman said he hoped lobbying by British regulators and his own organisation would push the US to soften its stance. The DTI agreed it 'had concerns' about the US law. 'We want to keep an eye on this and consult with UK companies,' said a spokeswoman.

The sworn certificates are just one of a range of new rules outlined in the US law, including legislation on the use of auditors and loans to company directors, almost all of which will apply to any British firms with shares traded in the US.

New York lawyer Jim Carlson said: 'It is only just dawning on people in Europe what this law means. Our laws and SEC rules always showed deference for foreign firms and accepted they were regulated by their own countries. That's all changed.'

Vodafone confirmed it would be covered by the new law, but said chief executive Sir Chris Gent had already personally signed off the annual report and that the US law would make little difference.

Cable & Wireless said: 'We will be meeting any necessary requirements for the signing of certificates.'

About 30% of Unilever's shares are held by US investors. The company said it was examining the rules and would make whatever changes were necessary.

London-based US lawyer Joseph Ferraro said a number of FTSE 100 companies had asked his firm to analyse the law. 'Interest has been intense,' he said.

Additional reporting by Graeme Beaton in New York