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Scareman of the board

A few weeks ago, David Webb, corporate governance champion and dedicated scourge of ill-regulated Hong Kong companies, attended the annual general meeting of Esprit Holdings. He is not, to put it mildly, a major Esprit shareholder: he owns 10 shares, currently valued at about $240. (It cost him approximately $80 to take a taxi from Central to the Kowloon Shangri-la hotel where the gathering took place.)

Nor was he intending to go in with guns righteously blazing. 'This meeting should be fairly straightforward,' he said in an e-mail which outlined the arrangements. 'It's one of Hong Kong's better-governed companies.'

By Webb standards, the Esprit meeting was, indeed, a low-key affair. It lasted 30 minutes and the only questions from the floor were Mr Webb's. They reflected classic Webb concerns.

He congratulated Esprit for, on this occasion, conducting a poll of shareholders' opinions, instead of relying on a show of hands, but wondered why this was not written company policy. 'It would prevent me coming every year to demand a poll,' he said.

He engaged the company's chief financial officer, John Poon Cho-ming, who chaired the meeting, in a discussion as to the whereabouts of one of the directors who was up for re-election but was absent from the gathering. 'Perhaps you could convey my disappointment,' said Mr Webb, smoothly. 'Perhaps he has too many appointments if he can't appear at an AGM once every three years.' He also queried the overall attendance record of independent directors ('I find there's an incentivising effect if you publish records').

Then, and this was the point of his presence, he objected to the resolution 'to give a general mandate to the directors to issue, allot and deal in additional shares not exceeding 20 per cent of the existing share capital of the Company'.

'Project Vampire calls upon companies to adopt international best-practice levels and limit their general mandate to five per cent in any one year,' he said. 'There's much less risk of dilution.'

Mr Poon said that he was familiar with the Webb mission known as Project Vampire - it's an acronym which stands for Vote Against Mandate for Placing, Issues by Rights Excepted - but that 20 per cent was within listing rules.

The meeting ended shortly afterwards, whereupon Michael Ying Lee-yuen, Esprit's chairman, immediately crossed over to Mr Webb, shook his hand and said: 'Mr Webb! I finally meet you, I've heard so much about you. We really try to exercise the best corporate governance we can.'

Mr Poon, who had never met Mr Webb before either, also shook his hand, the pair engaged in some badinage (Mr Webb: 'I hope you're wearing Esprit clothing.' Mr Poon: 'Everything! The shirt, the suit ... So. You're keeping busy?') and then he said, confidentially: 'Just so you know - Asset magazine's December issue has published a poll on corporate governance. We had been number eight, then I think we were number six, and now we're number three in Hong Kong. And we haven't exercised that mandate for six years.'

'But the fact that you can is enough,' replied Mr Webb, as he was on his way out the door.

Five years ago, most boards of directors neither knew Mr Webb's name nor would have cared particularly for his good opinion.

That was when he left Wheelock Nat West and decided that the time had come to put his own money into championing corporate governance in Hong Kong. He set up a website, naturally called www.webb-site.com. He started being what one international paper called 'a gadfly', irritating the lumbering buffalos of the Hang Seng Index (he had bought shares in its 33 constituent stocks) who preferred, as they had been for years, to keep on wallowing in their own muddy secrecy.

He launched his own causes: Project Vampire is one, Hams (Hong Kong Association of Minority Shareholders, an effort to represent and advance minority shareholders' interests, thereby advancing corporate governance reform) is another, and then there's Project Poll, which encourages formal votes, not just a show of hands, on all resolutions at annual meetings.

By the spring of this year, Mr Webb was sufficiently well known to be unexpectedly voted on to the Hong Kong Exchanges and Clearing (HKEx) board with the fourth-highest number of votes. Three candidates nominated by the board itself failed to be elected. Despite this new position, he is still adamant that HKEx's listing function should go to the Securities and Futures Commission, a topic which has proved a prickly one throughout 2003 (the government has issued a consultation paper on the issue and submissions have been invited until the end of this month).

He sees no conflict of interest in his stance: his consistent position is that it's for Hong Kong's long-term benefit because 'lower standards drive away investors'.

Consistency would appear to be a Webb characteristic. When he was at school in England, he had a 'disagreeable' teacher, and to fight back he set up the PLO - the Pupils Liberation Organisation (a tendency to pick jokey names and snappy acronyms was obviously an early motif).

So he was a bolshie brat? 'Yes,' replies Mr Webb, who is 38, mildly. 'Do people's characters change that much? If you're an opinionated child, you'll be an opinionated adult.'

He's certainly strong-minded, but the soft voice and general demeanour is generally disarming. 'I expected him to be a bit more aggressive,' said Mr Ying, after Mr Webb had left the Esprit meeting. 'He's really polished, you can tell that by meeting him.' He often looks as if he's secretly amused by some internal dialogue, an expression which can, when it publicly suits him, widen into an infuriating smirk.

Mr Webb is also a self-confessed geek; he also uses the word 'nerd' about himself. It is not altogether surprising to learn that he was once chairman of the Hong Kong arm of Mensa, the society for those with high IQs, and is still a committee member.

He wanted to be an astronaut when he grew up, and has strong memories of the last moon landing, in 1973, which took place when he was living in Thailand, where his father was working as an economist for the United Nations.

'I remember PG Tips giving away cards for kids in their boxes of tea, and it said on one card that, by the end of 1985, people would be walking on Mars,' Mr Webb said. 'People always tend to project that things will happen sooner than they actually do. That's true of corporate governance, too.'

He was fascinated by computers, and started writing programs for computer games before he left school and went up to Oxford to read pure and applied mathematics. After he graduated, he intended to set up a programming business but realised he knew nothing about finance and thought that investment banking would provide useful experience. That brought him to Hong Kong, on July 15, 1991 ('the day before the Hang Seng Index touched 4,000 for the first time'), and eventually to his current mission.

So what difference has he truly made? There is a pause. After a moment, Mr Webb said, carefully: 'The pace of reforms, while pretty slow, is not as glacial as it would be without people like me being around. You can embarrass people into achieving change.'

(Asked the same question, Tessa Tennant, founder and chairwoman of the Association for Sustainable & Responsible Investment in Asia, said: 'David's precision and persistency is doing more than anything else to make corporate Hong Kong accountable to all shareholders.')

It helps that, although he says he's not an extrovert, Mr Webb doesn't exactly loiter in the shadows when he's crusading. In May, he took over the question-and-answer session of the MTR Corporation's outgoing chairman, Jack So Chak-kwong, at its AGM, and let's just say that he was somewhat disingenuous when he lamented about Project Vampire being seized on by the media to melodramatic effect. (One magazine asked him to pose dressed as a priest, clutching a cross. He declined: 'I'm not going to insult the Catholic Church.')

Mr Webb admitted to getting nervous before AGMs. 'It's like going into any exam. You think, 'Oh God, I haven't done my homework.' I spend hours cramming, reading annual reports,' he said.

Is the campaigner driven by a moral compulsion?

'I get emotional satisfaction from things going right - that's the politician in me,' he said. 'I'd like to end my life feeling I've done something useful for society.'

Whether Hong Kong society deserves David Webb is, of course, another story. On being asked what he thought of Mr Webb's contribution at the Esprit meeting, one of the elderly Chinese shareholders, who was helping himself to the tea buffet afterwards, said, apologetically: 'Some of the Chinese ladies find him very troublesome. He makes the meetings so long and they want to eat the hotel food.'

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