LEADERSHIP FORUM 2005 SUCCESSES THROUGH ETHICAL GOVERNANCE CORPORATE GOVERNANCE IN PRACTICE CODES OF

1
LEADERSHIP FORUM 2005SUCCESSES THROUGH ETHICAL
GOVERNANCE CORPORATE GOVERNANCE IN
PRACTICECODES OF CONDUCTAT HONG KONG
INTERNATIONAL AIRPORTPresented byAlex Derbie,
Legal Director and Secretary to the BoardAirport
Authority Hong Kong16 June 2005
2
SOURCES OF POTENTIAL CRISESAT HONG KONG
INTERNATIONAL AIRPORTFOR THE AIRPORT AUTHORITY
(AA)

• Safety
• Quality
• Security
• Environment
• Ethics and Governance
• Efficiency
• Public Health
• Financial

3
AAS GOVERNANCE IN PRACTICE

• 1. People Approach for General Conduct and
  Behaviour
• 2. Corporate Performance

4
AAS PEOPLE APPROACH (I)

• Ethics and Governance a core value of the AA.
• The Code of Conduct promotes this core value.
• Its Purposes
• To provide broad guidelines to assist staff
  members in making ethical decisions in the course
  of their duties
• To inform and remind staff members of their legal
  and ethical obligations to the AA and other
  stakeholders
• To advise staff members against inappropriate and
  unacceptable behaviour and
• To inculcate a culture of integrity and
  excellence in corporate governance through
  ethical behaviour.

5
PEOPLE APPROACH (II) AAs ETHICS PYRAMID
Legal Compliance ????
Corporate Governance Policy Code of
Conduct ?????? ??????
General Conduct Behaviour ????????? Mindset ??
6
GENERAL CONDUCT AND BEHAVIOUR
PEOPLE APPROACH (III)

• Fundamentals
• Staff members should be proud of doing things
  right.
• An ethical mindset is most important.
• A proud working organization with high
  principles.
• To maintain the good image of the AA in the eyes
  of the public.
• Set a good foundation for governance and make
  ethics core to our business.

7
Lead by Example with an Integrated Approach
PEOPLE APPROACH (IV)

• Commitment to manage risk
• Assess risks robustly
• Dig-down with involvement of staff at all
  levels
• Integrate the AA is a business of integrated
  diversities
• Meet the costs of establishing and maintaining
  internal controls
• Ethics Panel with published guidelines and
  transparent process
• Culture of honesty and ethical behaviour
• Mindset
• Communicate and demonstrate
• The foundation is the Code of Conduct for
  employees
• Appropriate actions and responses
• Training and awareness

8
OBLIGATIONS TOWARDS THE AA
PEOPLE APPROACH (V)

• Public body/Public servants high standards and
  implications.
• AA Standard vs Noodle Shop Standard.
• Every action/favour is to be returned in
  reciprocity AND Being owed a favour can be a
  powerful strategy. This is NOT AA practice.
• NIL incidents

9
GOOD CORPORATE GOVERNANCE
CORPORATE PERFORMANCE (I)

• AA Believes
• Leads to better corporate performance
• Is essential for long-term sustainable growth
• Fairness, transparency and accountability
• In institutionalising a comprehensive framework
• Fostering ethical and responsible culture
• It should not rely on rules, regulations and
  legislation

10
HUMAN INTERVENTION
CORPORATE PERFORMANCE (II)

• All of the notorious corporate accounting and
  financial reporting scandals have been caused by
  human intervention, typically by managers and
  senior managers and/or officers, usually
  involving collusion, and always involving the
  circumvention of controls, policies and
  procedures. ()
• Price Waterhouse Coopers

11
TANGIBLE VALUE
CORPORATE PERFORMANCE (III)

• 2. Good Governance Adds Tangible Value according
  to a survey of over 200 institutional investors
  conducted by McKinsey Co.
• 75 said board practices are as important as
  financial performance in evaluating investment
  opportunities.
• Over 80 said they would pay more for shares of a
  well-governed company.
• Share premium investors are willing to pay for
  good governance ranges from 18 to 27.

12
GOVERNANCE (NOT) IN PRACTICE
CORPORATE PEFORMANCE (IV)

• 3. Corporate America
• Did you know?
• If you had bought 1,000 worth of Nortel stock
  two years ago, it would now be worth 49. With
  Enron, you would have 16.50 of the original
  1,000. With WorldCom, you would have less than
  5 left.
• If you had bought 1,000 worth of Budweiser (the
  beer, not the stock) two years ago, drank all the
  beer, then turned in the cans for the 10 cent
  deposit, you would have 214. ()
• Price Waterhouse Coopers

13
Transparency International Corruption Perception
Index 2004
SUCCESSES (I)
CPI Score relates to perceptions of the degree
of corruption as seen by business people and
country analysts and ranges between 10 (highly
clean) and 0 (highly corrupt).
14
POLICING GOOD PRACTICES
SUCCESSES (II)

• Code of Conduct Training
• Self-policing training is the key
• Proper checks-and-balances
• Partner with the ICAC
• Prevention of Bribery Ordinance (HK)
• Nil incidence of corruption
• Whistleblowers protected
• Reporting Receipt of Gifts
• Awards Diamond - 2002
• Platinum - 2003

15
AND FINALLY THE KEY IS MINDSET
Legal Compliance ????
Corporate Governance Policy Code of
Conduct ?????? ??????
General Conduct Behaviour ????????? Mindset ??
THANK YOU
XIE XIE