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Davos looks to rebuild confidence

Volunteers shovel snow on Tuesday from the roof of the congress center in Davos, Switzerland, where the six-day World Economic Forum will take place. PHOTO: AP

After Enron, after WorldCom, after Vivendi, and after investors large and small have seen their shares rendered worthless from fraud and other scandals, the world's capitalists have a tall order facing them: How to restore confidence.

Enter the World Economic Forum (WEF).

The WEF's annual meeting in the Swiss Alpine mountain resort of Davos this year will take place under the motto "Building Trust," and starting today for the next six days many of the world's top business and political leaders will engage in soul-searching about what went wrong.

Was it merely greed which, in the booming New Economy days, made people who should have known better lower their guard and join the get-rich-quick rush? Or is there something inherently wrong in the entire system?

These and other issues in the aftermath of the New Economy meltdown will be wrestled with by some 2,000 top-level business, governmental and international institution officials.

Before, it was the anti-globalization crowd who were angry about world capitalism. But now the anger and distrust is more widespread.

It has reached into the middle classes, who have seen their savings and jobs wiped out as companies have gone under in fraud, insider-trading and other scandals.

The list of transgressions is long and alarming. There were companies which simply invented virtually non-existent sales revenues and there were auditing firms which simply looked the other way when they should have been sounding the alarm and warning investors.

There were brokers who "talked up a stock" that they knew was no good. And then there were the top executives who bailed out and cashed in before their company's stocks began to nosedive, leaving shareholders empty-handed.

For long-time observers of the WEF proceedings, it will be interesting to see how the top executives from the West try to explain how all this could have happened.

Over the years, Western business leaders loved to preach to their colleagues from Asia, Africa and Eastern Europe about the virtues of transparency, good corporate governance and strong anti-corruption controls.

Now they may see the tables turned on them in Davos this year and have to face some uncomfortable questions about their own ethics.

As a measure of the confidence-building work facing the world's leadership community, the Geneva-based WEF has just published a survey of public attitudes on a range of trust issues. The results are anything but reassuring.

The WEF survey of 15,000 people in 15 countries found that the public's trust in government and corporate leaders has eroded over the past year, while there is greater trust in non-governmental organizations, the UN and spiritual and religious leaders.

In the average across all 15 countries, the survey found that 56 percent of the people said they had either "some" or "a lot" of trust in NGO leaders, 42 per cent in UN leaders and 41 per cent in spiritual leaders.

But only 33 per cent responded this way about executives of multinational companies.

At the very bottom of the scale, the WEF survey showed, only 27 per cent have any trust in US leadership.

"The magnitude of the public trust deficit is a worrying and urgent challenge," said WEF managing director Jose Maria Figueres.

"The fact that leaders are less trusted than their institutions suggests that leaders across all fields of human endeavor need to share part of the responsibility in rebuilding trust ... We urge them to bring this sense of common purpose with them [to Davos]."

While the issue of trust in business and government is the main theme of this year's WEF meetings, international political issues will also be discussed, in view of the preliminary list of 29 state and government leaders expected in Davos.
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