A timely report. Frits Bolkestein is right to postpone until end October at the earliest the presentation of the new draft European Directive on Takeover Bids. One should take one's time. The international earthquake that occurred after the European Parliament's rejection of the earlier project imposes global reflection on all aspects of financial market regulation, company law and the functioning of stock exchanges. Takeover bid regulation is part of this. Reflection is underway (the European Commission is playing an active part with various documents and initiatives) but it is not complete. It is important that, in addition to the representatives of professional and academic circles, the social and political forces should be involved in the current phase and should intervene without delay in the decision-making phase. The lesson learnt over the last months of 2000 and the first half of 2001 are not to be forgotten. Most commentators now admit that, at that time, however strange it may seem, neither the national governments (within the Council) or most of the MEPs had grasped the significance and the importance of what was at stake. The last minute turnaround of Germany - which, for essentially internal reasons, was opposed to the project after having agreed to it in the beginning - had been necessary to make other Member States reflect and to provoke a "refusal front" within Parliament able to block a "yes" at ideological level, which already seemed acquired.
Shameful and inadmissible behaviour. At the time, those who had managed to block the first project aimed at setting limits to the power of shareholders, in the name of corporate responsibility towards workers as well as towards the economy of a country or a region or the society in general. For shareholders, especially when they are very dispersed and when their majority has no direct link with the economy of the area or the production installations there, the priority or sole concern is the immediate yield from their legacy - and this neglects the European notion of social accountability on the part of companies and their involvement in the national and Community economy. This is why the tendency to strengthen the power of corporate management in the face of hostile takeover bids has been affirmed, and the initial directive (which would have removed from the management board of a company under fire all possibility of organising its defence without an explicit mandate from the shareholders' assembly) had not been approved. The intention was to affirm the social and regional responsibility of companies when shareholders are distant and not very involved in the problem. We know what happened next, in the United States in particular but also in Europe: - an impressive number of large managers showed that the interest of shareholders, the protection of employees and the social and economic responsibilities of the companies they head, are the very last of their worries. This is one of the blackest pages in the history of the western economy and the capitalist system. The "stock actions" mechanism was exploited by many managers with huge egos. They unscrupulously despoiled, to their own exclusive advantage, the companies whose interests they were supposed to defend. After having misled the markets and ruined millions of shareholders, these company leaders gave themselves colossal pay-offs. How can one not look with a friendly eye on the initiatives under way in the United States to make such company leaders responsible for their action not only at the civil level (by compelling them to reimburse the wealth they had fraudulently acquired) but also at the criminal level (with firm prison sentences)? How can one not wish for things to develop in a similar way in Europe, given the unacceptable and morally shameful abuse that is going on? The impression is that the Americans reacted vigorously but the Europeans not vigorously enough.
Going beyond technical aspects. It seems to me obvious that the new European legislation - that specific to takeover bids but also corporate law in general - must take into account what the political authorities, surveillance bodies, the economic world and also public opinion have learnt regarding the habits of some of the key managers. This is why Frits Bolkestein was right in surrounding himself with all the powers desired and to take every appropriate precaution before presenting his new project on takeover bids. But MEPs, too, are right when they ask to be involved in reflection under way from now on, and national political leaders must not leave it to the last minute before discovering the political and social significance and importance of this text or, in the meantime, leave it entirely in the hands of the professional circles concerned.
(F.R.)