European press review

The WorldCom scandal's effect on Europe's stock markets draws gloomy comments from the papers.

Meanwhile, Russian dailies look at a former spy's treason conviction.

A few smart swindlers have seriously harmed investors

Frankfurter Allgemeine Zeitung

Europe's stock markets were badly hit on Wednesday after WorldCom - one of America's biggest companies - admitted overstating its profits by nearly $4bn.

"Lesson number one of the day," says Britain's Independent, "is that when America sneezes, the rest of us catch a pretty bad cold."

Germany's Frankfurter Allgemeine Zeitung sees a wider malaise.

"What is alarming," it says, "is that investors around the world have lost faith in shares as a financial instrument."

As the paper sees it, "a few smart swindlers have seriously harmed investors, and indeed entire economies, with their particular brand of self-service".

In Britain, The Times believes that "the more profound damage is not to short-term stock prices but the wider reputation of corporations throughout the world."

It says that stock markets' fragile state does not equate to a feeble economy or flawed system and calls for greater transparency to head of the "attacks that will be launched on corporate ethics".

Investors have realized that the boom of the 1990s was built on swindling

Vremya Novostey

The Spanish El Mundo says shares' sharp slide has "helped open the eyes of many investors as to what kind of people are looking after their money".

"The conclusion could not be more depressing," it adds, slamming "the lying propaganda that leads millions of families to invest their savings in plummeting stocks and shares".

It warns that government reforms are needed to restore investors' confidence in "popular capitalism".

FAZ agrees that governments must step in, with Europe and the United States working together "to rebuild investors' confidence quickly".

"The stock markets are the major source of funding for companies and their future investment," it points out, "but if investors fight shy, this source is in danger of drying up."

Business on trial

Meanwhile in Russia, papers see the scandal as an indictment of corporate America.

Vremya Novostey says it has cast a shadow over "the cherished myth of transparency in American business".

A mania for giant things washes away any standards

Vedomosti

"Investors have realised," it adds, "that the boom of the 1990s was built on swindling, pure and simple."

The paper sees US wealth as being built on "cowboy audacity and puritan honesty".

"It turns out that there was too much audacity and quite clearly not enough honesty," it declares.

And the financial daily Vedomosti likens American corporate expansionism to the villain in a Bond film, "a madman striving for world domination, losing his conscience, his sense of realism, and finally [losing] control over his project".

Giant corporations, the paper concludes, are "beginning to collapse under their own weight".

Cold War revival

Closer to home, Russian papers disagree over the trial of former KGB General Oleg Kalugin - currently living in the United States - who was convicted of treason in absentia on Wednesday.

He has now been officially named a criminal and a traitor

Rossiyskaya Gazeta

The charges concerned his book, The First Directorate, which disclosed information about US-based spies.

The Russian government newspaper Rossiyskaya Gazeta makes no attempt to hide its satisfaction with the verdict.

His betrayed former colleagues, the paper says, "can preserve some moral consolation: he has now been officially named a criminal and a traitor".

The broadsheet Nezavisimaya Gazeta calls the 15-year sentence "strict but politically totally correct".

But it draws attention to the way the case was rushed through the courts.

This is "hardly surprising", the paper says, because the judges had a deadline to meet.

Under recent changes to the Russian Criminal Code, it explains, there can be no more trials in absentia after 1 July.

He will definitely gain US citizenship and will quietly live out his years in America

Kommersant

The business daily Kommersant, however, blasts the trial for resembling "some sort of farce".

The courtroom, it notes, "was completely closed to the press, and it was impossible to grasp what the disgraced general was being tried for".

But at any rate "this sentence poses no threat to Oleg Kalugin", the paper points out.

"Quite the reverse, he will definitely gain US citizenship and will quietly live out his years in America."

The European press review is compiled by BBC Monitoring from internet editions of the main European newspapers and some early printed editions.