ASC and its members were value neutral and objective. For example, they
assumed that the ASC did not exercise influence on peers and that pressures on
the ASC emanated from forces outside this organization (Hope and Gray, 1982).
Thus, notwithstanding some significant findings, their research has left a
noticeable gap in the study of power in accounting regulation.
It is also noteworthy that Hussein and Ketz (1980) and Hope and Gray (1982)
have examined the standard setting process at a national level. At an
international level the political process, and the modelling of power
relationships is complicated because of the involvement of transnational
corporations (TNCs). These entities have caused much controversy on the
international stage (Barnett and Mueller, 1974; Bhagwati, 1967, 1969),
particularly in respect of their financial reporting practices, the conflicting
interests of various nation states (Capithorne, 1971; Kussi, 1979; Mueller and
Morgenstern, 1974), and the sheer number of international bodies (e.g. the IASC,
the OECD, UN) with varying constituency and diverse objectives, engaged in
their regulation (Gray et al., 1981).
While the issue has been largely neglected in the literature, efforts to regulate
standard setting at an international level have been significant. A number of
international organizations, such as the OECD, the IASC and the UN
Commission for Transnational Corporations have been involved in the
standard-setting process for a significant period of time. The political character
and importance of accounting standard-setting for TNCs has also been widely
acknowledged (Gray et al., 1981; Stamp, 1978, 1979), but there is little or no
available research which has formally examined the process by employing a
rigorous political methodology.
The purpose of the present study is to develop the existing power literature
by examining the political nature of the standard setting process at an
international level through the use of an explicit model of power.
The international arena for TNC standard setting: background issues
Specifically, this paper examines the efforts and involvement of the United
Nations in TNC accounting regulation since the inception of the issue in the
1970s. The UN Charter offers equal voting rights to each member nation. The
UN General Assembly (GA) and its principal organ, e.g. the ECOSOC
(Economic and Social Council), operate on the basis of one-nation one-vote, with
decision making by simple majority (UN Charter, Article 61). The UN Security
Council is an exception to this rule where five large military powers possess
In the late 1970s and 1980s, an overwhelming majority of member nations
attempted to persuade the UN to prescribe financial disclosure rules for TNCs
(as a part of the broader UN Code of Conduct for TNCs). These “change
seeking” nations demanded that the UN implement binding regulations via
national legislation. The driving force behind increased regulation of TNCs
related to a number of alleged culpable financial and commercial practices
perpetrated by these entities across national borders. Another major spur for
international action on TNCs flowed from the publication of a US Senate Sub
committee report (in 1971) which confirmed the alleged involvement of one of
the largest multinationals in destabilising the democratic government of
Salvador Allende of Chile. In the July 1972 meeting of the ECOSOC, the
Chilean representative demanded that the UN should commission a high
ranking independent expert group to conduct a comprehensive investigation of
all supranational corporations. Simultaneous pressures from other developing
nations and support from many developed nations (e.g. Canada, Sweden, USSR)
resulted in the ECOSOC convening a “Group of Eminent Persons” (GEPs) to
study the role of TNCs and their impact on economic development and
international relations, particularly to developing countries. This event
formally demarks the beginning of efforts by the UN to initiate regulations over
the accounting practices of TNCs.
In contrast, a small number of developed nations have attempted to defend
the status quo and provided considerable support to the corporate anti-
disclosure lobbies. These nations have resisted all attempts to introduce any
significant positive accounting regulation on reporting by the TNCs. It is
noteworthy that despite intensive UN negotiations over an 18-year period, the
change-seeking nations did not succeed in carrying or imposing their
accounting reform agenda. Surprisingly, the heavily outnumbered minority
defenders of the status quo prevailed in the decision-making process.
The apparent failure of an overwhelming majority of member nations,
belonging to an ostensibly democratically constituted organization (i.e. the UN),
to effect a desired change presents an interesting paradox which deserves
Model of power to explain failed UN attempts to regulate TNCs
An attempt is made in this paper to explain the paradoxical nature of failed UN
attempts to regulate TNCs by invoking a political model of power. Furthermore,
the present study attempts to systematically analyse the behaviour of internal
participants and outside pressure groups in the decision-making process while
the deliberations were in progress.
The most significant problem in applying a model of power, particularly in
accounting investigations, is that the concept of power still remains elusive and
controversial in the political science literature. There are a number of competing
theories and concepts of power vying for supremacy. Some political theorists
(for example, Dahl, 1957, 1958, 1961, 1966; Polsby, 1960, 1963, 1968; Wolfinger,
1971) describe power as the winning over opposition, or a “zero-sum” game.
While others (e.g. Giddens, 1968, 1979, 1981, 1984; Parsons, 1957, 1963) view
power as serving collective goals or a “positive-sum” game. Some researchers
(Dahl, 1966, 1968; Polsby, 1960) emphasise actions and behaviours of persons or
groups and decision outcomes for researching power, while others (Bachrach
and Baratz, 1962, 1963; Clegg, 1989; Giddens, 1968, 1984; Lukes, 1974)
emphasise social and political systems and structures as appropriate starting
points for studying power. The approaches to the study of power, thus, reflect
the prevalence of two theoretical and methodological frameworks: the
structural theories (Clegg, 1989; Giddens, 1968, 1979, 1981, 1984; Lukes, 1974;
Parsons, 1957, 1963) and the action (or coercion) theories (Bachrach and Baratz,
1962, 1963; Dahl, 1961, 1966, 1968; Frey, 1971; Merelman, 1968; Polsby, 1960,
1963, 1968; Wolfinger, 1971).
Dahl’s (1957) work is emphasised in the present study, not only because his
work constitutes a landmark in the analysis of power (Clegg, 1989, p. 11), but
because his decisionist methodology is most appropriate to the events,
objectives and empirical research data examined in this study.
Dahl (1957) defines power as something (some resources, possessions, or
advantage) a person (say A) has over another individual (say B) “to the extent
that A can get B to do something (some action or inaction) that B would not
otherwise do” (p. 203). It is noteworthy that Dahl espoused the intellectual
position of behaviourism in the analysis of power. His focus is on observable
behaviour – the results of action. Dahl’s model of power refutes any reference to
the intentions the actors or agents might have. Power is seen to be exercised by
one party (A) when the results of actions, decision, and actual behaviour show
that A was able to get B to do certain things which B would not otherwise have
done. The very notion that “B might not otherwise have done” indicates a
disagreement and conflict of interest between A and B. Also, such conflict
should be “overt” (i.e. observable) about some issues on which some action (or
decision) is taken.
According to this action-oriented episodic concept of power (Clegg, 1989) the
focus of interest is the group decision-making process. Here, attempts are made
to win over conflicts or to overcome oppositions to ensure that one’s objectives
are embodied in the decisions made in the organization. An organization is
perceived as an ongoing process of human interaction producing a stream of
outcomes in the pursuit of certain objectives (Abell, 1975, p. 120). Power can
usefully be studied through an examination of the decision-making process,
focusing upon issues over which there is a “manifest” conflict of interest.
Dahl’s emphasis on “conflict” and “decision” originates from his deliberate
attempt to distinguish between “potential” and “actual” power – or more
specifically between its “possession” and its “exercise”. The exercise of power is
central to Dahl’s theory. This should be contrasted with the “élitist” theory of
power (Hunter, 1953; Mills, 1956), which is concerned with identifying who has
power or who are “reputedly powerful” (Lukes, 1974). According to the élitist
model, political power is concentrated in the hands of a few “élites”, who almost
inevitably succeed in “getting their way” on all important issues. Conflicts (if
any) are “always” managed by the élites in such a way that they produce
outcomes favourable to their interests. Distribution of power, in this model, is
static and stable over time and across space and issues (Whitt, 1979).
This postulate of élite power is emphatically rejected by Dahl (1958) and
Polsby (1960, 1963). They argued that everyone has a certain amount of
potential power and almost an equal chance of influencing decision making.
The study by Hussein and Ketz (1980) corroborates this view of pluralism.
Hence, authors such as Dahl and Polsby have acquired the title “pluralists”. To
theorists such as Dahl it is the actual deployment and exercise of (or lack of)
that potential power in the decision process which makes a difference.
The empirical attention in this pluralist research is on issues, conflicts and
decision outcomes. As power is revealed by participation in decision making it
can be analysed only after “careful examination of a series of concrete
decisions” (Bachrach and Baratz, 1970, p.6). This examination of decisions
involves a careful observation and analysis of the behaviour of participants in
the decision-making process. Observable changes in behaviour, shifts in policy
and position with respect to others provide important empirical evidence. The
researchers’ concerns (Dahl, 1961, p. 113), therefore, are:
(1) to select for study a number of “key” decisions;
(2) to identify the people or groups who took active part in the decision-
(3) to obtain a full account of their actual behaviour while the policy conflict
was being resolved; and
(4) to analyse and determine the specific outcomes of the conflict as
embodied in the decision(s) taken.
The specific application of Dahl’s methodology in the context of empirical
evidences of UN efforts to regulate TNCs is explored in greater detail at a later
stage in this paper.
UN efforts to regulate TNCs: structure of regulation and
chronology of events
This section briefly explains the composition, powers and jurisdiction of
relevant UN administrative appendages that are usually available for resolving
international economic and social issues. This is followed by a brief chronology
of events leading to attempted efforts by the UN to regulate TNCs since the
1970s. A discussion of these issues provides relevant detail necessary for
understanding the political nature of activities within the UN and for applying
Dahl’s methodology of power.
The ECOSOC took the initiative in the accounting regulation of TNCs
because under the UN structure the ECOSOC is the principal organ which is
responsible for handling issues of economic and social importance. During the
1970s and 1980s the ECOSOC had set up a number of bodies within the UN
structure to handle regulatory matters relating to TNCs. Figure 1 displays the
relevant machinery within the UN system that was directly involved in the area
of regulating the TNCs.
As displayed in Figure 1, the establishment of the Commission for
Transnational Corporations in 1975 was central to many subsequent regulatory
developments. The Commission for TNCs had established a number of
consecutive accounting expert groups in order to set reporting and disclosure
standards for TNCs. The recommendations of these groups could have been
The ECOSOC and
relevant UN bodies
involved in the
regulation of accounting
and reporting by trans-
UN General Assembly
159 members (1990)
Economic and Social
Centre for Transnational
The Secretariat of
the Commission for TNCs
Intergovernmental Group on Code of
Conduct for TNCs
Group of Experts on International
Standards of Accounting and Reporting
(1976-1977): Report Published: October 1977
The Ad-hoc Intergovernmental Group of Experts
on International Standards of Accounting and
Reporting (The Ad-hoc Group) 1979-1982
Report Published: March 1984
Intergovernmental Group of Experts on International
Standards of Accounting and Reporting
(ISAR Group) 1983-1993
Report Published – annually
UN Commission for Transnational
ratified by the Commission and passed on to the ECOSOC for implementation
by member governments via legislative or other appropriate measures. But the
Commission on TNCs found it difficult to make a decision and the process had
to be repeated. The chronology, including a brief account of significant events
is presented below.
Convening the group of eminent persons
As mentioned earlier, the ECOSOC had appointed a 20-member group of
eminent persons (GEPs) in 1972 to investigate the matters related to TNCs. The
appointment of the GEPs is considered to be the most significant event
instigated by the UN in the (attempted) regulation of TNCs. While the nations
represented in the group were elected by the ECOSOC, the UN Secretary
General personally selected the members to form the group. The group
consisted of 20 eminent individuals taken from various geographical areas and
diverse professional backgrounds. Their countries of origin were: Algeria,
Argentina, Brazil, Canada, Chile, France, West Germany, India, Indonesia, Ivory
Coast, Japan, The Netherlands, Sweden, Switzerland, Tanzania, UK, USA,
USSR, and Yugoslavia.
The GEPs conducted its own investigations and deliberations including two
public hearings of CEOs of Multinationals, government and trade union
officials, and academics. The GEPs’ report confirmed, inter alia, the view that
there was a serious lack of financial and non-financial information necessary to
effectively assess the commercial and operating affairs of TNCs (UN, 1974,
p. 55). The GEPs emphasised the pressing need for a uniform and
comparable accounting system and disclosure requirements for TNCs,
irrespective of national origin, which would disclose necessary economic and
social information to interested parties (UN, 1974, p. 95).
The GEPs recommended that a Commission for Transnational Corporations
and an Information and Research Centre on TNCs be established under the
ECOSOC. The GEPs also recommended that an expert group on international
accounting be convened by the Commission for TNCs to formulate an
international system of standardised accounting and reporting for TNCs (UN,
1974, p. 95). The group’s report (UN, 1974) was the source of many subsequent
structural changes within the UN concerning the regulation of TNCs. For
example, The UN Commission on TNCs was established in 1975 with the status
of a standing intergovernmental body of the ECOSOC. The Commission
consisted of 48 members elected (on a three-yearly rotation basis) by the
ECOSOC on the basis of predetermined geographical and eco-political
allocations (that mirror the UN membership), such as: Africa: 12; Asia: 11; Latin
America: ten; Developed market economy countries of Western Europe, North
America and Oceanic: ten; and Socialist countries of Eastern Europe: five.
The first UN group of accounting experts (the “GEISAR”)
The Commission on TNCs immediately (1976) convened a group of experts on
international accounting and charged it with the responsibility of formulating
international accounting and reporting standards for TNCs. This expert group
is known as the UN Group of Experts on International Standards of Accounting
and Reporting (also known as the “GEISAR”). This expert group consisted of
14 members of diverse nationality and profession. The countries
represented in the group were selected by the Commission on TNCs but the
members were selected and appointed personally by the UN Secretary General.
The members in the group acted and deliberated in their individual capacity (as
opposed to government nominees of respective countries).The countries
represented were: Algeria, Argentina, Brazil, France, West Germany, India,
Iran, Japan, The Netherlands, Philippines, Poland, Sweden, Tanzania and the
After two years of deliberations (during 1976-1977) in four sessions, this
group unanimously recommended a list of minimum items of disclosure for
TNCs (UN, 1977), which required, among others, the following from the TNCs:
(1) Consolidated group financial statements for the enterprise as a whole.
Such statements should include all undertakings (incorporated or not)
under the group’s control irrespective of their legal form and ownership.
(2) Separate financial statements for the parent company and for each
individual subsidiary company to be published at each subsidiary level,
and not at the group headquarters level.
(3) Disclosure of quantified data on related party transactions not
eliminated in consolidation.
(4) Use of “equity method” in accounting for associated companies.
(5) Disclosure of segmental data by Line-of-Business and Geographical
regions by all TNCs.
(6) Disclosure of the identity of all subsidiaries and associated companies of
transnational group in the group financial reports and identity of parent
company by each subsidiary.
(7) Disclosure of relevant non-financial information in specified areas such
as labour and employment, production, investment programs,
organizational structure and environmental measures both at the
subsidiary and the group level.
(8) Publication of a statement of sources and application of funds, which
should be given the same status as the balance sheet and income
Of special far-reaching significance to the TNCs was the requirement to include
all affiliates in consolidated reports for the group of entities as a whole and the
publication (of such a report) at each subsidiary level in addition to reports for
the subsidiary itself. The requirements for segmental reporting and non-
financial disclosure were also formidable.
These recommendations were unanimously adopted and were supposed to
be implemented by the ECOSOC after ratification by the Commission on TNCs.
Indeed, the UN Secretary General (Kurt Waldheim) had envisaged its
implementation through an intergovernmental agreement and legislative
measures and recommended that the UN should start work in that area. (UN,
1977, p. 17).
The turning point
The Commission on TNCs, considered the report of the GEISAR and the
recommendations of the UN Secretary General at its fourth session (16-27 May,
1978). However, it failed to endorse the report despite fervent debate on various
The developing nations supported the report and they had an absolute
majority in the Commission. Surprisingly, the report failed to gain approval
from the Commission. Instead, the Commission on TNCs recommended that the
ECOSOC establish a new “intergovernmental” group to work towards an
international agreement in the field of standards of accounting and reporting.
Unlike the GEISAR, the new group was to be composed of experts nominated
by the respective governments of the countries selected by the ECOSOC.
The new 34-member Ad hoc Intergovernmental Group of Experts on
International Standards of Accounting and Reporting (also called the Ad hoc
IWGEISAR or simply the “Ad hoc Group”) was established in 1979. The
following countries were selected by the ECOSOC: Algeria, Argentina, Brazil,
Canada, Cyprus, China, Dominican Republic, Egypt, France, Federal Republic
of Germany, India, Iran, Italy, Japan, Liberia, Libya, Mexico, Morocco, Nigeria,
Norway, Pakistan, Panama, Peru, Philippines, Poland, Swaziland, Switzerland,
Tunisia, Uganda, UK, Ireland and the USA.
According to the mandate set out in the ECOSOC resolution 1979/44 the
terms of reference of the Ad hoc Intergovernmental Group were to:
(1) review the 1977 report of the GEISAR;
(2) consult with other international accountancy bodies (implying the IASC)
and other interest groups (e.g. the ICC/IOE) on matters relating to
development of international standards of accounting and reporting;
(3) formulate priorities of information needs of home and host countries,
particularly those of developing countries; and
(4) submit its report to the Commission on TNCs on further steps to be
taken in the field of international standards of accounting and reporting.
It is significant that the terms of reference of the new Ad hoc Group placed more
emphasis on “reviewing” papers and works of other bodies, consulting with
interest groups, and “formulating priorities”, rather than formulating
standards for accounting and reporting by TNCs which was the focus of the
GEISAR report and indeed the principal objective of the United Nation’s
involvement in this area. As will be seen later, this change of policy direction by
the UN was a major turning point which shaped the future outcomes on the
TNC issue at the UN.
In short, it is quite clear that from the time of the formation of this group, the
United Nations has been effectively reduced to a discussion forum rather than
an international accounting standard setting body.
Dahl’s analytical framework
The previous section has presented a brief account of events and outcomes
relevant to the attempts by the UN to regulate the TNCs. The political nature of
the process and outcomes is obvious. What is not immediately understandable
is the apparent failure of the majority view to prevail in the voting and decision-
making process. A more rigorous political analysis is, therefore, necessary to
understand this paradox. A systematic study of power is essential in a political
analysis because very often political outcomes cannot be explained via
democratic values alone (Hope and Gray, 1982).
Emphasising the study of power in political analysis Dahl (1968) puts
forward an obvious question:
In a political system where nearly every adult may vote but where knowledge, wealth, social
position, access to officials, and other resources are unequally distributed, who actually
govern(s)? (p. 1).
As a source of power, Dahl puts voting strength in a subordinate position to
that of some material possessions. In his study of community power Dahl (1957)
dispels the myth of voting powers and draws attention to the study of other
earthly possessions as more effective sources of power. Expanding the
parameters of Dahl’s query to include the international community as a whole
and the UN, in particular, the question may be paraphrased and put as:
In an international community (e.g. the UN) where nearly every independent nation may vote
but where technology (i.e. knowledge), capital (i.e. wealth), international position (military and
diplomatic), access to international organizations (e.g. the Word Bank, the IMF etc.) and other
resources are unequally distributed, who actually govern(s)?
The UN, being the largest international democratic organization, presents a
unique opportunity to address the above question. In fact, the case of
accounting regulation replicates power struggle issues which have existed
within the UN in its other regulatory endeavours (such as, the UNCTAD,
UNCLOS, Laws Against Corrupt Business Practices, UN Nutrition Standards
for Artificial Baby Foods etc).
The application of Dahl’s methodology (Dahl, 1961, p. 113), requires the
(1) to select for study a number of “key” decisions;
(2) to identify the people or groups who took active part in the decision-
(3) to obtain a full account of their actual behaviour while the policy conflict
was being resolved; and
(4) to analyse and determine the specific outcomes of the conflict as
embodied in the decision(s) taken.
At an operational level the research methodology starts with selecting some
key decisions and determining for each decision, which participant(s) had
initiated alternatives that were finally adopted, which participant(s) had vetoed
alternatives initiated by others, and which participant(s) had proposed
alternatives that were turned down. These outcomes can then be tabulated as
individual (or group) “successes” or “defeats”. The participants with the
greatest proportion of successes out of the total number of successes are then
considered to be the most influential (Polsby, 1963, p. 113). In this action
oriented (decisionist) model, power is defined most crudely and simply as the
ability to prevail in conflict situations to overcome obstacles (Deutsch, 1966).
Hence, an attempt is made to study specific outcomes in order to ascertain who
actually prevails in decision making. The theory entails identifying who
prevails in decision making, which is the best way to determine which
individuals and/or groups are more powerful because direct conflict between
actors presents a situation most closely approximating an experimental test of
their capacities to affect outcomes (Polsby, 1963).
The extent and method of exercising power is assessed by observing and
studying behaviour of persons (or groups) in the decision making. The
frequency and the method with which a person (or group) successfully initiates
an important policy over the opposition of others, or vetoes policies initiated by
others, gives a rough test of the person’s (or group’s) overt or covert influence in
decision making (Dahl, 1961, p. 66). To analyse power, actual behaviour of
participants may be studied either at first hand or by restructuring behaviour
from records, documents, informants, bulletins, reports, press releases, and
other appropriate sources (Polsby, 1963, p. 121).
The UN power blocs and the structure of the playing field
As far as a political inquiry on accounting policy making by the UN is
concerned the essential empirical variables under Dahl’s methodology are the
disclosure issues, parties and groups participating in the deliberations,
conflicts, compromises and/or dominations which took place in the UN
international accounting bodies. Theoretically, each member nation of the UN
has equal voting rights and has complete independence in voting. However, an
essential characteristic of decision making at the various economic and social
committees of the UN has been the clustering of members around suitable
economic and political groups or caucuses. In a bargaining situation, these
caucuses do largely hold together, argue in the same line and vote en bloc on a
particular issue (Kaufman, 1980). These caucuses are appropriately called UN
“power blocs”. Figure 2 represents the relationship among these power blocs
within the UN system.
As shown in Figure 2, three such prominent “power blocs” were active and
visible at the time of the accounting group’s work. They were:
(1) The “Group of 77” – representing all the developing nations of the UN
plus China and (the then) Yugoslavia. In voting terms this group held
roughly about 75 per cent of the votes.
(2) The “Group-B” – representing the developed market economy nations of
Western Europe plus Australia, Canada, Japan, New Zealand and the
USA. This group had about 20 per cent of total membership.
(3) The “Group-D” – representing the socialist bloc nations of Eastern
Europe plus the Soviet Union. This group commanded about 5 per cent
of total votes.
This structure of the empirical reality has had significant influence over the
research method employed in this study. Successive steps taken in conducting
the inquiry included: first, selecting important accounting disclosure issues (i.e.
issues which have been contested or over which conflicts of interests were
visible); second, to identify the member nations and the contesting clusters of
nations participating in the debate. The actions and reactions of each group
were then traced back to reconstruct the behaviour of the national delegates or
group leaders while the issues were being resolved. These behaviours were also
Global cleavages and
UN power blocs (up to
The “Group of 77”
Socialist nations of
Military, Economic and
Total UN membership: In 1990 – 159
In 1993 – 181
critically examined to check if they did/did not reflect the preference positions
of some outside pressure groups. The reasons and rationales forwarded by each
contesting group are also analysed to ascertain which arguments did prevail,
how and why.
The outcomes of the debate were then tabulated and compared with
individual group objectives to exhibit (Table I) the relative rate of success or
failure, which reflects the relative strength of the groups. In this way, an
integration of action and structural methodologies of power is attempted in this
Signs of visible conflicts of interests
The United Nation’s attempts to regulate the conduct of TNCs in general and
accounting disclosure in particular, activated a variety of lobby groups such as
the TNCs and their associates, the international trade unions, environmental
groups and many national governments. Signs of disagreement and dissent
were visible within the (1972) Group of Eminent Persons (GEPs). The GEPs,
however, had followed a majority rule in resolving issues and making decisions.
The comments of the dissenting minority were published in the appendix of the
GEPs’ report (See, UN, 1974). Sessions of the subsequently formed GEISAR
indicated no serious disagreement or conflicts within the group. There was a
sense of seriousness and continuity of purpose in the group. The fact that the
chairperson of the GEPs was also the chairperson of the GEISAR may have
helped to maintain the link and focus on set objectives.
However, in the same period that the UN was resolving these issues, other
intergovernmental and professional groups had been active in forming parallel
regulatory regimes to challenge the UN’s actions (see, for example, Benson,
1978). The IASC (International Accounting Standards Committee) was
established in June 1973 as a caucus of professional accounting bodies and it
started challenging the UN’s authority with the rapid production of
international accounting standards (26 standards in the first 13 months). The
United Nation’s position was further undermined by the OECD, which reflected
the official political position of the industrially developed OECD nations
participating in the UN debates (Rahman, 1991). The OECD had set up a
Commission on International Investment and Multinational Enterprises (CIME)
in February 1975 which produced a set of guidelines in 1976 for the
Multinational Enterprises (MNEs) operating in OECD countries. These OECD
guidelines (OEDC, 1976) were voluntary and were a signal to the UN of the type
of rules the OECD would like to see emerging from the UN (Levy, 1984).
However, the most serious conflict and direct confrontation with the UN
position commenced after the GEISAR report was published in 1977. The
responses of the TNCs and their lobbying fronts, namely, the ICC (International
Chamber of Commerce) and the IOE (International Organization of Employers)
were sharp and hostile. These interest groups never welcomed the United
Nation’s involvement in accounting standard setting. Soon after the GEISAR
report was published the ICC and the IOE joined forces to form a working party
to coordinate the opposition of all TNCs to the UN Proposals (Stamp, 1979). The
joint ICC/IOE Working Party eventually delivered a lengthy protest against the
UN proposals (ICC, 1978) prior to the fourth session of the Commission on TNCs
(16-26 May 1978).
Furthermore, mounting opposition from the TNCs and other outside
pressure groups had definite bearings on the attitude and positions taken by
many government delegations participating at various UN committees. The UN
Commission on TNCs had considered the report of the GEISAR against the
background controversies and oppositions discussed above. At the
commission’s debate (1978), the delegates from the Western developed “Group-
B” countries expressed the view that the group of experts placed too much
emphasis on “international standards of accounting” and paid inadequate
attention to “harmonisation of accounting rules and principles”. Delegates from
the “Group of 77”, developing countries, on the other hand, considered it more
practicable to start with the identification of what was to be reported before
consideration of harmonisation of accounting principles. They argued that
harmonisation was extremely difficult to achieve even in regional groups
although it should continue to be a long-term objective of the UN. The “Group-
77” nations also demanded the GEISAR report be approved by the
The situation described above presents a classic case of contrast between the
“possession” and “exercise” of power. The “Group-77” developing nations
“possessed” the voting power, which if they decided to exercise properly, would
have resulted in the GEISAR report being endorsed by the Commission.
Subsequent events at the new intergovernmental accounting group presents
even more direct conflicts on all agenda issues discussed and forced the matter
to a turning point.
Conflicts within the Ad hoc Intergovernmental Group
The “Group D” socialist bloc nations traditionally supported the “Group of 77”
positions in all UN debates. It was observed, however, that the Group D nations
deliberately abstained from the Ad hoc Group’s debate. Group D’s position was
that the UN accounting standards should apply to Western TNCs only and not
on TNCs emerging from socialist nations. But the “Group B” insisted on their
inclusion into the rules. The socialist block nations, thus, chose to abstain from
all UN debates (Carty, 1982). As a result, it was a direct two-way negotiation
between the two principal opposing power blocs, namely the “Group of 77” (the
developing nations) and the “Group B” (developed market economy nations).
In general, the discussions within this group were highly political, with two
major power blocs basically seeking different aims and objectives. The “Group-
B” nations, who were dubious of the UN’s competence in accounting standard
setting matters, took the view that the UN was not the place for setting
accounting standards – a task which could better be performed by other
agencies, such as the OECD and the IASC. Hence, “Group-B”, nations sought to
limit the scope of accounting standards proposed by the (1977) GEISAR and to
ensure that recommendations were relegated to mere guidelines of best practice
rather than assuming a mandatory character. “Group-77” nations, on the other
hand, attempted to make the proposed UN accounting requirements mandatory
with appropriate governmental backing. The “Group-77” also desired the UN
assume a status of permanent standard setting body (Carty, 1982). The “Group-
77” delegations claimed that given the global network of operations, marketing
and financing strategies of the TNCs, the traditional accounting and reporting
systems needed to be significantly improved and modified in order to ensure
adequate levels of accountability (Wang, 1978).
It was clear from the nature of the ensuing debates that there were serious
differences of opinion and conflict of interest between the two power blocs. The
Ad hoc Intergovernmental Group published its interim report in 1981 and its
recommendations reflected a wide divergence of views on many fundamental
accounting issues, such as segmentation of data, treatment of depreciation,
classification of assets and liabilities, and valuation of assets and foreign
Not surprisingly, therefore, the final report of the group (UN, 1984) was
inconclusive. As previously stated, the report shows a split between issues
which were resolved and issues left unresolved. Most of the issues raised by the
TNCs were resolved in accordance with their demands. However, issues raised
by the host developing nations were left unresolved. In fact, the Ad hoc Group
abandoned the spirit of the 1977 GEISAR report, significantly reduced the
minimum items of disclosure recommended in 1977 and thus created a
stalemate between the two competing power blocs.
The group suggested, among the issues resolved, that:
(1) comparability of information provided by TNCs was an important issue;
(2) any reporting requirements for the TNCs be equally applicable to
(3) costs of providing information should be commensurate to the benefits
to be derived therefrom;
(4) maintaining business confidentiality in sensitive areas is important for
(5) international harmonisation should be the long-term objective of the UN.
As for the disclosure of information by the TNCs, the group suggested
that the TNCs should disclose information taking into account the
group’s “discussion” – in particular the agreed items of disclosure (UN,
1984, para. 40, p. 9).
The controversy over “true and fair view” versus “honest and accurate”
reporting was never resolved. Other unresolved issues included:
(1) transfer pricing, royalties, allocation of group overhead to subsidiaries
and other forms of intra-group transactions;
(2) foreign currency transaction;
(3) contents of general purpose reports versus those of special purpose
(4) valuation, classification and disclosure of movements in certain classes
of assets and liabilities;
(5) equity method of accounting for investments;
(6) accounting and reporting for government grants and subsidies;
(7) terms to be included in the statement of sources and uses of funds; and
(8) non-financial reporting items recommended by the GEISAR (1977).
Subsequent developments at the UN resulted in the dissolution of the Ad hoc
Group and the creation of another “intergovernmental” group to carry on the
job (ECOSOC resolution 1982/67 of 27 October 1982). It was mainly due to
pressures exerted from the “Group-77” nations that the ECOSOC agreed to
establish another group. The new group also consisted of 34 members elected
by the ECOSOC. But, as mentioned earlier, it had significantly diluted terms of
reference on international accounting issues. This new group was issuing
annual reports containing review of developments. This new intergovernmental
group was dissolved in 1993. As a remarkable turnaround the UN has dissolved
the UN Commission for Transnational Corporations (in 1994) which was the
key organ for the TNC matters.
The decision outcomes
The political environment and attitudes of the two opposing groups of nations
participating in the deliberations at the UN Ad hoc Intergovernmental Group
have been presented above. The results of the negotiations can now be
summarised on an issue by issue basis in order to identify policy preferences of
each group and the decision outcomes. Table I captures the essence of the
debate and presents such a summary. Table I is designed to indicate “who
prevailed” in the debates. The discussion that follows Table I attempts to
analyse “how” the minority view managed to prevail. The following points can
be drawn from the information contained in Table I:
(1) In most cases the “Group-77” recommended disclosure alternatives were
vetoed by the “Group-B” nations. The “no decision” outcome worked well
for the defenders of the status quo.
(2) A fundamental difference in the philosophy of corporate reporting by
TNCs between the “Group-77” and “Group B” delegations is observable.
For the first time in any international forum a contesting principle of
“accurate and honest” reporting was put forward against the established
principle of “true and fair view” for presentation of financial statements.
(3) Among the disclosure issues, intra-group transfer items, such as, intra-
group leases, sale-and-lease-back, receivables, payables, allocation of
group overheads, patent rights, investments, sales and transfers proved
to be the most contested issues.
Summary of policy
conflicting groups and
at the UN Ad hoc
Working Group of
Experts on International
(4) The whole debate indicates that the developing countries have a clear
idea about the crucial areas of TNC accounting and reporting which are
important for controlling and monitoring TNCs’ operations. For
example, the “Group-77” emphasised, among others, the following
• the transparency of published statements, rather than their
comparability and harmonisation;
• accurate and honest financial statements as opposed to “true and
fair view” as the reporting philosophy;
• need for structural change in financial reporting;
• the concept of de facto control for consolidation;
• classified disclosure of interest expense according to:
– currency of borrowing;
– sources of borrowing – home or host country;
– interest for financing investment or for financing current
– classification of sales revenue into revenue from natural
resources and revenue from technology licensing;
– separate disclosure of intra-group leasing, loans, sales and
(5) In almost all these cases the views of the “Group-B” nations prevailed.
They were able to discard many disclosure issues simply by arguing that
such classification would cause serious allocation problems.
Discussion and analysis
Given the democratic decision-making rule and relative strengths of the
conflicting parties, the outcomes of the negotiation summarised in Table I
would seem unexpected. Each UN member nation has equal voting rights and
the UN Charter provides for decision making by majority vote. According to
this rule the “Group-77” (developing nations), by virtue of their numbers (21 out
of 32) should have been able to carry their proposals through. Moreover, the Ad
hoc Intergovernmental Group was already dealing with a previously endorsed
disclosure package (by the GEISAR, 1977) and most of the issues and
alternatives raised and proposed by the “Group-77” were either already adopted
in practice or were under review by other accounting bodies.
However, in a political bargaining situation, reasons and rationales can often
be accepted or rejected depending on the possession or non-possession and
deployment of some social, economic, and political resources by the respective
groups involved in the negotiation (Lasswell and Kaplan, 1950). Prevailing in a
decision-making process is, therefore, a phenomenon that identifies the
powerful. More importantly, that phenomenon or outcome reveals the
possession and use of some economic and political resources by the “winner”.
These are likely to be the resources which are in short supply to the group
defeated. Every actor in a society (national or international) may be thought of
as controlling, by his/her actions and decisions, some amounts of values (or
resources) in relation to others, so that the controlling actor can increase or
decrease the resource position (both pecuniary and/or non-pecuniary) of those
others by his/her own actions or decisions. The values, resources or interests
that are desired by other people, but controlled by the actor, may be called
his/her power base or “base values” (Lasswell and Kaplan, 1950). Similarly,
some of his/her desired values, resources and interests (called “scope values”)
may be controlled by one (or more) other actors. In a bargaining situation, other
actors can be induced to give up control over some of those resources in
consideration of, or exchange for, any units of base values over which the first
actor has political influence owing to his/her base value position. According to
this theory, the power base for actor A (where A could be a person, a country or
group of either) is an amount of value or resource under, A’s control which is
needed by B.
Theoretically, then, A is in a position to increase or decrease B’s wealth, well-
being, or enjoyment of respect (i.e. prestige) by his/her action. If B values that
which A controls, B must try to convince A to let B have more of these values.
The actual method used in such a convincing process may range from simple
negotiation involving requests and offers to give up some scope values
controlled by B in A’s favour to the use of military power in extreme cases. For
example, “Group-B” nations possess surplus food and superior technology,
superior military and above all political control over multinational corporations
(base value of the developed nations) which the developing nations often
desperately need to resolve their domestic problems.
On the other hand “Group-77” developing nations possess the opportunities
of cheap labour, huge consumer market, low taxes, and above all, the voting
rights at the UN (Base values to “Group-77” and scope values to “Group-B”
nations). The “Group-B” nations want “Group-77” votes at the UN in order to
pass resolutions favourable to “Group-B”, simply because UN resolutions are
important in shaping world opinion. UN agenda items and resolutions are used
to form opinions on what is good and what is evil; what is legal and what is
illegal. They can enhance or damage international image about a nation or a
group of nations. Thus, if the “Group-77” developing nations need and want
economic aid to improve their technology and industrial base, or if a hungry
nation needs food in order to drive off famine, and one or more of the “Group-B”
nations (e.g. USA, UK, Japan) control the supply of these resources, then the
country(ies) possessing the resources will have a “power base” (i.e. potential
power) for exercising influence over these more needy countries (Deutsch, 1966).
“Group-B” nations may use (exercise) these “base values” (power base) to
acquire influence and power over the behaviour of some or all of the “Group-77”
nations in order to gain control over some “scope values”– such as a favourable
vote, an abstention, a non-opposition, acceptance of some proposals, approval of
access into the countries’ market, allowance of major concessions to the TNCs
operating in those countries and so on. The “Group-77” nations, on the other
hand, may decide to use (or exercise) whatever potential power they have (e.g.
voting power) to win over a crucial decision.
Dahl’s pluralist methodology, however, would decline to recognise a party as
“powerful” if one of the parties fail to exercise such potential power to prevail at
the time of actual decision making.
Construction of a “right” of veto by the “Group-B” nations
Signs of visible conflict started to emerge at the fourth session of the
Commission on TNCs (May 1978) where the GEISAR report was explicitly
considered. The Commission on TNCs was supposed to follow the rule of one-
nation one-vote and decision making by simple majority vote as provided by
the UN charter. But in this case the “Group-B” nations declined to support the
implementation of any UN disclosure recommendations unless they were
passed with absolute unanimity. They had also threatened to withdraw from all
negotiations concerning TNCs if the rule of majority vote was adopted in the
decision making (US Department of State, 1982).
This construction, and use, of a right of “veto” by the “Group-B” nations had
a dramatic impact on the outcomes of the negotiation. The “Group-77” nations
had the voting majority; but they obviously did not have much authority over
the TNCs. They realised that resolutions passed in the UN without the explicit
endorsement of a TNC’s countries of origin would have little effect in practice.
Moreover, the threatened cuts in financial support to the UN by the “Group-B”
would endanger the existence of the Commission itself. Eventually the so called
consensus formula of decision making was adopted at the Commission’s 4th
session. The GEISAR report failed to gain a consensus support, and naturally
no measures were recommended for its implementation. However, as a
compromise solution the Commission agreed to set up an Ad hoc
Intergovernmental Group of Experts on Accounting Standards. The
“consensus” rule of decision making was passed on to the Ad hoc Group as well.
The acceptance of the consensus formula for decision making essentially
stripped the developing nations of their only source of power.
On the surface, the consensus formula presented a unifying and
compromising image. However, in a decision-making process, a consensus
formula tends to suffocate all democratic values and offers each and every party
a de-facto power to veto over any decision. With such a power each and every
party can destroy a consensus of the rest through unilateral disapproval of a
decision. Such a veto power is instrumental in blocking resolutions from being
passed. The “Group-B” nations thus successfully eliminated the possibility of
any resolution being passed by majority vote. The “Group-B” nations, in this
case, successfully used their base values (economic influence and control over
TNCs) to compel the “Group-77” nations to abstain from exercising their base
values (voting power).
The “Group-77” nations were the change-seekers and the “Group-B” nations
were the defenders of status quo. If any decision was taken, the change seekers
would have been victorious. On the other hand, if no decision is made due to a
lack of consensus, the status quo was effectively preserved. Under the
unanimity rule, the job of the minority “Group-B” nations thus became easier.
They simply had to disagree with any disclosure proposal placed by the
“Group-77”, put a counter proposal and communicate their reservations about
the issue. There has been numerous occasions (as shown in Table I) when
“Group-B” nations have rejected disclosure proposals presented by the “Group-
77” (and indeed recommended by the GEISAR) simply by arguing that they
were of “unnecessary detail”; “were not suitable for general purpose reports”;
“would violate business confidentiality”; “would not accrue enough benefits to
match costs”; “need further investigations”; and so on. It was also observed that
in extreme cases, the USA and Japan alone have exercised such de-facto veto in
order to block many decisions otherwise agreed upon by all other nations (US
Department of State, 1982).
It may be recalled here that a similar exercise of pressure and threat of
abandoning all negotiations in international trade by the developed market
economy nations in 1964 resulted in the acceptance of the so called “consensus
formula” at the Geneva Conference of UNCTAD-1 (Cordovez, 1967). The net
result was a total stalemate in the negotiations – a nil output despite heated
debate and frequent meetings. The negotiations at the UN Commissions on
TNCs, and in the various sessions of the Ad hoc Intergovernmental Group,
evidenced meaningful employment of a similar strategy from the “Group-B”
nations. Under such a decision-making rule, the question of what is or what is
not on the agenda becomes less relevant. No matter how serious the issues are,
the final outcome is certain – the preservation of the status quo.
The commercial activities of transnational corporations are critical because
they cut across national boundaries and are responsible for the distribution and
re-distribution of a significant volume of wealth and jobs across the globe.
Furthermore, this paper supports the view that international regulation of
corporate accounting is a significant variable in shaping and re-shaping the
economic and political relationship among nations, and can potentially
contribute in easing international tensions and fostering economic and social
harmony among nations. A proper accountability of this phenomenon is
arguably an essential element in modern day international relations.
However, it has been shown that the needs and aspirations of the developing
nations and the developed nations are quite different on the TNC issue. The
developing nations have little voice in the accounting standard setting process
of other international bodies, such as the IASC, or the OECD (Stamp, 1978; UN,
1984). There is no other international forum except the UN where these nations
are meaningfully represented on an equal footing. It is, therefore, not surprising
that the UN, as the only international co-ordinating body with universal
membership, became involved in the process.
The present study attempted to analyse regulatory developments over TNCs
at the UN, to identify the groups and parties involved at various levels of the
negotiation process, and to capture the underlying tensions, conflicts and
compromises among nations. Empirical evidence suggests that, despite the
UN’s outward image of a democratically constituted organization, the UN
decision on (at least) the TNC issue cannot be explained in terms of democratic
rules and values. The normal democratic rules (as provided by the UN Charter)
are frequently overridden by domination (Clegg, 1979, 1989) of one kind or
another. The present study describes the process as a political one, and power is
the central element in such political analysis.
The pluralist decision-oriented framework of power based on the works of
Dahl (1957, 1961, 1966, 1968) and Polsby (1960, 1963) was utilised because
Dahl’s methodology proved to be more consistent and amenable to the
objectives and empirical data presented. As suggested by Dahl, the outcome of
a negotiation process was shaped not by the possession of resources relative to
other parties but by the actual exercise of these resources in the decision-
making arena. Thus, a group which ostensibly lacked power in terms of voting
rights came out as “winner” owing to the skilful and timely exercise of the
strategic resources they possessed. The results reinforce the view that all
member nations at the UN may well have voting rights, but whether these
rights are exercised or not depends on their socio-economic and political
position at that time. In the negotiations over accounting standard setting
within the various UN bodies, it was found that the group holding majority
votes was neutralised from exercising these rights by intimidation and threat of
withdrawal from all negotiations by the minority group.
Such political manoeuvring by the minority was successful because of the
prevailing hegemonic domination (Clegg, 1979) and control over the
international economic institutions by the minority (Gilpin, 1979). A rule of
consensus was constructed and applied in the decision-making processes,
which provided the opportunity to the minority to block all decisions.
Dahl’s pluralist methodology focuses on the actions, or lack of actions, by
each individual or group in the formal decision-making process. The
framework successfully identifies power wielders and can explain how power
was successfully exercised over others. It attempts to explain power in a
“combat” situation, and offers a clear focus on outcomes. However, the
methodology fails to present a complete picture of the underlying process
responsible for such action (or inaction). A more appropriate methodology
might be required to study a further aspect of power as articulated by Bachrach
and Baratz (1962, 1963), which goes on to examine various forms of “agenda
controlling”; i.e. those actions of political participants which prevent
contentious issues being surfaced in the first instance. It is also possible to take
the investigation one level further by examining the process by which the social
or economic variables are politically “managed” and manoeuvred in such a
manner that many participants become confused or lose sight of their real
interests, or fail to realise that they are being subjected to manipulation.
Finally, the ex post facto nature of the study and resultant gaps which might
have been introduced while reconstructing behaviour of participants from
documents and records rather than from first hand personal observation is
recognised. Such first hand observation for an archival study was not feasible
for understandable reasons.
1. The pluralist model of power suggests that in a decision-making situation every
participant in the process has almost an equal chance to influence the decision. That is, no
single person or group holds absolute power.
2. The drive for accounting regulation of TNCs has been precipitated by a number of factors.
They have been known to fiddle their accounts; avoid or evade taxes (Bhagwati, 1967);
Capithorne, 1971; Winston, 1970): rig their intra-company transfer prices (Lall, 1973;
Vaitsos, 1970, 1974); import foreign labour practices (Morawetz, 1974); compete unfairly
with local firms (Barnett and Mueller, 1974); export jobs from home countries to host
countries (Rubin, 1971); bring obsolete technologies to the developing world (Barnett and
Mueller, 1974; Robinson, 1979); meddle, bribe and wreck balance of payments (Muller and
Morgenstern, 1974; Nayaar, 1978); overturn local economic policies (Litvac and Maule,
1969); and play off government against government (UN, 1974; Kussi, 1979).
3. The Senate subcommittee report revealed the attempt made by the ITT (of USA) to
overthrow the Chilean Government through a military coup. See, The Economist (1976,
4. Under the UN structure, the ECOSOC is the principal organ which is responsible for
handling issues of economic and social matters. It is composed of the government
nominees of 54 member nations elected by the General Assembly on the basis of
predetermined regional and political groups to represent: Africa, 13; Asia, 12; Latin
America, 12; Developed Market Economy Countries of Western Europe, North America
and Oceania, 12; and Socialist Nations of Eastern Europe, five. The ECOSOC exercises its
power under the authority from the General Assembly. It operates on the basis of one-
nation, one-vote and decision making by majority vote. See Article 61 of the “UN Charter”.
reprinted in, among other places, Kaufmann (1980, Appendix 1).
5. Key decisions are decisions on key issues. Key issues are issues over which a conflict of
interest is visible.
6. The UN had attempted to set disclosure standards only. It made little or no attempt to set
7. That is, they were not government nominees of the countries they belonged to. They acted,
deliberated and voted as independent individuals as opposed to government delegates.
8. For the names and other details of the members, see the report of the GEPs (UN, 1974).
9. For a complete list of personalities testified before the GEPs and summary of the hearings,
see, UN (1974).
10. Even if some information was available the data did not adequately measure the
phenomenon of the TNCs. Neither the sales and earnings figures, nor capital flows and
investment stock could fully measure the impacts of the operations of the TNCs. The large
incidence of inter-affiliate transactions with attendant transfer-pricing effects and practices
involving capitalisation and de-facto control over local entities and resources could distort
the real picture (UN, 1974).
11. ECOSOC decision 114 (LIX) 29 July 1975. See UN Doc. E/5655, May 1975.
12. The group included, among others, Mr Joseph Cummings (the then Chairman of the IASC
and Deputy Senior Partner in charge of international relations of Peat, Marwick and
Mitchell and Co.), the late Pieter Louwers (Chief Auditor of Philips Group of The
Netherlands), Mr Hans Havermann (a leading German accountant), Mr Petra
Gyllenhammer (President, Volvo group of Sweden), Mr Washington SyCip (distinguished
Philippino accountant), and Mr Lakshmi K. Jha (Governor of Jammu and Kashmir, India).
13. The terms of reference of the expert group was limited to reviewing reporting
requirements in different countries and existing reporting practices of the TNCs:
identifying information gaps in existing corporate reports; and recommending a list of
minimum items that should be disclosed in the general purpose reports of TNCs and their
affiliates (UN, 1977, p. 17).
14. Note that the UK was not included in the group. However, Mr Joseph Cummings, Chairman
of the London-based IASC, was a member of the group.
15. As far as the financial items are concerned, the group of experts’ recommended list of
minimum disclosures represented a synthesis of the FASB Standards of the USA, the
disclosure rules contained in the OECD guidelines (OECD, 1976), and the IASC
pronouncements – all tailored to the needs of host nations. But on non-financial reporting
it had broken new grounds. The group suggested that non-financial information was no
less important than financial information in apprising the social and economic impact of
the operations of TNCs on the countries and communities in which they operated. The
GEISAR report may be called radical to the extent that no other national or international
body had then considered non-financial disclosure per se as a candidate for accounting
standard setting. In terms of conception and content, the UN disclosure list was more
comprehensive than any which existed in practice or had been proposed by other bodies.
16. See, Official Records of the ECOSOC, 64th Session Supplement No. 12 (1978), UN Doc. No.
(E/1978/52, E/C 10/43).
17. ECOSOC Resolution 1979/44. For a text of the resolution see CTC Reporter (1979).
18. Two seats remained vacant from the Socialist bloc nations which deliberately abstained
from these negotiations. For a complete list of personalities involved, see UN Doc. E/c.
10/1982/8/Nov. 1 (UN, 1984).
19. Key decisions are decisions on key issues. Key issues are issues over which a conflict of
interest is visible.
20. The origin of the title of this group dates back to the UNCTAD-I negotiations in 1964. A
total of 77 developing nations formed this group to present a unified position on global
trade issues. This group had more than 120 members. But the original title is still
maintained by the group as a symbol of unity. See, Cordovez (1967).
21. Mr L.K. Jha from India.
22. The report of the GEISAR was going to be considered and supposedly be accepted at this
session of the Commission. The ICC/IOE argued that the UN disclosure proposals
encroached upon business confidentiality; they would put TNCs at a competitive
disadvantage to local enterprises; the cost of improved reporting would exceed perceived
benefits; and that proposals relating to segmental reporting and non-financial disclosure,
in particular, were “ambitious” and “impracticable” (ICC, 1978, para. II (4.2), p. 7). The
ICC/IOE maintained that harmonisation of accounting standards across national
boundaries was the fundamental problem and expressed that they were “surprised and
concerned” at the UN Secretary General’s optimism about the implementation of the
GEISAR recommendations before tackling the harmonisation issue. (ICC, 1978, para. 1(1),.
23. See Official Records of the ECOSOC, 64th session, No. 12 (1978), UN Doc. (E 1978/52, E/C,
10/43), para. 108.
24. The group also could not resolve the controversy as to whether TNCs should provide
“accurate and honest” financial statements (demanded by the “Group-77”), or they should
present a “true and fair view” (favoured by the “Group-B”). There were also conflicting
opinions on the type of information to be disclosed by the TNCs at each subsidiary level
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