Investors `will hate' damaged Adecco

Adecco's business reputation and credibility in the financial markets could have suffered irreparable damage in the wake of its bungled attempts to explain accounting problems, leading fund 'managers and analysts have warned.
The fall-out could be negative, irrespective of whether the problems plaguing the world's biggest temporary employment group ultimately prove to be less severe than feared.
The potential backlash deepened yesterday when three US law firms filed class-action suits against the company, alleging violations of US securities law, mainly relating to the quality of financial information and internal controls:
"[The defendants] failed to disclose ... that the company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the company," said Philadelphia-based Schiffrin & Barroway, one of the three firms.
Investors have complained about the group's continuing failure to quantify the effect of the irregularities and procedural problems at its US operation.
"The management are all going to be viewed as complicit in how this unfolded," said Karl Green of Dresdner Kleinwort Wasserstein. "They have caused damage that is very, very difficult to repair."
"It is difficult to see how investors can be persuaded to come back to this stock," said a Zurich analyst who declined to be named. "American investors will hate the stock for at least a year."
The criticisms came as SonntagsZeitung, a Swiss Sunday newspaper, claimed the company would have to restate its earnings by €40m€50m ($50m-$62m).
The result would be to reduce Adecco's earnings before interest, tax and depreciation of €411m in the first nine months of last year by about 10 per cent. A restatement of that magnitude could, the paper claimed, endanger a €580m bank credit line.
Adecco officials were unavailable or unwilling
to comment yesterday. Exacerbating the selective information policy of recent days that has enraged investors, the same newspaper interviewed Conrad Meyer, Adecco's deputy chairman.
Mr Meyer appeared to recognise a threat to Adecco's financing as a result of the terms of the bank credit, which, he said, were "in every contract".
The appearance in the media of Mr Meyer, an accounting and legal expert, will inflame criticism of Adecco's information policy, which is already under attack after Felix Weber, the group's former finance director; last week spoke to the International Herald Tribune.
In further comments to the same paper at the weekend, Mr Weber, whose resignation was announced on Friday, said he regretted
having broken the compa ny's policy by speaking about its problems.
Mr Meyer's remarks are particularly untimely, as he is also a member of an expert committee of the Swiss stock exchange or corporate reporting.
Exchange officials last week denied any need for are investigation into Adecco's activities, in spite of the marked swings in its share price, but may now have been forced into action following investigations by the US Securities and Exchange Commission and the US Attorney's Office in New York.
Swiss and foreign-based analysts have commented adversely on the failure o the Swiss Federal Banking Commission, the self-regulat ing stock market's ultimate watchdog, to adopt a more robust approach.