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More than just cocktail parties for this year's World Economic Forum

As the United States struggles to cope with its weak economy and financial scandals -- including the one shrouding collapsed energy trader Enron Corp -- this week's World Economic Forum comes at a critical juncture for corporate and political leaders eager to shape the world's business agenda during 2002.

While some grouse that the annual meeting is little more than a glorified "schmoozefest," others have stated there is immense potential for networking provided by an intimate -- and largely off-the-record -- gathering of influential people.

The line-up of business leaders headed to New York City later this week is top-shelf. Heads of the world's biggest food companies, drug firms, mining conglomerates, and investment banks will mix freely with political leaders for brainstorming sessions.

"It's the logical place to make connections," said Richard Edelman, founder of public relations firm Edelman.

The outcome of these meetings will, in all likelihood, not be instant. But the impact may be felt over the next few months in the form of mergers, swapping of assets, joint ventures, alliances, huge contracts, and even the creation of new markets.

"Many business ideas come out of the (meetings)," said Joanna Gallanter, founder of Venture Strategy Partners, a Silicon Valley venture capitalist who is now working on a technology project in Nigeria, plans for which started during last year's WEF.

This year's official agenda covers a range of themes including the "alleviation of poverty" to "restoring sustained growth." But it is the unofficial pow-wows that lure the bulk of the almost 3,000 guests.

"What happens informally is more important than what happens formally," an investment banker with a top Wall Street firm said.

He said there have been instances where some high profile corporate deals started at Davos, Switzerland, the venue of previous WEF meetings, where chief executives meet face to face. The meeting has been switched to New York this year as a vote of confidence in the city after the devastating September 11 air attacks that destroyed the World Trade Center.

"In Davos, it used to be one big boot camp, you are bound to catch up with people in your industry," the banker added.

The WEF meeting is unique in many ways. Dignitaries do not just speak to a room full of scribbling analysts and bankers. Prime ministers, Arab princes, central bank heads, and corporate bosses leave their desks to discuss "The Big Picture." Even some of their frequent critics are invited.

Jeff Bezos, the founder of Internet retailer Amazon.com Inc and still a poster child of what is left of the New Economy, could bump into Malaysian Prime Minister Mahathir Mohamad.

Harvey Pitt, chairman of the US Securities and Exchange Commission, could have a few quiet words with Joseph Berardino, head of accountancy firm Anderson that is now under harsh scrutiny for its role in the auditing of Enron's accounts and its related destruction of documents.

HARD TIMES

This WEF will perhaps be one of the most closely watched in its history.

The five-day conference is being held at a time when global stock markets have been far from buoyant. The colossal corporate power of America is looking a little less confident these days with the likes of former industry standards Bethlehem Steel, Enron, and retailer Kmart Corp all operating under bankruptcy protection.

In recent months, the stench of corporate scandal has increased and threatens to undermine investor confidence in US regulations.

Last Friday alone, Kmart announced it had launched an internal investigation of its accounting following an anonymous letter sent to its directors, auditors and government regulators, while drug company ImClone Systems Inc, said it is under scrutiny by securities regulators and the Justice Department.

That came in addition to the shocking news that same day that Enron's former Vice Chairman J Clifford Baxter shot and killed himself.

Enron's former chairman and chief executive Kenneth Lay, who quit both positions this week, and ImClone CEO Samuel Waksal -- whose company is accused of misleading investors about a highly touted colon cancer drug -- were both on the original list of guests for the forum.

"We have some real issues here. We are not going to talk about dot-com millions or what's up on Nasdaq," Edelman said, referring to the kind of topics discussed at previous WEF events when stock markets were booming.

The WEF was founded in 1971 by German academic Klaus Schwab who wanted to create a platform where labor leaders, politicians, and business leaders would mingle. His ultimate goal was to help Europe counter US industrial power.

Today, armed with a common currency and a galaxy of cash-rich companies, leaders of corporate Europe are expected to use WEF as a good opportunity to initiate expansions into the United States.

Germany's Deutsche Bank and automaker BMW, Swiss food group Nestle, French cement company Lafarge SA, British oil giant BP, and Anglo Dutch group Unilever are all expected to have a major presence.

There is enough room for consolidation in the banking and financial services sector with world players looking to emulate the model of leader Citigroup, which offers retail, commercial, and investment banking on the same platform.

Deutsche Bank is a natural buyer of US assets and no doubt its CEO Rolf Breuer will be carefully watched this week by investment bankers.

Utilities are also under a spotlight with US power companies, thanks to Enron.

Apart from European utilities seeking to expand into the United States, some energy groups will also be looking to meet with visiting politicians from emerging countries.

Mining is another area where asset swapping has been in a frenzy and the New York meeting could add additional fuel. Executives from diversified South African mining giant Anglo American Plc, Canada's Barrick Gold Corp, and North American aluminum makers Alcan and Alcoa Inc are among those who may bump into each other in the corridors of the Waldorf Astoria hotel, the venue for the meeting.

The drugs and biotechnology sector will be in full form, too, and have critical issues to discuss.

Top drugmakers such as Merck & Co, Eli Lilly, AstraZeneca Plc, and Bristol-Myers Squibb face the threat of cheaper generic copycats and government attempts to rein in prices.

Another strand of concern at the WEF will be about how companies are protecting themselves financially from terrorist attacks, as insurers cut down coverage and raise prices, and as the US Congress has failed to agree on a federal backstop plan that would help insurers to keep terror cover available.

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