Bodo Schnabel, the boss of Com-road, a navigation-technology company listed on Germany's Neuer Markt, treated his accounts with wild abandon. In 1998 the company invented two-thirds of its total revenues and backed them up with the name of a non-existent client in Hong Kong. By 2000, 97% of Comroad's revenues came from the imaginary company, the existence of which its auditor, KPMG, did not bother to verify. Comroad is just one of a series of accounting scandals that have badly damaged investors' confidence in financial statements. Companies such as Waste Management, Cendant, Xerox and, of course, Enron, have lied wholesale to investors who have now become suspicious of all accounts. The share price of General Electric (GE), the world's biggest company by market capitalisation, has fallen by some 23% this year, due in part to concerns about its accounting methods (see page 63). Blacklists have circulated round the City of London and Wall Street. One listed all companies whose chief financial officers had been recruited from one of the Big Five accounting firms.
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