|Bruno Cova, Paul
The Parmalat fraud prompted a review of corporate governance
in Italy and led to reform of insolvency laws. But the response
has been too limited, according to Bruno Cova, former adviser
to Parmalat administrator Enrico Bondi and now co-chair of Paul
Hastings' Italian office.
"Rulemaking is not the answer to corporate wrongdoing," Cova
told IFLR. "We have to create a culture that encourages a more
ethical approach and rewards responsible behaviour."
Regulation, in reaction to financial fraud, can make doing
business more expensive and slash corporations' and markets'
efficiency, says Cova. The cost to US companies of complying
with Sarbanes-Oxley regulation has been estimated at $1.2
billion in total, with the annual cost of assessing fiscal
controls averaging $4.3 million for each company.
Building a culture of good governance might be a cheaper and
more effective means of combatting fraud. "If we are...