Many European businesses are failing to effectively implement corporate governance codes which is heightening the risk of a serious corporate scandal on the scale of that involving Enron, new research claims.

A poll of Europe's 500 largest publicity listed firms found just 56 percent had the necessary policies in place to protect against ethic and compliance failures, with only 9 percent expecting budgets aimed at addressing the issue to increase.

The worrying figures were despite three-quarters of respondents predicting greater pressure from stakeholders for improved ethics and compliance programs.

The report by Integrity Interactive and the Association of Corporate Counsel (ACC) also found that although 99 percent of companies had a code of conduct or value and principles statement prescribing what staff can or cannot do, only half ensured that all employees were made to read it.

In addition, a quarter of companies confessed to sending their code to selected employees even though 72 percent believed that the entire workforce should be privy to it.

Frederick J. Krebs, ACC president, said: "Companies in the U.S. have spent the last several years ratcheting up their efforts on ethics and compliance but many of their European counterparts still have more work to do.

"For any ethics and compliance program to be effective and successful, it is vital that adequate steps are taken to ensure that all employees understand the policies in place. It is not good enough to have codes of practice buried on an Intranet site where employees have to proactively seek them out.

"Therefore training on codes and policies and the evaluation of levels of understanding of these, play a significant role in protecting a business against scandal and without it many could be heading for trouble."