Corporate Governance at CITIC Pacific: A Case Study

Exposure to foreign exchange risks that led to significant damages to the profits of Citic Pacific, which is the Hong King branch of China's CITIC Group, went unannounced for six weeks, leaving investors quite understandably angry with the company and its leadership. A lack of adequate corporate governance at the state-owned investment organization was seen by many as the major problem in the situation, and despite the apologetic tone struck by company leadership when the two-billion-dollar loss was announced, many felt that the problem still persisted and was in obvious need of drastic action. It is recommended hat the risk management procedures at work in Citic Pacific undergo a major overhaul, and that management and the board of directors be made more responsive to investor and shareholder interests through a redefining of company policy and procedure and possibly through a direct link...
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