| BUSINESSWEEK ONLINE : JUNE 14, 1999 ISSUE | ||||||||
| ||||||||
 | ||||||||
| INTERNATIONAL -- ASIAN COVER STORY
'Knowledge of Corporate Governance Is Very Shallow' (int'l edition) David Chiang, 59, is chairman and managing partner of Lombard APIC, an investment group that is backed by CalPERs and the Asian Development Bank to promote shareholder rights and corporate governance in Asia. He recently spoke to Business Week Asia Correspondent Bruce Einhorn in Hong Kong. Here are edited excerpts of their conversation: Q: What do you mean by corporate governance? A: Corporate governance is the responsibility of protecting shareholder rights. That is what corporate governance is about -- how to balance power between the board and management. If people understand corporate governance, [they see] it is very user-friendly and not a threat to management. Q: How does corporate governance in Asia differ from that in the U.S.? A: Knowledge of corporate governance is very shallow. In most Asian companies, the chairman controls everything. Minority shareholders' rights are deprived. In Asia, the chairman or the [controlling] family is too strong. The board is just friends, and it rubber-stamps everything. Q: What did you ask companies to do in order to receive an investment from Lombard? A: We stressed the importance of corporate governance -- complying with standards and principles. [At our Korean company], they set up a corporate governance committee and a compensation committee to make sure that all senior management was paid in line with end results, not the old way of loyalty. They delineated the responsibility of the board and of the management. They have to make sure that management is empowered. Q: But doesn't management always have power? A: Before, even to buy a pencil, you needed the chairman's permission. You have to let the professionals make their judgment. Q: What about bringing change to the board? A: We make sure that all members of the board understand their accountability. There were two independent directors; we are adding a third. Q: Do independent board members have any clout, though? A: We had a long talk with them. Now they understand what is corporate governance. We need more involvement by independent directors. Companies all had independent directors, but [the people] didn't know how to do [the job]. I was an independent director; I understand. Q: What sort of reaction have you gotten to some of these changes? A: In Korea, at general shareholders meetings, there are usually people who shout and receive payments [to keep quiet]. Since we invested at the end of last year, we stopped this practice. At the meeting, there was one hour and thirty minutes of shouting. But we insisted not to pay them. Q: What is your next goal? A: I am setting up a committee for Asia Pacific promoting corporate governance. Through that committee we will create business for education and consultancy. New jobs for $1 billion. It will have six or seven people, from Korea, Taiwan, China, Malaysia, Hong Kong, Philippines-lawyers, businessmen, regulators, accountants, academics. I will set up the committee pretty soon. Now I'm searching for a source of funding. Q: Why do you think your ideas will catch on in Asia? A: Corruption is not in every citizen in a country, only a minority. Most people are honest people, who want to be fair. Everyone wants to be good, but the knowledge [of correct practices] is not there. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
|  |
 | |
 RELATED ITEMS The Stars of Asia David Chiang, Chairman, Lombard/Asian Private Investment, Hong Kong (int'l edition) ONLINE ORIGINAL: ``Knowledge of Corporate Governance Is Very Shallow'' (int'l edition) INTERACT E-Mail to Business Week Online | |||
