JOURNAL ON CORPORATE GOVERNANCE IN...

VOLUME 6 NUMBER 2 ISSN 1727-2254APRIL/MAY/JUNE 2009

J O U R N A L O N C O R P O R A T E G O V E R N A N C E I N A S I A

Asia’s brand of corporate governance – Page 2

Dongfeng and its corporate governance principles – page 3

Public Bank and corporate governance in Malaysia – page 7

The fraud fulnerability assessment: Making your supply chain security best in class – page 11

Sinagpore: Best practices in compliance – page 13

Leading the way in corporate governance in Indonesia – page 15

Ayala Land leading the way in corporate governance in the Philippines – page 20

Taiwan Mobile and itscorporate governance principles – page 23

CorporateGovernance AsiaRecognitionAwards 2009Asia’s brand of corporate governance – Page 2

Dongfeng and its corporate governance principles – page 3

Public Bank and corporate governance in Malaysia – page 7

The fraud fulnerability assessment: Making your supply chain security best in class – page 11

Sinagpore: Best practices in compliance – page 13

Leading the way in corporate governance in Indonesia – page 15

Ayala Land leading the way in corporate governance in the Philippines – page 20

Taiwan Mobile and itscorporate governance principles – page 23

CorporateGovernance AsiaRecognitionAwards 2009

irst of all, congratulations to the winners of Corporate Governance Asia 2009 Awards - the chosen

companies and financial institutions exemplify how far the standards of corporate governance have improved

in the region and how they stand with the best international practices.

It is our fervent wish that these accolades will further inspire the winners to continue in their pursuit to make

the corporate governance framework in Asia at par, if not surpass, what has the rest of the world has to offer.

We should not stop at what we have achieved and instead continue working to improve our standards, and in

the process serve to encourage and inspire the others to follow suit.

But the path is not easy, especially at this point in time when we are still facing what is perhaps the most

devastating financial crisis the world has seen. Recent events, such as the fraud committed at Satyam

Computer Services of India by no less than its founder and former chairman, and the massive losses suffered

by Citic Pacific on currency bets that have gone wrong due to loose internal control, show there are still more

that needs to be done.

Indeed, crises always expose corporate governance flaws. But, as past historical events show, however tight

the regulations are, there are always cracks in the system that allows all kinds of frauds and scandals to slip

through. And as always, they became the focal points of even tighter regulations, which are sure to come as a

result of the latest credit meltdown.

Asia will surely follow the path of tighter regulations as it is in its best interest to keep its house in order.

The global investing community is looking on Asia to lead in the economic recovery and investors are casting

their eyes on where to put their money. Without a doubt, companies and financial institutions with rigorous

corporate governance standards must be on top of their lists.

ALDRIN MONSOD

Publisher

CO R P O R AT EGOV E R N A N C EAS I A 1 AP R I L /MAY/JU N E 2009

Corporate Governance Asia is published every two months by new initiative media. No repro-duction is permitted in whole or in part without proper written consent of the publisher. Pleaseaddress all correspondence to: New Initiative Media, Rm 2301, 23th Floor, World Wide, 19 DesVoeux Road, Central, Hong Kong • Tel: (852) 3118 2902www.corporategovernanceasia.com • [email protected]

new initiative media Rm 2301, 23th Floor, World Wide House, 19 Des Voeux Road, Central, Hong KongEditorial : Rm 7D, 7th Floor, Shing Hing Comml Bldg, 21-27 Wing Kut St, Central, Hong KongTel : (852) 2231 9612 Fax : (852) 2169 6300 • Email: [email protected] www.corporategovernanceasia.com / www.newinitiativemedia.com.hk

Aldrin MonsodPublisher and Managing Director

Jenny WongDeputy Editor

F SantiagoEditorial Consultant

Louis ManiquizCreative Director

Malou PaezHead of Special Projects and Administration

Ann LauMarketing Services

Dante PeraltaH JeremiahPhotographer

L E T T E R F R O M T H E P U B L I S H E R

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orporate governance is an important component ofAsia’s corporate world. Ever since the Asian financial crisisin 1997, it has gained prominence on how publicly-listedcompanies and financial institutions are being run.Corporate governance in the region emphasizes trans-parency and accountability, as well as effective internalcontrol and stringent disclosure practices.

And with current global financial crisis, corporategovernance is again getting an increasing amount ofattention as the problems unraveled. A number of cor-porate scandals have exposed weaknesses in corporategovernance standards in a number of organizations fol-lowing massive losses as a result of loose internal riskcontrols, for instance.

None was more devastating than the case of SatyamComputer Services of India when its founder and formerchairman Ramalinga Raju admitted that he had inten-tionally overestimated the value of the company’s assetsto US$1.4 billion. Being labeled as India’s Enron, thisepisode shook the foundation of India’s corporate sectoras it tarnished its image in the eyes of the global invest-ing community.

A leading risk consultancy company Kroll also warnsthat the prevailing economic crisis presents new oppor-tunities for fraud. It notes that the stimulus plans such asChina’s 4 trillion renminbi’s package to boost construc-tion and infrastructure investment, Hong Kong’sUS$12.9 billion rescue package for small and mediumsized enterprises, as well as its HK$100 million megaevent fund to attract events in arts, culture and sports -all of these plans involve large sums of money and canbreed fraud and corruption.

There are very good reasons for adhering to thehighest standards of corporate governance - it helps toincrease the company’s share price and it enables issuersand borrowers to gain easier access to capital markets,to name a few. Investors put premium to good corporategovernance practices. Indeed, a compelling corporategovernance framework is fundamental to creatingshareholder value and in promoting the companies’long-term growth.

In Asia, the board of directors is mostly at the core ofcorporate governance practices and ensures that themanagement duly serves and protects the interests of allthe investors and stakeholders. In many boardrooms,they have more than the required number of independ-ent directors.

The size, composition and performance of the boardsin many companies are being reviewed from time to timeto make sure that they are conducive to effective discus-sion and have the diverse experience and appropriate skillsto ensure the creation of long-term value for investors.

Companies and financial institutions keep all thestakeholders informed of their corporate activities ontimely and consistent manner, and disseminate all price-sensitive information in order for the investing public tocome up with well-thought investment decisions. A num-ber of companies are setting up disclosure committees tofurther ensure that all disclosures made by them are deliv-ered in an accurate fashion.

This, in turn, ensure that the shareholders’ views arecommunicated to the board, which use the annual gener-al meeting, roadshows and online forums as principalchannels to keep its ongoing dialogue with the share-holders. Unfortunately, though, there are still jurisdictionsin Asia where they lag behind in disclosure category.

Companies and financial institutions also adopt pro-active approach to corporate social responsibility sincegiving back to the community is an important element tobeing a responsible corporate citizen. They believe thatcorporate social responsibility and business objectivescan co-exist and support each other in achieving a sus-tainable society.

One company, for instance, serves the local commu-nities in which the group operates through volunteerism,charitable activities and sponsorship initiatives, as wellsupport initiatives that promote public health and med-ical research and development. Others are committed toenvironmental protection, launching eco-friendly con-cepts and measures into the aspects of their operations,and to supporting children and youth, as well as educa-tion programmes. ■

E D I T O R I A L

Asia’s brand of corporate governance

C

1 What are principal features or char-acteristics of your management orcorporate governance structurewhich contributed to publicly-acclaimed track record for corporategovernance? (such as Audit Com-mittees, independent executive direc-tors, management incentive and dis-closure, special policies designed toenhance corporate governance, etc.)

1.1 Establish principles for corporategovernance conforming to regulatoryrequirements

In compliance with the CompanyLaw, Listing Rules of the Stock Exchangeof Hong Kong, administrative rules andthe Articles of Association of DongfengMotor Group Company Limited, on theback of our corporate governance prac-tice with reference to successful experi-ence of other H share companies, we for-mulated and revised the firm-level Rulesof Procedures for General Meetings,Rules of Procedures for Board Meetings,Rules of Procedures for SupervisoryCommittee Meetings, ImplementationRules for Audit Committee under theBoard of Directors, and Rules ofProcedures for Remuneration CommitteeMeetings under the Board of Directors.

1.2 Actively support duty perform-ance of Directors and ensure decision-making basis for Directors

When a new Director is appointed,the Company provides a set of instruc-tions introducing business of the Group,director’s obligations and other statutoryrequirements. Regular communicationsare provided to update Directors andSupervisors with latest market informa-tion and company information. At the

same time, annual work report, invest-ment and financing report, visits to busi-ness units and segments are arranged forDirectors. We keep all Directors especiallyindependent non-executive Directorsclosely informed of our business develop-ment, competition, regulatory environ-ment and industry development circum-stance through information presentation,work reports, field visits and professionaltrainings for the purpose of understand-ing of director’s obligations, correct deci-sion-making and effective supervision.

1.3 Give a full play of AuditCommittee in corporate governanceto protect interest of minority share-holders

Our Audit Committee comprises 1

non-executive Director and 2 independ-ent non-executive Directors, beingpresided by an independent Director, toeffectively ensure its independence.Audit Committee set up an office tocarry out its work.

To define its power and duty as wellas workflows, the Working Rules of AuditCommittee is formulated which wasapproved by the Board.

With authorization by the Board,Audit Committee supervises the manage-ment, internal and external auditingunder work rules approved by the Boardand other requirements. The committee isresponsible to the Board. Prior to everyBoard meeting on annual report, AuditCommittee discusses and communicateswith the management and external audi-tors on consolidated financial statements,accounting policies adopted and majoraccounting treatments to be included inthe annual report. Also discussion will beheld with external auditors on the scopeof auditing and work (including designand implement financial statement audit-ing procedures based on the assessmenton preparation of financial statementsand true and fair report of internal controlrisks). Audit Committee also addresses theeffectiveness of internal control system. Bycarrying out supervision and examinationof internal audit work, any issues arisingthere from will be submitted to the man-agement and requested to be rectified.

1.4 Strictly oversee connected trans-actions to ensure they are conductedon fair and reasonable terms

For major connected transactions, theCompany strictly carries out necessarypercentage ratio tests, reporting, Boardapproval, general meeting approval and


Q & A • C H I N A

Dongfeng and its corporate governance principles

Xu Ping: The Company is committed to

its corporate philosophy of honesty and

diligence, and always ensures to fulfil the

principles of good corporate governance

and improves the transparency in and

independence of operations.

disclosure procedures as required by theListing Rules.

The Company established aConnected Transaction ManagementTeam comprising non-executive Directors,financial controller and disclosure head forthe daily supervision of connected trans-actions, with monthly statistics and analy-sis of major connected transactions toensure annual caps are not exceeded.

Independent Directors provide inde-pendent opinions on major connectedtransactions, which will be specificallyreported to independent Directors andAudit Committee when proposing to seektheir opinions and advices; at the end ofeach accounting year, relevant depart-ments give an overall report on connectedtransactions for the year to independentDirectors and Audit Committee.

When necessary, the Companyappoints independent financial advisor togive independent opinion on major con-nected transactions for in-depth and fullunderstanding by Directors, shareholdersand regulatory bodies so as to make rea-sonable judgment.

1.5 Align the interest of the manage-ment and shareholders throughincentives to the management

The Company adopts stock apprecia-tion rights plan for senior managementmembers to link income of senior man-agement members to future operationresults and H share performance of theCompany. The Company has granted twosessions of stock appreciation rights planrespectively on 23 January 2006 and 15January 2007, both approved by theBoard in compliance with regulatory pro-cedures of SASAC.

1.6 In accordance with shareholdingstructure of Dongfeng, the Board del-egates its power to all directinvestees

The Company has 14 affiliates(including subsidiaries and jointly con-trolled entities) and 2 branches. Accordingto respective shareholding percentages,joint venture contracts and articles of

associations, the Company executes equi-ty management through nominating orappointing directors to its affiliates, jointlycontrolled entities and Sino-foreign jointventures.

To strengthen the equity manage-ment of our external investment, we havesuccessively introduced the ManagementMethods on Delegated Directors ofDongfeng Motor Group CompanyLimited (Dong Feng Ji Si Fa [2005] No. 39)and the Business ManagementProcedures of Delegated Directors(Shareholders’ Representatives) ofDongfeng Motor Group CompanyLimited (Dong Feng Ji Si Fa [2006] No. 8),which confirm that the Personnel & CadreDept. is the lead department for selecting,assessing, training, awarding and punish-ing directors delegated while theSecurities Dept. is the department for cen-tralized management on operations ofthe Board; define the appointment andresponsibilities of directors, rules of proce-dures of the Directors, management onthe Board’s operations and training forDirectors, assessment and award & pun-ishment; and sets forth the procedures forappointing officers to attend the generalmeetings and the procedures for appoint-ing directors to attend the board meetingsof subsidiaries, thus laying a systematicground for ensuring our stockholders’rights and duties in investees.

1.7 Strengthen training for Directors& Supervisors, and create the atmos-phere of corporate governanceunder laws

Our management has fully realizedthat the promotion of corporate gover-nance level under a sound corporate gov-ernance structure is the objective require-ment of establishing modern corporatesystems and a banner of mature enter-prises. Our leaders are aware as well thatthe effective operation of the Board andSupervisory Committee is a key link of thecorporate governance structure. Thus, wehave been providing systematic trainingfor delegated directors and supervisorssince 2006, with emphasises on strength-

ening roles of Directors and Supervisors,operation of the Board and SupervisoryCommittee, directions to corporate strate-gic business, financial standards and prac-tice, legal codes and practices. Over thepast two years, 240 persons have beenorganized to take two courses and 83persons of them obtained qualificationcertificates. The systematic courses provid-ed to Directors and Supervisors and rele-vant personnel improved their under-standing of check and balance effect ofcorporate governance structure amonggeneral meetings, the Board, SupervisoryCommittee and the management. Thus, afirm-wide atmosphere of governing theCompany according to modern corporatesystems under laws has been established.

2 How has corporate governanceworked in terms of enhancingDongfeng Motors competitiveness?

Corporate competitiveness is a combi-nation of various corporate capabilities.Corporate competitiveness, reflectingmore subsistence and growth capabilitiesas a going concern than just the profitabil-ity, is interpreted as always taking respon-sibility for corporate stakeholders andassuming responsibilities for the society.

Accordingly, in the corporate gover-nance building and reconstruction, weabsorb the common characters in thesystem design of modern enterprises,aiming at: treating all shareholdersequally and protecting legal interests ofshareholders; enhancing the Directors’fidelity and diligence obligations; exert-ing the Supervisory Committee’s supervi-sory effect; establishing sound perform-ance assessment and incentive restraintmechanism; safeguarding stakeholders’legal rights; strengthening informationdisclosure and reinforcing corporatetransparency.

On the other hand, we lay morestress on groping for the specific gover-nance mode in line with our own fea-tures in corporate operation, i.e. on thebasis of strategy-oriented and efficiency-focused philosophy with the principle ofsubstance outweighing form, we pre-


Q & A

vent material decision-making errors byway of “collective study and rationaldecision-making” for improving the sus-tainable corporate growth.

3 What lessons do you thinkDongfeng Motors has to offer toother companies in terms of improv-ing their respective corporate gover-nance track records?

3.1. Establishing corporate gover-nance system in strict accordance with rel-evant laws and administrative regulationsincluding the Company Law and the RulesGoverning the Listing of Securities on theStock Exchange of Hong Kong, and strict-ly implementing the procedures. (Pleaserefer to the answer 1.1 to Question 1)

3.2. Initiating enlightening activitiesfor Directors so as to improve their deci-sion-making ability and providing contin-ued business support. As at the end of2008, 46 issues of the Communicationsof Directors and Supervisors were pre-pared and Directions for Directors with33,000 Chinese characters were revised intotal.

3.3. Strengthening the building ofspecial committees and exertion of theirroles. Two special committees have beenestablished under the Board, includingAudit Committee and RemunerationCommittee. The Board fully takes inaccount of Directors’ expertise and experi-ence in selecting members of the commit-tees. Audit Committee comprises 1 non-executive Director and 2 independentnon-executive Directors, whileRemuneration Committee comprises 1executive Director and 2 non-executiveDirectors. Each committee regularly holdsmeetings, and reports work progress anddiscussion results to the Board.

3.4. Operations of the boards of allinvestees are included in the uniformmanagement, uniform system, workflowsand work standards. (Please refer to theAnswer 1.5 to Question 1 for details)

3.5. Continuing Director trainingwork and qualification certification man-agement. (Please refer to the Answer 1.6to Question 1 for details)

4 How do you assess the state ofcorporate governance in Hong Kongspecifically, in Asia in general?

Committed to complying with theCode on Corporate Governance Practicesand improving transparency, the listedcompanies in Hong Kong should outper-form in shareholders’ rights, fair treat-ment to minority shareholders, publicityand transparency.

5 How does your company evaluateand measure the effectiveness andperformance of the Board and itsmembers?

We are currently studying on themeasurement of the Board and its mem-bers. Preliminary, we believe that themeasurement shall focus on two aspects,with the first being the assessment onperformance in relation with the Board’sduties which highlights the Board’s func-tion in corporate management, operationand risk control. The other aspect involvesthe assessment on the behavior of per-sonnel establishing the Board, namely thedirectors. Focuses will be laid on the com-position of Board, abilities of its membersand performance of the directors. A spe-cific plan is still in progress.

6 What reforms do you think haveto be implemented to enhance thestandards of corporate governance inChina and Asia?

In our opinion, in order to enhancethe standards of corporate governance inChina and Asia, further improvements intransparency of listed companies’ infor-mation, function of external directors andtheir proportion in the Board are requiredto address the problem of control by inter-nal personnel. In the meanwhile, the gov-ernment should strengthen supervisionover listed companies to protect interestof minority shareholders.

7 What is the underlying philosophybehind Dongfeng Motors’ trackrecord on corporate governance?

The Company has been in compliancewith the relevant requirements provided

by the Company Law of the People’sRepublic of China (the “Company Law”),the Rules Governing the Listing ofSecurities on The Stock Exchange of HongKong Limited and the Code on CorporateGovernance Practices on the StockExchange of Hong Kong. The Companysupervises the daily operating activities instrict compliance with each governingregulation and reviews the operations andmanagement of the Company from timeto time. The Company is committed to itscorporate philosophy of honesty and dili-gence, and always ensures to fulfill theprinciples of good corporate governanceand improves the transparency in andindependence of operations. In addition,the Company is committed to continu-ously improving the corporate gover-nance, ensuring healthy development ofthe Company and maximising sharehold-er value.

8 In terms of structure, what meas-ures have you implemented toenhance the company’s corporategovernance?

The Company’s corporate governanceis structured with the shareholders’ gener-al meetings, the Board of Directors(including the Audit Committee andRemuneration Committee), theSupervisory Committee, the managementand the employees, each of which is instrict compliance with governing regula-tions of the Company. They review theoperations and management of theCompany from time to time, playing animportant role in the governance of theCompany.

9 How do you view the state of cor-porate governance in the businessesand areas where Dongfeng Motorsoperates in?

Dongfeng Motor Group is primarilyengaged in the business of commercialvehicles and passenger vehicles. In addi-tion, the Dongfeng Motor Group is alsoengaged in the import/export of vehiclesand equipment, finance, insuranceagency and used car trading. The business


Q & A

of commercial vehicles and passengers areprincipally conducted by joint venturesestablished by the Company and interna-tional renowned motor enterprises, suchas Nissan, Honda and PSA. We incorpo-rate balanced board of directors andmeasures thereof in the articles of asso-ciation and joint venture contract inaccordance with Sino-Foreign JointVenture Enterprise Law of the People’sRepublic of China.

10 Can you describe in brief yourfirm CSR, Environmental Practices andCommunity Partnership and how ithas made an impact to the communi-ty you operate with.

The Company will fulfill social respon-sibilities in daily operating activities, forinstance, we consciously observe to rele-vant requirements of the State in respectof energy conservation and emissionreduction, product quality assurance andtax payments. Members of the Companyincluding DFL, Dongfeng Honda andDongfeng Peugeot Citroen AutomobileCompany Ltd promoted new technolo-gies and energy conversation in regards ofmunicipal sewage water treatment, cleanenergy and production skills and achievedremarkable results. Dongfeng NissanPassenger Vehicle Company hasacclaimed the title of “NationalEnvironmental Friendly Enterprise” andreceived the top prize of “China’sEnvironment Award”, which showcasedan environmentally-friendly image of theCompany.

Amid meeting various operating tar-gets, the Company is committed to earth-quake relief work, Beijing Olympics, socialwelfare activities and other aspects. TheCompany also help withstand the disasterof snow storm, support the rebuilt of vil-lages and aid Tibet, receiving goodappraisals from the government and peo-ple of the afflicted area.

11 On the issue of family-ownedcompanies, some are saying that fam-ily-owned companies and corporategovernance are not really compatible.

As family-owned enterprise is oper-ated by family members who are tied byblood and marriage, family-based mem-bers of the board and management staffseem insular. Backed up by family ties,the enterprise can retain cohesion whenit starts. Family members can also helpthe enterprise to reduce agency costsand with their trust and loyalty, markettransaction costs can be reduced. This isbeneficial for the development of thefamily enterprise. However, once itbecomes a large company, the familyenterprise shall change itself into a jointstock limited company, abandoningfamily based management and estab-lishing corporate governance structureof modern company for its sustainabledevelopment.

12 What are the benefits/rewards ofgood corporate governance?

Since its listing on the Hong KongStock Exchange on 7 December 2005, theCompany has been committed to improv-ing its governance standards in accor-dance with the Code on CorporateGovernance Practices of Hong KongStock Exchange. Before long after its list-ing, Dongfeng Group (H shares) wasincluded as the constituent of the HangSeng China Enterprises Index in the HongKong Stock Exchange and the constituentof the MSCI China Index.

12.1. Corporate governance ensuredscientific decisions and improving resultsyear by year. The total sales volume of theDongfeng Motor Group increased from594,800 vehicles in 2005 to 1,058,000vehicles in 2008; the combined sales in2005 and 2008 achieved RMB41,735,000,000 and RMB70,569,000,000respectively; the combined net profit in2005 and 2008 was RMB1,601,000,000and RMB4,040,000,000 respectively.The Dongfeng Motor Group becameone of the most profitable car makersin the world.

12.2. Corporate governance ensureda good image in capital market, winingawards from domestic and Hong Kongcapital market. The Company was hon-

oured as The Most Influential OverseasListed Chinese Companies in 2006 joint-ly by Shanghai Securities News andcnstock.com in August 2007, and wasincluded as The Most PromisingTransnational Group in 21st Century inthe “New Global Challenger” report byBoston Consulting Group in August2008. At the same time, it was listed asTop Chinese 100 Listed Companies2008 in Forbes (Chinese edition) andobtained 3A Corporate GovernanceAward in 2008 by the Asset Magazine inOctober 2008.

12.3. Corporate governance built upinvestor confidence. The Company’s stockprice increased by 3 times since its listing,which showcased its investment valueand improved its reputation as well.

13 What measures can the companyimplement to further improve its cor-porate governance?

The Company’s current corporategoverning structure is set up in compli-ance with the Code on CorporateGovernance Practices by The StockExchange of Hong Kong Limited. TheCompany has been studying the recom-mended best practices thereunder andwill improve its governing structure in duecourse by following the best practices.Our focuses are on enhancing abilities ofinternal decision-making and risk control,and strengthening and improving externalinformation disclosure to meet the needsof investors.

14 Going forward, how do you seethe direction of corporate governancein China?

Looking ahead, Chinese companiesare establishing sound corporate gover-nance structure in accordance with therequirements of modern enterprise sys-tem, aiming to catch up with internation-al corporate governance standards.While improving internal control sys-tem, the companies are believed tomake use of more external supervisionto achieve more public and transparentcorporate governance. ■

Q & A


What are principal features or charac-teristics of Public Bank manage-ment/structure which has contributedto its publicly-acclaimed track recordfor corporate governance? (Auditcommittees, INEDs, director compen-sation disclosure, special policiesdesigned to enhance corporate gov-ernance, etc.) Please give a brief his-tory on Public Bank involvement incorporate governance reforms?

Public Bank’s robust corporate gover-nance structure has been built based onthe principles and best practices pre-scribed in the Malaysian Code onCorporate Governance (Revised 2007)and in accordance with the principles andstandards set by the Central Bank ofMalaysia in their Guidelines on CorporateGovernance for Licensed Institutions(Revised BNM/GP1), Bursa MalaysiaListing Requirements, as well as in linewith international best practices. PublicBank has also complied with most of theinternational best practices recommendedby The World Bank and Calpers.

The Public Bank Board comprises six(6) Independent Non-Executive Directorsor two-third of the total board memberscompared to one-third as prescribed bythe Malaysian Code on CorporateGovernance (Revised 2007).

Both the Board of Directors and theAudit Committee hold no less than 16meetings annually with full attendance ofthe members. In 2008, the Board and theAudit Committee held 16 meetings each.In addition, the Board ExecutiveCommittee held 98 meetings in 2008.

Public Bank always discloses its finan-cial results well ahead of the deadlinesspecified in the Bursa Malaysia Listing

Requirements, despite the need to obtaina prior approval from the Central Bank ofMalaysia. On the day of its release, PublicBank conducts a media briefing (localprint and electronic medias) and also afull briefing for analysts and fund man-agers. Public Bank also conducts confer-ence calls with long-distant analysts andfund managers.

Public Bank also provides detailedbreakdown with regards to the disclosureof the remuneration of each individualDirectors in the annual reports which isabove the requirements specified in theBursa Securities Listing Requirements andthe Central Bank of Malaysia.

How has corporate governanceworked in terms of enhancing PublicBank competitiveness?

The Public Bank Group’s steadfast

focus on corporate governance and itscontinued delivery of excellent financialperformance stand as a paragon of stabil-ity and safety in times of turmoil andvolatility in financial markets, and providesa source of confidence to stakeholders, bethey customers, employees, shareholdersor the public at large. In addition, thePublic Bank Group’s continued reinforce-ment of its commitment to excellence willstand stakeholders in good stead in thesignificantly more challenging economicenvironment going forward.

The Public Bank Group is fully com-mitted to the delivery of superior share-holder value. The consistent strong finan-cial performance of the Group and its 42year of unbroken profitability recordunderpins the value of the investment ofshareholders in Public Bank.

Public Bank’s excellence in corporategovernance and corporate conduct con-tinued to be validated in 2009 and 2008by several corporate governance awardsand recognitions by international publica-tions and surveys as follows:

❑ Public Bank received the followingawards in the Asiamoney CorporateGovernance Poll 2008:• Corporate Governance - Overall Best

Company in Malaysia• Corporate Governance - Best for

Disclosure and Transparency inMalaysia

• Corporate Governance - Best forResponsibilities of Management andthe Board of Directors in Malaysia

• Corporate Governance - Best forShareholders’ Rights and EquitableTreatment in Malaysia Public Bank was ranked No. 1 in the

Corporate Governance Survey Report


Q & A • M A L A Y S I A

Public Bank and corporate governance in Malaysia

Tan Sri Dato' Sri Dr. Teh Hong Piow,

Chairman, Public Bank

2008, a joint study by the MinorityShareholder Watchdog Group (“MSWG”)and the Nottingham University BusinessSchool, Malaysia Campus (“NUBS”).

This was the fourth consecutive yearthat Public Bank had emerged as the lead-ing company in the MSWG/NUBS survey,having been also ranked No. 1 in the inau-gural survey carried out in 2004, and theother two surveys done in 2006 and2007. Public Bank had also received theIndustry Excellence Award for the FinanceSector in the Corporate GovernanceSurvey Report 2008.• Public Bank was ranked No. 1 for Best

Corporate Governance in the Asia’sBest Companies 2008 Poll byFinanceAsia.

• Public Bank was adjudged the OverallWinner and received the Award forBest Return to Shareholders in theinaugural Malaysian Business - CIMAEnterprise Governance Awards 2008.

• Public Bank was ranked No. 1 in BestCorporate Governance (for Malaysia)in the Euromoney’s Best Managed andGoverned Companies - Asia Poll 2009.The recognition of the Public Bank

Group’s impeccable corporate gover-nance and exemplary performance,many of which were for consecutive ormultiple years will further enhance itsbranding and boost customer confi-dence in the Group - crucial ingredientsto sustain profitability in the more tur-bulent economy ahead.

The awards and recognition ofexcellence are a source of pride to thestaff of the Public Bank Group in its pur-suit of excellence to keep the Groupahead of its competitors. Today, thePublic Bank Group has attained the dis-tinction of being the biggest non-gov-ernment corporation by market capital-ization on Bursa Securities.

What lessons do you think PublicBank has to offer to other companiesin terms of improving their respectivecorporate governance track records?

Public Bank believes that good cor-porate governance helps it steer the

organisation to achieve its corporatemission. The Bank also believes thatgood corporate governance promotesstable relationships amongst all stake-holders. In the final analysis, good cor-porate governance contributes to share-holder value and long-term sustainablegrowth of the organization.

How do you assess the state of cor-porate governance in Malaysia specif-ically, in Asia in general?

Corporate governance in Malaysiahas improved significantly and a lot of thisis due to efforts by the private sector andalso by the authorities such as theSecurities Commission as well as the activ-ities of the Minority ShareholderWatchdog Group. Khazanah has playedan important role in strengthening corpo-rate governance of the government-linked companies. There has also beengreater awareness by companies on theimportance of good corporate gover-nance practices after the hard lessonslearned during the Asian financial crisis in1997 and 1998. The Malaysian Code onCorporate Governance has been revisedin 2007 to improve the quality of theboards of public listed companies andensure effectiveness of the audit commit-tee of public listed companies. Forlicensed financial institutions in Malaysia,Bank Negara Malaysia has furtherenhanced its governance framework,having played a significant role in ensur-ing the Malaysian financial institutionsadhere to the highest standards of corpo-rate governance.

How does your company evaluateand measure the effectiveness andperformance of the board and itsmembers?

The Public Bank Board, through theNomination Committee, carries outannual review of the effectiveness of theBoard as a whole and the effectivenessof each individual Director based on themechanisms established by theNomination Committee. The annualassessment conducted would be based

on objective performance criteria asapproved by the Board.

The Nomination Committee hasestablished the minimum requirementson the skills, knowledge, expertise, expe-rience, qualifications and other core com-petencies of a Director.

The Nomination Committee assessesand recommends to the Board technicallycompetent persons of integrity withstrong sense of professionalism and whofoster and practice the highest standardof banking and finance in the country forappointment as Directors.

In the case of persons for the positionof Independent Non-Executive Directors,the Nomination Committee evaluates theperson’s ability to discharge such responsi-bilities/functions as expected fromIndependent Non-Executive Directors.

The Nomination Committee overseesthe overall composition of the Board interms of appropriate size, required mix ofskills, experience and core competencies,and adequacy of balance betweenExecutive Directors, Non-ExecutiveDirectors and Independent Directorsthrough annual review.

The Nomination Committee alsoensures that all Directors receive appropri-ate continuous training programmes inorder to broaden their perspectives and tokeep abreast with developments in themarket place and with changes in newstatutory and regulatory requirements.

What reforms do you think have tobe implemented to enhance the stan-dards of corporate governance inMalaysia and Asia?

Corporate governance practices inMalaysia and the region will continue toimprove not only to boost investor confi-dence but also to attract foreign investorsby protecting minority shareholders. Wecannot go wrong if we provide morechecks and balances, greater transparencyand timely disclosure of material informa-tion to investors. Based on the currentglobal financial crisis, improvements in riskgovernance, transparency and disclosureof financial transactions are being sought


Q & A

by investors.

What is the underlying philosophybehind Public Bank track record oncorporate governance?

Public Bank, since its inception by theFounder and Chairman, Tan Sri Dato’ SriDr. Teh Hong Piow in 1965, has beensteadfast in its adherence to the tenets ofgood corporate governance, which areaccountability, integrity, transparency andresponsible corporate conduct.

Public Bank’s robust corporate gover-nance structure has been built based onthe principles and best practices pre-scribed in the Malaysian Code onCorporate Governance (Revised 2007)and in accordance with the principles andstandards set by the Central Bank ofMalaysia in their Guidelines on CorporateGovernance for Licensed Institutions(Revised BNM/GP1), as well as in line withinternational best practices. Public Bank,driven by good corporate governance anda deeply entrenched culture of commit-ment to excellence, holds an unbrokenrecord in all its 42 years of operations increating and consistently enhancing valuefor all its stakeholders.

The Board of Directors has alwaysobserved “Leadership by Example” to thePublic Bank Group by affirming thatsound corporate governance means notjust abiding by the rules but also embrac-ing the spirit of those rules. The Boardbelieves that going beyond compliance isthe fundamental to building a morehealthy governance culture and thus itshould stay focused on long-term trendsand their impact on the Bank to ensurethat the Bank continues to performstrongly in the more liberal operating envi-ronment.

In terms of structure, what measureshave you implemented to enhancethe company’s corporate gover-nance?

Public Bank’s corporate governancestructure has been established in line withBank Negara Malaysia’s guidelines, gover-nance framework and best practices rec-

ommended by the Malaysian Code onCorporate Governance and the interna-tional governance practices recommend-ed by The World Bank and Calpers.Continued efforts are being taken to fur-ther enhance the effectiveness of this gov-ernance structure.

How do you view the state of cor-porate governance in the business-es and areas where Public Bankoperates in?

Bank Negara Malaysia has imple-mented several measures to enhance cor-porate governance of banks and otherfinancial institutions in Malaysia. With theimplementation of the principle-basedregulatory regime for the financial sector,BNM has strongly emphasized corporategovernance, starting with the revisions ofits prudential standards on corporategovernance. BNM’s Guidelines onCorporate Governance for LicensedInstitutions - which are aligned with theprinciples enshrined in the MalaysianCode on Corporate Governance, the

Bank For International Settlements (BIS)Guidelines on Enhancing CorporateGovernance for Banking Organisations,and other international best practices oncorporate governance - spell out relevantgovernance matters such as boardresponsibilities, board compositions,board committees and processes, boardcompetencies and accountabilities. Thishas put Malaysian banks on a high levelof corporate governance, which is furtherimproved as Malaysian banks seek com-petitive advantage through a strong gov-ernance reputation.

Can you describe in brief your firmCSR, Environmental Practices andCommunity Partnership and how ithas made an impact to the communi-ty you operate in.

The Public Bank Group continues tobelieve that a company’s performanceshould be measured not only by the eco-nomic value it creates but also by itsimpact on all its stakeholders, includingsociety and the environment. It fully sub-scribes to the philosophy that in fulfillingits corporate responsibilities, the Group isalso enhancing its reputation, goodwilland brand. Through the Group’s effortsand initiatives in nation building and theenhancement of the market placethrough the promotion of the work place,the Group continues to discharge its cor-porate responsibilities. As a sociallyresponsible corporate, the Public BankGroup also continues to implement itsCSR programmes to enhance quality oflife and a sustainable environment by sup-porting education, disaster relief, healthcare, culture and the arts and caring forthe needy in addition to taking care of theenvironment.

The effort of the Public Bank Group infulfilling its corporate social responsibilitiesand its CSR initiatives were recognised in2008 with the award of the MalaysianBusiness CSR Awards 2007 for being theoverall winner and for the best innovationin CSR by the Malaysian Business.

The corporate responsibility initiativesof the Public Bank Group are focused on:


Q & A

The Public Bank Group continues to

believe that a company’s performance

should be measured not only by the

economic value it creates but also by

its impact on all its stakeholders,

including society and the environment.

• Nation building• Enhancement of the marketplace• Promotion of the workplace• Building the future through education• Support of the community• Greening the environment• Customer care

Environmental CSRIn a world that is constantly reminded ofthe devastation and havoc wrecked by theeffects of environmental changes andglobal warming, there is an urgent needfor everyone to address the issue of thesustainability of the environment. ThePublic Bank Group, in its role as a long-term partner with the Government innation building and as a responsible cor-porate, is mindful of its role in helping tosustain and improve the environment asits responsibility to the future generationsof Malaysians and the citizens of theworld. By playing its part in both promot-ing environmental awareness and in theconservation of the environment, as wellas direct participation in climate changeinitiatives, the Group continues to play anactive part in environmental CSR.

Some of the key CSR initiatives under-taken in 2008 included the planting of5,000 trees under the Public Bank TreePlanting-Climate Change Programmewhere Public Bank is working with theMalaysian Nature Society to plant up to20,000 trees at the site of a flood reten-tion pond which forms part of the KualaLumpur city flood management system.

Support of the CommunityThe corporate responsibility of the PublicBank Group extends into a wide range ofCSR initiatives in the Group’s commitmentto give back meaningfully to the commu-nity that supports its business and corpo-rate activities. The Group’s contribution toand participation in, both financial or oth-erwise, activities for the benefit and bet-terment of the welfare of the communityhave been geared towards benefiting asmany in the community as possible.

In fulfilling its corporate responsibili-ties to society and the community in

which it operates, the Public Bank Grouphad focused on initiatives and activities inthe areas of:• Healthcare and the physically chal-

lenged• Disaster relief• Youth and community activities• Culture and the arts• Support of the underprivileged

The Public Bank Group raised grossproceeds of close to RM1 million from thesale of the book, “Teh Hong Piow - ABanking Thoroughbred” which wasdonated to various organisations promot-ing healthcare, the physically disadvan-taged, education, youth activities andcharitable bodies. Further proceeds fromthe sale of the Chinese language editionof the said book would also be donatedto worthy and charitable causes in thecoming year.

In 2008, Public Bank also contributedsignificantly, to the tune of RM1.2 millionto Malaysian performing arts activitieswith the sponsorship of a third season ofthe critically acclaimed production “PuteriGunung Ledang” and support of thePersatuan Karyawan Malaysia and theKuala Lumpur Performing Arts Centre.

Other CSR activities of the Group in2008 included support of projects andevents promoting healthcare, education,professional development, disaster relief,preservation of the environment andnational pride, besides direct charitablecontributions to the welfare of the needyand the less fortunate.

On the issue of family-owned compa-nies, some are saying that family-owned companies and corporategovernance are not really compatible.

This can be disputed. Research haveshown that good corporate governancepractices lead to increases in the econom-ic value, higher productivity and profitabil-ity of firms, irrespective of the nature ofthe ownership of the enterprise.

What are the benefits/rewards ofgood corporate governance?

Benefits of good corporate gover-

nance include higher productivity, efficien-cy and profitability and ability to attractand retain financing at a lower cost. It alsomotivates employees to work towards thegoal of the organization.

What are measures can the companyimplement to further improve its cor-porate governance?

Investors need to be assured that thecompanies they invest in are run by peo-ple who will do what it takes for the com-panies and shareholders. Thus, efforts andmeasures to ensure their investments arein safe hands will go a long way to main-tain investor confidence. Corporate gov-ernance areas such as board independ-ence, transparency, disclosure and related-party transactions are current concerns ofinvestors.

In your views what lessons shouldcompanies learn from the GlobalFinancial Crisis and the impact it hasin investor confidence.

Based on the on-going global finan-cial crisis, there is ample room to improveon risk governance. The crisis was causedby the failure of risk governance infra-structure to develop at a pace that cankeep up to that of the rapid pace of inno-vation in financial products which arecomplex and difficult to understand.There is also a greater need for bettertransparency and appropriate disclosureof financial transactions.

Going forward, how do you see thedirection of corporate governance inMalaysia?

Corporate governance in Malaysiawill continue to evolve for the better.Based on recent corporate scandals in sev-eral jurisdictions, the need for greaterscrutiny on auditors has led the way forsteps to be taken for the formation of theAudit Oversight Board by the end of thisyear to supervise auditors. At the sametime, pressure from investors, fund man-agers and minority shareholder groupswill have a positive impact on corporategovernance practices in Malaysia. ■


Q & A

Supply chains get squeezed by twofraud pincers in a downturn. Onthe one hand, almost everyone –

including executives, employees, cus-tomers, and those working for suppliersand service providers – will be facing aworsened financial situation. Some willbe in great distress, and of these a cer-tain number inevitably turn to fraud. Inother words, the number of people withmotive increases. As for opportunity, thesupply chain is a favorite target.According to the recent Kroll GlobalFraud Report, theft of physical assets isconsistently the most widespread fraudrelated problem. In 2008, before thefinancial meltdown began, 37% ofcompanies said they had suffered fromthis over the preceding three years,including 50% who had weakened theirinternal controls – another unfortunatetemptation in uncertaintimes. These two factorscan combine in a painfulway: protecting supplychains should accordinglyrise up the list of priorities.

You may, however,think you are doingenough. C-TPAT, FAST,TAPA, CSI, AMR, ACI,ACFE, ASIS – if you are inthe supply chain operationsor security business, youknow what all of theseacronyms stand for andhow they affect your busi-ness. If not, rest assured,someone in your operationdoes and you do not needto worry about all of them

all of the time. In essence, they are stan-dards and organizations that promul-gate guidelines to help ensure the secu-rity of shipments and cargo, easesmooth transactions with US Customs,identify security standards, and so forth.They provide companies with innumer-able benefits.

What they do not do, however, isprovide a comprehensive security orfraud prevention program. Just becausea company follows best practices insecurity – or even scores extremely high-ly in a standardized, industry group secu-rity audit – does not mean that it is pro-tected from fraud as well as it could be.As internal auditors of public companieswill tell you, even though companies areSarbanes Oxley compliant, they stillexperience internal fraud and have towork hard to uncover it.

Doing well on audits of security pro-grams – audits that are not customizedbut put out as guidelines – provides afalse sense of security. Access controlsystems, cameras, guards, fences, frauddetection units, and other such wiseinvestments, for example, if not proper-ly deployed and monitored, may simplyuse up critical capital dollars in areas thatonly appear to be keeping assets safe.

Each component of the supply chainhas its own unique risks [see Figure 1].By conducting a Fraud VulnerabilityAssessment (FVA), an organization canidentify these and implement controlsthat help prevent fraud. Once controlsare in place, data mining and exceptionreporting can assist with ongoing mon-itoring. Combining this with the physi-cal security practices listed above willtruly help reduce the risks which an


F E A T U R E • B Y J O H N B R O C A R

The fraud vulnerability assessment:

Making your supply chain security best in class

Figure 1

organization faces. When conducting an FVA, a

committee – with representa-tives from HR, Finance, Logistics,Internal Audit, Security, IT, RiskManagement, and any otherarea of concern – should delveinto the company’s operations,looking for vulnerabilities totheft or fraud. Specifically, thegroup should ask, “if we want-ed to steal from this company,how could we do it?” Oncethese “ways to steal” are identi-fied, it should then ask, “whatwould stop us?” It is critical thateach response to the latter ques-tion is well thought-through andchallenged at every level. Manytimes, the committee will identi-fy physical security proceduresas the existing defense againstfraud. If, though, the reply tothe second question is some-thing like “it’s against policy”,much work needs to be done.All too often, managers rely onpolicies and procedures to makecertain that things work proper-ly. These, on their own, cannotcompletely ensure that every-thing is done honestly.

In reviewing operations in depth, thenumber of questions one could ask foreach area identified in Figure 1 isimmense. Figure 2 includes a small sam-ple of what might be asked when look-ing at the supplier selection process.There could be many more. When weconduct brainstorming sessions withproject leaders or committees it is alwaysamazing how many areas of opportuni-ty we find.

In such a process, when we have aquestion where we do not know theanswer, the best strategy is “let’s seewhat happens if we do it.” This is theeasiest way to observe the points of vul-nerability and breakdowns in controls.Most of the time, minor adjustments toexisting internal controls are all that isneeded to remove the vulnerability.

Sometimes, though, it requires thatprocesses be completely changed,updated, or monitored in ways that theorganization had not considered. Inother cases, process change may be toocumbersome or expensive. If so, theprocess will have to be watched andpoliced to ensure the risk is minimized.That is where data mining and exceptionreporting come in.

An example shows how the steps ofan FVA work. In looking at the packag-ing and shipping operation, the brain-storming team members might ask“how could I ship something small outof here?” After considering the matter,they figure that if someone fills out amanual airbill – as is sometimes neces-sary – and then placed a package on thepallet for outgoing items when no one

was watching, chances are thatFedex would take it.

The team then tests the idea,and it works. Knowing that itcouldn’t eliminate the need formanual airbills, the team imple-ments a procedure so that Fedexcannot take any package with amanual airbill unless approved bythe small pack manager. Just toensure that the manager could-n’t exploit the system, the teamimplements another procedurewhereby a supervisor randomlypulls a daily report from theFedex terminal and conducts amatching count of all of thesmall packs going out that day.

The latter is not somethingthat could be done every day, butit raises awareness and reducesthe risk of anyone being temptedto use this way to steal. Datamining and exception reportingcould be utilized as well. Onecould, for example, compare alladdresses shipped to by Fedexwith customer addresses.

Any anomalies could bereported as exceptions. This isjust a simple illustration of con-ducting and acting on an FVA,

but it shows how the process could beused to identify the largest of fraudulentschemes. Think like a thief and your onlylimitation will be your imagination. ■

John Brocar, Associate Managing Director, Kroll

John Brocar specializes in loss prevention and fraud

management. He conducts internal and external

fraud investigations for clients in industries including

retail, distribution, telecommunications and manu-

facturing. His investigations involve operational

analysis, interviews and computer data analysis. He

collaborates with his clients on risk assessments to

establish preventative procedures to reduce invento-

ry shrinkage and train personnel.

John has been instrumental in the design and

implementation of loss prevention programs in retail

segments including traditional department stores,

specialty, big box, and convenience stores. He has

created programs for pre-employment screening,

awareness training, inventory integrity, internal con-

trols and shoplifting prevention.


F E A T U R E

A few questions to consider when lookingat the supplier selection process

• Can a vendor be single sourced?

• What is the procurement process? Can a manager easily set

up a new vendor?

• Do we benchmark our rates to see if we are getting the best

prices?

• Does someone outside of the business unit review the vendor

performance and compliance with contract terms?

• Do we know that our managers couldn't send business to a

related party?

• Do we have anyone that always insists on dealing with a cer-

tain vendor or only travels when it is related to X?

• Have we ever asked suppliers who were not selected if they

were treated fairly?

• Do we conduct due diligence on new suppliers? If so, is it

done by the people that selected them?

• Do we check to see if any of our personnel have any finan-

cial interest in other companies that may be directly or indi-

rectly working with us?

• Do we review expense reports for patterns of excessive meet-

ings, events, meals, or other dealings with suppliers?

• Do our employees certify on an annual basis that they have

no conflicts of interest and have not accepted any gifts from

suppliers?

• Do our suppliers have access to our confidential hotline so

that they can report any inappropriate behavior by our

employees?

Figure 2

In recent years, compliance hasemerged as a distinct branch ofrisk management within thefinancial system. Like the otherrisk management disciplines, aneffective compliance frame-work calls for internationalfinancial institutions to put inplace a dynamic compliance

programme that is responsiveto market and regulatorydevelopments. With he globalregulatory community nowthinking hard about how tostrengthen rules in light of thestill evolving financial crisis,these are challenging times forcompliance professionals.


S I N G A P O R E • L E E B O O N N G I A P

Best practices in compliance

As new rules are introduced,compliance professionals willneed to keep abreast of these

changes and respond by makingadjustments to the compliance prac-tices in their organizations. The focusof today’s seminar on “Best Practicesin Compliance” is thus appropriate

and timely. I am sure that the presen-tations and discussions will providevaluable ideas on enhancing compli-ance risk management practices inthis period of heightened uncertaintyin the financial markets and in theoperating environment.

My remarks today will focus on

what supervisors see as the key ele-ments underpinning a sound andeffective compliance risk managementframework.

First, board and senior manage-ment must set the right tone at thetop. This is essential to ensure that atop-to-bottom compliance culture is

Singapore financial centre

Lee Boon Ngiap

MA

S

MA

S

embedded into a firm’s day-to-dayoperations. Compliance will be mosteffective in a corporate culture whereboard and senior management lead byexample in emphasizing standards ofhonesty and integrity.

To create appropriate compliancerisk controls, board and senior man-agement must ensure that businessline management remains engaged inthe compliance process. To this end,compliance risk management must beseen as the responsibility of everyone,and not just the responsibility of thecompliance function. In an increasingnumber of firms, this sense of respon-sibility is reinforced by factoring com-pliance ratings into performance meas-ures for business line managers.

Second, a firm’s compliance func-tion must be independent. The head ofcompliance should not have directbusiness line responsibilities. This isan important safeguard which iscritical to the compliance func-tion’s ability to effectively assess afirm’s compliance with policies,procedures and regulatory require-ments. The compliance functionmust be able to report irregularitiesor non-compliance with rules orguidelines to senior management,without fear of retaliation.

However, this does not meanthat the compliance functionshould adopt an adversarialapproach in their dealings withbusiness units. A good workingrelationship between the compli-ance function and business unitscan help identify compliance risksat an early stage. Indeed, constantreassessment of risks and controlsand communication with businessunits is necessary to foster a com-pliance programme that is able topro-actively respond to changes inthe operating environment.

Third, a firm’s compliance func-tion must have enough resourcesto carry out its responsibilitieseffectively. This is more than just a

body count but requires firms to havestaff with the relevant qualificationsand experience to adequately monitorand assess compliance risks. Financialinstitutions should have regular andsystematic training programmes toupgrade the skill-sets of their compli-ance staff and keep them up-to-date

with developments in laws, rules andstandards.

Finally, the internal audit functionshould perform periodic independentreviews of the effectiveness of thefirm’s compliance risk managementframework. Such reviews should bewelcome as a complement to theresponsibilities of the compliance func-tion, as it would provide useful inde-pendent insights into the adequacy ofthe firm’s governance structure andprocesses for managing compliancerisk. This should strengthen the firm’sability to continually enhance its riskmanagement capabilities and makesure that the system of internal con-trols has no gaps.

To conclude, let me assure you thatsupervisors do not underestimate thechallenges faced by financial institu-tions in effectively managing compli-

ance risks. Recent events andthe changing financial land-scape indicate that thedemands on the compliancefunction will grow. Financialinstitutions that do it well willbe able to strengthen the longterm integrity of their businessfranchise and enhance its value.MAS on its part will continue toengage the financial industry inensuring that proportionaterules and the right incentivesare in place, and in setting clearsupervisory expectations thattake into account practical con-siderations.

Opening Address by Mr LeeBoon Ngiap, Executive Director,Monetary Authority of Singa-pore at The Institute of Bankingand Finance’s Seminar on “BestPractices in Compliance” on 31March 2009. ■

Reproduced with the permission

of the Monetary Authority of

Singapore Â(c)

2009 The Monetary Authority

of Singapore.


S I N G A P O R E

Financial institutionsshould have regular and

systematic trainingprogrammes to upgrade

the skill-sets of theircompliance staff and

keep them up-to-datewith developments

in laws, rules andstandards

Raffles place

MA

S

Give you provide us of your banksmanagement structure, its evalua-tion of board members, its corpo-rate governance measures andunderlying philosophy.

Let me start with the underlyingphilosophy of the Bank’s corporategovernance activity. Banking is a busi-ness of trust and therefore it is impor-tant that it takes into account theobjective and concerns of all stake-holders, from the customers, employ-ees, shareholders to the government.In this regard, it is important that theBank tries always to uphold the fourpillars of corporate governance,namely Fairness and Independence;Accountability; Responsibility; andTransparency.

The way the Bank implements cor-porate governance is to ensure thatthe four principles are adhered to

throughout the different parts of thebank, from the lines of businesses tothe supporting units. A self assessmentis made each year and the CorporateGovernance Committee writes up areport to Bank Indonesia each year onits corporate governance activities.

The evaluation of Board ofDirectors (BoDs) is done with theestablishment of key performanceindicators (KPIs) and then an assess-ment is made the extent to these KPIsare met and underlying reasons behindthem. The Nomination andRemuneration Committee under theBoard of Commissioners then drawsup a compensation scheme thatreflects each BoD member perform-ance accordingly. The compensationscheme is a long term scheme, where-by the rewards are spread over time toensure that the BoD maintains the

Bank’s long term performance and via-bility in mind.

The Bank’s stresses the importanceof having a sufficiently competent andindependent Board of Commissioners(BoC), with a broad range of back-grounds and expertise to supervise theBoD and its activities. This is donethrough its regular BoC/BoD quarterlymeetings and through more detailedand specialized Committee meetingsunder the BoC. These include the Auditand Risk Monitoring Committees,which meet every month; theNomination and Remuneration and theCorporate Governance Committees,which meet at least twice during theyear. All Committees are chaired byIndependent Commissioners and theBank follows Bank Indonesia regula-tion to ensure that IndependentCommissioners make up at least half


Q & A • I N D O N E S I A

Leading the way in corporate governance

in Indonesia

of the BoC members.Another important unit, to ensure

BoD manages its activity properly, isthe independent Internal Audit (SKAI)unit, which liaises closely with theAudit Committee.

What are the benefits of practicinggood corporate governance and itscompatibility with family-ownedcompanies?

The Bank believes that a goodCorporate Governance is important toensure that all stakeholders have atransparent view of the bank’s per-formance and financial condition. Thisis important for the regulators to feelconfident about the financial health ofthe Bank and also equally important isto have the Bank’s depositors andcreditors feel the same way as well.Lastly, the Bank wants to make surethat its true value is appropriatelyreflected in its share price. These are allimportant benefits derived from a highlevel of corporate governance.

Family-owned companies need notbe incompatible with good corporategovernance as long as the companiesadhere to strong corporate gover-nance principles and implement themin a serious and consistent way.

Please kindly provide us of yourviews on bank improvements thedirection of development of cor-porate governance in Indonesiaand Asia.

Corporate governance, both inIndonesia and Asia, has made consider-able progress during the last decade.The 1997/98 Asian Financial Crisis wasa major milestone that underlined theimportance of good corporate gover-nance. Since then there has been clear-er, more detailed and more consistentregulations and guidelines on corporategovernance issued by regulatoryauthorities throughout Asia. Thesebenchmarks have allowed companiesto ensure that they meet the minimumlevel required and for some to take the

initiative and go beyond the bench-marks on their own initiative.

For example, the Bank under BankIndonesia regulation on CorporateGovernance was not required to havea Corporate Governance committeeunder the BoC, but decided to set oneup to ensure that focus on CorporateGovernance was maintained at thehighest level.

Corporate Governance is not staticand continues to evolve. The Bank isconfident that corporate governancelevels would continuously improve asboth regulators and companies realizeits growing importance as the publicbecomes more aware of it.

In your views what lessons shouldcompanies learn from the GlobalFinancial Crisis and the impact ithas in investor confidence.

Lessons learnt is that during thepast and current crisis is that the Bankhad a better chance of getting share-holder support to raise its capital wasby adhering to a high level of corpo-rate governance.

Another lesson learnt is not to relyon just meeting the regulatory bench-

marks but to try to exceed it. It is acontinuous challenge to do this.

Provide us a brief descriptionBank’s CSR activity and impact onits community.The Bank conducts its CSR activitythrough its foundation YayasanDanamon Peduli. The foundation has sofar focused on communities surround-ing its Danamon Simpan Pindjam (DSPor micro-banking) branches located inroughly 700 traditional (wet) marketsthroughout the country.

The foundation has launched threemajor programs.

The first is the Clean, Healthy andProsperous market program, whichinvolves a one-day event a year where-by Bank Danamon volunteers clean upthe markets where they are located.This is not just limited to cleaning upthe markets but also to invest in themarket infrastructure, such as pavingthe market alleys, renovating the toiletfacilities and giving a fresh coat ofpaint to the public facilities.

The second is the DisasterResponse and Recovery program,which involves each Danamon branchresponding quickly in times of naturaldisasters (floods, fires, volcano erup-tion and earthquakes) in its vicinity.These involve bottled water and first-aid medicinal kits to disaster victimsand recovery efforts with regard topublic facilities.

The third is the Market GarbageCompost program, which collectsorganic waste from markets, whereDanamon has a DSP branch, and con-verts this waste to compost for use asorganic fertilizer to surrounding farm-ers. A pilot project has been done inseveral counties and this will be repli-cated in some 30 counties by year-end.

Our view is that a company canonly sustain its business growth byactively contributing the improvementof the welfare of its surrounding com-munity. This is the philosophy behindour CSR activities. ■


Q & A

Manggi Habir: Corporate Governance is

not static and continues to evolve.


AD

Public Bank was founded in August 1966 by itsChairman, Tan Sri Dato’ Sri Dr. Teh Hong Piow,

and quickly became synonymous with efficientservice delivery, strong corporate governance,industry-leading profitability and a corporate cul-ture that is committed to excellence.

Under the exemplary leadership of Tan Sri Teh,the Group attributes much of its success to the ded-icated and competent staff force. These staff,exceeding 16,000 to date of which 90% is inMalaysia with the balance in Hong Kong andChina, Vietnam, Cambodia, Laos and Sri Lanka,were instrumental in realising the exceptionally highrates of organic growth in the Group’s core busi-nesses, resulting in industry-shattering profits andlarge tax contributions to the Government.

The Public Bank Group has an array of productsand services catering to the needs of discerning

customers. These offerings, packaged under com-mercial banking, retail wealth management, Islamicbanking, investment banking and stock broking,are made available to customers via the large andwell-distributed network of full-service branches inMalaysia and the Asian region.

Owing to its sterling financial performance yearafter year, the Bank has grown in size and stature.Today, it stands tall as the third-largest listed com-pany on Bursa Malaysia with current market capi-talisation of RM30 billion.

It is also the largest non-government-linkedlisted company in Malaysia by market capitalisa-tion, and the third-largest financial group inMalaysia by asset size, with total assets of RM196billion as at the end of 2008. Public Bank’s assetquality is the best in the domestic banking indus-try - a significant attribute for the consistently


S P O N S O R E D S T A T E M E N T

Public Bank staying ahead

Chairman, Tan Sri Dato' Sri Dr. Teh Hong Piow accepts Asian Banker Award for Best Retail Bank in

Asia Pacific presented by Mr Emmanuel Daniel, President and Editor-in-Chief of The Asian Banker.

strong financial ratings assigned by internationaland national rating agencies.

The Group’s impressive financial performancehas greatly enhanced the “Public Bank” brand. Thisyear alone, the Bank is the proud winner of 21awards and commendations of exemplary corpo-rate excellence from international and domesticinstitutions, including The Asian Banker’s “BestRetail Bank in Asia Pacific” award as well as con-secutive annual “Best Bank” and “Best CorporateGovernance” accolades from international andnational publications.

Founder and Chairman Tan Sri Dato’ Sri Dr. TehHong Piow has also received the “Best CEO inMalaysia 2009” and the “Asian Banker ParExcellence 2008” awards from international finan-

cial publication FinanceAsia for his outstandingcontributions to the banking and finance industry.

The Public Bank Group endeavours to continu-ously enhance stakeholder value, and its unbroken42-year record of profitability stands as a testimonyto this commitment. To its customers, the Groupproactively devises competitive financial solutionsand services to meet their present and anticipatedneeds in future. To raise staff welfare, the Groupensures that its staff’s competencies are enhancedthrough a policy of continuous learning and a mer-itocratic culture that allows unencumbered staffdevelopment to foster strong collective perform-ance of all in the Group. ■


S P O N S O R E D S T A T E M E N T

For more information, please contact,

Mr Leong Kwok NyemChief Operating Officer, Public Banke-mail [email protected]

How important is corporate gover-nance to Ayala Land?

Corporate governance is very, veryimportant to Ayala Land and it is muchmore than just a buzzword for us.Transparency and accountability lead totrust, and the trust that has been built-up in the Ayala Land name and brand is

one of our most valuable assets, espe-cially during challenging economic timeslike these. In essence what these meanto us is that we always try to do the rightthings, we hold ourselves accountablefor the actions and results of the com-pany, and we communicate as accurate-ly and as often as we can with our

investors and stakeholders so that theycan get a true picture of corporate per-formance and value. In practice wemake use of comprehensive and meas-urable scorecards at both the corporate,business and individual level whererewards are very closely linked to per-formance. There is frequent and rigor-ous interaction between the Board andmanagement and between manage-ment and institutional shareholders. Wemake ourselves available to answerquestions on operations and financialsfrom our shareholders and we maketimely and appropriate disclosures onmaterial events that may affect our stockprice or investment decisions in ourcompany.

We also have a very extensiveInvestor Relations website whereinvestors can obtain information oncompany and share price performanceand where we post all of our investorpresentations and analyst briefing mate-rials as well as all structured and non-structured disclosures that we submit tothe various regulatory agencies that wedeal with. We are very proud to notethat because of our extensive and time-ly disclosure and the immediate avail-ability of these on our IR website, wehave been recognized as having the“Best and Most Informative Website inAsia” by Euromoney in 2008.

What is the underlying philosophybehind Ayala Land’s track record oncorporate governance?

Integrity is a cornerstone value atAyala Land and corporate governanceprovides us with the enabling frame-work for managing our relationshipswith all our stakeholders - shareholders,customers, business partners and thecommunity at large.

We view corporate governancepractices as tools in ensuring the highestpossible standards of business integrity,accountability, and responsible businesspractices. We hold ourselves to a higher


Q & A • P H I L I P P I N E S

Ayala Land leading the way

in corporate governance

in the PhilippinesAyala headquarters - Tower One

standard than most and therefore makeit a point not only to comply with the let-ter of the corporate governance regula-tions, but rather with their spirit andintent. As an example, when in doubt,and there are lots of grey areas for inter-pretation on issues involving “materiali-ty”, we choose to disclose. Anotherexample is that we have a longer tradingblack-out period that we impose inter-nally than what is required by our regu-lators because we are conscious of notonly avoiding impropriety, but even theappearance of impropriety.

What are the benefits of goodcorporate governance? Apart fromregulatory compliance, how cantransparency create value for yourorganization?

We believe that there are multiplebenefits to good governance - strongercustomer support and flight to quality intimes of uncertainty, preferred access topartnering opportunities, better accessto capital markets, and a lower cost ofthat capital. More transparent compa-nies are also rewarded by trading athigher valuation multiples comparedwith our competitors. During times ofcrisis, investors are driven by fear andthey oftentimes make irrational deci-sions. Transparency and good gover-nance allow us to more effectivelybridge the information asymmetry thatoften exists between a company and itsinvestors. Less uncertainty breedsgreater confidence and these ultimatelylead to higher valuations.

Transparency and good corporategovernance is a key differentiator. Allthings being equal, investors will chooseto invest in companies that they under-stand better, where there are no risks ofhaving negative “surprises” down theline. This is a fundamental tenet ofinvesting and will become an even morecritical factor in investing decisionsbecause of all of the corporate scandalsthat we have seen in the last few years.And not only will investors choose toinvest in transparent companies, but

they will also be prepared to pay a pre-mium for earnings and cash flows thatthey can trust. Because transparencybuilds confidence, companies that haveearned this trust are also often given thebenefit of the doubt when there is someuncertainty, and this can help reducetrading volatility and create a more sta-ble shareholder base.

What lessons do you think AyalaLand has to offer to other compa-nies in terms of improving theirrespective corporate governancetrack records?

The key is consistency and we imple-ment good governance practices at alltimes and with a long-term view, andnot only when convenient. Ayala Land’slong term success lies in the consistencywith which we have adhered to a com-mon set of core values - values that areclearly aligned with shareholder valuecreation objectives and balance theinterests of all stakeholders. These val-ues of long term orientation, commit-ment to customers, satisfaction and a

genuine concern for the company’sresources enable the company not onlyto achieve its business objectives but todo so in the most responsible mannerpossible.

Why should Asian corporationsadopt “Western style” corporategovernance and additional account-ing disclosures? How does yourgroup balance corporate trans-parency and accountability with theneed to protect trade secrets?

The principles of good corporategovernance should be universal.Certainly “trade secrets” that contributeto or preserve competitive advantageare not openly discussed but opacity indisclosure or opacity in the presentationof financials is not a competitive advan-tage. For example transparency does notmean revealing the details of our strate-gic plans, the blueprint for a new projectthat we wish to launch or discussing theprospects for a property that we wish toacquire before the deal is done, just likea company like Coca-Cola does notneed to reveal its secret recipe for Coketo be transparent in its dealings.

Transparency is all about honesty inpresenting the facts that paint the truepicture of the business and contributedto past performance, candidness inassessing future possible performanceand risk factors, and fairness in dealingwith all our stakeholders and makingsure that material information gets dis-closed in a timely way and no onegroup benefits from having an informa-tion advantage over another. Differentcountries may have slightly differentrules on governance and standards ofdisclosure but the principles underlyingthese are all universal. We also believethat these rules will all convergetowards the highest standard becauseinvesting is global and capital can movefreely so markets (and companies)which remain opaque and unclear willsee capital flight while the most openand the most transparent will attractthe most capital.


Q & A

Antonino T. Aquino, President and

CEO of Ayala Land, Inc.


Consistent with corporate gover-nance best practice, the Company annu-ally conducts a formal Board self-assess-ment. This is a detailed questionnairethat covers four areas of Board perform-ance: fulfillment of the Board’s keyresponsibilities, the quality of the rela-tionship between management and theBoard, the effectiveness of Boardprocesses and meetings, and the per-formance of individual members. This isquite a rigorous process and the resultsof the self-assessment are analyzed anddiscussed by the Board with appropriateaction being taken where necessary toconstantly improve Board performance.

How does Ayala Land view sustain-ability? How important is it to com-municate your involvement in activ-ities relating to social upliftmentand community development?

Sustainability is integral to every-thing that we do in Ayala Land. Thedream of a sustainable future beginswith actions that are rooted in the pres-ent. We realize that to make a differ-ence, the critical strides towards a sus-tainable future need to be taken todayespecially as we face daunting environ-mental and social challenges. While wehave had a rich heritage of environmen-tal enhancement and impact reductioninitiatives in our land development, wehave taken this forward even more aswe have defined a SustainabilityFramework that will ensure that the waywe do business is responsive, transpar-ent, and aligned with our commitmentto enhancing land and enriching lives formore people in the future.

Last year we issued our secondAyala Land Sustainability Report for2008, which was prepared using theGlobal Reporting Initiative’s (GRI) G3Reporting Guidelines. This report wasissued along with our 2008 annualreport and links to electronic copies of

both are on our website.Within this framework, we define

sustainability as building communitiesthat meet the needs of existing andfuture customers, offer environmentallysensitive products and design, are social-ly responsible, and contribute to a highquality of life. In this report we discussextensively the various initiatives that wehave in place for the environment, thecommunities where we operate, andour employees. Social upliftment andcommunity development are integral toour business model and we are firmbelievers in the value of promotingnation building. It simply makes goodbusiness sense to actively engage our-selves in programs that ensure a higherquality of life and a better future for ourchildren. The Sustainability Report is, inessence, our “report card” for sustain-ability where we track and report on var-ious metrics and which we will use notonly as a reporting mechanism but moreimportantly as a tool for improving oursustainability efforts even further.

On the issue of family-owned com-panies, some are saying that family-owned companies and corporategovernance are not really compati-ble. Are you comfortable with theprospect of increased regulation ofcompanies moving forward?

I believe that this mindset is chang-ing. Families will continue to be repre-sented on the Boards of many publiccompanies but as I mentioned earlier,the principles of good corporate gover-nance should be universal. Any compa-ny that needs to tap the public capitalmarkets needs to come to terms withthis reality very quickly if they are to sur-vive. Both Ayala Land and our parentcompany Ayala Corporation are publiccompanies and we continually subjectourselves to the discipline and regulationof the public capital markets. Theamount of regulation has increased sig-nificantly because of all of the gover-nance scandals of the past decade andwill probably continue to do so. We are

comfortable with increased regulationbecause we hold ourselves to a very highstandard of fairness and integrity. This isa value that is core to Ayala and existswhether or not we consider ourselves afamily-controlled company or not. Wealso believe that investors are sophisti-cated enough to discern whether fami-ly-controlled corporations have goodgovernance practices or not. At the endof the day, there are good and bad com-panies regardless of the shareholderstructure. We view ourselves as a highlyprofessional company that looks afterthe interests of all shareholders equally. In your views what lessons shouldcompanies learn from the GlobalFinancial Crisis and the impact it hasin investor confidence.

One of the most important lessons isreally a “back-to-basics” one - that thereis no such thing as a free lunch. Both theproviders and the takers of capital haveto go back to and address the funda-mental risk-reward equations. This glob-al financial crisis came about partlybecause people forgot to pay enoughattention to the risk side of the equationand for many years risk was effectivelymis-priced. Risk management willbecome much more important foreveryone moving forward.

Going forward, how do you see thedirection of corporate governance inthe Philippines?

We believe that good corporategovernance will continue to gain groundin the Philippines. Strong advocacygroups such as the Institute ofCorporate Directors are working closelywith many companies through the SECand the Philippine Stock Exchange andthe past corporate governance surveyresults have shown a clear improvementover the years. I believe that this will con-tinue. We really don’t have any choicebecause global capital is becomingincreasingly mobile and also increasinglydiscerning. We need to keep progress-ing on this front if we are to remain vis-ible and relevant on the global stage. ■


Q & A

What are principal features or charac-teristics of Taiwan Mobile manage-ment/structure which has contributedto its publicly-acclaimed track recordfor corporate governance? (Auditcommittees, INEDs, director compen-sation disclosure, special policiesdesigned to enhance corporate gov-ernance, etc.) Please give a brief his-tory on Taiwan Mobile involvementin corporate governance reforms?

The Company has made relentlessefforts in having corporate governancerooted and maintaining shareholders’interests. Independent directors on theAudit Committee replaced board super-visors in overseeing the Company’soperations, thus moving the Company astep closer to the global standards incorporate governance. In addition, for-feiture of dividends from the parentcompany by TFN and TFN Investmenthas set an unprecedented move for list-ed companies in Taiwan, evidencing theCompany’s determination to maximizeshareholders’ interests.

How has corporate governanceworked in terms of enhancingTaiwan Mobile competitiveness?

Taiwan Mobile’s good corporate gov-ernance enables effective check-and-bal-ance mechanism which streamlines oper-ation process and hence improves opera-tion efficiency and reduces business risks.Separately, quality disclosure and infor-mation transparency facilitate decisionmaking of all stakeholders and thus low-ers our cost of capital and enhances sus-tainability of profits.

What lessons do you think TaiwanMobile has to offer to other compa-

nies in terms of improving theirrespective corporate governancetrack records?

The determination and persistence inimplementation of corporate governancecoupled with abiding by basic disciplinesis the key.

How do you assess the state of cor-porate governance in Taiwan specifi-cally, in Asia in general?

We are not in a position to assess thisas each company’s situation varies.


Taiwan Mobile conducts evaluation ofthe board performance every year. TheCorporate Governance Committee sum-marizes the directors’ self-assessment

reports and resolutions and submits themto the BOD. The evaluations include thebroad director’s diversification in expert-ise, good communications betweenboard members and management, andcontributions of board members.

What reforms do you think have tobe implemented to enhance the stan-dards of corporate governance inTaiwan and Asia?

As all the related regulations andmechanisms are in place, we don’t thinkthere is a need for further reforms.Instead, the determination and persist-ence in implementation of corporate gov-ernance is more important.

What is the underlying philosophybehind Taiwan Mobile track recordon corporate governance?

The Company acknowledges theimportance of good corporate gover-nance and abides by the followingphilosophies:• Timely disclosure of material informa-

tion• Maintain a check-and-balance system

between the board and management• Audit Committee ensures fair and inde-

pendent financial oversight• Allot 4 seats for independent board

members, more than fulfills currentregulations requiring public companiesto have at least 2 seats

• Corporate Governance Committeeensures that sound corporate gover-nance practices and systems are inplace

• Adoption of a cash dividend policybased on high earnings payout ratio

• Distribution of all employee profit shar-ing in the form of cash


Q & A • T A I W A N

Taiwan Mobile and itscorporate governance principles

Harvey Chang: Maintain a check-and-balance

system between the board and management

In terms of structure, what meas-ures have you implemented toenhance the company’s corporategovernance?

How do you view the state of corpo-rate governance in the businessesand areas where Taiwan Mobileoperates in?

We have observed a continuousimprovement in governance standard.Local Securities and Futures Institute’sadvocate on the importance of corporategovernance also increased local corpora-tions’ awareness.

Can you describe in brief your firmCSR, Environmental Practices andCommunity Partnership and how ithas made an impact to the communi-ty you operate with.

Corporate social responsibility is notonly a key measurement of a company’scompetitiveness, but also a demonstra-

tion of a company’s core value. TaiwanMobile formed a foundation in 1999 as away of giving back to society and hasreceived numerous recognitions for its

efforts. The Company allocates aroundNT$60 million annually to its corporatesocial responsibility division to undertakevarious social welfare activities. In 2008,the Taiwan Mobile Foundation devoted56% of its budget to social welfare, 25%to telecom research, and 15% to emer-gency rescue. The major beneficiaries andtargets were minorities and the disadvan-taged, environmental protection and edu-cation, bridging the digital gap, and artsand culture promotion.

On the issue of family-ownedcompanies, some are saying thatfamily-owned companies and cor-porate governance are not reallycompatible.

This is not true in our case. As long

as a company is determined to imple-ment corporate governance, with sepa-rate ownership and management, fami-ly-owned companies and corporate gov-

ernance can be compatible.

What are the benefits/rewardsof good corporate governance?

Good corporate governancehas enabled us receiving severalrecognitions and achievements,which are a testament to the quali-ty and reputation of TaiwanMobile’s products and its channels’services. The Company’s high cashdividend policy (based on its pro-posed cash dividend distribution for2008, dividend yield would bearound 10% - which is higher thanthe Asian and Taiwanese telecommarket average) has attracted moreinvestment interests and loweredour cost of capital.

What are measures can thecompany implement to furtherimprove its corporate gover-nance?

Persistence in implementing qual-ity corporate governance.

In your views what lessons shouldcompanies learn from the Global

Financial Crisis and the impact it hasin investor confidence.

Corporate Social Responsibility isan integral part of CG. A company isaccountable to its employees andshareholders. Not only should the man-agement align interests between itsemployees and shareholders, but alsotake care of the interests of all its stake-holders.

Going forward, how do you see thedirection of corporate governance inTaiwan?

I am very positive on the future ofTaiwan’s corporate governance. Taiwanhas already developed considerableawareness of CG and the acceptancelevel of CG has been on the rise. ■


Q & A


Corporate Governance Asia is once again giving our Annual Recognition Awards 2009. The issue of cor-

porate governance once again dominated the markets in 2008 following the Financial Markets meltdown.

Last year we saw corporate governance, ethics and transparency crumbles across the global financial mar-

kets with the demised of major corporations that led to the loss of millions of jobs across the world.

The significance of corporate governance for the stability and equity of society is captured in the broader

definition of the concept offered by Sir Adrian Cadbury (2002): "Corporate governance is concerned with

holding the balance between economic and social goals and between individual and communal goals. The

governance framework is there to encourage the efficient use of resources and equally to require account-

ability for the stewardship of those resources. The aim is to align as nearly as possible the interests of indi-

viduals, corporations and society."

Corporate governance is a continuing process which majority of public companies in Asia continues to

adopt based on standards, in Asia and across the global financial markets. For the past six years, Corporate

Governance Asia has put emphasis on recognizing companies in Asia who continue to lead the way in ini-

tiating best practices which provide an open, ethical, Asian values, fair spirit and continuing dialogue with

all stakeholders.

As the only journal currently specializing in corporate governance in this region, Corporate Governance

Asia is in a unique position to see and observe those who have contributed significantly to the overall

development of corporate governance during the past year.

In recognition of such contributions, Corporate Governance Asia is giving out the “5th Corporate

Governance Asia Recognition Awards 2009” to selected companies, based on the following criteria:

• The awardee must have must a previous publicly-acclaimed track record for corporate governance (This

can be in the form of other CG-related awards);

• The awardee must have been involved in a specific publicly-known activity/activities (legislation, surveys,

studies, etc) directly related to improving or enhancing the standards of corporate governance during

the past 12 months;

• The awardee must have implemented significant and specific CG-related reforms during the past 12

months

• Rights of shareholders

• Disclosure and transparency

• Board and management discipline

• Audit and Remuneration committee

• INEDS and Investor Relations Practices

• Corporate Governance as a business proposition

• Corporate Social Responsibility and Environmental Practices

CORPORATE GOVERNANCE ASIA

Recognition Awards 2009


THE BEST OF ASIA 2009

China Construction BankChina Construction Bank has established a corporate gover-nance structure based on check-and-balance mechanismamong the decision-making body, supervising body and themanagement. It has complied with the provisions of thecode of corporate governance practices and has substantial-

ly complied with the recommended best practices. In its2008 Corporate Social Responsibility Report, the bank illus-trates its efforts in implementing the scientific developmentconcept, adaptation to the change in macro-economicmeasures and the complicated situation, and its achieve-ments in persistently undertaking full corporate socialresponsibilities, further demonstrating its in-depth and effec-tive communication with all circles of the society and its pur-suits in realizing the blue prints of a harmonious society.

China Life InsuranceChina Life Insurance has improved its corporate gover-nance structure and established a check-and-balancescheme between the board of directors, the supervisorycommittee and the operational management. It believesthat through fostering sound corporate governance, it canfurther enhance its transparency and accountability. In2008, the company took effective measures and conduct-ed sustained rectification tasks to improve the operationalefficiency of the board and enhance the communicationwith investors. It has put in place employees conduct stan-dards and various policies and systems, risk control proce-dures for prevention of fraud, as well as staff conductguidelines and model code of ethics. China Construction

Bank has established a corporate governance structurebased on check-and-balance mechanism among the deci-sion-making body, supervising body and the management.It has complied with the provisions of the code of corpo-rate governance practices and has substantially compliedwith the recommended best practices. In its 2008Corporate Social Responsibility Report, the bank illustratesits efforts in implementing the scientific development con-cept, adaptation to the change in macro-economic meas-ures and the complicated situation, and its achievements inpersistently undertaking full corporate social responsibili-ties, further demonstrating its in-depth and effective com-munication with all circles of the society and its pursuits inrealizing the blue prints of a harmonious society.

China Agri IndustriesHoldingsThe corporate governance principlesof China Agri Industries emphasize

on upholding sound ethics and integrity in all aspects of itsbusinesses and ensuring that its affairs are conducted inaccordance with all applicable laws and regulations. Duringthe past year, it has initiated a number of measures to fur-ther enhance its governance standards, including the com-mencement of the re-engineering of the company's riskmanagement system as well as the standardization andconsolidation of its policies and procedures. In February thisyear, China Agri Industries set up an executive committee,provision of board training in respect of the new amend-ments to the listing rules and the adoption of the revisedcodes of securities transactions by directors and relevantemployees.

C H I N A


China TelecomInheriting an excellent and prudentmanagement style, and insisting on

practicing corporate governance with efficient manage-ment and operations, China Telecom strongly believes thatsound corporate governance practices can ensure manage-ment effectiveness, prosperous corporate culture, successfulbusiness development and a sustainable increase in share-holders' value. In 2008, the company increasingly improvedthe daily operations of the board of directors and its sub-committees, continued to perfect and optimize its organi-

zational structure, and put com-prehensive risk management intooperational practice in order tocontinuously enhanced its stan-dard of corporate governance andfirmly protect the interests of theinvestors and shareholders.

China ResourcesEnterpriseSolid corporate governanceframework is essential for ChinaResources Enterprise. The boardof directors assumes overallresponsibility to establish andmaintain sound systems in riskmanagement, internal control and governance to ensure theeffective and efficient accomplishment of corporate goalsand objectives, safeguard the group's assets and sharehold-ers' interests as well as ensure the reliability of financial andcorporate reporting. Policies and procedures are designed to

safeguard corporate assets, maintain proper accountingrecords and ensure that transactions are executed in accor-dance with management authorization. The company iscommitted to a policy of open and regular communicationand fair disclosure of information to its shareholders.

Wang Xiaochu

Chairman and Chief

Executive Officer

China Resources Enterprise, Limited

China Resources Enteprise (CRE Board of Directors)

China Resources Enteprise (CRE Board of Directors)

CNOOCCNOOC has always upheld and executed highlevel of business ethics for which its transparen-

cy and standard of governance have been recognized by thepublic and its shareholders. Since its listing, the company hasendeavoured to maximize its shareholders' value. In 2008, itexecuted its corporate governance policies strictly andsought to comply with the relevant provisions of the code ofcorporate governance practices as set out in the listing rulesof the Stock Exchange of Hong Kong, thus ensuring that all

its decisions were made on theprinciples of trust and fairness,and in an open and transparentmanner, in order to protect theinterest of the shareholders.

Fu Chengyu

Chairman of the

Board of Directors & Chief

Executive Officer


Dongfeng MotorsDongfeng adheres to best practices of cor-porate governance, building a strong foun-dation to ensure that it follows regulatorystandards under the guidance of its man-agement and board of directors. The com-pany certainly benefits from its strategicalliances with its foreign partners creating awin-win situation for both parties. The com-pany is putting a lot of efforts to ensure thatthe board of directors, including the inde-

pendent non-executive directors, isfully aware of the regulatory devel-opments as well as their responsibil-ities to affirm that they are capableof making the right decisions for thesake of all investors and sharehold-ers. As Dongfeng is committed inbuilding itself into a large interna-tional company, it adopted a com-prehensive risk management systemto prevent fraud and other malprac-tices.

Xu Ping,

Chairman of the Board of Directors &

Executive Director

LENOVOAs part of its corporate gover-

nance practices, Lenovo has formulated and implemented aclear written policy by which the board of directors is respon-sible for steering the company and ensure that it achieves itsoverall strategy. It is committed to safeguard shareholders'interests and has put in place a number of interactive com-munication channels to facilitate open dialogue with all itsstakeholders. Lenovo ensures that it follows the mandatorycompliance requirements such as publishing quarterly finan-cial results and business reviews within 45 days after the endof the relevant quarters. It also employs more independentnon-executive directors, exceeding the regulatory require-ments as per the listing rules.

COSCO PacificThe management of CoscoPacific maintains a high degree ofcorporate gov-

ernance by running the company with aclear goal. It has always placed greatemphasis on maintaining good relation-ships with all its stakeholders through agood practice of investor relations. Thecompany is committed to meetinginvestors' request on business-relatedinformation. It proactively communicateswith the investment community to ensureits strengths and advantages, togetherwith its ability to handle economic down-turns, are fully reflected in the company'svaluation of the market. As a market

leader, it places high importance to corporate socialresponsibility, taking responsible approach toward climatechange initiatives and environmental protection.


Li NingThe board of directors of Li Ning strives to promote anduphold good corporate governance as it recognizes its mis-sion of creating value for and maximizing returns to theshareholders, while at the same time fulfilling its corporateresponsibilities. The company applied all the principles andcomplied with all the code provisions and most of the rec-ommended best practices of the Code of CorporateGovernance Practices. To assure a balance of power andauthority, the roles of the chairman and CEO are separat-ed, and Li Ning appointed a sufficient number of inde-pendent non-executive directors with extensive profession-al experience. The company has established an integratedsystem of internal control, which plays a key role in riskmanagement and in safeguarding shareholders' invest-ments as well as its assets.

SinopecChina Petroleum and ChemicalCorporation (Sinopec) contin-ues to commit itself to thestandard operation, enhancefundamental system and

improve its corporate governance. Itstrengthens the information disclosure andinvestor relations of the company, thus con-tinuously improving its transparency amongits shareholders. Sinopec conducts a compre-hensive internal control review every year.Internal control aims at offering reasonableassurance for the legal compliance of the

company's operation and management,safeguarding of assets and the authen-ticity and completeness of financialreporting and the related information.This is designed to enhance efficiencyand effectiveness of business operationsand to enable the company to achieveits development strategies.

Ping AnPing An has adopted several measures toachieve high standards of corporate gover-nance. It has established a system of checks-and-balances that comprises the general

meeting of shareholders, a board of directors, a supervisoryboard and the senior management in accordance with theCompany Law. Internal control and regulatory complianceare paramount to the company. In addition to an account-able board of directors, a quality senior management teamand a number of committees, Ping an has put in place a sys-tem in daily operation throughout the organization thatdemands standardized procedures be carried out to enforcecompliance and provide internal control through checks-and-balances.

Mr. Chen Tonghai,

Chairman, Sinopec

Ma Mingzhe, Chairman and CEO, Ping An


CLP HoldingsMaintaining a good, solidand sensible framework of

corporate governance has been and remains one of CLP'stop priorities. The company has its own code on corpo-rate governance as opposed to the code issued by theStock Exchange of Hong Kong to express its own prac-tices, which in a number of respects went beyond the

terms of the stock exchange code. Central to the successof CLP has been the company's commitment to a setof business principles and ethics that help it drive for-ward. These principles extend to all aspects of its opera-tions - how it treats its own people and its relationshipswith investors, business partners and government, thewider communities in which it operate and the naturalenvironment.

HONG KONG

EspritEsprit adheres to highstandards of corpo-

rate governance anchored through itsboard of directors, internal control and riskmanagement, and channels for dissemina-tion of shareholders information. Itbelieves in developing and maintainingsustainable relationships with all its stake-holders and the rest of the investing com-munity. The company aims to develop andmaintain long-term relationships with itsbusiness partners based on openness,honesty and trust. It is committed to con-

ducting business in a responsible andsuitable manner. Its vendor compli-ance manual offers suppliers strictguidelines in regard to child labour,workplace safety, working hours andcompensation based on nationallabour laws and international bestpractices.

Heinz Jürgen KROGNER-KORNALIK

Chairman & Group Chief Executive Officer


Hysan Development Co LtdIn aiming to be financially success-

ful and deliver long-term sustainable value to its stake-holders, Hysan Properties is committed to maintaining thehighest standards of corporate governance. The corner-stones of the company's governance practices are account-ability, transparency and integrity. A key focus for Hysan isto further strengthen its internal control system, especiallyin the light of the global financial market turmoil. Itadhered to the principle of financial prudence and furtherboosted its financial and treasury management, budgetaryplanning and costs control. In particular, Hysan further

strengthened its regular review system of the group's coun-terparty risks in banking and investment activities.

Hang Seng BankAdhering to high stan-dards of corporate gover-

nance, Hang Seng Bank follows the module issued by theHong Kong Monetary Authority and all the provisions setout in the code of corporate governance practices by theStock Exchange of Hong Kong To further enhance thebank's risk management framework and in line with best

policies, the bank set up a risk management committee inJuly 2008 to centralize its risk management oversightfunction. Its main functions are to review, analyze, evalu-ate, recognize and manage various risks of the bank. HangSeng attaches great importance to communication withshareholders and disseminate relevant information to pro-mote greater understanding and dialogue with the invest-ing community.

Hang Lung PropertiesHang Lung Properties seeks tosustain excellence in corporate

governance practices as they are fundamental to maximize thebenefits of the company and all its stakeholders. It emphasizeshigh standards of integrity and establishes trust throughsound governance, and instill these principles in its corporate

culture through leadership by example, training and effectiveinternal control. The company maintains a good internal con-trol environment and the systems have been designed toenable it to monitor the group's overall financial position, safe-guard its assets against loss and misappropriation, provide rea-sonable assurance against fraud and errors, and manage therisk in failing to achieve the group's objectives.

Hutchison WhampoaHutchison Whampoa strives toattain and maintain the high-est standards of corporategovernance as it believes that

such practices are fundamental to enhancing shareholdervalue and safe guarding interests of the shareholders andother stakeholders. The company accordingly adoptedsound corporate governance principles that emphasize aquality board of directors, effective internal control, strin-gent disclosure practices as well as transparency andaccountability to all stakeholders The group places utmostimportance on employees' ethical, personal and profes-sional standards. It actively promotes investor relations andcommunication with the investment community, and val-ues feedback from shareholders on its efforts to promotetransparency. It also adopts a proactive approach to corpo-rate social responsibility.


Shui On LandFor Shui On Land,enhancing corporategovernance is notsimply a matter of

applying and complying with thecode of corporate governance ofthe Stock Exchange of Hong Kong,but about promoting and develop-ing an ethical and healthy corporateculture. The company is committedto maintaining a high standard ofcorporate governance within a sen-

sible framework with an emphasison the principles of transparency,integrity, accountability, sustainabledevelopment and independence. Ina new initiative, the company isestablishing a disclosure committeeto further ensure that all disclosuresmade by the company to its share-holders are made in an accurate,complete and timely manner.

Vincent Lo, Chairman and CEO

Shui On Land Limited

Li & FungThe board of directors and management of Li &Fung are committed to principles of good corporategovernance consistent with prudent enhancementand management of shareholder value. These prin-ciples emphasize transparency, accountability andindependence. In 2008, no incident of fraud or mis-

conduct was reported from employees, shareholders orstakeholders that have material effect on the company'saccounts and overall operations. In terms of corporate com-munications, the company held semi-annual policy commit-tee meetings for senior executives to formulate company-wide policies and practices, and to report and discuss signif-icant issues affecting the group.

Melco GroupThe maintenance of a high standard of cor-porate governance has been and remains atop priority of Melco, as it believes that suchpractices will contribute in bringing thehighest possible returns to its shareholders.The company has promulgated a set of codeof corporate governance, which spells outthe standards and practices used by thecompany to direct and manage its businessaffairs. In addition to formalizing the exist-

ing corporate governance principles andpractices, the code also serves the purposeof assimilating the existing practices withbenchmarks prescribed by the StockExchange of Hong Kong and ultimatelyensuring high transparency and accounta-bility to the company's shareholders. Toenhance the social responsibilities practiceof the group and to generate growth andwell-being of a new generation in the coun-tries in which the group invests, Melcoestablished a new committee in January2008 called corporate social responsibility

Mr. Lawrence Ho,

Chairman & CEO, Melco

Dr Victor FungGroup Chairman

Allan Wong

SpencerFung

Henry Chan

DannyLau

LeungWai Ping

James Siu

RickDarling

MarcCompagnon

Dow Famulak

EmilyMaak

GuyD’Auriol

WarrenMcFarlan

MakotoYasuda

MartinTang

Dr William FungGroup ManagingDirector

Bruce RockowitzPresident

PaulSelwaySwift


Sino GroupThe board of directors of Sino Landis committed to attain the best

corporate governance practices through the provision ofeffective management and sound control of the compa-ny's operations. The board composition, size and struc-ture are being reviewed from time to time to ensure thatit has a balanced skill and expertise for providing effectiveleadership to the company. Sino Land has enhanced itsinternal function by integrating a comprehensive riskmanagement framework which aims to provide reason-able assurance againstmaterial errors, losses orfraud. The board alsostrives to maintain anongoing dialogue with theshareholders, using theannual general meeting asone of the principal chan-nels for communicatingwith the shareholders

Sun Hung Kai PropertiesSun Hung Kai Properties practices rig-orous standards of corporate gover-nance, anchored on the principle ofaccountability and transparency,enabling the company to earn theconfidence of the shareholders andthe public. The company's variouscommittees meet regularly to addressvarious issues relating to its businessstrategy, performance, conflict ofinterest and management process inorder to ensure that the interest of all

shareholders are taken into account. Thecompany follows a policy of disclosingrelevant information to shareholders in atimely manner and ensures that theshareholders' views are communicated tothe board of directors. In terms of corpo-rate social responsibility, Sun Hung Kaiintroduces eco-friendly concepts into allaspects of its operations, adopts a greenmanagement approach and innovatesenvironmental protection facilities withthe aim to promote a greener lifestyle.

Sun Hung Kai Properties Corporate

Headquarters

Astra InternationalAt Astra, the core of good corporate gover-nance is derived from various forms of con-trols, ethical and sustainable business prac-

tices applied since the company's establishment in 1957.Several committees including an audit committee, remu-neration and nomination committee, executive commit-

tee, risk management group and an internal audit depart-ment, are formed to in charge of improving the effective-ness of corporate governance activities. Also. Astra hasconsistently sponsored programs to assist in situationssuch as floods and other disasters as well as support forcultural events, sports, health and education, includingscholarships for gifted students across Indonesia.

INDONESIA


Bank DanamonAt Bank Danamon, theBoard of Commissionersand Board of Directors

believe that commitment to principles of corporate gover-nance is critical in obtaining and maintaining the trust ofinvestors and in achieving the bank's overall goal of per-formance with integrity. The principles' of Danamon'simplementation of Good Corporate Governance within thebank is based on transparency, accountability, responsibility,independence, fairness, and integrity. In addition, Danamonestablished a Danamon Peduli Foundation with an aim to

provide sustainable supportto various community activi-ties such as public hygieneand health improvement,environmental protectionand scholarships to the stu-dents from less privilegedcommunities.

Manggi Habir

Chief Executive Officer

Bank MandiriBank Mandiri strongly believesthat the consistent application ofgood corporate governance prin-

ciples will confer a number of concrete benefits to thebank as well as all of its stakeholders by ensuring man-agement commitment in applying principles of openness,accountability, responsibility, independence, fairness andprudence in managing the bank. Bank Mandiri has a clearCSR policy with a series of programmes designed to estab-lish or maintain a harmonious relationship with the com-munity. The company supports environment protection,provides scholarships to the underprivileged, and givesdonation to charities organizations every year.

Kookmin BankAt Kookmin Bank, a high degree of trans-parency and independence of managementis maintained. The matters related to corpo-rate information, corporate governance,investor related information are provided viaInternet websites in real time and makespublic through Financial Supervisory Serviceand Korea Exchange. The group operatesseven committees such as board steering

committee, management strategy commit-tee, audit committee, evaluation and com-pensation committee etc so as to secure theindependency of the board of directors,thus, protecting shareholders' rights.

Kang Chung-won,

Chief Executice Officer

Samsung ElectronicsSamsung Electronics has established a global standard ofcorporate governance, operating within a structurewhose focal point is the Board of Directors. This enablestransparent and sound management practices. The Boardof Directors consists of nine Directors, including fourExecutive Directors and five Independent Directors. ore-

over, Samsung Electronics has pursued the spirit ofco-prosperity to make life better for all. The companyengages in diverse activities to fulfill its role as a sociallyresponsible corporate citizen by promoting socialwelfare, culture and the arts, academics and education,environmental protection and volunteer communityservice.

KOREA


CIMB Group At CIMP, the importance of corporate governance in enhanc-ing stakeholders' value, increasing investors' confidence,establishing customers' trust and building a competitive organ-ization has been recognized. The Group's governance frame-work adopts the principles and best practices recommendedby the Malaysian Code on Corporate Governance (Revised2007) and relevant regulators as well as international best

practices. The implementation of good governance practices inthe Group can be seen in the following areas: a high perform-ance Board, an effective Internal Audit function, an integratedenterprise-wide risk management framework, active and ded-icated committees and task forces with specific roles andresponsibilities In addition, CIMB Group has clear CSR initia-tives and has conducted a series of CSR programmes with anaim to forge closer ties with the local communities.

Public BankPublic Bank has prop-erly in place an effec-tive corporate gover-

nance framework that is based on the princi-ples and best practices of corporate gover-nance as contained in the Malaysian Code ofCorporate Governance, and also in line withinternational best corporate governance prac-tices. The company's board of directorsstrongly believes that good corporate gover-nance is the key to the improved long-term

performance of Public Bank as well as that asound governance structure is fundamental tosafeguard the interests of all its stakeholders.The Public Bank Group recognized the impor-tance of CSR policy and has clear CSR initia-tives. It supports CSR programmes includeefforts and projects in key areas such as nationbuilding, education, environmental conserva-tion and health care.

Tanjong Public At Tanjong, the board of direc-tors strives to maintain highstandards of

corporate governance and endeavours tocontinually enhance the company's gover-nance processes and structures as articulat-ed in the Principles and Best Practicespromulgated in the Malaysian Code ofCorporate Governance for meaningful andeffective governance. The Tanjong Public

believes corporate social responsibility is an integral part ofits business. The company has a set of principles to guidetheir actions on the health and safety of employees, conser-

vation of resources and environmentalprotection, as well as contributions tothe communities. The group has CSRprogrammes that support educationand art. It also supports the develop-ment of rural communities through sub-stantial contributions to the electricitysupply industry.

Tan Sri Dato' Sri Dr. Teh Hong Piow,

Chairman of Public Bank

MALAYSIA

PHILIPPINES

Ayala CorporationAyala Corporation has

put in place a compelling corporate gover-nance framework. It believes that soundcorporate governance practices are of fun-damental importance in creating sharehold-er value and in promoting the company'slong-term growth. It involves a number ofelements, including clear understanding ofits directors of their primary role in repre-

senting all the stakeholders andbeing accountable to all aspects ofthe company operations. Ayalaplaces considerable emphasis onthe importance of independentdirectors in all its member compa-nies, rigorous internal and externalaudits, and fostering a culture ofaccountability, transparency andadherence to Philippine and globalreporting standards, even beyondcompliance.


Banco de OroBanco de Oro enforces strictaccountability and transparency,

while maintaining operational efficiency and pursuingdynamic innovation to deliver increased value to thebanking public. The corporate governance committeeassists the board in shaping up the bank's policies andpractices, recommending applicable guidelines andrequired adjustments to ensure effectiveness. Where

needed, the committee, which meets at least once quar-terly, recommends measures for the directors' continuingeducation and succession plan. It also exercises oversightover the bank's compliance function. Banco de Oro hasalso its own code of conduct, which outlines the princi-ples and policies that govern the activities of the institu-tion, and to which all directors, officers and employeesand those that work for the bank, its subsidiaries andaffiliates should follow.

Ayala LandAyala Land is firmlycommitted to goodcorporate gover-

nance practices as they are key to creatingand sustaining shareholder value, while bal-ancing the interests of its various stakehold-ers. The management places high impor-tance to having clear policies, best practicesand strong internal controls in support ofeffective corporate governance. All theboard members have undergone training in

corporate governance and have been certified bythe Institute of Corporate Directors, a profes-sional organization committed to promotingworld class corporate governance principles inthe East Asia region. The company remains com-mitted to periodic upgrading of corporate gover-nance training and intends to broaden the atten-dance to other members of senior and middlemanagement in 2009.

Antonino T. Aquino,

President and CEO of Ayala Land, Inc

Benpres HoldingsBenpres devotes considerable efforts toinstitutionalize high standards of corporategovernance. The board and the manage-

ment believe that good corporate governance practices arenecessary components of sound strategic business man-agement and improve the economic and commercial pros-perity of the company and its stakeholders. The company's

various committees establish transparent procedures andperform oversight functions to ensure that it achieve busi-ness excellence. Fully embracing the principles of good cor-porate governance, the company has its own corporatecode of conduct to govern and guide the actions of all itsrepresentatives in dealing with shareholders, customers,joint venture partners, suppliers and service providers, gov-ernment and creditors.

Globe TelecomGlobe Telecom commits to theprinciples and best practices in cor-porate governance in the attain-

ment of its corporate goals. It regularly pursue to develop andadopt new governance initiatives and to build the right cor-porate culture across the organization. The company hasadopted a code of conduct, conflict of interest and a whistle-blower policy for its employees and has existing formal poli-cies concerning unethical, corrupt and other prohibited prac-tices covering both its employees and members of the board.Moreover, Globe Telecom has adopted an expanded corpo-rate governance approach in managing business risks - anenterprise risk management policy which was developed toprovide a better understanding of the different risks thatcould threaten the achievement of the company's vision, mis-sion, strategies and goals.


HOUSE AD


PLDTPLDT is committed todoing business in

accordance with the highest ethical stan-dards. It seeks to promote a culture of goodcorporate governance by observing its corebusiness principles of accountability, integri-ty, fairness and transparency in relationshipsamong internal stakeholders and in thecompany's dealings with customers, suppli-ers, competitors, business partners, regula-tors and the public. In 2008, PLDT's corpo-

rate governance office remained steadfast toits framework of the three Cs of corporategovernance: compliance, competence andultimately, culture. Efforts are directed atembedding good corporate governance inthe company's daily work routines. The com-pany is also committed to respect and pro-mote shareholders' rights.

Manuel Pangilinan,

Chairman

MetrobankMetrobank is aninstitution that

puts the highest priority and importance oncorporate governance. It is the cornerstone ofits business growth, profitability and long-term sustainability, thus enabling the bank touphold the best interest of all its stakeholdersat all times. It is dedicated to sustain and fur-ther building up shareholder confidence andtrust because it believes that a transparent

organization is a credible organization. Thebank is very transparent in its financial report-ing and provides informative and timely disclo-sures of the group's plans and strategies. It alsoadheres to better ethical conduct as exempli-fied by the quality standards imposed on thebank's officers and directors.

Mr. Antonio S. Abacan, Jr

Chairman, Metrobank

Manila WaterManila Water believes that corporate governance shouldbe present in its everyday business operations. And to bet-ter on improving its practices across the organization, thecompany has reorganized its compliance and governancesection and established a corporate governance office.This new office formulates and implements initiatives oncorporate governance, reporting to the audit and gover-nance committee. The company has also created a corpo-rate governance cluster, a cross-functional team tasked toidentify the gaps and challenges on corporate governanceacross the company, as well as propose recommendations

to improve ManilaWater's policies andpractices. Anotherenhancement to itscorporate governancepractice was theannual evaluation ofits board of directors -the first time everthat it was done atthe board level.


San MiguelCorporationSan Miguel Corporation put astrong emphasis on corporategovernance as it is a necessary

component of what constitutes sound strategicbusiness management and will,therefore, undertake every effortnecessary to create awarenessthereof. Compliance with theprinciples of good corporate gov-ernance starts with the board ofdirectors, who conducts itselfwith utmost honesty and integrityin the discharge of its duties,functions and responsibilities. Theboard is committed to respect the

rights of investors and minority shareholders. Itrecognizes that the most cogent proof of goodcorporate governance is that which is visible tothe eyes of its investors.

SM Investments CorporationThe board of directors of SMInvestments Corporation is responsi-ble for promoting and adhering to theprinciples and best practices of corpo-rate governance, fostering the long-term success of the issuer and secur-ing its sustained competitiveness inthe global environment. This is donein a manner consistent with its fiduci-

ary responsibility, which it shall exercisein the best interest of the company, itsshareholders and other stakeholders.The board, which has two independentdirectors, is supported in its corporategovernance functions by three commit-tees: the compensation and remunera-tion committee, the nomination com-mittee, and the audit and corporategovernance committee.

San Miguel

Headquarters

SMIC Board

of Directors.

Eduardo M

Cojuangco Jr SMC

Chairman and

CEO.


Noble GroupThe Noble Group recognizes the importance of adopting thebest international practices in corporate governance at alltimes. Its businesses are global, thus it strives to respect the cul-

ture and values of all the communities in which the groupworks - not because it is good business, but because it is theright thing to do. Having a strong and highly independentboard of directors is paramount to Noble considering thataccountability is an integral value that drives everything withinthe group. It places high priority to ethical business conductsince that will inspire confidence among shareholders,investors and the public at large.

CapitaLandCapitaLand applies good corporate governance principles inbuilding a company committed to integrity, excellence andits people. It believes that each company needs to developand maintain sound and transparent policies and practicesto meet its specific business needs and to provide a solidfoundation for a trusted and respected business enterprise.Led by an effective board of directors, CapitaLand believesin conducting itself in ways that deliver maximum sustain-able value to its shareholders. It promotes best practices asa means to build an excellent business for its stakeholders

and is accountable to them for its performance. The com-pany has put in place a comprehensive risk managementframework, which applies across the entire group.

Keppel CorporationStrong corporate governance enables Keppel Corporationto achieve its goal of growing sustainable businesses withgreater confidence and efficacy. The board and the man-agement fully appreciate that fundamental to good cor-porate governance is an effective and robust boardwhose members engage in open and construction debate

and challenge management on its assumptions and pro-posals. The company has, therefore, adopted initiatives toput in place processes to ensure that the non-executivedirectors are well supported by accurate, complete andtimely information, have unrestricted access to manage-ment, and have sufficient time and resources to dischargetheir oversight function effectively.

SINGAPORE

Dr. Hu Tsu Tai, Chairman (left), Mr Liew Mun Leong

President and Chief Executive Officer

Board of Directors


SingTelFor SingTel, good corporate gov-ernance ensures that shareholder

interests are protected as well as enhances corporate per-formance and accountability. As a company whose sharesare listed in both Singapore and Australia Stock Exchanges,it seeks to comply with two sets of listing rules, though it

always strive to observe the more stringent requirements inthe marketplace. The size and composition of the board ofdirectors are reviewed from time to time to ensure that it isconducive to effective discussion and decision-making, andthat it has an appropriate number of independent directors.Its composition has changed significantly in recent years toreflect the focus of the group's business across the region.

UOB GroupThe UOB group believes that adheringto good corporate governance is nec-

essary to sustain good business performance and safe-guard the interests of the stakeholders. It subscribes to thecore values of integrity, performance excellence, team-

work, trust and respect and it has a code of conduct for thestaff to observe. The bank prides itself with a highly inde-pendent board, as six of the nine members are consideredindependent directors. Their performance and effective-ness are assessed in terms of strategic insight, financial lit-eracy, business judgement and sense of accountability.

Fubon FinancialFubon Financial puts an effort to main-tain high standards of ethics, corporategovernance and effective accountabilitymechanisms in every aspect of its busi-ness. For instance, Fubon has an inter-nal audit office and independent super-visors to ensure proper reporting andadequate internal controls. In addition, acorporate governance committee wasestablished. Other measures to safe-guard shareholders' interests include thecompany's effective board of directorsand the prompt disclosure of relevantinformation to shareholders. Fubon

Financial maintains high transparencywith the timely release of information toshareholders and investors. The FubonGroup, through associated enterprisesand the Fubon Charitable, Cultural &Educational and Art Foundations, is sub-stantially executing various clearly target-ed charity works, including providingmedical emergency and disaster assis-tance, sponsoring private service-orientedsocieties, and to sponsor private service-oriented societies, and promoting art tothe public, thus fulfilling the responsibili-ties of an enterprise towards society.

Daniel Tsai

Chairman of Fubon Financial

TAIWAN

Sembcorp IndustriesSembcorp Industries' corporate gover-nance principles are built on the corevalue of integrity and reflect its com-mitment to protect and enhance share-holder value. The board and manage-ment are committed to maintaining thebest practices of corporate governanceand recognize the important role thatwell-defined corporate governanceprocesses play in strengthening corpo-rate accountability and sustainability.

The company boasts of several com-mittees that are primarily made up ofindependent or non-executive direc-tors with diverse experience andappropriate skills, and are structuredto ensure the creation of long-termvalue for investors.

Peter Seah Lim Huat

Non-executive Chairman

Tang Kin Fei

Group President and CEO


KasikornbankKasikornbank endeavours to uphold goodcorporate governance and has been recog-nized by a number of organizations bothdomestically and globally. During the pastseveral years, Kasikornbankhas showed its commitmentto achieve good corporategovernance and consistentwith the guiding principlesof various regulators includ-ing the Bank forSettlements, Stock Exchangeof Thailand, Securities andExchange Commission,Thailand and etc. In addi-tion, the company has aclear CSR policy to promotethe participation in environ-

mental preservation and social responsibilities activities. Thecompany also has guidelines to direct all business units toadhere to the Statement of Business Conduct.

Banthoon Lamsum,


THAILAND

Taiwan MobileTaiwan Mobile recognizes the importanceof good corporate governance. It has a setof clear principles and guidelines for infor-mation disclosure, maintain checks andbalances between board of directors andsales team. In addition, a corporate gover-nance committee and an audit committeeare formed as well as independent direc-tors are appointed in order to ensure best

practices of corporate governance. Besides,the company has been taking its corporatesocial responsibility when it established theTaiwan Mobile Foundation in 1999. It focus-es in supporting activities to advance knowl-edge and technology in the telecom indus-try, foster international cooperation andaccess to education, and sponsor art, cultur-al, charity activities.

Harvey Chang,

President and


TSMCTSMC believes good corporate governance is an integralpart of its core values and a clear policy is formed. Thecompany advocates and acts upon the principles of oper-ational transparency and respect for shareholders' rights.TSMC strives to maintain a sound and effective board ofdirectors and believes it is the basis for successful corpo-

rate governance. In line with this principle, the companyhas established a functioning audit committee and a com-pensation committee. Also, TSMC is dedicated to becom-ing the leading Taiwan corporate citizen and establishedthe TSMC Education and Culture Foundation in 1998with an aim to provide continuous support to education-al and cultural activities. Moreover, the company has spe-cific policy in environmental protection.


PTT Public CompanyAt PTT, good corporate governancepractice has been placing high

importance. The company has carefully studied and adoptedthe guidelines of Stock Exchange of Thailand on corporategovernance to streamline with PTT business. The corporategovernance principles at PTT embrace six keys elements,namely accountability, responsibility, equitable treatment,

transparency, vision to create long term value and ethics. Indoing so, the company hopes to boost credibility and confi-dence among investors, which will bring about premium forthe company. In addition, corporate social responsibility haslong been incorporated in PTT business strategy. The compa-ny's prime focus is on cultivating the health, safety, security,and environment culture. It supports programmes in environ-ment protection, education, art and cultural events.

Board of Directors, PTT

Siam Commercial Bank The board of directors at the SiamCommercial Bank strives to main-tain a high standard of good gov-ernance in promoting andstrengthening the trust of itsshareholders, stakeholders andthe public. The board of directorsendeavours to compliance withcorporate governance guidelinesissued by the regulatory bodiesthat govern its operations as acommercial bank and public com-pany. The company also recog-

nizes the importance of the implemen-tation and compliance with such otherhigher standards as are appropriate tothe conduct of its business. In addi-tion, the group considers corporatesocial responsibility as a core elementof its vision. The bank has establisheda Corporate Social Responsibility (CSR)Committee consisting of members ofthe Board of Directors in order to pro-mote CSR at high level. It aims at pro-moting activities in four areas namely,youth development, environmentalprotection, public health, religion artand culture.

Dr. Vichit Suraphongchai,

Chairman, Siam Commercial Bank

Chairman

President &CEO,Secretary tothe Board

Asia’s Best Executive Search Firm – Board Practice

Heidrick & Struggles International, Inc. is the world's premier provider of sen-ior-level executive search and leadership consulting services, including talentmanagement, board building, executive on-boarding and M&A effectiveness.For more than 50 years, we have focused on quality service and built strongleadership teams through our relationships with clients and individuals world-wide. Today, Heidrick & Struggles leadership experts operate from principalbusiness centers in North America, Latin America, Europe and Asia Pacific.

CEO / Board Practice

As part of the global practice, the CEO/board practice in Asia focuses on help-ing the chairman and the board to build the most senior governing body of acompany. This expertise combined with our industry practices, provides theedge for us to help clients identify & recruit impactful CEO talent. In close con-junction with our Leadership Consulting Practice, we also work with companieson issues critical to the board and the top management team such as succes-

sion planning of the board & the C-Suite. The team in Asia includes some of the most senior members of the Firm, and is linked seamlessly with theexperts in Europe and in the Americas, helping clients with their Asia and global needs.Key trends in Asia which drives the growth and development of the practice: Asian companies, particularly Chinese companies, are now among someof the highest capitalized companies in the world. There is a corresponding quest for a higher standard of governance. Many Asian companies arealso increasingly pursuing a global strategy. The need for international expertise on the board and in the C-suite isgetting crucial. Major private equityfunds' investments in Asia are also driving the need for transformational CEOs and board of directors. With Asia being a significant part of most multi-nationals' business, there is also an increasing need for directors with significant experience in Asia.


Alice Au David Pumphrey Arun Mahapatra Inhye Kim

Karen Choy Simon Monks Steve Mullinjer Toshifumi Mori

Asia’s Best Legal Firm Corporate Practices

DLA Piper in AsiaA vibrant and diverse region offering unparalleled opportunities - and risk - requires a trusted legal partner working with you anywhere, any timearound the globe. DLA Piper looks after the world's businesses. We are a legal services firm unlike any other. We are a business which puts clientsfirst. Our clients are our most important partners. Clients know they can safely put their businesses in our hands. That's because we understandyour business, the law and the big picture. Our one-stop legal and business services combine convenience with a team that completely understandsyour operations. As a truly global legal services organisation, we are built to meet the legal and business needs of our clients wherever they dobusiness. Whether you are an Asian company operating in your home town expanding overseas or a multinational operating in the region, per-haps even entering Asia for the first time, we will take care of your business. Asia is changing fast. In this era of globalisation, Asian companies aregoing global while multinationals continue to invest - all at a staggering pace which makes our region the fastest growing in the world. At thesame time, economic cycles fluctuate dramatically. The regulatory environment is continually evolving: liberalising sometimes; toughening at othertimes in different parts of the region. We know from experience in Asia the picture is constantly changing. Yet one thing remains the same: oppor-tunities abound - and so do risks. That's why you need a trusted partner.

Operating across Asia, Europe, the Middle East and the US, we offer you more than 3,700 lawyers in over 60 cities worldwide. Our networkspans over 20 countries, ensuring clients based both in Asia and elsewhere operating in this region receive a seamless global service. Our approachis both local and global - a fusion of local expertise combined with international best practice and insight, with resources and expertise availableanywhere around the world 24 hours a day, seven days a week. Our offices in Bangkok, Beijing, Hong Kong, Shanghai, Singapore and Tokyo area blend of more than 250 partners, lawyers, consultants and legal executives (in fact 80 per cent of our people are locally-raised) as well as advis-ers who work internationally. These offices link seamlessly with our international office network, providing clients with advice and support fromaround the globe via one single point of contact.

We place the highest value on building close working relationships with our clients. Our lawyers are attuned not only to your business but alsothe legal requirements and cultures of the places where you operate. Our people have excellent legal skills and are totally committed to our clientservice ethic.

Our clients say this commitment is what really sets us apart.Mabel Lui, Partner, T: +852 2103 0808 / E: [email protected]

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