XN000022-1995-05-24 — Page 40

-

17.

As regards the role of the Director of Audit, Section 15 of the Audit Ordinance provides that and 1 quote "Notwithstanding that he is not empowered by any Ordinance to audit, examine or inquire into the accounts of a person, body corporate or other body, the Director may audit, examine or inquire into the records and accounts of

any person, body corporate or other body if he is authorized in writing to do so by the Governor in the public interest .....". Clause 32(7) of the Airport Authority Bill makes it clear that this section of the Audit Ordinance applies to the Airport Authority. So the Governor could, if necessary, authorize the Director of Audit to audit, examine or inquire into the records and accounts of the Airport Authority.

Used in combination, Section 15 of the Audit Ordinance and Clause 31 of the Airport Authority Bill provide strong powers and I believe them to be sufficient. Like the Mass Transit Railway Corporation and the Kowloon-Canton Railway Corporation, the Airport Authority will be required to operate on prudent commercial principles. Like the two railway corporations it will be expected to raise considerable sums of money in international capital markets and it is important that it develops the same strong reputation amongst lenders and international credit rating agencies. This can only be achieved if a proper balance is struck between the need for prudent oversight of the Authority's activities and the need for it to be allowed to operate effectively as a commercially independent entity, and be seen to be so.

Compensation

Turning now to the payment of compensation, we have received suggestions that the Authority, which is wholly owned by Government, should be obliged to act in the public interest and should not be paid any compensation for losses incurred as a result of being directed by the Governor in Council to take certain courses of action. There is, however, another angle to this issue. Lenders to the Authority will want to be assured that the Authority will be able to generate the necessary revenues to service and repay its debt and that its ability to do so will not be adversely affected by a direction given by the Government. Balancing the two considerations, we decided that the circumstances under which compensation will be payable should be qualified. Clause 20(2) of the Bill now provides that compensation will only be payable where compliance with a direction given by the Governor in Council in the public interest results in the Authority's being unable to conduct its business according to prudent commercial principles and to pay a debt or otherwise being unable to discharge any of its legal obligations. In addition, Clause 20(3) of the Bill provides that an application for compensation shall be made by, and only by, the Board of the Authority.

Page 40Page 41