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AIRPORT AUTHORITY HONG KONG 1 LEADERSHIP FORUM 2005 SUCCESSES THROUGH ETHICAL GOVERNANCE CORPORATE GOVERNANCE IN PRACTICE CODES OF CONDUCT AT HONG KONG.

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Presentation on theme: "AIRPORT AUTHORITY HONG KONG 1 LEADERSHIP FORUM 2005 SUCCESSES THROUGH ETHICAL GOVERNANCE CORPORATE GOVERNANCE IN PRACTICE CODES OF CONDUCT AT HONG KONG."— Presentation transcript:

1 AIRPORT AUTHORITY HONG KONG 1 LEADERSHIP FORUM 2005 SUCCESSES THROUGH ETHICAL GOVERNANCE CORPORATE GOVERNANCE IN PRACTICE CODES OF CONDUCT AT HONG KONG INTERNATIONAL AIRPORT Presented by: Alex Derbie, Legal Director and Secretary to the Board Airport Authority Hong Kong 16 June 2005

2 AIRPORT AUTHORITY HONG KONG 2 SOURCES OF POTENTIAL CRISES AT HONG KONG INTERNATIONAL AIRPORT FOR THE AIRPORT AUTHORITY (AA) Safety Quality Security Environment Ethics and Governance Efficiency Public Health Financial Safety Quality Security Environment Ethics and Governance Efficiency Public Health Financial

3 AIRPORT AUTHORITY HONG KONG 3 AAS GOVERNANCE IN PRACTICE 1. People Approach for General Conduct and Behaviour 2. Corporate Performance 1. People Approach for General Conduct and Behaviour 2. Corporate Performance

4 AIRPORT AUTHORITY HONG KONG 4 AAS PEOPLE APPROACH (I) Ethics and Governance – a core value of the AA. The Code of Conduct promotes this core value. Its Purposes: 1. To provide broad guidelines to assist staff members in making ethical decisions in the course of their duties; 2. To inform and remind staff members of their legal and ethical obligations to the AA and other stakeholders; 3. To advise staff members against inappropriate and unacceptable behaviour; and 4. To inculcate a culture of integrity and excellence in corporate governance through ethical behaviour. Ethics and Governance – a core value of the AA. The Code of Conduct promotes this core value. Its Purposes: 1. To provide broad guidelines to assist staff members in making ethical decisions in the course of their duties; 2. To inform and remind staff members of their legal and ethical obligations to the AA and other stakeholders; 3. To advise staff members against inappropriate and unacceptable behaviour; and 4. To inculcate a culture of integrity and excellence in corporate governance through ethical behaviour.

5 AIRPORT AUTHORITY HONG KONG 5 PEOPLE APPROACH (II) AAs ETHICS PYRAMID General Conduct & Behaviour Mindset Corporate Governance Policy Code of Conduct LegalComplianceLegalCompliance

6 AIRPORT AUTHORITY HONG KONG 6 GENERAL CONDUCT AND BEHAVIOUR 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. 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. PEOPLE APPROACH (III)

7 AIRPORT AUTHORITY HONG KONG 7 Lead by Example with an Integrated Approach 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 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 PEOPLE APPROACH (IV)

8 AIRPORT AUTHORITY HONG KONG 8 OBLIGATIONS TOWARDS THE AA 1. Public body/Public servants – high standards and implications. 2. AA Standard vs Noodle Shop Standard. 3. Every action/favour is to be returned in reciprocity AND Being owed a favour can be a powerful strategy. This is NOT AA practice. 4. NIL incidents 1. Public body/Public servants – high standards and implications. 2. AA Standard vs Noodle Shop Standard. 3. Every action/favour is to be returned in reciprocity AND Being owed a favour can be a powerful strategy. This is NOT AA practice. 4. NIL incidents PEOPLE APPROACH (V)

9 AIRPORT AUTHORITY HONG KONG 9 GOOD CORPORATE GOVERNANCE 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 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 CORPORATE PERFORMANCE (I)

10 AIRPORT AUTHORITY HONG KONG 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 1. 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 HUMAN INTERVENTION CORPORATE PERFORMANCE (II)

11 AIRPORT AUTHORITY HONG KONG 11 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%. 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%. TANGIBLE VALUE CORPORATE PERFORMANCE (III)

12 AIRPORT AUTHORITY HONG KONG 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 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 GOVERNANCE (NOT) IN PRACTICE CORPORATE PEFORMANCE (IV)

13 AIRPORT AUTHORITY HONG KONG 13 Transparency International Corruption Perception Index 2004 Country RankCountry2004 CPI Score* 1Finland9,7 2New Zealand9,6 3 Denmark9,5 Iceland9,5 5Singapore9,3 16Hong Kong8,0 133 Cote d'Ivoire2,0 Georgia2,0 Indonesia2,0 Tajikistan2,0 Turkmenistan2,0 140 Azerbaijan1,9 Paraguay1,9 142 Chad1,7 Myanmar1,7 144Nigeria1,6 145 Bangladesh1,5 Haiti1,5 * 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). * 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). SUCCESSES (I)

14 AIRPORT AUTHORITY HONG KONG 14 POLICING GOOD PRACTICES 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 Platinum 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 Platinum SUCCESSES (II)

15 AIRPORT AUTHORITY HONG KONG 15 AND FINALLY: THE KEY IS MINDSET General Conduct & Behaviour Mindset Corporate Governance Policy Code of Conduct LegalComplianceLegalCompliance XIE XIE THANK YOU


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