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
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AIRPORT AUTHORITY HONG KONG
SOURCES OF POTENTIAL CRISES
AT HONG KONG INTERNATIONAL AIRPORT
FOR THE AIRPORT AUTHORITY (“AA”)
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Safety
Quality
Security
Environment
Ethics and Governance
Efficiency
Public Health
Financial
AIRPORT AUTHORITY HONG KONG
AA’S GOVERNANCE IN PRACTICE
1. “People Approach” for General
Conduct and Behaviour
2. Corporate Performance
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AIRPORT AUTHORITY HONG KONG
AA’S “PEOPLE APPROACH” (I)
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1.
2.
3.
4.
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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.
AIRPORT AUTHORITY HONG KONG
PEOPLE APPROACH (II)
AA’s ‘ETHICS PYRAMID”
Legal
Compliance
遵守法律
Corporate
Governance Policy
Code of Conduct
機構管治政策
職員行為守則
General Conduct & Behaviour
一般品德及行為操守
“Mindset”
心態
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AIRPORT AUTHORITY HONG KONG
PEOPLE APPROACH (III)
GENERAL CONDUCT AND BEHAVIOUR
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Fundamentals
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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.
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AIRPORT AUTHORITY HONG KONG
PEOPLE APPROACH (IV)
Lead by Example with an Integrated Approach
Commitment to manage risk
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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
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“Mindset”
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Communicate and demonstrate
The foundation is the Code of Conduct for employees
Appropriate actions and responses
Training and awareness
AIRPORT AUTHORITY HONG KONG
PEOPLE APPROACH (V)
OBLIGATIONS TOWARDS THE AA
1.
2.
3.
4.
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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
AIRPORT AUTHORITY HONG KONG
CORPORATE PERFORMANCE (I)
GOOD CORPORATE GOVERNANCE
AA Believes:
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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
AIRPORT AUTHORITY HONG KONG
CORPORATE PERFORMANCE (II)
HUMAN INTERVENTION
1.
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10
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
AIRPORT AUTHORITY HONG KONG
CORPORATE PERFORMANCE (III)
TANGIBLE VALUE
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2.
Good Governance Adds Tangible Value
according to a survey of over 200 institutional
investors conducted by McKinsey & Co.
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75% said board practices are as important as
financial performance in evaluating investment
opportunities.
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Over 80% said they would pay more for shares
of a well-governed company.
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Share premium investors are willing to pay for
good governance ranges from 18% to 27%.
AIRPORT AUTHORITY HONG KONG
CORPORATE PEFORMANCE (IV)
GOVERNANCE (NOT) IN PRACTICE
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. (*)
*
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Price Waterhouse Coopers
AIRPORT AUTHORITY HONG KONG
SUCCESSES (I)
Transparency International Corruption Perception Index 2004
Country Rank
2004 CPI Score*
1
Finland
9,7
2
New Zealand
9,6
Denmark
9,5
Iceland
9,5
5
Singapore
9,3
16
Hong Kong
8,0
Cote d'Ivoire
2,0
Georgia
2,0
Indonesia
2,0
Tajikistan
2,0
Turkmenistan
2,0
Azerbaijan
1,9
Paraguay
1,9
Chad
1,7
Myanmar
1,7
Nigeria
1,6
Bangladesh
1,5
Haiti
1,5
3
133
140
142
144
145
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Country
* 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).
AIRPORT AUTHORITY HONG KONG
SUCCESSES (II)
POLICING GOOD PRACTICES
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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
AIRPORT AUTHORITY HONG KONG
AND FINALLY:
THE KEY IS “MINDSET”
Legal
Compliance
遵守法律
Corporate
Governance Policy
Code of Conduct
機構管治政策
職員行為守則
General Conduct & Behaviour
一般品德及行為操守
“Mindset”
心態
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XIE XIE
THANK YOU
AIRPORT AUTHORITY HONG KONG