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Additionally, it proved highly able to develop and implement the respective policies within the necessary performance measures and necessities. As they themselves stated, the managerial team at Citic Pacific took great pride in its commitment to "excellent standards of corporate governance and first class business practices." And not only that they implemented the policies and mechanisms desired by the standing legislations, they also stated to have developed and implemented additional mechanisms which extend "beyond compliance with the mandatory requirements such as that of the Companies Ordinance, accounting standards and the Stock Exchange" (Ko, 2009).
As reality proved, these were just vain promises and the actual mechanisms which were developed were insufficient and allowed it for the company to register historic loses.
4. Have the board and the independent directors on its audit committee carried out their responsibilities suitably? Explain.
The role of the board and the independent directors is that…
Ko, S., Corporate governance at Citic Pacific, the Asia Research Center, 2009
Performance pay for professionals, the Association of Professional Engineers, Scientists and Managers, Australia, 2010, http://www.apesma.asn.au/adviceonline/remuneration/performance_pay.asp last accessed on November 19, 2010
Corporate Governance at Citic Pacific
An unauthorized foreign currency transaction left Citic Pacific, the Hong King branch of CITIC Group (the large state-owned Chinese investment bank) exposed to the tune of approximately two billion dollars (Ko & Joshi, 2009). Not only was this unnecessary risk taken on through an unauthorized trade, but investors and shareholders in the bank were not notified of this fact until six weeks following the date that the transaction and risk came to the attention of leaders at the bank (Ko & Joshi, 2009). Only when the loss was certain was it announced, and though apologies and guarantees about reforming the practices and policies that allowed this to happen were made, distrust and outrage were rife amongst investors and analysts (Ko & Joshi, 2009). This case touches on several issues that are worthy of consideration from a corporate governance and management perspective.
Corporate Governance at CITIC Pacific: A Case Study
Exposure to foreign exchange risks that led to significant damages to the profits of Citic Pacific, which is the Hong King branch of China's CITIC Group, went unannounced for six weeks, leaving investors quite understandably angry with the company and its leadership. A lack of adequate corporate governance at the state-owned investment organization was seen by many as the major problem in the situation, and despite the apologetic tone struck by company leadership when the two-billion-dollar loss was announced, many felt that the problem still persisted and was in obvious need of drastic action. It is recommended hat the risk management procedures at work in Citic Pacific undergo a major overhaul, and that management and the board of directors be made more responsive to investor and shareholder interests through a redefining of company policy and procedure and possibly through a direct link…