Corporate Governance at Citic Pacific Harvard Case Solution & Analysis

Evening, October 20, 2008 Citic Pacific, Hong Kong arm CITIC Group, the largest state investment company in China, stunned stock markets by announcing that he would lose as much as HK $ 15,5 billion (about U.S. $ 2 billion). The company said that these losses were due to foreign exchange risk, which has been known for six weeks, but was not able to tell investors about. In apologetic statements to the public, Larry Yung Chi-kin, chairman Citic Pacific, recognized losses and admitted that the contracts were not properly authorized. Investors and analysts subsequently attacked Citic Pacific its corporate governance and internal management practices. They expressed shock that the company would make such risky operations, and that it will delay the disclosure of large potential losses for six weeks. What does this incident say about internal risk Citic Pacific management and its board of directors, particularly independent directors? Whether the company has demonstrated the effectiveness of corporate governance standards and mechanisms offset its senior executives' decisions with the interests of shareholders? "Hide
by Steven Ko, Havovi Joshi Source: University of Hong Kong, 18 pages. Publication Date: June 18, 2009. Prod. #: HKU841-PDF-ENG

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