Corporate Governance at Citic Pacific Case Solution

On the night of October 20, 2008 Citic Pacific, the Hong Kong arm of CITIC Group, the largest state investment company in China, has surprised the markets by announcing that lose up to HK $ 15 5000000000 (about 2 U.S. $ million). The company said that these losses were due to currency exposure had been aware of six weeks, but did not tell investors. In a statement of apology to the public, Larry Yung Chi-kin, chairman of CITIC Pacific, recognized losses and admitted that the contracts they had not been authorized. Investors and analysts attacked Citic Pacific for its corporate governance practices and internal control. They expressed shock that the company would make such risky transactions and would delay the release of large potential losses for six weeks. What does this incident say about the internal risk management and the board of directors, particularly independent directors of CITIC Pacific? The rules of society proven and effective corporate governance mechanisms of the alignment of the decisions of its senior management with the interests of shareholders?
by
Stephen Ko,
Havovi Joshi
Source: University of Hong Kong
18 pages.
Release: June 18, 2009. Prod #: HKU841-PDF-ENG
Corporate governance in the settlement of cases Citic Pacific

Corporate Governance at Citic Pacific Case Solution
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