Make accountants accountable

It is clear from the EU's G20 preparations that its neoliberal ideology perpetuates respect for those who oppose regulation

At a time when numerous EU figures are descending on Dublin as part of efforts to browbeat Irish voters into accepting the Lisbon treaty, one man has been conspicuous by his absence.

Charlie McCreevy, Ireland's representative in the European commission, has barely featured in the media coverage of the campaign ahead of the referendum on 2 October. His apparent willingness to be muzzled could be explained by how he unintentionally helped persuade his compatriots to reject the same treaty last year by admitting that he hadn't bothered to read the document.

McCreevy, whose portfolio covers financial services, has not displayed the same reticence about the global economy. Last weekend, he made the ludicrous suggestion that we shouldn't blame the financial crisis on unregulated capitalism but on the "failure of the education system which rarely encompasses sufficient emphasis on the life skills needed to understand, manage and mitigate personal financial risk".

If McCreevy really thinks that ordinary people should be blamed for Wall Street's woes because they haven't figured out how derivatives work, then it is fortunate that his stint as commissioner will soon come to an end. Sadly, the neoliberal ideology that he espouses (to extremes) won't be leaving Brussels with him, judging by the EU's preparations for the G20 summit in Pittsburgh.

Wrapping up an earlier G20 pow-wow in April this year, Gordon Brown announced the demise of the "Washington consensus", under which key international players had foisted market fundamentalism on the poor. Yet at the beginning of this month, the EU's finance ministers facilitated at least a partial return to the days when the west meddled in the economic and political affairs of Latin America with the sole intention of protecting the profits of multinational firms.

On 1 September, the International Monetary Fund allocated $150m to Honduras, despite the fact that the country's democratically elected government had been toppled in a rightwing coup. Rather than protesting at how the IMF was conferring legitimacy on an illegally installed regime, the EU agreed one day later to endow the fund with $178bn. (It took the IMF another week before it announced that the money wouldn't be released to Tegucigalpa until the fund had decided if it could recognise the new regime).

In his latest stunt, Nicolas Sarkozy has pledged to walk away from the Pittsburgh summit if he doesn't secure an agreement on limiting bankers' salaries. This threat will probably come to nothing, just as happened with a similar vow by the French president to leave London if the previous G20 summit didn't go his way. Of course, he's right to insist that the bonus culture is scrapped but this is only one of a range of measures that the EU should be seeking.

Sarkozy's finance minister, Christine Lagarde, is perturbed by a new blueprint for changing the way that assets held by banks are valued that has been drafted with the Pittsburgh summit in mind. Her anger would perhaps be better directed not at the detail of the proposal but at the body behind it: the International Accounting Standards Board. The IASB is a private firm dominated by the accounting industry, banks and multinational companies. Although it was only established in 2001, it sets the standards that listed companies in more than 100 countries must follow. Its activities may sound arcane, yet without clear accounting standards none of us can have any idea what major firms, some of which are more powerful than governments, are up to.

Lagarde's reservations notwithstanding, the EU has been generally supportive of the IASB. Am I the only one struggling to explain why such an untrustworthy and unaccountable group is treated with respect not only by governments but also by some anti-poverty campaigners? Christian Aid and a few like-minded organisations are calling for the G20 to demand that the IASB co-operates in efforts to secure a new system whereby large companies have to report how much tax they pay in each country where they operate.

I fully support the principle of country-by-country reporting and applaud the fight against tax swindling, which, according to Christian Aid, could be depriving poor countries of $160bn per year. But how can we have any confidence in a body like the IASB, stuffed with men (its 15-member board has only one woman) with a deep-rooted aversion to regulation?

In December last year, Prem Sikka, an accounting professor at the university of Essex, wrote: "Accounting has done grievous harm to too many innocent citizens and is central to the current financial crisis. Rather than allowing private interests to make public policies, accounting rules should be made by an independent body representing a plurality of interests."

If the standards of the IASB have been central to causing the crisis, why on earth is it still operating?