The failure of Enron and WorldCom has been a disaster, and not only for their shareholders and employees. Such dramatic examples of malfeasance have triggered a crisis of confidence among all investors in equity shares in all public limited companies. They have contributed to an avalanche fall in share prices over the past two years, with baleful consequences for people's pensions, life insurance and savings. We heard evidence in the Treasury Select Committee that Enron and WorldCom were operating to American standards and practices, and that the same could not happen in Britain. I completely reject that—it has happened here. The reports of the Select Committee on the crisis in Equitable Life and on split capital investment trusts demonstrate that.
The companies involved here are not exact replicas of Enron and WorldCom, but they operate in the same culture of concealing rather than revealing their true financial state; they display irresponsible recklessness in not adequately assessing the risks to which others' savings are exposed. Those trusted by investors focused their attention on extravagant personal rewards that immunised them from the risks to which they exposed others. It amounted to contempt for the investing public who had trusted those responsible.