XN000022-1987-08-04 — Page 3

TUESDAY, AUGUST 4, 1987

CONCERTED EFFORTS IN CONTROLLING COMMERCIAL CRIME STRESSED

* * *

UPHOLDING HONG

THE HONG KONG GOVERNMENT WILL BE SCRUPULOUS IN KONG'S STANDING AS AN INTERNATIONAL FINANCIAL AND TRADING CENTRE WHICH DEPENDS ON

REPUTATION OF INDIVIDUAL COMPANIES AND THE MARKETS.

THE

THIS WAS STRESSED TODAY

(TUESDAY) BY THE SECRETARY FOR MONETARY AFFAIRS, MR DAVID NENDICK, WHEN HE ADDRESSED THE ECONOMIC CRIME WORKSHOP ORGANISED BY THE CROWN AGENTS OF THE UNITED KINGDOM.

MR

NOTING THAT LEGISLATION COULD ONLY BE PART OF THE ANSWER TO DEAL WITH COMMERCIAL CRIME,

NENDICK HAS IDENTIFIED FOUR AREAS WHERE ACTION TO BUTTRESS THE GENERAL LEGISLATIVE FRAMEWORK WAS CONSIDERED TO BE IMPORTANT.

THE FIRST AND BASIC BUTTRESS, SAID MR NENDICK, WAS THE PROPER THAT BEHAVIOUR OF THE BOARD OF DIRECTORS OF A COMPANY. HE POINTED OUT TO GUARD AGAINST A COMPANY FROM INVOLVING IN COMMERCIAL CRIMES, IT WOULD BE NECESSARY TO KEEP CONSTANT VIGILANCE OF THE DIRECTORS,

HE COMMENDED THE RECENT ACTION OF THE HONGKONG AND SHANGHAI BANKING CORPORATION IN SETTING UP WHAT

WAS, IN EFFECT, AN AUDIT COMMITTEE DRAWN FROM THE MEMBERS OF ITS BOARD OF DIRECTORS ON WHICH NON-EXECUTIVE DIRECTORS WERE IN THE MAJORITY.

то

BUT

"THIS COMMITTEE HAS BEEN GIVEN WIDE RANGING POWERS WITH ACCESS TO INTERNAL PAPERS AND TO THE AUDITORS BOTH INTERNAL AND EXTERNAL. THE HONGKONG BANK, OF COURSE, CHOSE WISELY IN THE FIRST PLACE BY

INTEGRITY APPOINTING INDEPENDENT MINDED MEN OF

ITS BOARD. PUTTING THEM TOGETHER IN THIS SORT OF WAY IS A MAJOR STEP IN ENSURING THE ACCOUNTABILITY OF THE MANAGEMENT OF A COMPANY WHERE, OF NECESSITY, THE EXECUTIVE HAS CONSIDERABLE FINANCIAL SCOPE AND POWER, MR NENDICK SAID.

"

"SIMILAR STEPS HAVE BEEN TAKEN BY LARGE COMPANIES IN OTHER

EXECUTIVES COUNTRIES TO ENSURE THE ACCOUNTABILITY OF

AND 1 COMMEND THIS EXAMPLE TO THE BOARDS OF OTHER LARGE ENTITIES HERE WHO WISH THEIR INVESTORS AND POTENTIAL INVESTORS TO VIEW THEIR COMPANIES IN THE MOST FAVOURABLE LIGHT, MR NENDICK SAID.

THE SECOND VITAL BUTTRESS, ACCORDING TO MR NENDICK, WAS ADEQUATE DISCLOSURE.

"THERE ARE THREE ASPECTS. THE FIRST IS THE FLOW OF COMMERCIAL INFORMATION FROM THE COMPANY TO THE PUBLIC AT THE EARLIEST POSSIBLE MOMENT. THE SECOND IS THE DISCLOSURE OF HOLDINGS OF CONTROLLERS AND DIRECTORS SO THAT THEIR ACTIONS CAN BE APPROPRIATELY JUDGED. THE THIRD IS THE EARLY IDENTIFICATION OF LARGE INVESTORS WHO MAY BECOME TOMORROW'S CONTROLLERS.

/HE NOTED